Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: [CANSLIM] Ask Bill--Does anybody really ask these questions?
Date: Sat, 24 Aug 2002 21:32:17 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_0091_01C24BB5.B8A91E10 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Here is today's "Ask Bill" column. Sound familiar? Question: Can you please define "swing trader"?=20 =20 - - Submitted from Texarkana, Texas=20 =20 Answer: A swing trader is one who trades short-term "swings" in the = market, stocks, options, etc. that last anywhere from a few days to just = a few weeks.=20 I'd sure like to know why so often these questions are exactly the same = topics that appear on our email list. Why pick up on stuff like this and = make up bogus "Ask Bills" when I've still got at least 2 questions asked = of them and never answered (I'm sure there are others who've written = questions that aren't answered). For example, why the heck does the IBD calculate the ROE based on the = average of 2 years data? Huh? Since when did anybody use 2 years for = such a measurement? Here's the Ask Bill I'm referring to (highlighting is mine): Ask Bill O'Neil Archives Wednesday, August 21, 2002=20 =20 "Why is it some stocks showing accelerating earnings and sales growth = still have relatively low return on equity? Would you make an exception = to your rule of buying stocks with ROE of 17% or better?" - - Submitted from Montgomery, Texas =20 One possible reason is the fact that IBD's measure of ROE (return on = equity) takes an average of the ROE over the past two fiscal years. If a = company posted weak earnings or a loss in the previous year, that would = dilute its ROE. Also keep in mind that ROE measures total operating = earnings divided by shareholders' equity. So even when the = year-over-year EPS growth is accelerating, if earnings per share are = small (say, only 4 or 8 cents), it may result in a relatively small = numerator in the ROE equation. This is why the best growth companies = with strong ROE tend to show strong growth over several years, not just = in a number of quarters. Regarding the rule of having ROE of at least = 17%, keep in mind that some of the best stocks had an ROE less than = that, including Emulex (8% before its big price run-up beginning in = December 1998), Millennium Pharmaceuticals (7%) and Qualcomm (8%). But = on average, the best stocks during the 1997-2000 period sported an = average ROE of 23%.=20 - --Katherine - ------=_NextPart_000_0091_01C24BB5.B8A91E10 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML xmlns:o =3D "urn:schemas-microsoft-com:office:office"><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2716.2200" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV>Here is today's "Ask Bill" column. Sound familiar?</DIV> <DIV> </DIV> <DIV> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New">Question: Can you please define "swing trader"?=20 <o:p></o:p></FONT></FONT></SPAN></P> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New"><SPAN style=3D"mso-spacerun: yes"> =20 </SPAN><o:p></o:p></FONT></FONT></SPAN></P> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New">- Submitted from Texarkana, Texas=20 <o:p></o:p></FONT></FONT></SPAN></P> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New"><SPAN=20 style=3D"mso-spacerun: = yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></P> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New"><SPAN=20 style=3D"mso-spacerun: yes"></SPAN><o:p></o:p></FONT></FONT></SPAN></P> <P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20 style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20 face=3D"Courier New"><SPAN style=3D"mso-spacerun: yes"> Answer: = </SPAN>A swing=20 trader is one who trades short-term "swings" in the market, stocks, = options,=20 etc. that last anywhere from a few days to just a few weeks.=20 <o:p></o:p></FONT></FONT></SPAN></P></DIV> <DIV> </DIV> <DIV> </DIV> <DIV>I'd sure like to know why so often these questions are exactly the = same=20 topics that appear on our email list. Why pick up on stuff like this and = make up=20 bogus "Ask Bills" when I've still got at least 2 questions asked of = them=20 and never answered (I'm sure there are others who've written questions = that=20 aren't answered).</DIV> <DIV> </DIV> <DIV>For example, why the heck does the IBD calculate the ROE based on = the=20 average of 2 years data? Huh? Since when did anybody use 2 years for = such a=20 measurement?</DIV> <DIV> </DIV> <DIV>Here's the Ask Bill I'm referring to (highlighting is mine):</DIV> <DIV> </DIV> <DIV>Ask Bill O'Neil Archives<BR>Wednesday, August 21, 2002 = <BR> <BR>"Why=20 is it some stocks showing accelerating earnings and sales growth still = have=20 relatively low return on equity? Would you make an exception to your = rule of=20 buying stocks with ROE of 17% or better?"<BR>- Submitted from = Montgomery,=20 Texas<BR> <BR>One possible reason is the fact that <FONT=20 color=3D#0000ff><EM>IBD's measure of ROE (return on equity) takes an = average of=20 the ROE over the past two fiscal years</EM></FONT>. If a company posted = weak=20 earnings or a loss in the previous year, that would dilute its ROE. Also = keep in=20 mind that ROE measures total operating earnings divided by shareholders' = equity.=20 So even when the year-over-year EPS growth is accelerating, if earnings = per=20 share are small (say, only 4 or 8 cents), it may result in a relatively = small=20 numerator in the ROE equation. This is why the best growth companies = with strong=20 ROE tend to show strong growth over several years, not just in a number = of=20 quarters. Regarding the rule of having ROE of at least 17%, keep in mind = that=20 some of the best stocks had an ROE less than that, including Emulex (8% = before=20 its big price run-up beginning in December 1998), Millennium = Pharmaceuticals=20 (7%) and Qualcomm (8%). But on average, the best stocks during the = 1997-2000=20 period sported an average ROE of 23%. </DIV> <DIV> </DIV> <DIV> </DIV> <DIV>--Katherine</DIV></BODY></HTML> - ------=_NextPart_000_0091_01C24BB5.B8A91E10-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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