Go to Jeff Salisbury LWGate Home Page.From: "Curt Corley" <cjcorley@hiwaay.net>
Subject: [CANSLIM] Fundamental Philosophies
Date: Thu, 5 Dec 2002 20:14:42 -0600
Next Article (by Subject): RE: [CANSLIM] Fundamental Philosophies "Fred Richards"
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Hi,
=20
I hope you don=92t mind me changing the subject name of this thread to
something a little more appropriate than NXTL and SXT.=20
=20
To answer your question: Yes, I would certainly consider purchasing a
stock if the ROE was less than 16.5% with all other factors looking
good. As you know, I=92ve purchased PECS and MNTR recently -- two =
stocks
that were a lot less perfect than the theoretical stock you mentioned.
I get your point, and you are right: an ROE below 17% certainly does
not mean the company or the stock is bad. But here=92s a situation to
consider. Let=92s say you have screened 9,100+ stocks, and came up with =
a
dozen or so stocks that have what you consider to be near-perfect
fundamentals. And let=92s say a few of those look like they might break
out of a base formation within the next couple of weeks. Would you
rather wait around for the possibility that those stocks with the best
fundamentals will break out? Or would rather purchase stocks that have
already broken out but which have less stellar fundamentals? Within a
very short time after purchasing PECS and MNTR, I saw other stocks with
better fundamentals that looked like they were ready to make a move. Of
course, that=92s a tough thing to watch, and that=92s why I put some =
thought
into this question. Given my situation and my personality, I decided I
would rather keep my eye on only the very best ones. That=92s why I
decided last weekend to screen only the near-perfect ones and keep an
eye on those. And now you, Andy, and Tom are starting to make me doubt
that decision. Thanks a lot! :)
=20
Seriously now: this has been a very educational and interesting thread.
Hopefully, by the time we are through with this, we will have figured
out the best overall stock-picking system; then we can start an on-line
rating system and screening service that doesn=92t cost $500 a year. :)
=20
Curt
=20
P.S. =96 I would like to open a topic up some time in the future about =
the
use of earnings estimates. But this topic is enough for now. My laptop
is over-heating. I=92m coming into work tired. And my wife is starting
to forget my middle name.
=20
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of kmalm
Sent: Thursday, December 05, 2002 11:44 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] NXTL, SXT
=20
Hi Curt,
=20
I think you've identified the stickier issues in CANSLIM and
interpreting WON's work. As both Tom and Andy have pointed out in their
posts, while WON may *seem* to be stating that ROE>=3D17 is a "minimum
requirement' it turns out it is a guidepost to lead you to better
quality stocks. As with other indicators, this is based on his
historical view of winning stocks, meaning that "on average" winning
stocks had an ROE>=3D17. As with D/E, ROE can be misleading. For =
example,
if a company rejiggers their capital structure and increases their
outstanding shares, this will have an immediate impact on the ROE
measure. Another way of viewing it would simply be by asking a question.
That is, if you were looking at a stock and it had a "perfect" cup with
handle (ok, it's theoretical!); high RS Rank; an RS line making new
highs; met all other earnings, sales and profit margin guidelines, and
broke out on 150% of ADV, would you pass it up because it had an ROE of
16.5%? If so, why? Does the "low" ROE mean that it is not a good company
or a good stock?
