RE: [CANSLIM] Reasonable Goal?

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

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