Re: [CANSLIM] VectorVest fundies

From: Davellil5@aol.com
Subject: Re: [CANSLIM] VectorVest fundies
Date: Sun, 10 Mar 2002 21:16:26 EST

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I was typing this email when my computer suddenly mailed it before it was 
finished.  So here it is again with the concluding comment.


 Katherine, here's a fundamental question about VectorVest's Relative Value 
(RV) rating of stocks.

This approach rests on an unstated assumption, i.e., that there is such a 
thing as an objective value of a stock.  If that assumption is true, and if 
the objective value of a stock is calculated to be 50% higher than its 
current market value, then that stock has an RV of 1.5.  Presumably, when the 
market realizes that the stock's objective ("real") value is 50% higher than 
current price, the market will be willing to pay that much more for the stock 
- -- sooner or later.

But if there really is no objective value for any stock, the RV logical 
structure crumbles.  In that case, we have to fall back on the CANSLIM 
approach that relies on patterns of stock behavior to make buy decisions with 
a probability of success based upon past experience with such patterns, e.g., 
70% probability of being right.

As you say, VV may be useful mainly as a hunting ground for CANSLIM stocks.  
If so, which of VV's cuts, RV?  Or RT?  And how fruitful?  Out of every 100 
stocks with VV's high ratings, how many  turn out, on investigation, to meet 
CANSLIM requirements?

Regards, Dave


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