Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Bear Rally?
Date: Sun, 14 Apr 2002 09:44:11 -0500
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Duke, Tom, jans,
I'll bet the small to large cap migration has more to do with the length =
of the Secular Bull than anything else. In the early stages of a new =
Bull market, small caps (especially those with high growth =
characteristics) lead the market. It makes intuitive sense. As the bull =
wears on, those "small caps" become "big caps" as more and more money =
is drawn to the stock. It's the very thing that CANSLIM is looking for =
in the "I"...that is, you watch for evidence of institutional monies =
moving into the stock and then just follow their lead. Once the stocks =
put in their 3rd and 4th stage bases, everybody knows about them and =
their market caps are quite large in comparison to where they were when =
they blew out of their first stage bases. Nearly every high flier late =
in '98 and '99 was a late stage base. Only those companies that have the =
wherewithal to survive as a business and expand their markets will set =
up new first stage bases. Non-CANSLIMers are still chasing AOL, DELL, =
CSCO, etc., all former winners and all large caps due to their huge runs =
in the 90's. CANSLIMers know better....go to strength, regardless of =
market cap. It just so happens small and mid-cap are leading right now =
and that is one more piece of evidence for the "emerging new bull" point =
of view.
Katherine
----- Original Message -----=20
From: Tom Worley=20
To: canslim@lists.xmission.com=20
Sent: Sunday, April 14, 2002 9:20 AM
Subject: Re: [CANSLIM] Bear Rally?
Duke,
We don't need a new letter, we already have "S". Of course, over the =
years
WON has redefined this letter. In my first edition of HTMMIS, this =
letter
was defined as "S=3DSupply and Demand: Small Capitalization Plus =
Volume
Demand" and WON indicated that you should look for a company with only =
a few
million shares outstanding. He also favored "Stocks that have a large
percentage of ownership by top management are generally your better
prospects". He also noted that the "average capitalization of top =
performing
listed stocks from 1970 through 1982 was 11.8 million shares. The =
median
stock exhibited 4.6 million shares outstanding before advancing =
rapidly in
price."
Of course, a lot has changed since my copy was published in 1991, and =
I
doubt either WON or IBD today would champion small cap stocks, much =
less
ones this small. WON went over to the big cap camp over five years =
ago, and
I have seen little evidence of him adhering to the "S" since then.
Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
----- Original Message -----
From: "Duke Miller" <dukemill@tampabay.rr.com>
To: <canslim@lists.xmission.com>
Sent: Sunday, April 14, 2002 9:55 AM
Subject: RE: [CANSLIM] Bear Rally?
Jans:
Good thinking and input for the neighborhood. Can you say "CANSLICM?"
Not long ago we debated herein the capitalization definitions. Do you
suppose their (IBD's) definitions in the IC (<=3D1bb is small; >=3D5bb =
is
large; mid in between) conform to the S&P 600 (Small), 400 (mid), and
500 (big)?
Duke
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of =
Spencer48@aol.com
Sent: Sunday, April 14, 2002 1:15 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Bear Rally?
Katherine and Duke:
In today's Investor's Corner (4/15) the column focuses on the =
fact
that
small caps are doing well while the big caps are lagging. This =
approach
is
interesting. Apparently one should look at: The Mkts ->The Industry =
- ->
The
Capitalization (whether the stock is a big cap or a small cap makes a
difference, according to the article, regarding the probability that =
the
stock will take off. If small caps are currently being favored than
investing in big caps is less likely to garner a winner.)
-> (and finally) The Stock.
So it looks as if one should go through the above checklist to =
find
a
stock that will be a winner. (Apropos, I wonder if anyone has =
compared
the
industry [I know CANSLIM uses a Strong Industry as a necessary
forerunner of
a strong stock] with the favored capitalization at the time.