=20
Katherine
=20
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<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Hi,<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>I hope you don’t mind me =
changing
the subject name of this thread to something a little more appropriate =
than
NXTL and SXT. <o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>To answer your question:<span
style=3D'mso-spacerun:yes'>=A0 </span>Yes, I would certainly consider =
purchasing a
stock if the ROE was less than 16.5% with all other factors looking =
good.<span
style=3D'mso-spacerun:yes'>=A0 </span>As you know, I’ve purchased =
</span></font><st1:City><st1:place><font
size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:navy'>PECS</span></font></st1:place></st1:City><font size=3D2 =
color=3Dnavy
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:navy'> and
MNTR recently -- two stocks that were a lot less perfect than the =
theoretical
stock you mentioned.<span style=3D'mso-spacerun:yes'>=A0 </span>I get =
your point,
and you are right:<span style=3D'mso-spacerun:yes'>=A0 </span>an ROE =
below 17%
certainly does not mean the company or the stock is bad.<span
style=3D'mso-spacerun:yes'>=A0 </span>But here’s a situation to
consider.<span style=3D'mso-spacerun:yes'>=A0 </span>Let’s say you =
have
screened 9,100+ stocks, and came up with a dozen or so stocks that have =
what
you consider to be near-perfect fundamentals.<span =
style=3D'mso-spacerun:yes'>=A0
</span>And let’s say a few of those look like they might break out =
of a
base formation within the next couple of weeks.<span =
style=3D'mso-spacerun:yes'>=A0
</span>Would you rather wait around for the possibility that those =
stocks with
the best fundamentals will break out?<span =
style=3D'mso-spacerun:yes'>=A0 </span>Or
would rather purchase stocks that have already broken out but which have =
less
stellar fundamentals?<span style=3D'mso-spacerun:yes'>=A0 </span>Within =
a very
short time after purchasing </span></font><st1:City><st1:place><font =
size=3D2
color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:navy'>PECS</span></font></st1:place></st1:City><font size=3D2 =
color=3Dnavy
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:navy'> and
MNTR, I saw other stocks with better fundamentals that looked like they =
were
ready to make a move.<span style=3D'mso-spacerun:yes'>=A0 </span>Of =
course, that’s
a tough thing to watch, and that’s why I put some thought into =
this question.<span
style=3D'mso-spacerun:yes'>=A0 </span>Given my situation and my =
personality, I decided
I would rather keep my eye on only the very best ones.<span
style=3D'mso-spacerun:yes'>=A0 </span>That’s why I decided last =
weekend to
screen only the near-perfect ones and keep an eye on those.<span
style=3D'mso-spacerun:yes'>=A0 </span>And now you, Andy, and Tom are =
starting to
make me doubt that decision.<span style=3D'mso-spacerun:yes'>=A0 =
</span>Thanks a
lot!<span style=3D'mso-spacerun:yes'>=A0 =
</span>:)<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Seriously now:<span
style=3D'mso-spacerun:yes'>=A0 </span>this has been a very educational =
and
interesting thread.<span style=3D'mso-spacerun:yes'>=A0 =
</span>Hopefully, by the
time we are through with this, we will have figured out the best overall =
stock-picking
system; then we can start an on-line rating system and screening service =
that
doesn’t cost $500 a year.<span style=3D'mso-spacerun:yes'>=A0 =
</span>:)<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Curt<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>P.S. – I would like to open a =
topic
up some time in the future about the use of earnings estimates.<span
style=3D'mso-spacerun:yes'>=A0 </span>But this topic is enough for =
now.<span
style=3D'mso-spacerun:yes'>=A0 </span>My laptop is over-heating.<span
style=3D'mso-spacerun:yes'>=A0 </span>I’m coming into work =
tired.<span
style=3D'mso-spacerun:yes'>=A0 </span>And my wife is starting to forget =
my middle
name.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>kmalm<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> =
</span></font><st1:date
Month=3D"12" Day=3D"5" Year=3D"2002"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:
10.0pt;font-family:Tahoma'>Thursday, December 05, =
2002</span></font></st1:date><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'> </span></font><st1:time
Hour=3D"11" Minute=3D"44"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;
font-family:Tahoma'>11:44 AM</span></font></st1:time><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'><br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> RE: [CANSLIM] =
NXTL, SXT</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Hi Curt,<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>I think you've identified the stickier issues =
in
CANSLIM and interpreting WON's work. As both Tom and Andy have pointed =
out in
their posts, while WON may *seem* to be stating that ROE>=3D17 is a =
"minimum
requirement' it turns out it is a guidepost to lead you to better =
quality
stocks. As with other indicators, this is based on his historical view =
of
winning stocks, meaning that "on average" winning stocks had =
an
ROE>=3D17. As with D/E, ROE can be misleading. For example, if a =
company
rejiggers their capital structure and increases their outstanding =
shares, this
will have an immediate impact on the ROE measure. Another way of viewing =
it
would simply be by asking a question. That is, if you were looking at a =
stock
and it had a "perfect" cup with handle (ok, it's =
theoretical!); high
RS Rank; an RS line making new highs; met all other earnings, sales and =
profit
margin guidelines, and broke out on 150% of ADV, would you pass it up =
because
it had an ROE of 16.5%? If so, why? Does the "low" ROE mean =
that it
is not a good company or a good stock?<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Katherine<o:p></o:p></span></font></p>
</div>
<blockquote =
style=3D'margin-top:5.0pt;margin-right:0in;margin-bottom:5.0pt'>
<p class=3DMsoNormal style=3D'margin-bottom:12.0pt'><font size=3D3
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
</blockquote>
</div>
</body>
</html>
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Next Article (by Subject): RE: [CANSLIM] Fundamental Philosophies "Fred Richards"
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