RE: [CANSLIM] Q: Accelerating growth

From: "Mike Gibbons" <mikegibbons@proactech.com>
Subject: RE: [CANSLIM] Q: Accelerating growth
Date: Thu, 2 May 2002 10:15:57 -1000

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OK, try this.

In mathematical terms:

velocity is first derivative (that is difference between two equally spaced
values)

acceleration is second derivative (that is the difference of the
differences)

So if s1, s2, s3, s4 are sales in consecutive quarters, then

growth of sales g1 = s2-s1; g2=s3-s2; g3=s4-s3;

If g2-g1 is positive then we have accelerating sales.

To have accelerating growth we need second derivative of growth which is

(g3-g1) - (g2 - g1)

In the IBD example we have g1=8; g2=35; g3=57 so (57-35) - (35-8) = -5

 So IBD either means "accelerating earnings" or "increasing (not
accelerating) earnings"

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 Ian
Sent: Thursday, May 02, 2002 10:29 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Q: Accelerating growth


Mike:

As an engineer, I've got to call 8% to 35% to 57% acceleration. The rate of
acceleration is declining, but it is still acceleration - not deceleration.
You've got your derivatives mixed up.

It's not deceleration unless it goes 8% - 35% - 57% - 35%. Remember they are
percentage increases, not actual EPS figures.

Ian


- ----- Original Message -----
From: Mike Gibbons <mike@proactech.com>
To: <canslim@lists.xmission.com>
Sent: Thursday, May 02, 2002 12:24 PM
Subject: [CANSLIM] Q: Accelerating growth


> I've often seen WON and IBD refer to the need for "accelerating growth".
> Strictly speaking, that means that the *rate of change* of growth should
be
> positive.
>
> In yesterday's Investor's Corner they said of PHA, "At the time, earnings
> growth was accelerating (8% to 35% to 57%)". So the change in growth was
> from 8% to 35% (27%) to 35% to 57% (22%). So the *rate of change* of
growth
> was 22 - 27 -> -5. That is, growth was decelerating not accelerating
>
> Now as a physics major, I may be too picky, but I believe that language
> should be used correctly or it loses its value. It seems to me that what
> they mean is "earnings growth was increasing".
>
> In that case the WON rule that says that "sales growth should be
> accelerating" needs to be restated to "sales growth should be increasing".
>
> 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 Warren Keuffel
> Sent: Thursday, May 02, 2002 7:55 AM
> To: canslim@lists.xmission.com
> Subject: Re: [CANSLIM] IBD's Industry Group and Ticker Symbol Index
>
>
> If you intend to pursue a group-oriented strategy, and you intend to use
> IBD's 197 industry group tables, the book is indispensible because it's
> not always obvious which companies are assigned to which industry
> groups. I'm using Vector Vest now, which has its own industry groupings,
> so I no longer buy the IBD books.
>
> HTH.
> Warren
>
> rolf hertenstein wrote:
>
> >Hello all -
> >
> >Could anyone who has used this guide in the past
> >tell me if they
> >indeed found it useful?  I'll likely wait for the
> >next issue due in June
> >in any case.
> >
> >Thanks!
> >
> > Rolf
> >
> >
> >-
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