Industry Analysis (was:[CANSLIM] Point of View: Why bother with fundamentals?)

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Industry Analysis (was:[CANSLIM] Point of View: Why bother with fundamentals?)
Date: Mon, 17 Dec 2001 12:10:01 -0600

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John,

The issue you bring up is extremely valid. Backtesting through many market
cycles with different biases is critical in testing a hypothesis such as
this one.

I *can* tell you, however, that I use a similar approach to Andreas'.
However, I am looking at industry rotation based on shorter cycles and look
for strong players to move off the bottom of this rotation. I use it in
reverse when looking for tops. I have used it extensively during the Bear
and have backtested it to data that I have to about '95, which would have
been considered "late Bull" territory. I know that this is not nearly
thorough enough, as it would carry more weight if I could at least run it
through a couple of complete cycles. Maybe from about 1940 or so. If only
those databases didn't cost $15,000, I would!

Katherine

- ----- Original Message -----
From: "John Kruger" <jokguger@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Monday, December 17, 2001 1:24 PM
Subject: Re: [CANSLIM] Point of View: Why bother with fundamentals?


> > But my Industry Analysis that I am doing right know (its a hell of a
> > work
> > to backtest, so it will take some weeks until I have statistical
> > significance)
>
> Andreas,
>
> Thank you for sharing your efforts.  One of the risks that you must
> guard against in such studies, is to make sure that the period that you
> use for your back-test is similar to the period during which you will
> use the results.
>
> In particular, be wary of doing back-tests of the long bull market, and
> then useing those results in the current transtional (my opinion)
> market.
>
> The long bull market had both a strong upward bias and slower group
> rotation.
>
> Just my opinion.
>
> John
>
>
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