Re: [CANSLIM] New using DGO

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] New using DGO
Date: Sun, 19 May 2002 20:23:35 -0400
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I will toss a few more comments in as well.

Up/Down ratio - somewhere along the way of my CANSLIM education, I was =
taught (I think by an O'Neill staffer) that u/d needed to be at least =
0.8, but preferable it be 1.0 or better. He used 0.8 to avoid excluding =
at least looking at ones that met all other criteria but that. My lesson =
for that is to always use screening criteria well outside the limits =
where I want to be buying. Better to look at too many not quite perfect =
charts, than not enough.=20

On management ownership, management is far more restricted in their =
ability to sell than funds and other institutional holders. And they =
must report it to the SEC when they do. I like at least a 20% stake by =
mngmt, and prefer more. Have bot stocks with as much as 70%.

Debt is tricky, you have to consider the industry. Some, home builders =
as an example, traditionally carry very high debt loads. It's normal and =
ok, easiest is to look at half a dozen other companies in the same =
industry group before concluding debt is too high.

- ----- Original Message -----=20
From: Chazmoore@aol.com=20
To: canslim@lists.xmission.com=20
Sent: Sunday, May 19, 2002 5:50 PM
Subject: Re: [CANSLIM] New using DGO


Marty:=20
By setting your minimums so high you have missed stocks that are on the =
move upward. Try setting the EPS at 75 or 80. Move the RS down to maybe =
70. I like Industry groups 75 and above, but you can go down to 60.=20

I do not know of any rule regarding management ownership versus the =
public, other than that it is desirable for management to have a vested =
interest in the company. On the flip side if most of the company is =
owned by management, they are in a position to manipulate the stock =
price.=20

I like to see the ROE about 15 to 20%. Some use 17% as a minimum but =
this may eliminate companies in the midst of a rapid turnaround, so I =
lower the bar a bit.=20

No debt means the company is generating enough income to finance the =
assets, and this is very good. When the cost of borrowing is low, like =
it is now, then some debt is good because the assets generate income =
more than necessary to cover the cost of debt and contribute to the =
return. Excess debt is usually not good. Some feel more than 30% debt =
bears watching. Try to find out why the debt load is high. I tend to =
accept higher debt due to an acquisition, if it appears the acquisition =
can generate the income to cover the debt.=20

I don't place a lot of significance on the u/d ratio, but more up than =
down is desirable.  I am more interested in a sudden increase in upward =
trading volume.=20

WON says that a desirable Earnings Stability would be 20 and under. I =
think you will find this has been hard for most to achieve in a bear =
market.=20

I didn't try to answer all of your questions but this should get you =
started. May I suggest you keep reading the postings at this site? You =
will learn rather quickly who the experienced investors are and their =
wisdom is priceless.=20

Charley=20

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<META http-equiv=3DContent-Type content=3D"text/html; =
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<STYLE></STYLE>
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial>I will toss a few more comments in as =
well.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Up/Down ratio - somewhere along the way of my =
CANSLIM=20
education, I was taught (I think by an O'Neill staffer) that u/d needed =
to be at=20
least 0.8, but preferable it be 1.0 or better. He used 0.8 to avoid =
excluding at=20
least looking at ones that met all other criteria but that. My lesson =
for that=20
is to always use screening criteria well outside the limits where I want =
to be=20
buying. Better to look at too many not quite perfect charts, than not =
enough.=20
</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>On management ownership, management is far more =
restricted=20
in their ability to sell than funds and other institutional holders. And =
they=20
must report it to the SEC when they do. I like at least a 20% stake by =
mngmt,=20
and prefer more. Have bot stocks with as much as 70%.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Debt is tricky, you have to consider the =
industry. Some,=20
home builders as an example, traditionally carry very high debt loads. =
It's=20
normal and ok, easiest is to look at half a dozen other companies in the =
same=20
industry group before concluding debt is too high.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
<DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
title=3DChazmoore@aol.com =
href=3D"mailto:Chazmoore@aol.com">Chazmoore@aol.com</A>=20
</DIV>
<DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
<DIV><B>Sent:</B> Sunday, May 19, 2002 5:50 PM</DIV>
<DIV><B>Subject:</B> Re: [CANSLIM] New using DGO</DIV></DIV>
<DIV><BR></DIV><FONT face=3Darial,helvetica><FONT size=3D2>Marty: <BR>By =
setting=20
your minimums so high you have missed stocks that are on the move =
upward. Try=20
setting the EPS at 75 or 80. Move the RS down to maybe 70. I like =
Industry=20
groups 75 and above, but you can go down to 60. <BR><BR>I do not know of =
any=20
rule regarding management ownership versus the public, other than that =
it is=20
desirable for management to have a vested interest in the company. On =
the flip=20
side if most of the company is owned by management, they are in a =
position to=20
manipulate the stock price. <BR><BR>I like to see the ROE about 15 to =
20%. Some=20
use 17% as a minimum but this may eliminate companies in the midst of a =
rapid=20
turnaround, so I lower the bar a bit. <BR><BR>No debt means the company =
is=20
generating enough income to finance the assets, and this is very good. =
When the=20
cost of borrowing is low, like it is now, then some debt is good because =
the=20
assets generate income more than necessary to cover the cost of debt and =

contribute to the return. Excess debt is usually not good. Some feel =
more than=20
30% debt bears watching. Try to find out why the debt load is high. I =
tend to=20
accept higher debt due to an acquisition, if it appears the acquisition =
can=20
generate the income to cover the debt. <BR><BR>I don't place a lot of=20
significance on the u/d ratio, but more up than down is desirable. =
&nbsp;I am=20
more interested in a sudden increase in upward trading volume. =
<BR><BR>WON says=20
that a desirable Earnings Stability would be 20 and under. I think you =
will find=20
this has been hard for most to achieve in a bear market. <BR><BR>I =
didn't try to=20
answer all of your questions but this should get you started. May I =
suggest you=20
keep reading the postings at this site? You will learn rather quickly =
who the=20
experienced investors are and their wisdom is priceless. =
<BR><BR>Charley</FONT>=20
</FONT></BODY></HTML>

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