Re: [CANSLIM] Today's IBD "Big Picture" comments...

From: Warren Keuffel <wkeuffel@xmission.com>
Subject: Re: [CANSLIM] Today's IBD "Big Picture" comments...
Date: Wed, 01 May 2002 15:13:14 -0600
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Not to be flip or to create a self-referential definition, but IMO 
secular is the opposite of cyclical. The idea is that basic materials, 
heavy manufacturing, etc. are the so-called cyclical industries (i.e., 
performance is tied to interest rate behavior) and the rest are secular. 
Where the name came from, I have no clue.

Warren

Mike Gibbons wrote:

> 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 <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 <mailto:btriffet@earthlink.net>
>
>         To: canslim <mailto:canslim@lists.xmission.com>
>
>         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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