Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: [CANSLIM] CANSLIM Hunting List 02/21/03 + Notes on CANSLIM
Date: Sun, 23 Feb 2003 11:54:40 -0600
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This is a multi-part message in MIME format. - ------=_NextPart_000_005C_01C2DB32.58AC74A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Hi All, I've uploaded the latest CANSLIM Hunting list to: http://cwhcharts.com/katherine/CANSLIMHunting022103.xls ( quite slow to load) http://cwhcharts.com/katherine/CANSLIMHunting022103.zip ( a zipped version for download) *Please note that these spreadsheets were prepared with Excel 2000 for Windows. If you have older versions of Excel or use a Mac version, you will not be able to view them properly. If you do not have Excel, see http://office.microsoft.com/downloads/2000/xlviewer.aspx for a free viewer. If you'd like to look at last month's hunting list, you will find it at: http://www.cwhcharts.com/katherine/CANSLIMHunting011003.zip In order to make it to the list, the stock had to have a forward growth rate of at least 15%, Price at least 6, Avg Daily Vol at least 30K, RS at least 60, no more than 15% below the 50 day SMA, and at or above the 200 day SMA. This is what I consider to be "bare bones" requirements for CANSLIM quality stocks. (Note that if you follow stricter CANSLIM guidelines, you can use the autofilter feature in each column and view only Price>=$12 (or 15) and AvgVol>=100000.) Other information included is industry name (slightly different than DGO's names, but close), price, avg vol, and links to graphs and due diligence sites on the internet. You'll find a column for the % change in price since the market low 10/10/02 and another column which shows the direction of the RS Line since the 10/10 market low. If the RS Line (RS compared to S&P500) has been going up since that date (indicating outperformance relative to the market), it is indicated with a "+". Be sure to note that there are 4 sheets in the workbook. The first sheet has the listed stocks; others include a list of stocks dropped from the list, a summary of stocks by sector, and a sheet with misc. links for free info on the web. This month there are 415 names, down 95 names from the list I posted last month. This month, 227 names fell from the list, 131 names are new and 284 names are repeats. Dave Frank's comments regarding the "death of CANSLIM" and the ensuing discussion in this weekend's thread (entitled "POSS") sent my brain cells spinning and thought it might be an interesting exercise to go back to the CANSLIM Hunting list from a year ago and perform some comparison. Before I give some statistics, I thought I might make some general comments on the CANSLIM methodology. I think that if you look at the core of CANSLIM, you could characterize it as an "intermediate term growth, long position strategy for fundamentally sound stocks" Break that down instead into these questions: - -Is the market favorable to long strategies? - -Is the market favorable to fundamentally sound growth stocks? - -Is the market favorable to intermediate term entry/exit strategies? There's no secret that any long strategy works best when the majority of stocks are going up. The odds are just better that you can pick a stock, go long and profit. You can be a sloppy stock picker and make sloppy executions and the odds are still in your favor. If 3 out of 4 stocks are going up, it's difficult to make costly mistakes even if you only apply a modicum of expertise. If the underlying long term trend is up and people are pumping loads of extra cash into the market, it's just *easier* to use a CANSLIM strategy. If, however, the underlying longer term trend is down, the best you can do is be smart about the shorter lived upswings and use long strategies only during the upswing. (The same would be true of sideways markets where the cycle is continuously up/down, with no longer term underlying uptrend). It also means that you have to be darned good with both stock picking and execution to eek profits out the upswing. It's left to the investor to decide if they want to choose CANSLIM-quality stocks for the upswings, or simply ride it with the stocks du jour. Are growth stocks always the "best" stocks for long positions? Are fundamentally sound stocks always the best for long positions? I'd say without hesitation that they are not always "best", but the more important question is does it work against you to invest in fundamentally sound companies that are growing their business? I think it would be hard to