RE: [CANSLIM] Fundamental Philosophies

From: "Fred Richards" <ffradrich@attbi.com>
Subject: RE: [CANSLIM] Fundamental Philosophies
Date: Thu, 5 Dec 2002 22:39:32 -0600
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Curt,

After some 40 years in this business, I believe that one of the guidelines
my mentor pounded into my head is still applicable.

"You get what you pay for in this business."

Fred
  -----Original Message-----
  From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Curt Corley
  Sent: Thursday, December 05, 2002 9:22 PM
  To: canslim@lists.xmission.com
  Subject: RE: [CANSLIM] Fundamental Philosophies


  Fred,



  I was just joking about the online service.  Maybe I should have put a
 “;)” after that statement, instead of a “:).”



  I agree with the idea that the cost is not very significant if you are
able to make significantly more than $500 using DGO and IBD – especially if
you are unable to make that amount without DGO.  However, that could very
well strengthen the argument in favor of lower cost, because (1) there are
quite a few people out there who are not in your position and who don’t have
the starting capital and/or skills to make a significant amount over $500,
and (2) there are quite a few people out there who can make significant
money without the service.  ;)



  Curt



  -----Original Message-----
  From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Fred Richards
  Sent: Thursday, December 05, 2002 8:36 PM
  To: canslim@lists.xmission.com
  Subject: RE: [CANSLIM] Fundamental Philosophies



  And just how much will you charge?  Have you given any consideration to
the costs involved?  Or how many people might sign up for another stock
rating service?



  It is always great to leverage off other people's work but unless you can
make a profit after all the costs both known and unknown are caculated,
don't  make the number 1 mistake of most entrepreneurs . . . failing to
consider the cost of one's time.



  Since I make a few more dollars than $500 using the DGO and IBD, the cost
is only material to those who don't.

    -----Original Message-----
    From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Curt Corley
    Sent: Thursday, December 05, 2002 8:15 PM
    To: canslim@lists.xmission.com
    Subject: [CANSLIM] Fundamental Philosophies

    Hi,



    I hope you don’t mind me changing the subject name of this thread to
something a little more appropriate than NXTL and SXT.



    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!  :)



    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.  :)



    Curt



    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.



    -----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



    Hi Curt,



    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>=17 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>=17. 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?



    Katherine




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<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =

size=3D2>Curt,</FONT></SPAN></DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =

size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =
size=3D2>After=20
some 40 years in this business, I believe that one of the guidelines my =
mentor=20
pounded into my head is still applicable.</FONT></SPAN></DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =

size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =
size=3D2>"You=20
get what you pay for in this business."</FONT></SPAN></DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =

size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D180333704-06122002><FONT face=3DArial color=3D#0000ff =

size=3D2>Fred</FONT></SPAN></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
  <DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
  size=3D2>-----Original Message-----<BR><B>From:</B>=20
  owner-canslim@lists.xmission.com=20
  [mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Curt=20
  Corley<BR><B>Sent:</B> Thursday, December 05, 2002 9:22 =
PM<BR><B>To:</B>=20
  canslim@lists.xmission.com<BR><B>Subject:</B> RE: [CANSLIM] =
Fundamental=20
  Philosophies<BR><BR></FONT></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">Fred,<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>&nbsp;</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 was just =
joking=20
  about the online service.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>Maybe I=20
  should have put a =93;)=94 after that statement, instead of a =
=93:).=94<SPAN=20
  style=3D"mso-spacerun: yes">&nbsp; =
</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>&nbsp;</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 agree =
with the idea=20
  that the cost is not very significant if you are able to make =
significantly=20
  more than $500 using DGO and IBD =96 especially if you are unable to =
make that=20
  amount without DGO.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>However, that=20
  could very well strengthen the argument in favor of lower cost, =
because (1)=20
  there are quite a few people out there who are not in your position =
and who=20
  don=92t have the starting capital and/or skills to make a significant =
amount=20
  over $500, and (2) there are quite a few people out there who can make =

