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I came across a 'new' method of investing whilst perusing the Motley Fool
boards (I think a subscription is required - sorry). It's called the BMW system
after the inventor's name BuildMWell.
<A
href="">http://boards.fool.com/Message.asp?mid=20414790
Basically, he takes a long price history (typically 30 years of monthly
data) and constructs a series of % CAGR (compound annual growth rate) curves
which encompass the data.
Here is an example (PEP) from, I believe, Excel:
<IMG alt="" hspace=0 src="jpg00065.jpg"
align=baseline border=0>
The first curve uses today's price and the price 30 years ago to calculate
the current CAGR (say 11.3%) which he then draws (manually) on a chart
printout.
He simply calculates the price every 5 years assuming an annual 11.3%
increase and connects the dots with a French curve!
Similar curves are then drawn to hit the obvious high and low
points.
In this way he invests when the stock is historically 'low'. For example
see the above chart about mid 2002.
As you will appreciate, this is not a short term system, but BMW claims not
to have had ANY losers since starting in 1999!
The question, of course, is can we draw these curves in AB?
Thanks,
Steve
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