Go to Jeff Salisbury LWGate Home Page.From: "Mike Gibbons" <mikegibbons@proactech.com>
Subject: RE: [CANSLIM] Today's IBD "Big Picture" comments...
Date: Wed, 1 May 2002 07:54:54 -1000
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I've seen the term "secular bull" and "secular bear" several times on the
board but don't understand it. What other kinds of market are there -
catholic? anglican?
I'm not being fascetious, just curious.
Aloha,
Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Wednesday, May 01, 2002 7:25 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Today's IBD "Big Picture" comments...
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 -----
From: Bill Triffet
To: canslim
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
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<DIV><SPAN class=3D670465117-01052002><FONT face=3DArial color=3D#0000ff =
size=3D2>I've=20
seen the term "secular bull" and "secular bear" several times on the =
board but=20
don't understand it. What other kinds of market are there - =
catholic?=20
anglican?</FONT></SPAN></DIV>
<DIV><SPAN class=3D670465117-01052002><FONT face=3DArial color=3D#0000ff =
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D670465117-01052002><FONT face=3DArial color=3D#0000ff =
size=3D2>I'm=20
not being fascetious, just curious.</FONT></SPAN></DIV>
<DIV> </DIV>
<DIV><FONT face=3DArial size=3D2>Aloha,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Mike Gibbons<BR>Proactive Technologies, =
LLC</FONT></DIV>
<DIV><FONT face=3DArial size=3D2><A=20
href=3D"http://www.proactech.com/">http://www.proactech.com</A></FONT></D=
IV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Katherine =
Malm<BR><B>Sent:</B> Wednesday, May 01, 2002 7:25 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM] Today's =
IBD "Big=20
Picture" comments...<BR><BR></FONT></DIV>
<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=20
last couple of years I've come to believe that there is a core set of =
"golden=20
rules" at the heart of CANSLIM that are universal to the style, but =
the=20
implementation of those golden rules may be different from one person =
to the=20
next. Contrary to DanF's point of view, I don't see IBD as "jerking =
our chain"=20
but instead see this as proof of my point of view. That is, even =
within the=20
IBD (and CANSLIM), there are seeming contradictions. Their 20 points =
will say=20
one thing, but they will give examples of winning stocks that =
demonstrate=20
exceptions. Bottom line for me is that there's a big difference =
between=20
"restrictive rules" and "general guidelines" and there's no substitute =
for=20
understanding the core concepts that make up the CANSLIM style. For =
example,=20
in a secular Bull where nearly every stock is in an uptrend and above =
the=20
200dMA, the biggest task is to pick "the best" of those going up. =
During=20
downtrending or sideways markets, the first task is to identify those=20
stocks/groups that are technically superior, and then, within those =
groups to=20
find the best fundamental stories. The difference between those 2 =
markets is=20
simply that the risk of being wrong in a secular bull vs =
downtrending/sideways=20
markets is smaller, so the tuition for making errors is smaller. But =
the=20
tuition is *always* there, just more severe and obvious in =
tougher=20
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,=20
estimates can be wrong, but if the technicals are also strong, at =
least the=20
market is confirming this expectation (for the moment). Confirm these=20
estimates with appropriate due diligence so that you =
understand=20
what makes this growth possible.</DIV>
<DIV>-Select only stocks with superior financials. That means not only =
a=20
demonstrated ability to grow earnings and revenues, but financial =
stability=20
that will allow them to weather the tough times and/or continue their =
strategy=20
for 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=20
when 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=20
will continue their upward trek. In downtrending/sideways markets, you =
cannot=20
afford to sit through the consolidation because the risk that the=20
stock/sector/style will fall out of favor is greater. Step aside as =
the=20
consolidation starts, move to strength elsewhere, come back when/if =
the=20
consolidation ends and continues upward. If a secular bull starts =
again,=20
you'll be in the right stocks already and can just ride them =
longer.</DIV>
<DIV>-Know how to identify and track a group of stocks that gives you =
the=20
"pulse of your market." If the pulse is poor, stand aside or learn to =
short=20
them as they fail.</DIV>
<DIV>-Always do post analysis and use successes and failures as =
building=20
blocks to becoming a better investor. Be honest about what you are =
doing right=20
or wrong. It's just like budgeting or dieting. Obviously, if you're =
gaining=20
weight 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=20
readings of the three major<BR>market indexes ( a big departure from =
HTMMIS).<BR><BR>I'm paraphrasing the last three paragraphs of "The =
Big=20
Picture"(there are<BR>stiff copyright disclaimers at IBD):<BR><BR>It =
will=20
take a few days to see if the rotation BACK into the Dow, Naz,=20
and<BR>S&P is valid. There should be a big move in heavier =
volume by the=20
end of the<BR>week to confirm it.<BR><BR>It goes on to say it's a =
"nonissue"=20
for growth investors since small and<BR>mid-cap stocks along with =
medical,=20
consumer and defense are doing well<BR>despite the big averages. If =
they=20
hold up, it says, the major averages could<BR>improve.<BR><BR>Also =
mentions=20
"careful trading" with tight loss cutting is key.<BR><BR>My point? =
IMHO, IBD=20
is marketed for many types of investors. Pure canslim<BR>(if there =
is such a=20
thing) is just one of them.<BR><BR>I think perhaps it's time for me =
to look=20
at growth investing with a canslim<BR>approach. I'm starting to see =
several=20
here have done this to great success<BR>(though with very close =
watching).=20
Including things such as a lower but<BR>advancing RS as opposed to =
just a=20
high rating and not be afraid to jump into<BR>stocks in an upwards =
trending=20
sector though the market is flat or down IF<BR>they have good=20
fundies.<BR><BR>Several times this and last year I saw stocks and =
groups=20
moving ahead but<BR>stayed out due to the major indexes downward =
trend.=20
Comments?<BR><BR>Btw, for Fred, it suggests there's heavy =
distribution out=20
of gold and<BR>precious metals by investors.<BR><BR>Bill=20
Triffet</BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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