Re: [CANSLIM] Tom or Ian

From: Dimitri Katsaros <dcka@yahoo.com>
Subject: Re: [CANSLIM] Tom or Ian
Date: Thu, 18 Apr 2002 01:51:24 -0700 (PDT)

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> In fact, the biggest hurdle I see to a long
> sustained move up in tech
> stocks is that they split way too many times in the
> 1998-2000 mania

Which IBD says is "okay" for tech stocks

> leaving most of them horrendously over-priced on a
> P/S or P/E basis above $15.

Dunno about P/S, but WON says to ignore PE unless it
goes up 120% since last pivot, then it is a sell
signal.

> Remember that when WON did his original research,
> the median number of shares outstanding was
> 4,000,000! I would absolutely love to have a large
> selection of $15+ stocks with solid growth, and less
> than 10,000,000 shares
> outstanding.

It seems his stance has changed considerably on this
matter since the book was written... I did a search on
the "Ask IBD" knowledgebase:

Question: Some companies have high IBD SmartSelect®
Corporate Ratings and well-formed charts, but low
market capitalization. Is there a minimum market cap I
should look for when evaluating stocks? 
 
Answer: A stock's market capitalization should make no
difference. It's more important to disregard stocks
priced less than $15 or those that have less than
200,000 shares of average daily volume. That should
help you focus on quality stocks with adequate
liquidity. 

Question: In 'How To Make Money in Stocks' you
emphasize stocks with fewer than 25 million shares. I
see little mentioned about this in IBD. Has the number
changed? 
 
Answer: Generally speaking, the more shares a stock
trades, the more buying that is needed to lift the
share price. In recent years, however, large cap
stocks (with many million shares outstanding) have
shown more leadership thanks to the growing influence
of mutual funds, indexing and the growth of leading
industries. Therefore, a stock with any size
capitalization is worth considering as long it has the
characteristics of strength we look for. To properly
weigh the demand for a stock, you should analyze day
to day price and volume changes.

The purpose of my question wasn't to tell you that you
are wrong or anything like that. Rather, I am still
learning the CANSLIM method and was curious about your
discounting some of the rules as I am always
open-minded to what works and what doesn't.

Thank you
Dimitri Katsaros

=====
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