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Control Data—Abnormal Strength in a Weak Market

During a trip to New York in April 1967, I remember walking through a broker's office on one day when the Dow Jones Industrial Average was down over twelve points. When I looked up at the electronic ticker tape showing prices moving across the wall, Control Data was trading in heavy volume at $62, up SV-j points for the day. I immediately bought the stock at the market, because I knew Control Data well, and this was abnormal strength in the face of a weak overall market. The stock subsequently reached $150.

In April 1981, just as the 1981 bear market was commencing, MCI Communications, a Washington, D.C.-based telecommunications stock trading in the over-the-counter market, broke out of a price base at $15.

It advanced to the equivalent of $90 in the following 21 months. MCI tripled in a declining market. This was a great example of abnormal strength during a weak market. Lorillard did the same thing in the 1957 bear market. Software Toolworks soared in January 1990. So don't forget: It seldom pays to invest in laggard performing stocks even if they look tantalizingly cheap. Look for the market leader.