For instance, if XYZ industry is the industry that CANSLIM/WON
favors at
the present, would the capitalization of the stock that is in that
industry
make a significant difference as to its return, ie. do the statistics
confirm
that not only the industry, but also the capitalization of the stock =
in
that
industry, is a big factor in the movement up of that stock? )
jans
In a message dated 4/13/2002 12:50:16 PM Eastern Daylight Time,
kmalm@earthlink.net writes:
<< MessageHi Duke,
I read the article and thought the same thing. I think the real issue
is
that when all stocks are not in a Bull Market, you can't talk
meaningfully
about "THE Market" any longer. For example, the last couple of years =
of
"the
great Bull", the Dow ran sideways while the NASDAQ screamed. The =
article
today only reinforces that notion. That is, some stocks are going up,
others
are going down, others are moving sideways. That's always the case, =
but
when
equities aren't the absolute best place to put your money for "sure"
gains,
the marginal dollars will flow to other investment classes and the =
rest
of
the market will ebb and flow. If nothing else, it just reminds us as
CANSLIM
investors that we have to pick only the best candidates and follow =
sound
buy/sell rules. I don't think there's going to be a clear direction =
for
"the
Market" as a whole for many years. We're going to have to read the
health of
the CANSLIM market (i.e. CANSLIM-quality stocks) and then go for
strength
within that.
Katherine
PS.... The term "rally" is used in many contexts, even within the IBD
and
Investors.com. Is it an upswing? Is it action after a followthru day? =
Is
it a
Bull? How persistent does an upswing need to be before it's no longer
considered "a rally"? Rally relative to what? relative to when?
Geez....very
confusing terminology. >>
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<DIV>Duke, Tom, jans,</DIV>
<DIV> </DIV>
<DIV>I'll bet the small to large cap migration has more to do with the =
length of=20
the Secular Bull than anything else. In the early stages of a new Bull =
market,=20
small caps (especially those with high growth characteristics) lead the =
market.=20
It makes intuitive sense. As the bull wears on, those "small caps" =
become=20
"big caps" as more and more money is drawn to the stock. It's the very =
thing=20
that CANSLIM is looking for in the "I"...that is, you watch for evidence =
of=20
institutional monies moving into the stock and then just follow their =
lead. Once=20
the stocks put in their 3rd and 4th stage bases, everybody knows about =
them and=20
their market caps are quite large in comparison to where they were when =
they=20
blew out of their first stage bases. Nearly every high flier late in '98 =
and '99=20
was a late stage base. Only those companies that have the =
wherewithal to=20
survive as a business and expand their markets will set up new =
first stage=20
bases. Non-CANSLIMers are still chasing AOL, DELL, CSCO, =
etc., all=20
former winners and all large caps due to their huge runs in the 90's. =
CANSLIMers=20
know better....go to strength, regardless of market cap. It just so =
happens=20
small and mid-cap are leading right now and that is one more piece of =
evidence=20
for the "emerging new bull" point of view.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dstkguru@bellsouth.net =
href=3D"mailto:stkguru@bellsouth.net">Tom=20
Worley</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Sunday, April 14, 2002 =
9:20=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Bear =
Rally?</DIV>
<DIV><BR></DIV>Duke,<BR><BR>We don't need a new letter, we already =
have "S".=20
Of course, over the years<BR>WON has redefined this letter. In my =
first=20
edition of HTMMIS, this letter<BR>was defined as "S=3DSupply and =
Demand: Small=20
Capitalization Plus Volume<BR>Demand" and WON indicated that you =
should look=20
for a company with only a few<BR>million shares outstanding. He also =
favored=20
"Stocks that have a large<BR>percentage of ownership by top management =
are=20
generally your better<BR>prospects". He also noted that the "average=20
capitalization of top performing<BR>listed stocks from 1970 through =
1982 was=20
11.8 million shares. The median<BR>stock exhibited 4.6 million shares=20
outstanding before advancing rapidly in<BR>price."<BR><BR>Of course, a =
lot has=20
changed since my copy was published in 1991, and I<BR>doubt either WON =
or IBD=20
today would champion small cap stocks, much less<BR>ones this small. =
WON went=20
