RE: [CANSLIM] Second Guessing Myself - SFCC

From: Tomas <tomas986@yahoo.com>
Subject: RE: [CANSLIM] Second Guessing Myself - SFCC
Date: Wed, 9 Jul 2003 20:52:14 -0700 (PDT)
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Katherine,

Just to recap, is this your priority order?

1) price/chart action
2) fundamentals
3) news and significant developments 
4) more details of company
5) group/industry health


tomas

- --- Katherine Malm <kmalm@earthlink.net> wrote:
> Hi Roger,
> 
> While I believe wholeheartedly in following a set of
> rules when trading, and
> particularly trading as a CANSLIM investor, I think
> that it is nearly
> impossible to find a stock or business that is
> "perfect" in every sense of
> the word. I think that it is more dangerous to take
> WON's guidelines and
> make them into a rigid set of go/nogo parameters and
> I don't believe that's
> what he intended. From the very first free IBD
> seminar that I went to many
> years ago, WON always talked about exceptions and
> each time I've seen him at
> a seminar or each time I've re-read his writings, I
> have understood that he
> is looking for a "preponderance of evidence" when
> determining whether or not
> to purchase a stock. My personal preference is to
> look first at the
> soundness of the base. I think that speaks most to
> the worthiness of a
> candidate. From there, I then look to see if the
> fundamentals show a
> preponderance of evidence of "a good company." Then
> I take a quick tour
> through news and significant developments to
> determine if there are any
> smoking guns lurking about. When fundamentals are a
> bit lacking in one or
> more areas, I take more time and skim the management
> discussion in the
> latest SEC filing. I then try to determine what
> makes the company tick, what
> makes it different from the competition. I determine
> who the company's
> direct competitors are and take a look at their
> charts. Lastly, I look at
> the industry itself to determine how other stocks
> are acting as a whole.
> This is primarily to determine if the industry as a
> whole is rolling over
> and/or if the leaders are rolling over and/or if the
> industry itself is
> rising in technical strength. But for the most part,
> this is a
> risk-assessment check, not a go/nogo parameter.
> 
> -Katherine
> 
> Here are a couple of "Ask Bill" columns that show
> this "preponderance of
> evidence" approach:
> =====
> Ask Bill O'Neil Archives
> Thursday, April  10, 2003
> 
>  Q:"Many stocks breaking out lack some of the
> fundamentals you look for,
> such as ROE of 17%. Jacob's Engineering and Advance
> Neuromoduation are two
> examples. Do you wait for "perfection" or do you
> weigh the pros and cons and
> go for it?"
> - Submitted from Fullerton, Calif.
> 
>  A: Generally, we will weigh the pluses and minuses
> if the stock is not a
> perfect fit and "go for it," as you say. ANSI's
> return on equity is
> currently unreported for 2002, but 2001 came in at
> 5.4%, which is an
> improvement over 2000's 2.1% return on equity. In
> this case, given that all
> other factors are fairly strong, we would accept the
> fact that return on
> equity is improving, although it does not meet the
> optimal level we would
> prefer. However, if we compared ANSI with, for
> example, ZMH, another stock
> in the same group, we might decide to choose ZMH
> based on its 115.9% return
> on equity, assuming all other factors are equal and
> ZMH is at a proper buy
> point. The other example you cite, JEC, is showing a
> return on equity of
> 17.1% — very strong and very desirable — but
> earnings are growing in the
> mid-teens over the past four quarters. However, we
> might take into account
> the fact that JEC is a steady earnings performer,
> something that is at a
> premium in the current environment, and may benefit
> from current trends in
> that industry. So, again, we are weighing pluses and
> minuses and "going for
> it."
> 
> =====
> Ask Bill O'Neil Archives
> Wednesday, July  9, 2003
> 
>  Q: "If a company with good fundamentals breaks out
> and becomes a leader but
> its peer group is lagging, is it  still a good idea
> to follow it? NTE is an
> example."
> - Submitted from Wilmington, N.C.
> 
>  A: Sometimes, a company may have unique
> characteristics, and the stock does
> well even if its industry group  lags. In the case
> of Nam Tai Electronics
> (NTE), maybe it's the fact it manufactures
> electronic components for  major
> global companies in China. China is enjoying
> tremendous growth right now.
> Once a stock is purchased  properly as it breaks out
> of a sound base and has
> solid fundamentals, you should base a decision to
> sell only  on the action
> of price and volume. Right now, Nam Tai looks
> positive.
> =====
> 
> 
> 
> -----Original Message-----
> From: owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]On Behalf
> Of Roger Tawa
> Sent: Wednesday, July 09, 2003 8:26 PM
> To: canslim@lists.xmission.com
> Subject: RE: [CANSLIM] Second Guessing Myself - SFCC
> 
> 
> Hi Mike,
> 
> Over the last few weeks (since early to mid june), I
> have found the
> opposite: very few "good" stocks breaking out.  This
> mostly likely just
> means we define "good" differently.
> 
> This brings me to the real point of this email.  I
> am new to CANSLIM and
> surely have much less experience that you do in
> investing.  As a newbie, I
> find it easy to pick "perfect" stocks, ie. those
> that meet all required
> criteria.  However, as soon as I see a stock that
> has one or two points that
> may be iffy (price below 15$, ROE not quite 17%,
> etc.), I don't know what to
> do about it.  I suppose I'll have to learn by
> rolling the dice every once in
> a while on a less-than-perfect stock.
> 
> Any comments from other newbie CANSLIMers on how you
> handle this?  Thanks.
> 
> =================================================
> Roger Tawa
> http://tawacentral.net/
> [One thing about paradigms: shift happens.]
> [When you stop, you're done.]
> 
>  -----Original Message-----
> From: 	owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]  On Behalf
> Of
> michael_niemotka@baxter.com
> Sent:	Wednesday, July 09, 2003 5:01 PM
> To:	canslim@lists.xmission.com
> Subject:	Re: [CANSLIM] Second Guessing Myself - SFCC
> 
> 
> Kelly,
> 
> I saw the same things that you did.  For me, it is
> always a struggle not to
> chase those stocks that break out of a nice looking
> pattern, but don't
> having the fundies behind them.
> 
> I am sure that many people probably make some money
> doing just that, but I
> have also seen some of them drop way back down in a
> hurry. From what I have
> seen over the fast few weeks is that many good
> stocks are breaking out, you
> just need to stay focussed.
> 
> Mike
> 
> Mike Niemotka , PE
> Sr. Principal Engineer
> Baxter Healthcare Corporation
> Route 120 & Wilson Road
> 
=== message truncated ===


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