Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Fundamental Philosophies
Date: Thu, 5 Dec 2002 21:45:19 -0500
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Hi Curt,
Whether time is limited, or plentiful, it remains most important to keep =
your focus. And that focus must take you to a level where you can sleep =
nights.=20
I routinely have 30-40 stocks on watch at any given time. Many people =
would question why some of them are even of interest to me, sometimes I =
am one of those (usually just a day or two after I buy them). I stick to =
what I understand, and am comfortable with. That means totally ignoring =
(except when I do my WWW each weekend) certain sectors that have taught =
me I just don't understand them. So I have missed catching many stocks =
that would have made me money, and were screaming "buy me, buy me, I =
promise to be good to you". Bill Gates mentioned PUMA in his opening =
remarks to COMDEX this year, remarking about how MSFT was using their =
software. I looked at the chart, cussed a blue streak (it was up 100% =
for the day), noted it was just my kind of company, kinda (micro cap, =
few shares out, etc.), then took an honest look at it and admitted I =
never would have bought it had I seen it before (it was losing money, =
among other reasons, one of my big no-no's). I did keep PUMA on my watch =
list, where it may remain a year or more without ever doing a trade on =
it.
So I was comfortable having missed a chance to double my money in a =
single day, because I also knew I never would have bought it, or if =
somehow I had, would not have been comfortable with it. Just making =
money is not enough for me, I want to enter a stock with a high degree =
of confidence that it will be a successful and enjoyable trip. For me, =
maintaining my discipline and focus is ultimately what will be most =
likely to give me profits.
- ----- Original Message -----=20
From: Curt Corley=20
To: canslim@lists.xmission.com=20
Sent: Thursday, December 05, 2002 9:14 PM
Subject: [CANSLIM] Fundamental Philosophies
Hi,
=20
I hope you don't 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've 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's a situation to =
consider. 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. And let's 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's a tough thing to watch, and that's 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's 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't cost $500 a year. :)
=20
Curt
=20
P.S. - 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'm 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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<DIV><FONT face=3DArial>Hi Curt,</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Whether time is limited, or plentiful, it =
remains most=20
important to keep your focus. And that focus must take you to a level =
where you=20
can sleep nights. </FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>I routinely have 30-40 stocks on watch at any =
given=20
time. Many people would question why some of them are even of =
interest to=20
me, sometimes I am one of those (usually just a day or two after I buy =
them). I=20
stick to what I understand, and am comfortable with. That means totally =
ignoring=20
(except when I do my WWW each weekend) certain sectors that have taught =
me I=20
just don't understand them. So I have missed catching many stocks that =
would=20
have made me money, and were screaming "buy me, buy me, I promise to be =
good to=20
you". Bill Gates mentioned PUMA in his opening remarks to COMDEX this =
year,=20
remarking about how MSFT was using their software. I looked at the =
chart, cussed=20
a blue streak (it was up 100% for the day), noted it was just my kind of =
company, kinda (micro cap, few shares out, etc.), then took an honest =
look at it=20
and admitted I never would have bought it had I seen it before (it was =
losing=20
money, among other reasons, one of my big no-no's). I did keep PUMA on =
my watch=20
list, where it may remain a year or more without ever doing a trade on=20
it.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>So I was comfortable having missed a chance to =
double my=20
money in a single day, because I also knew I never would have bought it, =
or if=20
somehow I had, would not have been comfortable with it. Just making =
money is not=20
enough for me, I want to enter a stock with a high degree of confidence =
that it=20
will be a successful and enjoyable trip. For me, maintaining my =
discipline and=20
focus is ultimately what will be most likely to give me =
profits.</FONT></DIV>
<DIV> </DIV>
<DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
<DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
title=3Dcjcorley@hiwaay.net href=3D"mailto:cjcorley@hiwaay.net">Curt =
Corley</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> Thursday, December 05, 2002 9:14 PM</DIV>
<DIV><B>Subject:</B> [CANSLIM] Fundamental Philosophies</DIV></DIV>
<DIV><BR></DIV>
<DIV class=3DSection1>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">Hi,<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">I hope you =
don=92t mind=20
me changing the subject name of this thread to something a little more=20
appropriate than NXTL and SXT. <o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">To answer =
your=20
question:<SPAN style=3D"mso-spacerun: yes"> </SPAN>Yes, I would =
certainly=20
consider purchasing a stock if the ROE was less than 16.5% with all =
other=20
factors looking good.<SPAN style=3D"mso-spacerun: yes"> </SPAN>As =
you know,=20
I=92ve purchased </SPAN></FONT><st1:City><st1:place><FONT face=3DArial =
color=3Dnavy=20
size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">PECS</SPAN></FONT></st1:place></st1:City><FONT=20
face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial"> and MNTR =
recently --=20
two stocks that were a lot less perfect than the theoretical stock you=20
mentioned.<SPAN style=3D"mso-spacerun: yes"> </SPAN>I get your =
point, and=20
you are right:<SPAN style=3D"mso-spacerun: yes"> </SPAN>an ROE =
below 17%=20
certainly does not mean the company or the stock is bad.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>But here=92s a situation to =