argue against that one, because the history of markets over longer periods of time prove that stinky companies eventually get their comeuppance and for the most part, good companies that grow the business reward the investor. However, there's still the question of timing and I think to discount the importance of entry/exit or in favor/out of favor is dangerous to a portfolio. If you're a "CANSLIM investor", I think it simply means that you are committed to focusing buying attention on fundamentally sound stocks with growth characteristics and that you ignore the cyclicals and defensives. That also means that the CANSLIM investor has to interpret whether the market favors growth stocks and hold off on making substantial equity investments when it does not. I've always interpreted "intermediate term" as a period of a few weeks to a few months. That means that as a CANSLIM investor, I look to ride the mid-waves in the longer term trend. I think the biggest problem with interpretation of CANSLIM is that there is still the misperception that CANSLIM is a longer term strategy and that one would or could purchase a stock and hang on to it for years. If one really looks at the rules of CANSLIM, that's not the case. The idea is to purchase a stock that has shown outperformance over a period of time and grab it as it pushes through it's latest area of consolidation. It's the "early beanie baby syndrome." Get it while everybody else is figuring out it's hot, then ride it just until there interest begins to wane. Not "buy it after it's become the most popular thing on the block and ride it until the last person in the world hates beanie babies." I think that simply means that you have to be good at figuring out when something is showing under-recognized strength, ride it up, take your profits and then move on to the next new hot thing. That also means that as long as there is an uptrend that lasts a few weeks to a few months, there's good long positions to be had in CANSLIM quality stocks. In all, I interpret CANSLIM as a trading strategy, not an investment strategy. As a trader taking long positions in short upwaves, the job is just a heck of a lot tougher and a high skill level is particularly key if you're to make money consistently. I'd agree with Dave that the market has been "right for CANSLIM for the 16th time." In between, it "wasn't right." If you're more rigid in your interpretation of the "M" in CANSLIM, then as a CANSLIM trader, you would also wait for the underlying longer term trend of the market to be up, meaning that the market hasn't been "right" since March of 2000. As many others stated in the thread, that means that as a CANSLIM investor, you simply aren't investing in long positions, happily sitting on the super gains of the 90's. If/when the longer term trend ever turns up, then it'll be time for new positions. Some statistics on the Hunting list 2/20/02 vs. 2/21/03. (Note: I've added a column to this month's list indicating whether the stock also appeared on the list last year. You'll see some familiar names including Tom's EPIQ, SBUX, WFMI, APOL, CECO, AMZN, and yes, POSS) (1) Total number of stocks on the list: 2/20/02: 510 2/21/03: 415 Conclusion: if the list of stocks isn't growing over the year, it's unlikely the longer term trend in the market is up. (2) Stocks on the list 2/20/02 that are still on the list 2/21/03: 95. Conclusion: Growth stocks weren't necessarily the "favored" group of stocks during the last year. Less than 20% of the growth stocks on 2/20/02 are still holding up a year later. At the same time, the total number of stocks has not fallen significantly, meaning that there is a pool of respectable size from which to draw trading possibilities. Timing is obviously key, however. I took a quick stab at categorizing the 95 stocks into cyclical (economically and/or interest rate sensitive), defensive (safe havens during economic downturns), or growth. There's no perfect categorization along these lines, because a business can be from an industry that is traditionally considered defensive or cyclical and still have growth characteristics. In fact, that's how they make it to the list. Here's how the numbers pan out: Defensive: 12 Cyclical: 41 Growth: 42 That's 42 stocks out of an active set of stocks traded on the major exchanges (about 7500), or less than 1%. That certainly demonstrates that the market hasn't favored traditional growth stocks over the last year. Has CANSLIM been the "best" or the "easiest" strategy over the last year? No. Was it possible to make money on