Re: [CANSLIM] Re: Retstatement of CANSLIM?

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Re: Retstatement of CANSLIM?
Date: Wed, 26 Jun 2002 22:25:18 -0400

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part of the problem we suffer as investors in individual stocks is that the
market is driven by human psychology. After all, Worldcom was already down
to 83 cents before the news yesterday. Who cares if it dropped 90% to 9
cents in off market trading, that was still only 74 cents drop, a pittance
to a viable company. The chart already said it was in trouble, and had been
for months. The loss in value over the past six months was far greater than
the past 24 or 48 hours.

On the other hand, the "market" takes WCOM's news and extrapolates it to
cover the entire marketplace, as if every company out there is at least a
possible suspect in the same faulty accounting practices. Likewise, I assume
every company (including one I personally own) is suspect if they continued
to use Andersen until just a few months ago.

The entire marketplace is condemned by this type of behavior, and now must
once again prove itself. Foreign investors, just like us, withdraw
investment dollars from the US markets because they don't know what is safe
or trustworthy. It is clear that Andersen has a morality / infrastructure
problem that far transcends the Houston office, and has persisted for a
number of years. Maybe all companies of a certain size, where they have much
to gain (via employee stock options), and have the cash available, and "cash
flow", need a special exam by the SEC. But I would still start with former
Andersen clients. Credibility in financial reporting must be restored before
it is too late.

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, June 26, 2002 10:12 PM
Subject: Re: [CANSLIM] Re: Retstatement of CANSLIM?


Fanus:

     My point-and it is just an opinion- was just to point out a fact (not
to
make an implication that only technical chart reading can now to be used
safely.)

     However, I believe you are right.  Of all publically traded stock
companies, 99% are probably as pure as Ivory Soap.  However, the question
becomes which are the 1%.  Taking your assumption of 10,000, 1% of that
leaves 100 companies to avoid.  But which are they?  And since it is not
possible to know what companies are keeping inaccurate records before they
are uncovered, one wonders is it wise to pay attention to the fundamentals
of
earnings and cash-flow?

     Katherine, in "Suitable for Framing", sent some "Big Picture" passages
that are pertinent to this discussion..  The companies that have been
discovered as having bogus financial records are the same companies whose
charts have fallen apart.  This, I suppose then, is the way to spot these
companies.  After all, the CANSLIM investor is not interested primarily in
uncovering"accounting fraud"; his/her first concern is to find a stock that
looks as if it is a winner.

jans




In a message dated 6/26/2002 4:54:48 PM Eastern Daylight Time,
fanus13@yahoo.com writes:

<< So, you are saying throw away the fundamentals and
 trade only on the technicals?
 There are probably close to 10000 public traded
 companies and just because a handful of companies
 committed fraud and use creative accounting, does that
 mean the other 99% are also just as bad?   This is
 like saying because a small fraction of the population
 is in prison, this mean all people are criminals.

 - Fanus >>

In a message dated 6/26/02, Katherine Malcolm writes:

<<From this evening's Big Picture at Investors.com:

"Stocks such as Enron, ImClone (IMCL), Tyco (TYC) and WorldCom have shaken
investor confidence. But there was no reason for growth investors who study
fundamentals and technicals to be caught in these downdrafts. Long before
the
headlines turned nasty, these and other infamous stocks had broken down from
established uptrends. You just don't see scandals hitting leading stocks
from
out of the blue.

WorldCom peaked in June 1999 after failing to break out successfully from a
late-stage base. End of story for growth investors. The stock slid as its
fundamentals deteriorated. It never presented another buying opportunity if
your criteria include superior fundamentals, a strong industry group and a
sound price base.

So while the SEC issues press releases expressing its outrage over WorldCom,
the ultimate safety net is your own knowledge and discipline to follow a set
of good trading rules."



- --Amen.

Katherine>>

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