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We would like to share with you some historical proofs which demonstrate the power of the FireRock Element® and the capability for our research to predict performance.

Below, we have highlighted a few companies which have had significant gains.  In the future, we plan to provide you with further examples of such proofs, including those which would have prevented you from experiencing large losses.  Ultimately, our goal at FireRock Research is to provide investment research which permits “Capital Appreciation through Capital Preservation.”

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ENRON

The downfall of Enron provides a perfect example of the need to pay attention to Main Street when evaluating a company.  In doing an historical analysis of Enron, FireRock Research clearly shows that there was never a good time to buy the stock, as the reported numbers on Main Street didn’t support the uproar on Wall Street.  Even before investigators found that the books were falsified,  Main Street ratios such as Price to Free Cash Flow and Return on Invested Capital would have indicated to the investor that Enron was an “AVOID” throughout its history.  At FireRock Research, we look to Main Street for all of our primary data.  We go to Wall Street only to determine what “Mr. Market’s” quote is for each company.

  Performance Graph and Market Price History

Learn how the FireRock Element® works, click here.

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American International Group (AIG)

American International Group was a solid investment in 1991 when the company was burning on all cylinders and continued to do so for another 16 years.  The company was the largest insurance company in the world and allowed its clients to have a “one-stop shop” for all their insurance needs.   This was a moat that allowed AIG to have little in the way of competition at the level they were operating at, through the theory of economies of scale.  AIG began writing numerous insurance claims to acquire additional premiums.  They insured Trillions of dollars in claims, though they didn’t have the money to back up those claims, if they were to come due.  As the story dictates, AIG couldn’t cover them.  The FireRock Element™ numbers convey the tale.   We clearly protected our subscribers by showing them that there was no Capital Preservation here and that the stock was ready to crater, which it did.  The failure of this business scenario, is a product of lack of balance of Capital Appreciation and Capital Preservation which could have steered this investment in a different direction.

Performance Graph and Market Price History

Learn how the FireRock Element® works, click here.

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Washington Mutual (WAMU)

Washington Mutual was a business that was conservatively run for decades and became the largest thrift/ savings and loan bank in the world.  The problem that would eventually occur and lead to their destruction was that they forgot to follow their founding principles. Historically, banks would take money that their customers deposited in their savings account and loaned that money out in the form of mortgages.  The banks would hold those mortgages on their books and make their money by keeping the difference in the interest they charged for the mortgage and what they paid out to the depositor.  It was a simple system that worked for years.  This became the birth of securitization.  Securitization, allowed the banks to take the mortgages they make and bundle them up and sell them to the stock market.  They no longer owned the loans and they received a nice profit from selling them.  But the loans unfortunately, are no longer based on the savings from depositors, but are free floating.  If that wasn’t enough, other firms could take those loans and borrow from them (as much as 20 to 1) and buy more securitized loans with the borrowed money.  This system was successful as long as the original customers continued to pay their mortgages.  We learned that wasn’t the case.  What happened at Washington Mutual and other institutions is that the banks began loaning money to individuals that couldn’t afford to pay their mortgage.  The rest is history.  Here, the FireRock Element numbers convey the tale. 

Performance Graph and Market Price History

Learn how the FireRock Element® works, click here.

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MasterCard

MasterCard Incorporated, together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs.  The credit crunch has caused more people to rely on their credit cards in order to pay their bills.  Accordingly, MasterCard has undergone explosive growth and it’s value has increased by 341.75% since September 1st.   FireRock Research has clearly captured this growth, as shown in the chart below.

 Performance Graph                          Market Price History

Learn how the FireRock Element® works, click here.

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McDermott International, Inc.

McDermott International, Inc., through its subsidiaries, operates as an engineering and construction company worldwide. The company operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems.  In the chart shown below, we demonstrate that FireRock Research would have indicated avoidance of this stock for almost 20 years, followed by an accumulation of the stock just as oil prices started to ignite and has since yielded a 257.76% gain.

  Performance Graph                          Market Price History

Learn how the FireRock Element® works, click here.

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TD AMERITRADE

TD AMERITRADE Holding Corporation, through its subsidiaries, provides securities brokerage services and technology-based financial services in the United States. The company provides common and preferred stocks, exchange-traded funds, option trades, mutual funds, fixed income, margin lending, and cash management services.  Financial companies these days are having a tough time weathering the storm of subprime and as an analyst it is almost impossible to find a safe financial to invest in.  In TD AMERITRADE you have one of the world’s premier CEO’s running the business, who goes by the name of Mr. Joseph H. Moglia.  Mr. Moglia is a great CEO because he chose many years ago not to involve AMTD in the subprime arena but instead stuck to what they were good at, brokerage services.  He could have made easy money in subprime, a few years back, but chose not to, seeing what a dangerous business it was.  This is a hallmark of a great CEO who has brought great skill to running the company on Main Street. This is shown by the 36.43% 5 year annualized growth rate in net income that Mr. Moglia has achieved.  In giving this company the rating of accumulate we feel that any drops in the market going forward will allow the intelligent investor the opportunity to further dollar cost average in this jewel.

   Performance Graph                          Market Price History

Learn how the FireRock Element® works, click here.

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