Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Today's IBD "Big Picture" comments...
Date: Wed, 1 May 2002 12:24:58 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_0060_01C1F10B.3553C060 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Bill, You've brought up an excellent issue and that is "what *is* CANSLIM"? I = think reading HTMMIS is a lot like reading the Bible. Each person can = read the same text, the same translation, and they will come away with a = different interpretation of "what it means." I reread HTMMIS constantly, = seeing new passages and new points of view given my new experiences over = time. In the last couple of years I've come to believe that there is a = core set of "golden rules" at the heart of CANSLIM that are universal to = the style, but the implementation of those golden rules may be different = from one person to the next. Contrary to DanF's point of view, I don't = see IBD as "jerking our chain" but instead see this as proof of my point = of view. That is, even within the IBD (and CANSLIM), there are seeming = contradictions. Their 20 points will say one thing, but they will give = examples of winning stocks that demonstrate exceptions. Bottom line for = me is that there's a big difference between "restrictive rules" and = "general guidelines" and there's no substitute for understanding the = core concepts that make up the CANSLIM style. For example, in a secular = Bull where nearly every stock is in an uptrend and above the 200dMA, the = biggest task is to pick "the best" of those going up. During = downtrending or sideways markets, the first task is to identify those = stocks/groups that are technically superior, and then, within those = groups to find the best fundamental stories. The difference between = those 2 markets is simply that the risk of being wrong in a secular bull = vs downtrending/sideways markets is smaller, so the tuition for making = errors is smaller. But the tuition is *always* there, just more severe = and obvious in tougher markets. This is how I'd express the "core spirit of CANSLIM": - -Use technical strength to draw your eye to stocks that are working. = This can be expressed by relationship to intermediate term moving = averages (50/200 day MA's), rising RS, new highs, = accumulation/distribution, up/down ratios, strong groups, increasing = institutional ownership, strong style subsectors of the market, etc. = Make purchases only on appropriate technical patterns. - -Select only stocks with superior forward growth estimates. Yes, = estimates can be wrong, but if the technicals are also strong, at least = the market is confirming this expectation (for the moment). Confirm = these estimates with appropriate due diligence so that you understand = what makes this growth possible. - -Select only stocks with superior financials. That means not only a = demonstrated ability to grow earnings and revenues, but financial = stability that will allow them to weather the tough times and/or = continue their strategy for continued growth. That means a strong = balance sheet, sufficient cash flow, excellent returns on equity = invested, etc. - -Select only stocks with sufficient liquidity to allow easy entry/exit = when the time is right technically. - -Preserve capital above all else. When you make a mistake, move on and = reinvest the remaining capital in what *is* working. - -Know how to read a chart so that you can exit and keep profits at the = appropriate time. In secular bull markets, you can ride out = consolidations knowing that there is a greater likelihood that the same = stocks and groups will continue their upward trek. In = downtrending/sideways markets, you cannot afford to sit through the = consolidation because the risk that the stock/sector/style will fall out = of favor is greater. Step aside as the consolidation starts, move to = strength elsewhere, come back when/if the consolidation ends and = continues upward. If a secular bull starts again, you'll be in the right = stocks already and can just ride them longer. - -Know how to identify and track a group of stocks that gives you the = "pulse of your market." If the pulse is poor, stand aside or learn to = short them as they fail. - -Always do post analysis and use successes and failures as building = blocks to becoming a better investor. Be honest about what you are doing = right or wrong. It's just like budgeting or dieting. Obviously, if = you're gaining weight or saving less than your plan, you need to change = something. Katherine - ----- Original Message -----=20 From: Bill Triffet=20 To: canslim=20 Sent: Wednesday, May 01, 2002 11:12 AM Subject: [CANSLIM] Today's IBD "Big Picture" comments... Well friends, it seems that today's IBD confirms what I've thought = about the M in canslim - It's not necessarily based on the readings of the three = major market indexes ( a big departure from HTMMIS). I'm paraphrasing the last three paragraphs of "The Big Picture"(there = are stiff copyright disclaimers at IBD): It will take a few days to see if the rotation BACK into the Dow, Naz, = and S&P is valid. There should be a big move in heavier volume by the end = of the week to confirm it. It goes on to say it's a "nonissue" for growth investors since small = and mid-cap stocks along with medical, consumer and defense are doing well despite the big averages. If they hold up, it says, the major averages = could improve. Also mentions "careful trading" with tight loss cutting is key. My point? IMHO, IBD is marketed for many types of investors. Pure = canslim (if there is such a thing) is just one of them. I think perhaps it's time for me to look at growth investing with a = canslim approach. I'm starting to see several here have done this to great = success (though with very close watching). Including things such as a lower = but advancing RS as opposed to just a high rating and not be afraid to = jump into stocks in an upwards trending sector though the market is flat or down = IF they have good fundies. Several times this and last year I saw stocks and groups moving ahead = but stayed out due to the major indexes downward trend. Comments? Btw, for Fred, it suggests there's heavy distribution out of gold and precious metals by investors. Bill Triffet - ------=_NextPart_000_0060_01C1F10B.3553C060 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 Bill,</DIV> <DIV> </DIV> <DIV>You've brought up an excellent issue and that is "what *is* = CANSLIM"? I=20 think reading HTMMIS is a lot like reading the Bible. Each person can = read the=20 same text, the same translation, and they will come away with a = different=20 interpretation of "what it means." I reread