Speaking of things that are on the decline... Internet Fund assets at Rydex now down to early 2003 levels. I believe I had posted that the tech and semi funds were at similar levels last week.

Monthly RSI's are looking interesting on stocks such as EBAY and YHOO. As Bill says if the market is going lower these may be taken down with the ship as well. However at least the 'hot money' is out. Growth managers and traders now look to energy for growth, not tech or internet.

Bill -

Seems to me your core approach takes the best of both worlds: both conservative (proven companies) and bold (targeting >35% annual gains).

It focuses upon trading in and out of proven companies as they become favorably priced, then overvalued. (avoiding the risk of a small IBD stock failing to manage growth, or of a value stock languishing undervalued).

It also makes great sense to "stand on the analysts shoulders" by interpreting, then using their profit projections to estimate potential price gains, and thus entry points.

I just have two questions: first, can we trust ANY financial statements? I read within the last year in Fortune that much of Jack Welches strong, steady earnings growth traced to major under-reserving of GEs reinsurance business.

If analysts of the MOST FOLLOWED company in the US didnt discover this until 10 years after the fact, how can we ever trust any financial statements at all? (From what I have read, Sarbanes Oxley hasnt led to an out-break of accounting honesty!)

My less paranoid question is a bigger one. Whether or not a Cara 100 stock merits purchase once it comes down in price depends, ultimately, upon whether its proven business model can generate growth in the future as it has in the past.

Has Starbucks saturated the US market? If so, will they be as successful internationally? Sure, they have flagship stores overseas, but can they REALLY dominate there, as they do in the US? My daughter lives in Portugal where espresso drinks cost 50 cents, not >$2 !

Will Dells direct to customer distribution continue to dominate? Or will customers revert to computer stores, so they have somewhere to complain face-to-face when increasingly complex PCs fail? (jConversely, can Dell fix their terrible telephone support at affordable cost?)

Will PC growth in future be sufficient for Intel to prosper? (I've read crtics saying that the world doesn't need the power of the dual core chips, and won't pay for it.) If PCs won't provide enough growth, they will need to capture dominanced in a new market - which they havent been able to do yet with cellphones, mp3 players, dsl or flash.

I have less doubt about Dow, whose business is to serve other industries. Theyre embedded in others products.

And, of course, materials, financials, consumer stocks may be easier to read in that they depend upon visible economic trends rather than particulars of a clever business model.

I havent heard you explain how you address either the large strategic questions for the Cara 100, or reliability of financial statements.

Thanks in advance for your customarily sage response.

Jock

Re:
"Seems to me your core approach takes the best of both worlds: both conservative (proven companies) and bold (targeting >35% annual gains)."

Hmmm...very interesting Jock!

Bill,
I sincerely hope you engage in an open discussion/debate for the benefit of us all, particularly the SBUX and Dell future earnings scenarios (some have written off INTC - for now).

Hi,Bill and others
do you think Tim Hortons now reach the accumulation area? Thanks for your comments.

I seem to recall someone saying that Tim Horton's was a $20 stock. It's getting there... but with another 160M shares coming out in Oct. doesn't it look like it will get there soon?

http://www.hotelnewsresource.com/pid/detail.php?sid=23347&pid=10044

When I was in China last year there was a Starbucks right inside the Forbidden City. If that is not market saturation I don't know what is.

--

Re: how can we ever trust any financial statements at all? An old joke an accountant once told me...

A business man was interviewing applicants for the position of divisional manager. He devised a simple test to select the most suitable person for the job. He asked each applicant the question, "What is two and two?"

The first interviewee was a journalist. His answer was "Twenty-two."

The second was a social worker. She said, "I don't know the answer but I'm glad we had time to discuss this important question."

The third applicant was an engineer. He pulled out a slide rule and showed the answer to be between 3.999 and 4.001.

The next person was a lawyer. He stated that in the case of Jenkins v Commr of Stamp Duties (Qld), two and two was proven to be four.

The last applicant was an accountant. The business man asked him, "How much is two and two?"

The accountant got up from his chair, went over to the door and closed it then came back and sat down. He leaned across the desk and said in a low voice, "How much do you want it to be?"

He got the job.

wavesmash,

LMAO. thank you. i will tell that around the next bonfire.

Guys and gals-

Random thoughts at 4am....

The overnight gold chart is very skittish and usually presages a move coming.

I am looking to go slightly net short after the bulls exhaust themselves on this run.

Anyone else concerned about the overbullishness in the energy space besides stockman and I?

Didn't EBAY look like a buy at 23?

PG looked like a great buy for this environment at 54ish. Starting to look toppy though. The play was to write puts at 62 a while back and harvest them at 56ish when they broke downtrend line. (Thanks Bill, g034!)

If bonds are not part of your portfolio, several systems I follow are about to flash green for a buy signal. This goes against my scenario but you can't fight the (manipulated?) tape.

wavesmash, thank you for your comments.