Go to Jeff Salisbury LWGate Home Page.From: "Dempsey, Chris" <Chris.Dempsey@ReedHycalog.com>
Subject: RE: [CANSLIM] Reasonable Goal?
Date: Sun, 25 May 2003 15:56:58 -0500
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Great question!! Several years ago I posed this same question to this group and got = nearly no response. At the time it was obvious that the majority of this = group had no goals. I hope that has changed now. I think that goals are = the only way and the first step to get there. I thought long and hard about this question and here's some of what I = came up with. WON & Ryan, on one of the IBD tapes say they won an = investment challenge with a 3400% return in five years. Annualized this = is 101% per year. Of course that was their job working in the brokerage = industry. Is it realistic to think we could do half that good (50%) each = year for five years? I have a 40 hour + job each week. Or would taking = two years to do what they have done in one be more realistic (42%). IBD = has mentioned several times a set of Texas twins that achieved a 57% = annual compounded return from 1988 to 1999. Eleven years WOW!! Some how = I think that some kind of index average also needs to be part of the = equation but since this is an unknown I'm not sure how to include or = calculate this. At any rate I figured that I could take twice the time = as the professionals and would set 42% as my goal. Do I think that it is realistic? Absolutely, but not without a lot of = hard work and quick decision-making. In WON's book he says, "It's the = time you put in after 9 to 5 Monday through Friday that ultimately makes = the difference." Boy is he right on this one. This takes a lot of time. Ian said it well with the following three points, and I added some = comments: * cutting losses very early WON says in his book take 7-8% losses when wrong but that the average of = these losses should be 5% or less. * REALLY letting your winners run With all the sell rules he has this is sometimes hard to do. WON says = 40% of breakouts come back to the breakout point, making this even = harder. * committed to buying strong breakouts during confirmed rallies (You = don't have to believe in a 'secular bull' to do this - but you do need = to understand that most of these rallies are good for about 2 months and = 30% runs in the indices). This is very important. To add another two to Ian's list: * WON's book says that he realized, "Most stocks that topped had done so = because the general market started into a decline of 10% or more." = Therefore it becomes very important to reduce holdings during this time = period. * I believe he says there is a three year learning curve for the CANSLIM = method. So you must account for this when setting goals. I'd like to see more thoughts on reasonable goals this time around. Who = else on this list has set a goal? - -----Original Message----- From: Tomas [mailto:tomas986@yahoo.com] Sent: Friday, May 23, 2003 2:58 PM To: canslim canslim Subject: [CANSLIM] Reasonable Goal? This question is for the senior CS'ers. If an investor is 29 years old right now, and his goal is to make $2M by 40 to retire, is this a reasonable goal?=20 The assumption is that he will start with $10K and add between $5-$10K capital every year. I understand that there are many factors like - - how discipline you are - - how diligence you are - - how persistent you are - - how you learn from your mistake and=20 do post analysis of your trades - - and even how lucky you are. But assumption that the investor is decently good on those factors. What is your opinion? Thanks, tomas - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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