HTMMIS constantly, seeing = new=20 passages and new points of view given my new experiences over time. In = the last=20 couple of years I've come to believe that there is a core set of "golden = rules"=20 at the heart of CANSLIM that are universal to the style, but the = implementation=20 of those golden rules may be different from one person to the next. = Contrary to=20 DanF's point of view, I don't see IBD as "jerking our chain" but instead = see=20 this as proof of my point of view. That is, even within the IBD (and = CANSLIM),=20 there are seeming contradictions. Their 20 points will say one thing, = but they=20 will give examples of winning stocks that demonstrate exceptions. Bottom = line=20 for me is that there's a big difference between "restrictive rules" and = "general=20 guidelines" and there's no substitute for understanding the core = concepts that=20 make up the CANSLIM style. For example, in a secular Bull where nearly = every=20 stock is in an uptrend and above the 200dMA, the biggest task is to pick = "the=20 best" of those going up. During downtrending or sideways markets, the = first task=20 is to identify those stocks/groups that are technically superior, and = then,=20 within those groups to find the best fundamental stories. The difference = between=20 those 2 markets is simply that the risk of being wrong in a secular bull = vs=20 downtrending/sideways markets is smaller, so the tuition for making = errors is=20 smaller. But the tuition is *always* there, just more severe and = obvious in=20 tougher markets.</DIV> <DIV> </DIV> <DIV>This is how I'd express the "core spirit of CANSLIM":</DIV> <DIV> </DIV> <DIV>-Use technical strength to draw your eye to stocks that are = working. This=20 can be expressed by relationship to intermediate term moving averages = (50/200=20 day MA's), rising RS, new highs, accumulation/distribution, up/down = ratios,=20 strong groups, increasing institutional ownership, strong style = subsectors of=20 the market, etc. Make purchases only on appropriate technical = patterns.</DIV> <DIV>-Select only stocks with superior forward growth estimates. Yes, = estimates=20 can be wrong, but if the technicals are also strong, at least the market = is=20 confirming this expectation (for the moment). Confirm these estimates = with=20 appropriate due diligence so that you understand what makes = this=20 growth possible.</DIV> <DIV>-Select only stocks with superior financials. That means not only a = demonstrated ability to grow earnings and revenues, but financial = stability that=20 will allow them to weather the tough times and/or continue their = strategy for=20 continued growth. That means a strong balance sheet, sufficient cash = flow,=20 excellent returns on equity invested, etc.</DIV> <DIV>-Select only stocks with sufficient liquidity to allow easy = entry/exit when=20 the time is right technically.</DIV> <DIV>-Preserve capital above all else. When you make a mistake, move on = and=20 reinvest the remaining capital in what *is* working.</DIV> <DIV>-Know how to read a chart so that you can exit and keep profits at = the=20 appropriate time. In secular bull markets, you can ride out = consolidations=20 knowing that there is a greater likelihood that the same stocks and = groups will=20 continue their upward trek. In downtrending/sideways markets, you cannot = afford=20 to sit through the consolidation because the risk that the = stock/sector/style=20 will fall out of favor is greater. Step aside as the consolidation = starts, move=20 to strength elsewhere, come back when/if the consolidation ends and = continues=20 upward. If a secular bull starts again, you'll be in the right stocks = already=20 and can just ride them longer.</DIV> <DIV>-Know how to identify and track a group of stocks that gives you = the "pulse=20 of your market." If the pulse is poor, stand aside or learn to short = them as=20 they fail.</DIV> <DIV>-Always do post analysis and use successes and failures as building = blocks=20 to becoming a better investor. Be honest about what you are doing right = or=20 wrong. It's just like budgeting or dieting. Obviously, if you're gaining = weight=20 or saving less than your plan, you need to change something.</DIV> <DIV> </DIV> <DIV>Katherine</DIV> <DIV> </DIV> <DIV>----- Original Message ----- </DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black"><B>From:</B>=20 <A title=3Dbtriffet@earthlink.net = href=3D"mailto:btriffet@earthlink.net">Bill=20 Triffet</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</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, May 01, 2002 = 11:12=20 AM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Today's IBD = "Big=20 Picture" comments...</DIV> <DIV><BR></DIV>Well friends, it seems that today's IBD confirms what = I've=20 thought about the<BR>M in canslim - It's not necessarily based on the = readings=20 of the three major<BR>market indexes ( a big departure from=20 HTMMIS).<BR><BR>I'm paraphrasing the last three paragraphs of "The Big = Picture"(there are<BR>stiff copyright disclaimers at IBD):<BR><BR>It = will take=20 a few days to see if the rotation BACK into the Dow, Naz, = and<BR>S&P is=20 valid. There should be a big move in heavier volume by the end of = the<BR>week=20 to confirm it.<BR><BR>It goes on to say it's a "nonissue" for growth = investors=20 since small and<BR>mid-cap stocks along with medical, consumer and = defense are=20 doing well<BR>despite the big averages. If they hold up, it says, the = major=20 averages could<BR>improve.<BR><BR>Also mentions "careful trading" with = tight=20 loss cutting is key.<BR><BR>My point? IMHO, IBD is marketed for many = types of=20 investors. Pure canslim<BR>(if there is such a thing) is just one of=20 them.<BR><BR>I think perhaps it's time for me to look at growth = investing with=20 a canslim<BR>approach. I'm starting to see several here have done this = to=20 great success<BR>(though with very close watching). Including things = such as a=20 lower but<BR>advancing RS as opposed to just a high rating and not be = afraid=20 to jump into<BR>stocks in an upwards trending sector though the market = is flat=20 or down IF<BR>they have good fundies.<BR><BR>Several times this and = last year=20 I saw stocks and groups moving ahead but<BR>stayed out due to the = major=20 indexes downward trend. Comments?<BR><BR>Btw, for Fred, it suggests = there's=20 heavy distribution out of gold and<BR>precious metals by=20 investors.<BR><BR>Bill Triffet</BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_0060_01C1F10B.3553C060-- - - - -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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