the long strategy during certain times over the last year? Yes. Is CANSLIM dead forever? No way... read Buffett, Graham & Dodd or any market history book and see that there's always room for a strategy that focuses on fundamentally sound stocks with growth characteristics. Happy Hunting, Katherine PS You can see a list of stocks on the 2/20/02 list at: http://cwhcharts.com/katherine/CANSLIMHunting022002.zip - ------=_NextPart_000_005C_01C2DB32.58AC74A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2800.1126" name=3DGENERATOR></HEAD> <BODY> <DIV> <DIV> <DIV>Hi All,</DIV> <DIV> </DIV> <DIV>I've uploaded the latest CANSLIM Hunting list to:</DIV> <DIV> </DIV> <DIV><A=20 href=3D"http://cwhcharts.com/katherine/CANSLIMHunting022103.xls">http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine</SPAN>/CANSLIMHunting<= SPAN=20 class=3D906271822-11012003><SPAN=20 class=3D171303916-23022003>02210</SPAN>3</SPAN>.xls</A> ( <SPAN=20 class=3D906271822-11012003>quite</SPAN> slow to load)</DIV> <DIV><A=20 href=3D"http://cwhcharts.com/katherine/CANSLIMHunting022103.zip">http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine</SPAN>/CANSLIMHunting<= SPAN=20 class=3D171303916-23022003>0221</SPAN><SPAN=20 class=3D906271822-11012003>03</SPAN>.<SPAN = class=3D906271822-11012003>zip</A>=20 </SPAN> ( a zipped version for download)</DIV> <DIV>*Please note that these spreadsheets were prepared with Excel 2000 = for=20 Windows. If you have older versions of Excel or use a Mac version, you = will not=20 be able to view them properly. If you do not have Excel, see <A=20 href=3D"http://office.microsoft.com/downloads/2000/xlviewer.aspx">http://= office.microsoft.com/downloads/2000/xlviewer.aspx</A> for=20 a free viewer.</DIV> <DIV> <DIV> </DIV> <DIV>If you'd like to look at last month's hunting list, you will find = it=20 at:</DIV> <DIV><A=20 href=3D"http://www.cwhcharts.com/katherine/CANSLIMHunting011003.zip">http= ://<SPAN=20 class=3D906271822-11012003>www.cwhcharts.com/katherine</SPAN>/CANSLIMHunt= ing<SPAN=20 class=3D906271822-11012003><SPAN=20 class=3D171303916-23022003>011003</SPAN></SPAN>.zip</A></DIV></DIV> <DIV> </DIV> <DIV> <DIV>In order to make it to the list, the stock had to have a forward = growth=20 rate of at least 15%, Price at least 6, Avg Daily Vol at least 30K, RS = at least=20 60, no more than 15% below the 50 day SMA, and at or above the 200 day = SMA. This=20 is what I consider to be "bare bones" requirements for CANSLIM quality = stocks.=20 (Note that if you follow stricter CANSLIM guidelines, you can use the = autofilter=20 feature in each column and view only Price>=3D$12 (or 15) and=20 AvgVol>=3D100000.) Other information included is industry name = (slightly=20 different than DGO's names, but close), price, avg vol, and links = to=20 graphs and due diligence sites on the internet.<SPAN = class=3D171303916-23022003>=20 </SPAN>You'll find a column for the <SPAN = class=3D906271822-11012003>% change=20 in price since the market low 10/10/02 and another column which shows = the=20 direction of the </SPAN>RS Line since the 10/10 market low. If the RS = Line (RS=20 compared to S&P500) has been going up since that date (indicating=20 outperformance relative to the market), it is indicated with a = "+". <SPAN=20 class=3D906271822-11012003>Be sure to </SPAN>note that there are 4 = sheets in the=20 workbook. The first sheet has the listed stocks<SPAN = class=3D906271822-11012003>;=20 </SPAN>others include a list of stocks dropped from the list, a summary = of=20 stocks by sector, and a sheet with misc. links for free info on the = web.</DIV> <DIV><A=20 href=3D"http://www.cwhcharts.com/katherine/CANSLIMHunting011003.zip"></A>= </DIV> <DIV>This month there are <SPAN class=3D906271822-11012003><SPAN=20 class=3D171303916-23022003>415 </SPAN></SPAN> names, <SPAN=20 class=3D171303916-23022003>down 95</SPAN><SPAN=20 class=3D906271822-11012003> </SPAN>names from the list I posted = last=20 month. This month, <SPAN class=3D906271822-11012003><SPAN=20 class=3D171303916-23022003>227</SPAN> </SPAN>names fell from the = list, <SPAN=20 class=3D906271822-11012003><SPAN class=3D171303916-23022003>131</SPAN> = names are new=20 </SPAN>and <SPAN class=3D906271822-11012003><SPAN=20 class=3D171303916-23022003>284</SPAN></SPAN> names are = repeats. </DIV> <DIV> </DIV> <DIV><SPAN class=3D171303916-23022003>Dave Frank's comments = regarding the=20 "death of CANSLIM" and the ensuing discussion in = this weekend's thread=20 (entitled "POSS") sent my brain cells spinning and thought it might be = an=20 interesting exercise to go back to the CANSLIM Hunting list from a year = ago and=20 perform some comparison. Before I give some statistics, I thought I = might make=20 some general comments on the CANSLIM methodology. I think that if you = look at=20 the core of CANSLIM, you could characterize it as an "intermediate term = growth,=20 long position strategy for fundamentally sound stocks" Break that down = instead=20 into these questions: </SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>-Is the market favorable to long=20 strategies? = </SPAN></DIV> <DIV><SPAN class=3D171303916-23022003>-Is the market favorable to = fundamentally=20 sound growth stocks?