Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] How are you choosing your stocks?
Date: Mon, 29 Apr 2002 09:59:48 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_0057_01C1EF64.9926A7E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Dimitri, Each person will find a minimum that feels comfortable to them, but I = think you need to start by considering what each of the criteria truly = means and then go from there. For example, RS<70 is a laggard stock. = Perhaps you start by setting the RS at 70. I have chosen to dip down and = start looking at RS>=3D60 as long as other minimum technicals are also = in place. For me, that means that the Price has to be at or above the = 200 day moving average, no less than 15% below the 50 day moving average = and that the A/D is A, B or C. In other words, I have set the scouting = bar minimum down so that if the stock is lousy technically, I won't look = at it. But if it's marginal, I will at least give it a look see. With = respect to annual and quarterly growth, ROE, D/E, cashflow etc., again, = I look at these things in total, knowing that accounting rules often = obfuscate the "real" story. For that reason, I like to skim the recent = SEC filings if a stock makes my short due diligence list, rather than = eliminating stocks entirely just because ROE is 14.6 vs 15% for example. = All in all, I'd say the smart thing to do is to let technicals lead you = to the stocks for consideration and then let fundamentals be a = sorting/elimination tool rather than a filtering tool. So, for example, = you might set the minimum fundamentals at the lower end of acceptable = for your first pass (e.g., set EPS ranking at 50, meaning it falls in = the top half), set minimum technicals as well, then flip through the = charts. Eliminate all but the best charts, i.e. those currently setting = up, then evaluate the fundamentals more closely on those that remain. = The advantage of an approach like this is that it forces you to look at = a lot of charts and provides practice in quickly evaluating a "good" vs = a "lousy" chart. Sometimes the results of your efforts are a handful of = stocks that pass through your review and this is the clearest sign that = smooth sailing in the market is not in the cards. Other times, you'll = find many stocks that look decent and then you are left with selecting = the best of the best. I'd say until corporate earnings show real and = consistent growth, you're not going to be able to set the bar at the = upper end of acceptable and find many candidates. While the market is on = the mend, you'll need to be a more creative scout and find ways to = uncover potential candidates before they become obvious to the masses. Katherine ----- Original Message -----=20 To: canslim@lists.xmission.com=20 Sent: Friday, April 26, 2002 4:35 AM Subject: Re: [CANSLIM] How are you choosing your stocks? Hey Katherine, You state many good points. So then, as a "scout" for potential stocks, one must still have minimums (which is what I thought WON was stating, my mistake). How then does one develop minimums so that a meaningful screen can be created (or can one?) Thank you Dimitri --- Katherine Malm <kmalm@earthlink.net> wrote: > Hi Dimitri, >=20 > The contradiction *is* the point. Think of it this > way. Let's say that you are a scout for a > professional sports team and someone has given you > the following statistic: >=20 > The average height of world class professional > athletes is 5'7" >=20 > Let's say that as a result of that statistic that > you refuse to look at any athlete who is less than > 5'7." What does that mean? You have taken an average > and turned it into a minimum.=20 >=20 > Here's another example. Let's say that somebody > tells you that the batting average of professional > baseball players is 700 and that as a result you > refuse to look at any baseball player who has an > average of less than 700. You would say, of course > that's silly, because if I'm scouting for a team, > I'm looking for an athlete who has a well rounded > set of skills and/or has a set of skills that adds > value to the team as a whole. You may, as a result > of past studies determine that a baseball player who > has a batting average of less than 200 is > unacceptable, but you would not refuse to look at > them if they had all the requisite skills and a > batting average of 650. >=20 > The point is that you have to look at the > preponderance of evidence for the stock and not > build your screens so tightly that you eliminate > excellent candidates just because they meet some > arbitrary minimum cut offs that are based on > *averages* for past winning stocks. >=20 > Katherine > ----- Original Message -----=20 > From: Dimitri Katsaros=20 > To: canslim@lists.xmission.com=20 > Sent: Friday, April 26, 2002 12:02 AM > Subject: Re: [CANSLIM] How are you choosing your > stocks? >=20 >=20 > Katherine, >=20 > This seems quite contradictory... if one cannot > sort > according to the recommended minimums, then what > is > the point of stating them and... what is the value > of > the Daily Graphs Custom Screen Wizard? >=20 > Just learning as I go > Dimitri Katsaros - ------=_NextPart_000_0057_01C1EF64.9926A7E0 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 6.00.2600.0" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV>Hi Dimitri,</DIV> <DIV> </DIV> <DIV>Each person will find a minimum that feels comfortable to them, but = I think=20 you need to start by considering what each of the criteria truly means = and then=20 