Have you ever overheard a phrase which caught your ear? You can ignore it the first time; The next time, you wonder if it's deja vu. By the third time the same phrase slides by, you know its no longer a coincidence -- something's up.

That's what happened with one of my favorite companies earlier this year: EMC. People kept asking me about it -- not just my firms' portfolio managers and clients -- but friends, family, even people on the train. Each heard the exact same answer from me: "The chart looks awful -- stay away from it."

They all said the exact same thing: But it's a Great Company!

The coup d'grace arrived unexpectedly on afternoon. The proprietor of a local coffee shop invariably asks the same question: "How's EMC?"

Ever since the stock broke its uptrend in the high 90s in early October, my answer has been "worse." Yes, I know, no one wants to hear the truth, but that's what I do.

One February day, I laid out the grisly details: "It's about thirty-seven bucks" I said. "It was as low as $34 this morning." Earlier that day, I had published a brief critique regarding the belated downgrades from Morgan Stanley and Bank of America, noting there was support in the mid 30s, and that bottom fishers could nibble at 33 - 34, but should be prepared to add to any new positions as low as the upper 20s. . The stock subsequently rebounded to over 50 before renewing its slide.

None of that mattered to him: "It's a Great Company!", he protested.

That was the final straw.

Apparently, many investor's are unaware of this little tidbit I'm about to share with you. Its really not a secret, but all too many investors still don't get it. Here is the unvarnished truth:

You don't buy companies, you buy stock.

Let that sink in for a moment.

Unless your one of the hundred or so people on the planet that actually buys entire companies, get it through your skull that you are only buying a few shares of equity. Your holding amounts to a mere billionth or so of a corporation.

There is a universe of difference between buying stocks and companies. You would be well served to understand the distinction.

You know who buys companies? Warren Buffet (BRK); Buy's em by the handful. John Chambers, CEO of Cisco (CSCO) buys companies; last year, he bought one every other week.

I buy stocks, not companies. That's why its easy to walk away when the stock starts heading south. Sure, I know almost all the details of every company my office buys -- but they are no more than letters and numbers on a screen to me. If I have done my homework correctly, then we are buying a tiny little piece of a firm which we hope will appreciate in value over time.

If you buy companies -- instead of stocks -- you cannot be detached and unemotional. Your involvement makes you hopeful; you develop a relationship with management. You hate the people who short the stock.You root and cheerlead. You post nice things on message boards.

You become reluctant to cut and run.

It is the height of arrogance to imagine you are purchasing anything more than a teeny tiny ownership stake when you buy stock. That's why the action of the equity -- as revealed on a price and volume chart -- is so much more important than how much you adore the company, which you own a billionth of.

Look at Microsoft -- a great company, right? Over the past 6 months, you could have paid as much as $120 or as little as $40 per share. Its still the same company, but at recent price of $60, one buyer is up 50% while the other buyer is down 50%.

Great company; but a fabulous investment for one shareholder, and a terrible investment for another.

Loving a company will not make up for a poorly timed or priced buy. The price you pay per share is much, much more important than your feelings toward management or the business model. That's cause you are not buying the business model -- I'll say it again -- you’re buying the stock.

Lest anyone think I am picking on EMC -- the company holds a special place in my heart. Early in my career, it was my very first "home run" recommendation. Clients made oodles of money, brokers raised assets under management -- and my money was no good in any bar within 10 blocks of the office. I even got a logo-ed t-shirt from EMC's investor relationship department.

But when the chart of a stock starts rolling over, its time to part ways. If for no other reason, watching the charts will tell you when a company's stock is being distributed. Institutional investors have the greatest impact on a stock's progress. When the big boys are unloading a position -- no matter how great a company is -- the stock gets punished.

When the chart cries uncle, I'm gone. Microsoft, Phillip Morris, Cisco, General Electric, Nortel, EMC -- sold 'em all.

There have been times when I didn't sell a stock -- despite the chart telling me to. Perhaps I suspected a new product was forthcoming, or the company had discussed an upcoming contract on a conference call that I thought would catapult the company higher. Every time I have held on in the face of chart turning negative, I have regretted it -- mightily.

There have been enough debates between Technical and Fundamental analysts; this is not one of them. It's not an either/or situation. You don't have to choose one or the other; You can -- and should -- use both.

That's why every investor who manages his or her own money should learn enough charting to recognize when a stock is beginning to rollover.

You can sell the stock and still love the company. There is invariably an opportunity to get back in at a better price. All it takes is patience -- you may have to wait months, or even years, before again owning stock in a company you love. I prefer a pullback to the prior breakout, or to a level where there is significant support.

Yes, there are people who (wrongly) declare "You can't time the market." And there are always those advisors who shout "Capital Gains Taxes!" to the high heavens, as if that is the end of all of money management. I guarantee that if you look at your own portfolio, there are lots of jumbo losers you're holding from last year, that you now wish you were paying capital gains taxes on. (My favorite example os Qualcomm, which I spent the better part of Q1 2000 begging people to sell). Instead, you now have the privilege of carrying forward losses for the next few years.

As to EMC, I have hated its stock for many, many months, while still loving the company. In mid-March, when the equity price had finally slid down to a level I believed was defendable on a fundamental basis, AND where there was technical support, I gave the green light to my portfolio managers to start accumulating EMC.

We now own it as low $26, as high as $34, and everywhere in between. I believe Traders with a short term horizon could own this up to $55. Longer term investors should consider EMC a core holding in an aggressive portfolio.

Of course, it's easier for me to own stock in a quality company after missing a 50 point slide. I believe the stock can hit $100 over the next 36 months. But if the chart starts rolling over before then, we're gone. And you should be too . . .

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