</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN><SPAN = class=3D171303916-23022003>-Is=20 the market favorable to intermediate term entry/exit = strategies?</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>There's no secret that any long = strategy=20 works best when the majority of stocks are going up. The odds are just = better=20 that you can pick a stock, go long and profit. You can be a sloppy stock = picker=20 and make sloppy executions and the odds are still in your favor. If 3 = out of 4=20 stocks are going up, it's difficult to make costly mistakes even if you = only=20 apply a modicum of expertise. If the underlying long term trend is up = and people=20 are pumping loads of extra cash into the market, it's just *easier* to = use a=20 CANSLIM strategy. If, however, the underlying longer term trend is down, = the=20 best you can do is be smart about the shorter lived upswings and use = long=20 strategies only during the upswing. (The same would be true of = sideways=20 markets where the cycle is continuously up/down, with no longer term = underlying=20 uptrend). It also means that you have to be darned good with both = stock=20 picking and execution to eek profits out the upswing. It's left to the = investor=20 to decide if they want to choose CANSLIM-quality stocks for the = upswings, or=20 simply ride it with the stocks du jour.</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>Are growth stocks always the = "best" stocks=20 for long positions? Are fundamentally sound stocks always the best for = long=20 positions? I'd say without hesitation that they are not always "best", = but the=20 more important question is does it work against you to invest in = fundamentally=20 sound companies that are growing their business? I think it would be = hard to=20 argue against that one, because the history of markets over longer = periods of=20 time prove that stinky companies eventually get their comeuppance and = for the=20 most part, good companies that grow the business reward the investor. = However,=20 there's still the question of timing and I think to discount the = importance of=20 entry/exit or in favor/out of favor is dangerous to a portfolio. If = you're a=20 "CANSLIM investor", I think it simply means that you are committed to = focusing=20 buying attention on fundamentally sound stocks with growth = characteristics and=20 that you ignore the cyclicals and defensives. That also means that the = CANSLIM=20 investor has to interpret whether the market favors growth stocks and = hold off=20 on making substantial equity investments when it does not.</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>I've always interpreted = "intermediate term"=20 as a period of a few weeks to a few months. That means that as a CANSLIM = investor, I look to ride the mid-waves in the longer term trend. I think = the=20 biggest problem with interpretation of CANSLIM is that there is still = the=20 misperception that CANSLIM is a longer term strategy and that one would = or could=20 purchase a stock and hang on to it for years. If one really looks at the = rules=20 of CANSLIM, that's not the case. The idea is to purchase a stock that = has shown=20 outperformance over a period of time and grab it as it pushes through = it's=20 latest area of consolidation. It's the "early beanie baby syndrome." Get = it=20 while everybody else is figuring out it's hot, then ride it just until = there=20 interest begins to wane. Not "buy it after it's become the most = popular=20 thing on the block and ride it until the last person in the world hates = beanie=20 babies." I think that simply means that you have to be good at figuring = out when=20 something is showing under-recognized strength, ride it up, take your = profits=20 and then move on to the next new hot thing. That also means that as long = as=20 there is an uptrend that lasts a few weeks to a few months, there's