consider.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>Let=92s say you have screened =
9,100+=20
stocks, and came up with a dozen or so stocks that have what you =
consider to be=20
near-perfect fundamentals.<SPAN style=3D"mso-spacerun: yes"> =
</SPAN>And=20
let=92s say a few of those look like they might break out of a base =
formation=20
within the next couple of weeks.<SPAN style=3D"mso-spacerun: yes"> =
</SPAN>Would you rather wait around for the possibility that those =
stocks with=20
the best fundamentals will break out?<SPAN style=3D"mso-spacerun: =
yes"> =20
</SPAN>Or would rather purchase stocks that have already broken out but =
which=20
have less stellar fundamentals?<SPAN style=3D"mso-spacerun: yes"> =20
</SPAN>Within a very short time after purchasing=20
</SPAN></FONT><st1:City><st1:place><FONT face=3DArial color=3Dnavy =
size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">PECS</SPAN></FONT></st1:place></st1:City><FONT=20
face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial"> and MNTR, I =
saw other=20
stocks with better fundamentals that looked like they were ready to make =
a=20
move.<SPAN style=3D"mso-spacerun: yes"> </SPAN>Of course, that=92s =
a tough=20
thing to watch, and that=92s why I put some thought into this =
question.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>Given my situation and my =
personality, I=20
decided I would rather keep my eye on only the very best ones.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>That=92s why I decided last =
weekend to=20
screen only the near-perfect ones and keep an eye on those.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>And now you, Andy, and Tom are =
starting=20
to make me doubt that decision.<SPAN style=3D"mso-spacerun: yes"> =20
</SPAN>Thanks a lot!<SPAN style=3D"mso-spacerun: yes"> =20
</SPAN>:)<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">Seriously =
now:<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>this has been a very =
educational and=20
interesting thread.<SPAN style=3D"mso-spacerun: yes"> =
</SPAN>Hopefully, by=20
the time we are through with this, we will have figured out the best =
overall=20
stock-picking system; then we can start an on-line rating system and =
screening=20
service that doesn=92t cost $500 a year.<SPAN style=3D"mso-spacerun: =
yes"> =20
</SPAN>:)<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">Curt<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">P.S. =96 I =
would like to=20
open a topic up some time in the future about the use of earnings=20
estimates.<SPAN style=3D"mso-spacerun: yes"> </SPAN>But this topic =
is enough=20
for now.<SPAN style=3D"mso-spacerun: yes"> </SPAN>My laptop is=20
over-heating.<SPAN style=3D"mso-spacerun: yes"> </SPAN>I=92m =
coming into work=20
tired.<SPAN style=3D"mso-spacerun: yes"> </SPAN>And my wife is =
starting to=20
forget my middle name.<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial color=3Dnavy size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DTahoma =
size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">-----Original=20
Message-----<BR><B><SPAN style=3D"FONT-WEIGHT: bold">From:</SPAN></B>=20
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]=20
<B><SPAN style=3D"FONT-WEIGHT: bold">On Behalf Of =
</SPAN></B>kmalm<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Sent:</SPAN></B> </SPAN></FONT><st1:date =
Year=3D"2002"=20
Day=3D"5" Month=3D"12"><FONT face=3DTahoma size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">Thursday, December 05,=20
2002</SPAN></FONT></st1:date><FONT face=3DTahoma size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma"> </SPAN></FONT><st1:time=20
Minute=3D"44" Hour=3D"11"><FONT face=3DTahoma size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">11:44=20
AM</SPAN></FONT></st1:time><FONT face=3DTahoma size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma"><BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">To:</SPAN></B> =
canslim@lists.xmission.com<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> RE: [CANSLIM] NXTL,=20
SXT</SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN style=3D"FONT-SIZE: =
12pt"><o:p> </o:p></SPAN></FONT></P>
<DIV>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN style=3D"FONT-SIZE: 12pt">Hi =
Curt,<o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN style=3D"FONT-SIZE: =
12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN style=3D"FONT-SIZE: 12pt">I think you've identified the =
stickier=20
issues in CANSLIM and interpreting WON's work. As both Tom and Andy have =
pointed=20
out in their posts, while WON may *seem* to be stating that ROE>=3D17 =
is a=20
"minimum requirement' it turns out it is a guidepost to lead you to =
better=20
quality stocks. As with other indicators, this is based on his =
historical view=20
of winning stocks, meaning that "on average" winning stocks had an =
ROE>=3D17.=20
As with D/E, ROE can be misleading. For example, if a company rejiggers =
their=20
capital structure and increases their outstanding shares, this will have =
an=20
immediate impact on the ROE measure. Another way of viewing it would =
simply be=20
by asking a question. That is, if you were looking at a stock and it had =
a=20
"perfect" cup with handle (ok, it's theoretical!); high RS Rank; an RS =
line=20
making new highs; met all other earnings, sales and profit margin =
guidelines,=20
and broke out on 150% of ADV, would you pass it up because it had an ROE =
of=20
16.5%? If so, why? Does the "low" ROE mean that it is not a good company =
or a=20
good stock?<o:p></o:p></SPAN></FONT></P></DIV>
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size=3D3><SPAN style=3D"FONT-SIZE: =
12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN=20
style=3D"FONT-SIZE: 12pt">Katherine<o:p></o:p></SPAN></FONT></P></DIV>
<BLOCKQUOTE style=3D"MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt; MARGIN-RIGHT: =
0in">
<P class=3DMsoNormal style=3D"MARGIN-BOTTOM: 12pt"><FONT face=3D"Times =
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size=3D3><SPAN=20
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12pt"><o:p> </o:p></SPAN></FONT></P></BLOCKQUOTE></DIV></BODY></HTML=
>
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