Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: [CANSLIM] Fundamentals and Technicals
Date: Wed, 19 Dec 2001 07:59:58 -0600
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This is a multi-part message in MIME format. - ------=_NextPart_000_01C8_01C18863.27165780 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable >>The "Fundamentals" that are "Analyzed" are made up of two kinds of = data, historical data from the past and guesses about the future. << After reading John K's post last night, I pulled some notes from a = recent conversation with a friend about this very issue. *What* = fundamentals are we talking about? This has been an ongoing and lively = debate between us for most of the year and is wrapped up in the larger = debate of fundamentals vs. technicals. I thought I'd throw out the = latest from that discussion and see what thoughts you all might add to = it. This is the conclusion at this point in the discussion: - -Fundamentals tell you what *has* happened. - -Due diligence tells you what *could* happen. - -Technicals tell you what *is* happening and what is *most likely* to = happen in the near future. This idea of separating due diligence into its own category takes care = of some of what John K is referring to in his post. That is, we can look = at past financial statements (or their proxies such as EPS) and tell = what the company has actually done. The growth in sales tells us that = they have been able to build an ever growing market for their products. = The earnings growth tells us how effectively they are executing so as to = generate a larger return for their efforts. I see this in many ways as a = measure of strategic and management effectiveness. Of course, Eric T = reminded us that "pro forma earnings" should be listed under "dangerous = words." What should/do we look at when reviewing the past other than = earnings and sales growth?=20 The due diligence step is an attempt to assess the potential of the = company. Yes, this is often based on forward looking estimates of sales = and revenues, but it is more than that. What specifically are you = looking for when you do this step? How *do* you make an educated guess = about the future potential of the business? its industry? its markets? = How much weight should/does this step have in your analysis of a buy = candidate? Is this something that should be done again after the stock = is purchased and held for some length of time? Would there ever be a = case where this would trigger a sell rule after holding? Technicals tell the story of supply and demand. Or do they? Are = technicals alone enough to build a "most likely" scenario for price = movement? Katherine - ------=_NextPart_000_01C8_01C18863.27165780 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4611.1300" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial size=3D2>>><FONT face=3D"Times New Roman" = size=3D3>The=20 "Fundamentals" that are "Analyzed" are made up of two kinds of data, = historical=20 data from the past and guesses about the future. = <<</FONT></FONT></DIV> <DIV> </DIV> <DIV><FONT face=3DArial size=3D2>After reading John K's post last night, = I pulled=20 some notes from a recent conversation with a friend about this very = issue.=20 *What* fundamentals are we talking about? This has been an ongoing and = lively=20 debate between us for most of the year and is wrapped up in the larger = debate of=20 fundamentals vs. technicals. I thought I'd throw out the latest from = that=20 discussion and see what thoughts you all might add to it. This is the = conclusion=20 at this point in the discussion:</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>-Fundamentals tell you what *has*=20 happened.</FONT></DIV> <DIV><FONT face=3DArial size=3D2>-Due diligence tells you what *could*=20 happen.</FONT></DIV> <DIV><FONT face=3DArial size=3D2>-Technicals tell you what *is* = happening and what=20 is *most likely* to happen in the near future.</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>This idea of separating due diligence = into its own=20 category takes care of some of what John K is referring to in his post. = That is,=20 we can look at past financial statements (or their proxies such as EPS) = and tell=20 what the company has actually done. The growth in sales tells us that = they have=20 been able to build an ever growing market for their products. The = earnings=20 growth tells us how effectively they are executing so as to generate a = larger=20 return for their efforts. I see this in many ways as a measure of = strategic and=20 management effectiveness. Of course, Eric T reminded us that "pro forma=20 earnings" should be listed under "dangerous words." What should/do we = look at=20 when reviewing the past other than earnings and sales growth? = </FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>The due diligence step is an attempt to = assess the=20 potential of the company. Yes, this is often based on forward looking = estimates=20 of sales and revenues, but it is more than that. What specifically are = you=20 looking for when you do this step? How *do* you make an educated guess = about the=20 future potential of the business? its industry? its markets? How much = weight=20 should/does this step have in your analysis of a buy candidate? Is = this=20 something that should be done again after the stock is purchased and = held for=20 some length of time? Would there ever be a case where this would trigger = a sell=20 rule after holding?</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>Technicals tell the story of supply and = demand. Or=20 do they? Are technicals alone enough to build a "most likely" scenario = for price=20 movement?</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>Katherine</FONT></DIV></BODY></HTML> - ------=_NextPart_000_01C8_01C18863.27165780-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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