good = long=20 positions to be had in CANSLIM quality stocks. In all, I interpret = CANSLIM as a=20 trading strategy, not an investment strategy. As a trader taking long = positions=20 in short upwaves, the job is just a heck of a lot tougher and a high = skill level=20 is particularly key if you're to make money consistently. I'd agree with = Dave=20 that the market has been "right for CANSLIM for the 16th time." In = between, it=20 "wasn't right." If you're more rigid in your interpretation of the "M" = in=20 CANSLIM, then as a CANSLIM trader, you would also wait for the = underlying longer=20 term trend of the market to be up, meaning that the market hasn't been = "right"=20 since March of 2000. As many others stated in the thread, that means = that as a=20 CANSLIM investor, you simply aren't investing in long positions, happily = sitting=20 on the super gains of the 90's. If/when the longer term trend ever turns = up,=20 then it'll be time for new positions.</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>Some statistics on the Hunting = list 2/20/02=20 vs. 2/21/03. (Note: I've added a column to this month's list indicating = whether=20 the stock also appeared on the list last year. You'll see some familiar = names=20 including Tom's EPIQ, SBUX, WFMI, APOL, CECO, AMZN, and yes, = POSS)</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>(1) Total number of stocks on the=20 list:</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>2/20/02: 510</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN><SPAN=20 class=3D171303916-23022003>2/21/03: 415</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>Conclusion: if the list of stocks = isn't=20 growing over the year, it's unlikely the longer term trend in the market = is=20 up.</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>(2) Stocks on the list 2/20/02 = that are=20 still on the list 2/21/03: 95.</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>Conclusion: Growth stocks weren't=20 necessarily the "favored" group of stocks during the last year. Less = than 20% of=20 the growth stocks on 2/20/02 are still holding up a year later. At the = same=20 time, the total number of stocks has not fallen significantly, meaning = that=20 there is a pool of respectable size from which to draw trading = possibilities.=20 Timing is obviously key, however. I took a quick stab at categorizing = the 95=20 stocks into cyclical (economically and/or interest rate sensitive), = defensive=20 (safe havens during economic downturns), or growth. There's no perfect=20 categorization along these lines, because a business can be from an = industry=20 that is traditionally considered defensive or cyclical and still have = growth=20 characteristics. In fact, that's how they make it to the = list. Here's how=20 the numbers pan out:</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>Defensive: 12</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003>Cyclical: 41</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003>Growth: 42</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003></SPAN> </DIV> <DIV><SPAN class=3D171303916-23022003>That's 42 stocks out of an active = set of=20 stocks traded on the major exchanges (about 7500), or less than 1%. That = certainly demonstrates that the market hasn't favored traditional growth = stocks=20 over the last year. Has CANSLIM been the "best" or the "easiest" = strategy over=20 the last year? No. Was it possible to make money on the long strategy = during=20 certain times over the last year? Yes. Is CANSLIM dead forever? No = way... read=20 Buffett, Graham & Dodd or any market history book and see that = there's=20 always room for a strategy that focuses on fundamentally sound stocks = with=20 growth characteristics.</SPAN></DIV> <DIV><SPAN class=3D906271822-11012003></SPAN> </DIV></DIV> <DIV>Happy Hunting,</DIV> <DIV>Katherine</DIV> <DIV> </DIV> <DIV><SPAN class=3D171303916-23022003>PS=20 <DIV><SPAN class=3D171303916-23022003>You can see a list of stocks on = the 2/20/02=20 list at:</SPAN></DIV> <DIV><SPAN class=3D171303916-23022003><A=20 href=3D"http://cwhcharts.com/katherine/CANSLIMHunting022002.zip">http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine</SPAN>/CANSLIMHunting<= SPAN=20 class=3D171303916-23022003>022002</SPAN>.<SPAN=20 class=3D906271822-11012003>zip</A></SPAN></SPAN></DIV></SPAN></DIV></DIV>= </DIV></BODY></HTML> - ------=_NextPart_000_005C_01C2DB32.58AC74A0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". 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