  significant money without the service.<SPAN style=3D"mso-spacerun: =
yes">&nbsp;=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>&nbsp;</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>&nbsp;</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>Fred=20
  Richards<BR><B><SPAN style=3D"FONT-WEIGHT: bold">Sent:</SPAN></B>=20
  </SPAN></FONT><st1:date Year=3D"2002" Day=3D"5" Month=3D"12"><FONT =
face=3DTahoma=20
  size=3D2><SPAN style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Tahoma">Thursday, December=20
  05, 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"36" Hour=3D"20"><FONT face=3DTahoma size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">8:36=20
  PM</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>=20
  canslim@lists.xmission.com<BR><B><SPAN=20
  style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> RE: [CANSLIM] =
Fundamental=20
  Philosophies</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>&nbsp;</o:p></SPAN></FONT></P>
  <DIV>
  <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dblue=20
  size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: blue; FONT-FAMILY: =
Arial">And just=20
  how much will you charge?&nbsp; Have you given any consideration to =
the costs=20
  involved?&nbsp; Or how many people might sign up for another stock =
rating=20
  service?</SPAN></FONT><o:p></o:p></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">&nbsp;<o:p></o:p></SPAN></FONT></P></DIV>
  <DIV>
  <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dblue=20
  size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: blue; FONT-FAMILY: =
Arial">It is=20
  always great to leverage off other people's work but unless you can =
make a=20
  profit after all the costs both known and unknown are caculated, =
don't&nbsp;=20
  make the number 1 mistake of most entrepreneurs . . . failing to =
consider the=20
  cost of one's time.</SPAN></FONT><o:p></o:p></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">&nbsp;<o:p></o:p></SPAN></FONT></P></DIV>
  <DIV>
  <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dblue=20
  size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: blue; FONT-FAMILY: =
Arial">Since I=20
  make a few more dollars than $500 using the DGO and IBD, the cost is =
only=20
  material to those who don't.</SPAN></FONT><o:p></o:p></P></DIV>
  <BLOCKQUOTE style=3D"MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt; =
MARGIN-RIGHT: 0in">
    <P class=3DMsoNormal=20
    style=3D"MARGIN-BOTTOM: 12pt; MARGIN-LEFT: 0.5in; MARGIN-RIGHT: 0in; =
mso-margin-top-alt: 0in"><FONT=20
    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=20
    [mailto:owner-canslim@lists.xmission.com]<B><SPAN=20
    style=3D"FONT-WEIGHT: bold">On Behalf Of </SPAN></B>Curt =
Corley<BR><B><SPAN=20
    style=3D"FONT-WEIGHT: bold">Sent:</SPAN></B> Thursday, December 05, =
2002 8:15=20
    PM<BR><B><SPAN style=3D"FONT-WEIGHT: bold">To:</SPAN></B>=20
    canslim@lists.xmission.com<BR><B><SPAN=20
    style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> [CANSLIM] =
Fundamental=20
    Philosophies</SPAN></FONT><o:p></o:p></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    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 style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">I hope=20
    you don=92t mind me changing the subject name of this thread to =
something a=20
    little more appropriate than NXTL and SXT. =
<o:p></o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">To=20
    answer your question:<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>Yes, I=20
    would certainly consider purchasing a stock if the ROE was less than =
16.5%=20
    with all other factors looking good.<SPAN style=3D"mso-spacerun: =
yes">&nbsp;=20
    </SPAN>As you know, I=92ve purchased =
</SPAN></FONT><st1:City><st1:place><FONT=20
    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 =
recently=20
    -- two stocks that were a lot less perfect than the theoretical =
stock you=20
    mentioned.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>I get your =
point,=20
    and you are right:<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>an =
ROE below=20
    17% certainly does not mean the company or the stock is bad.<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; </SPAN>But here=92s a situation =
to=20
    consider.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Let=92s say =
you have=20
    screened 9,100+ stocks, and came up with a dozen or so stocks that =
have what=20
    you consider to be near-perfect fundamentals.<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; </SPAN>And let=92s say a few of =
those look=20
    like they might break out of a base formation within the next couple =
of=20
    weeks.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Would you =
rather wait=20
    around for the possibility that those stocks with the best =
fundamentals will=20
    break out?<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Or would =
rather=20
    purchase stocks that have already broken out but which have less =
stellar=20
    fundamentals?<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Within =
a very=20
    short time after purchasing </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=20
    other stocks with better fundamentals that looked like they were =
ready to=20
    make a move.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Of =
course, that=92s=20
    a tough thing to watch, and that=92s why I put some thought into =
this=20
    question.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>Given my =
situation=20
    and my personality, I decided I would rather keep my eye on only the =
very=20
    best ones.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>That=92s =
why I decided=20
    last weekend to screen only the near-perfect ones and keep an eye on =

