Re: [CANSLIM] A good posting from Tom Worlye (from 5 years ago)

From: Dan Musicant <musicant@pacbell.net>
Subject: Re: [CANSLIM] A good posting from Tom Worlye (from 5 years ago)
Date: Tue, 20 May 2003 19:02:22 -0700
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Dave and all,

It could just be my email client but the post I'm replying to (a repost
of one of Tom Worley's posts from 5 years ago) came to me oddly
formatted. I straightened it out so it's more readable, at least on my
system, and am presenting the results. I resubscribed to the list on
4/23/03, and Tom only made two posts after that.=20

Dan Musicant
______________________________________________________
On Sat, 10 May 2003 04:26:10 -0700 (PDT), Dave Cameron
<dfcameron@yahoo.comwrote:
(results reformatted)

When I began my personal transition from a pure fundamentalist to
adding a TA approach, it was because pure fundamentalism didn't
work, at least in the short term. Too often I saw a stock report
earnings up 20 or 30% over the prior year, yet go down. I spent a lot of
time, and money, finally figuring out that it was expectations that
drove the mkt in the short, and even long, term. Over the years I began
to question why the mkt did what it did, things like increased
employment being bad for the mkt despite reduced welfare costs and
increased consumer spending. Took me a while to grasp how the fear of
inflation was greater than the effect of improved employment (course,
now that I finally understand it, it doesn't seem to apply as well).

Today, I use both a fundamental and a technical approach both to
individual stocks and the mkt at large. Because of my curiousity about
the influences on the mkt, I have developed a heavy bias on economics. I
consider myself knowledgable, intelligent, and with over 40 years
experience in the mkt, including seven as a broker and three running the
"back office" of a securities firm. I have been learning and using
CANSLIM for over seven years, and have received not only training from
WON associates but for a time got his institutional picks.

I went thru a period when I essentially dismissed my basic fundamental
approach and was little more than a WON groupie, whatever the
master guru thought I should do, I did. And I learned that, like I, he
is not perfect in forecasting the mkt or individual stocks (altho his
success rate is better).

Can I forecast what the mkt will do 3, 6 or 12 months out? No, nor
do I claim to. There are far too many influences on the mkt direction,
including human psychology shaped by many sources including airhead
media commentators (script readers).

What I can and do give freely to this group is my experience, made
somewhat unique by my occupation within the securities industry. I have
learned the hard way things like a reverse split is usually bad and you
are better off selling; if the mkt closes strongly on volume at either
the high or low end of that day's range it will likely follow thru the
next day in the same direction; just because a stock is cheap doesn't
mean it can't get cheaper and it is better to wait for an uptrend to be
developed; etc etc. I have learned the cost of entering mkt orders at
the open, and am now developing a feel for when and how to enter  limit
orders within the spread under the new Order Display rules.

As one of the early members of this group, it has been my experience
that postings of new stock picks tends to be highest when the mkt does
well and the trend is obvious, little discussion takes place on where
the mkt is likely to go. When the mkt is chaotic, that's when more
opinions and questions start surfacing about "M". It's a time for
discussion, questioning, opinions, education, and sitting on cash till
each individual is confident of what he should do for his investments.

CS principles should not be abandoned, but I do not agree with selling
everything because "M" looks ugly. Let your individual stops take
you out according to the rules you have developed from CS principles.
One thing I learned the hard way is that there are no absolute rules in
this. Each person develops his or her own application of CANSLIM
philosophy as it suits their comfort level.

So long as I continue to get feedback from the members of this
group that I am contributing something worthwhile, I don't intend to
change.

Because I am licensed and regulated, I still must be restrained in what
I say, even within a private group such as ours. But I doubt the SEC or
NASD would object to my efforts to educate and inform. I disagree
strongly that I ignore WON's views on "M", in fact you seem to have
disagreed entirely with his views on Thursday's action as presented in
IBD (I doubt that was published without his approval). We got the
confirmatory day very late, but we got it. And Friday would seem to
further confirm it both with a further 1% gain on NYSE and NASDAQ, even
without a substantial increase in volume to the upside. Interestingly,
this seems to have caused Connie's indicators to go negative. Don't know
if this just means it's no longer a good enviroment for day traders, or
also bad for CANSLIM. VIX did drop by over 10%, but at 33.04 it's still
a long way over 20. Some months ago, well before the Asian crises broke,
I espoused the opinion that the volatility would be much greater for the
balance of the year. So far that is proving correct, and I see no reason
to change that opinion.

Having now spent so much time on my soap box, what do I think is
going on in the mkt?  As I have been saying, I see the mkt consolidating
both long and mid term gains as well as a short term correction. At the
same time it is absorbing major intl "psychological" influences such as
Asia and Latin America, flight to safety in US treasuries, economic
reports suggesting a need for the Feds to hike immediately
counterbalanced by very bullish reports, gold continuing its bear mkt,
strong dollar further reducing export growth but hurting big caps with
intl exposure, a shift of money from big caps to small caps and back to
big caps, and Iraq stupidly saber rattling.

Currently I am looking for a home for the cash I raised over the
past several weeks selling my dogs. I expect to be fully invested by the
end of the week barring some major event or change in my reading of both
the fundamental and technical portrayal of "M". This is what is right
for me, and by definition may not be right for even one other member of
this fine group. It fits my confidence and comfort level. No other
member should make a decision on what I think is right for me.

One of the best comments I heard recently was from Wayne Angell,
former Fed governor and now economist at Bear Stearns: "Gold at $310 is
a huge vote of confidence in the Feds" (course now it's at $304 after
briefly breaking $300, and forecasts now are for 275-280 before the
bargain hunters will step in).

Any statements or opinions are strictly my own and not that of my
employer. My comments should not be interpreted as a recommendation of
any kind. I am a licensed (inactive) broker and an active investor. All
investors should do their own research prior to any investment,
especially one learned about on the Internet. Hopefully my comments will
better inform and educate all investors.

tom w=20
=3D=3D=3D=3D=3D
Dave Cameron
dfcameron@yahoo.com

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