Walter P.
St. Louis, Missouri

Mark Guerrero
Dallas, TX

Charles Snell
Beverly Hills, CA

Robert Stroz
Reno, NV

Sitting Around the Table Sept 03, 2003 Dow Jones 9565 NASDAQ 1859 S&P 500 1026 September 3, 2003

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Let's take some profits

Today, we made some adjustments to the Stock Table. By now, you have received a separate e-mail from us telling you that we have made three adjustments to our list. We are telling our subscribers to take profits in:

Liberty Media Up 51% from last write-up

Rite Aide Up 38%

Ann Taylor Up 40%

Now do we think these stocks have topped out? Well, let's get into it a little bit and you get to make your own decisions. After all, you are the investor.

Nobody invests in a vacuum

When you have an investment in a stock, you have to be concerned about several different factors simultaneously. The first factor is the stock itself. Now unless you are in it for the long-term (several years), you have to be just as concerned about the market environment itself. In the office here at StocksAtBottom.com we have charts of stocks that go back as far as 50 years. There is one thing that we can absolutely say with certainty. That certainty is that STOCKS PRICES FOLLOW EARNINGS OVER THE LONG TERM. There is no question about this truth. We have plotted these graphs for hundreds of stocks over a period of decades.

Sometimes the price follows the earnings and sometimes the earnings follow the price. Over a period of years into decades though, the two lines always work in tandem and that is the key point. The only issue then is, what is the growth rate? Stocks compound at different earnings rates. The expert on this subject is Warren Buffett . In our opinion compounding is hardwired into his brain. He mastered it at a very young age. If you had the opportunity to ask him, he would tell you a different story. Buffett would say that his gift is the "ability to allocate capital". If he lacked this gift he would be no different than the headhunter living in the jungles of Africa. Actually, he would probably be the hunted.

This market can turn at any time and that's our concern. We therefore are telling you to take what we view as big profits in Liberty Media, Rite Aid, and Ann Taylor. All three stocks can certainly work higher. The cream is out of them and that's what we look for, the cream. If the market takes a hit on the downside, profits can and will evaporate very quickly. In the end, paper profits mean nothing, the only thing that matters is what is REAL. You generate real profits by selling stocks.

We are adding a new idea to the Stock Table

We added McDonald's to the Stock Table today, and you should have already received this e-mail as well. As you know, our subscribers made a considerable amount of money in McDonald's recently, and now we are putting it back on the list. We will just touch upon it here, because our report will be ready shortly. We think in the short period of time it has been since we deleted McDonald's, the fundamentals have dramatically gotten better. The potential for margin improvement is staggering. They also have over a thousand units open until 4AM and this is working also. We believe the stock will be headed in the $30's and why shouldn't you participate.

We will be talking about other stocks very shortly, so stay tune.

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