Summary & Discussion of My Trading History of KLM Airlines (KLM) in 1993/1994 Based on the Triangle Pattern

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New World Technologies, Inc.
www.nwtai.com

Michael Fouche
mfouche@nwtai.com


 

Table of Contents

Introduction. 3

KLM Trading Executive Summary. 4

Investment Rationale, Results & Discussion. 5

Original Return on Investment. 6

Alternative Return on Investment. 8

Conclusions. 10

Appendix – Transaction Receipts. 11

 

 

 

 

 

 

 

 

 


 

Introduction

 

In 1989 I was introduced to Ted Warren’s book, “How to Make the Stock Market make Money for You” (originally published in 1966) – his claim was that one could discern specific patterns in stock histories to predict future performance (this is also called “Technical Analysis”).

In order to validate his claims, I studied many stock charts from the local library in 1990 – interestingly I found that the same type of patterns that Warren had used as examples from the 1950s and 1960s, were also present in the stocks that I’d studied from the 1970s and 1980s. 

Thus the next step was to begin investing - which is where the “rubber meets the road” so to speak, using the techniques that he had described in this book. 


During the early, mid, and late 1990s, I was successful for the most part, in selecting and investing in good stocks based on specific patterns – my primary downfall was in not being patient enough to wait for the stock to meet its full potential.

This document discusses the details of one of thirty documented stock investments which were made based on the patterns discerned from that particular historical stock profile.


 

KLM Trading Executive Summary


The following is a synopsis for this stock investment.   

Return on Investment (ROI)

-2.8% after investing multiple rounds over a period of 14 months

 

 

Maximum possible ROI

39% within 24 months

 

 

Reason for Purchase

Classic triangle pattern

 

 

Time Frame When Purchased

1993 / 1994

 

The next two sections include more details on the reasons for the trade, the trading history, and the maximum potential ROI. 

Copies of the original stock transaction receipts, for each of the trades (buy and sell), are included in the appendix at the end of this document.




 

Investment Rationale, Results & Discussion


I studied stock charts obtained from the library and the internet – in this case it appeared that KLM was following the triangle pattern as shown below in Figure 1. 

 

Figure 1 – Original Chart from Library – Triangle Pattern

 

 

 

 

 


 

Original Return on Investment

 

I purchased the stock originally in June of 1993 and then invested again 4 more times as the stock continued to rise – and then sold all shares in August of 1994 – as shown in Figure 2.

 

 

Figure 2 – Observed Pattern, and Buy / Sell History

 

 

 

 

 

 

 

 

The transaction summary for this investment is shown below in Figure 3.  Note that this does not account for transaction costs.

 

 

Figure 3 – Transaction Summary

 

 

 

 

 

 

 


 

Alternative Return on Investment

 

There was still a little bit of upside to this stock at the time that it was sold $27 7/8 – it moved up further to top out at around $37 – as shown below in Figure 4. 

 

 

Figure 4 – Illustration of Actual ROI vs Potential ROI

 

 

 


 

A projected transaction summary of the “maximum projected ROI” of 39.0% (assuming that I’d sold out at the maximum ROI percentage) is shown below in Figure 5.  Note that this does not account for transaction costs.

 

 

Figure 5 – Projected Transaction Summary

 

 


 

Conclusions

 

I sold out because I was afraid that the stock was in a longer term retreat – all of the profit to be had was behind me.  But based on study of other stocks that exhibited the triangle pattern, I should have known that there was likely more upside during this time interval.  In other words, this was just a temporary pull-back.

The best scenario would have been to make a single purchase and then hold it – instead of purchasing more at different intervals as the stock continued to rise.  Thus if I had just made the single purchase and then sold out at the top, the ROI would have been 159.6% in 24 months – this scenario is shown below in Figure 6.  Of course nobody knows when exactly a stock has topped out, but this represents the maximum potential ROI (thus one could have easily sold at a 100% ROI in less than 2 years).

 

Figure 6 – Projected Transaction Summary

 

 

 

 

 

 


 

Appendix – Transaction Receipts


The records of the purchase and sell transactions are shown below.


 

Stock Purchase Receipt

 

 

 

Stock Purchase Receipt


 

 

Stock Purchase Receipt

 

 

 

Stock Purchase Receipt

 

 

 

 

 

Stock Sell Receipt