over to the big cap camp over five years ago, and<BR>I have seen =
little=20
evidence of him adhering to the "S" since then.<BR><BR>Tom =
Worley<BR><A=20
=
href=3D"mailto:stkguru@bellsouth.net">stkguru@bellsouth.net</A><BR>AIM:=20
TexWorley<BR>----- Original Message -----<BR>From: "Duke Miller" =
<<A=20
=
href=3D"mailto:dukemill@tampabay.rr.com">dukemill@tampabay.rr.com</A>>=
<BR>To:=20
<<A=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
><BR>Sent:=20
Sunday, April 14, 2002 9:55 AM<BR>Subject: RE: [CANSLIM] Bear=20
Rally?<BR><BR><BR>Jans:<BR><BR>Good thinking and input for the =
neighborhood.=20
Can you say "CANSLICM?"<BR><BR>Not long ago we debated herein the=20
capitalization definitions. Do you<BR>suppose their (IBD's) =
definitions=20
in the IC (<=3D1bb is small; >=3D5bb is<BR>large; mid in =
between) conform to=20
the S&P 600 (Small), 400 (mid), and<BR>500=20
(big)?<BR><BR>Duke<BR><BR>-----Original Message-----<BR>From: <A=20
=
href=3D"mailto:owner-canslim@lists.xmission.com">owner-canslim@lists.xmis=
sion.com</A><BR>[mailto:owner-canslim@lists.xmission.com]=20
On Behalf Of <A =
href=3D"mailto:Spencer48@aol.com">Spencer48@aol.com</A><BR>Sent:=20
Sunday, April 14, 2002 1:15 AM<BR>To: <A=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
<BR>Subject:=20
Re: [CANSLIM] Bear Rally?<BR><BR><BR>Katherine and=20
Duke:<BR><BR> In today's Investor's Corner =
(4/15) the=20
column focuses on the fact<BR>that<BR>small caps are doing well while =
the big=20
caps are lagging. This approach<BR>is<BR>interesting. =
Apparently=20
one should look at: The Mkts ->The Industry=20
-><BR>The<BR>Capitalization (whether the stock is a big cap or a =
small cap=20
makes a<BR>difference, according to the article, regarding the =
probability=20
that the<BR><BR>stock will take off. If small caps are =
currently =20
being favored than<BR>investing in big caps is less likely to garner a =
winner.)<BR>-> (and finally) The =
Stock.<BR><BR> So=20
it looks as if one should go through the above checklist to =
find<BR>a<BR>stock=20
that will be a winner. (Apropos, I wonder if anyone has=20
compared<BR>the<BR>industry [I know CANSLIM uses a Strong Industry as =
a=20
necessary<BR>forerunner of<BR>a strong stock] with the favored =
capitalization=20
at the time.<BR><BR> For instance, if XYZ =
industry is=20
the industry that CANSLIM/WON<BR>favors at<BR>the present, would the=20
capitalization of the stock that is in that<BR>industry<BR>make =
a=20
significant difference as to its return, ie. do the=20
statistics<BR>confirm<BR>that not only the industry, but also the=20
capitalization of the stock in<BR>that<BR>industry, is a big factor in =
the=20
movement up of that stock? )<BR><BR>jans<BR><BR><BR><BR>In a message =
dated=20
4/13/2002 12:50:16 PM Eastern Daylight Time,<BR><A=20
href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>=20
writes:<BR><BR><< MessageHi Duke,<BR><BR> I read the =
article and=20
thought the same thing. I think the real issue<BR>is<BR>that when all =
stocks=20
are not in a Bull Market, you can't talk<BR>meaningfully<BR>about "THE =
Market"=20
any longer. For example, the last couple of years of<BR>"the<BR>great =
Bull",=20
the Dow ran sideways while the NASDAQ screamed. The =
article<BR><BR>today only=20
reinforces that notion. That is, some stocks are going =
up,<BR>others<BR>are=20
going down, others are moving sideways. That's always the case,=20
but<BR>when<BR>equities aren't the absolute best place to put your =
money for=20
"sure"<BR>gains,<BR>the marginal dollars will flow to other investment =
classes=20
and the rest<BR>of<BR>the market will ebb and flow. If nothing else, =
it just=20
reminds us as<BR>CANSLIM<BR>investors that we have to pick only the =
best=20
candidates and follow sound<BR><BR>buy/sell rules. I don't think =
there's going=20
to be a clear direction for<BR>"the<BR>Market" as a whole for many =
years.=20
We're going to have to read the<BR>health of<BR>the CANSLIM market =
(i.e.=20
CANSLIM-quality stocks) and then go for<BR>strength<BR>within=20
that.<BR><BR> Katherine<BR><BR> PS.... The term "rally" is =
used in=20
many contexts, even within the IBD<BR>and<BR>Investors.com. Is it an =
upswing?=20
Is it action after a followthru day? Is<BR>it a<BR>Bull? How =
persistent does=20
an upswing need to be before it's no longer<BR>considered "a rally"? =
Rally=20
relative to what? relative to when?<BR>Geez....very<BR>confusing =
terminology.=20
>></BLOCKQUOTE></BODY></HTML>
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