go from there. For example, RS<70 is a laggard stock. Perhaps = you start=20 by setting the RS at 70. I have chosen to dip down and start looking at=20 RS>=3D60 as long as other minimum technicals are also in place. For = me, that=20 means that the Price has to be at or above the 200 day moving average, = no less=20 than 15% below the 50 day moving average and that the A/D is A, B or C. = In other=20 words, I have set the scouting bar minimum down so that if the stock is = lousy=20 technically, I won't look at it. But if it's marginal, I will at least = give it a=20 look see. With respect to annual and quarterly growth, ROE, D/E, = cashflow etc.,=20 again, I look at these things in total, knowing that accounting rules = often=20 obfuscate the "real" story. For that reason, I like to skim the recent = SEC=20 filings if a stock makes my short due diligence list, rather than = eliminating=20 stocks entirely just because ROE is 14.6 vs 15% for example. All in all, = I'd say=20 the smart thing to do is to let technicals lead you to the stocks for=20 consideration and then let fundamentals be a sorting/elimination=20 tool rather than a filtering tool. So, for example, you might set = the=20 minimum fundamentals at the lower end of acceptable for your first = pass=20 (e.g., set EPS ranking at 50, meaning it falls in the top half), set = minimum=20 technicals as well, then flip through the charts. Eliminate all but the = best=20 charts, i.e. those currently setting up, then evaluate the fundamentals = more=20 closely on those that remain. The advantage of an approach like this is = that it=20 forces you to look at a lot of charts and provides practice in quickly=20 evaluating a "good" vs a "lousy" chart. Sometimes the results of your = efforts=20 are a handful of stocks that pass through your review and this is the = clearest=20 sign that smooth sailing in the market is not in the cards. Other times, = you'll=20 find many stocks that look decent and then you are left with selecting = the best=20 of the best. I'd say until corporate earnings show real and consistent = growth,=20 you're not going to be able to set the bar at the upper end of = acceptable and=20 find many candidates. While the market is on the mend, you'll need to be = a more=20 creative scout and find ways to uncover potential candidates = before=20 they become obvious to the masses.</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 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> Friday, April 26, 2002 = 4:35=20 AM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] How are = you=20 choosing your stocks?</DIV> <DIV><BR></DIV>Hey Katherine,<BR><BR>You state many good points. So = then, as a=20 "scout" for<BR>potential stocks, one must still have minimums = (which<BR>is=20 what I thought WON was stating, my mistake). How<BR>then does one = develop=20 minimums so that a meaningful<BR>screen can be created (or can=20 one?)<BR><BR>Thank you<BR>Dimitri<BR><BR>--- Katherine Malm <<A=20 href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>> = wrote:<BR>>=20 Hi Dimitri,<BR>> <BR>> The contradiction *is* the point. Think = of it=20 this<BR>> way. Let's say that you are a scout for a<BR>> = professional=20 sports team and someone has given you<BR>> the following = statistic:<BR>>=20 <BR>> The average height of world class professional<BR>> = athletes is=20 5'7"<BR>> <BR>> Let's say that as a result of that statistic=20 that<BR>> you refuse to look at any athlete who is less = than<BR>> 5'7."=20 What does that mean? You have taken an average<BR>> and turned it = into a=20 minimum. <BR>> <BR>> Here's another example. Let's say that=20 somebody<BR>> tells you that the batting average of = professional<BR>>=20 baseball players is 700 and that as a result you<BR>> refuse to = look at any=20 baseball player who has an<BR>> average of less than 700. You would = say, of=20 course<BR>> that's silly, because if I'm scouting for a = team,<BR>> I'm=20 looking for an athlete who has a well rounded<BR>> set of skills = and/or has=20 a set of skills that adds<BR>> value to the team as a whole. You = may, as a=20 result<BR>> of past studies determine that a baseball player = who<BR>>=20 has a batting average of less than 200 is<BR>> unacceptable, but = you would=20 not refuse to look at<BR>> them if they had all the requisite = skills and=20 a<BR>> batting average of 650.<BR>> <BR>> The point is that = you have=20 to look at the<BR>> preponderance of evidence for the stock and = not<BR>>=20 build your screens so tightly that you eliminate<BR>> excellent = candidates=20 just because they meet some<BR>> arbitrary minimum cut offs that = are based=20 on<BR>> *averages* for past winning stocks.<BR>> <BR>>=20 Katherine<BR>> ----- Original Message -----=20 <BR>> From: Dimitri Katsaros <BR>> To: = <A=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= =20 <BR>> Sent: Friday, April 26, 2002 12:02 = AM<BR>> =20 Subject: Re: [CANSLIM] How are you choosing your<BR>> = stocks?<BR>>=20 <BR>> <BR>> Katherine,<BR>> <BR>> = This=20 seems quite contradictory... if one cannot<BR>> = sort<BR>> =20 according to the recommended minimums, then what<BR>>=20 is<BR>> the point of stating them and... what is the=20 value<BR>> of<BR>> the Daily Graphs Custom Screen=20 Wizard?<BR>> <BR>> Just learning as I = go<BR>> =20 Dimitri Katsaros</BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_0057_01C1EF64.9926A7E0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". 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