    those.<SPAN style=3D"mso-spacerun: yes">&nbsp; </SPAN>And now you, =
Andy, and=20
    Tom are starting to make me doubt that decision.<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; </SPAN>Thanks a lot!<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>:)<o:p></o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">Seriously =
now:<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; </SPAN>this has been a very =
educational and=20
    interesting thread.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>Hopefully,=20
    by the time we are through with this, we will have figured out the =
best=20
    overall stock-picking system; then we can start an on-line rating =
system and=20
    screening service that doesn=92t cost $500 a year.<SPAN=20
    style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>:)<o:p></o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    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 style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial">P.S. =96=20
    I would like to open a topic up some time in the future about the =
use of=20
    earnings estimates.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>But this=20
    topic is enough for now.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>My=20
    laptop is over-heating.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>I=92m=20
    coming into work tired.<SPAN style=3D"mso-spacerun: yes">&nbsp; =
</SPAN>And my=20
    wife is starting to forget my middle =
name.<o:p></o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3DArial =
color=3Dnavy=20
    size=3D2><SPAN=20
    style=3D"FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: =
Arial"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><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" 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>=20
    canslim@lists.xmission.com<BR><B><SPAN=20
    style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> RE: [CANSLIM] NXTL,=20
    SXT</SPAN></FONT><o:p></o:p></P>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><FONT face=3D"Times =
New Roman"=20
    size=3D3><SPAN style=3D"FONT-SIZE: =
12pt"><o:p>&nbsp;</o:p></SPAN></FONT></P>
    <DIV>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><FONT face=3D"Times =
New Roman"=20
    size=3D3><SPAN style=3D"FONT-SIZE: 12pt">Hi=20
    Curt,<o:p></o:p></SPAN></FONT></P></DIV>
    <DIV>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><FONT face=3D"Times =
New Roman"=20
    size=3D3><SPAN=20
    style=3D"FONT-SIZE: 12pt">&nbsp;<o:p></o:p></SPAN></FONT></P></DIV>
    <DIV>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><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=20
    pointed out in their posts, while WON may *seem* to be stating that=20
    ROE&gt;=3D17 is a "minimum requirement' it turns out it is a =
guidepost to lead=20
    you to better quality stocks. As with other indicators, this is =
based on his=20
    historical view of winning stocks, meaning that "on average" winning =
stocks=20
    had an ROE&gt;=3D17. As with D/E, ROE can be misleading. For =
example, if a=20
    company rejiggers their capital structure and increases their =
outstanding=20
    shares, this will have an immediate impact on the ROE measure. =
Another way=20
    of viewing it would simply be by asking a question. That is, if you =
were=20
    looking at a stock and it had a "perfect" cup with handle (ok, it's=20
    theoretical!); high RS Rank; an RS line making new highs; met all =
other=20
    earnings, sales and profit margin guidelines, and broke out on 150% =
of ADV,=20
    would you pass it up because it had an ROE of 16.5%? If so, why? =
Does the=20
    "low" ROE mean that it is not a good company or a good=20
    stock?<o:p></o:p></SPAN></FONT></P></DIV>
    <DIV>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><FONT face=3D"Times =
New Roman"=20
    size=3D3><SPAN=20
    style=3D"FONT-SIZE: 12pt">&nbsp;<o:p></o:p></SPAN></FONT></P></DIV>
    <DIV>
    <P class=3DMsoNormal style=3D"MARGIN-LEFT: 1in"><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=20
      style=3D"MARGIN-TOP: 5pt; MARGIN-BOTTOM: 5pt; MARGIN-RIGHT: =
0in"><P=20
      class=3DMsoNormal=20
      style=3D"MARGIN-BOTTOM: 12pt; MARGIN-LEFT: 0.5in; MARGIN-RIGHT: =
0in; mso-margin-top-alt: 0in"><FONT=20
      face=3D"Times New Roman" size=3D3><SPAN=20
      style=3D"FONT-SIZE: =
12pt"><o:p>&nbsp;</o:p></SPAN></FONT></P></BLOCKQUOTE></BLOCKQUOTE></DIV>=
</BLOCKQUOTE></BODY></HTML>

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