RE: [CANSLIM] AAII letter to the editor

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] AAII letter to the editor
Date: Sun, 13 Jul 2003 21:21:57 -0500

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Hi John,

I have not read the AAII article to which you refer, but I remember
distinctly that in early March *2000*, the Big Picture column used these
exact words... "If you are not already out of this market, you should be." I
wish to high heaven I'd kept a copy of it, because my investing/coffee buddy
and I have reminisced about the day we read it many times since.

I often fail to understand the criticism that O'Neil faces with respect to
the IBD. It is, afterall, a newspaper, a tool which is designed to educate
and *report* the news. It is not touted as an investment newsletter full of
stock "picks" and I've never understood why people expect it to be so. For
example, I often hear folks criticize the IBD for their "Monday night
quarterbacking." Last I checked, newspapers always report the news *after*
it occurs, not before and tell the story of what *has* happened. True,
O'Neil makes money on his investment tools: DGO, WONDA, IBD, Daily Graphs
printed product, etc. But I fail to see how making tools available at a
price is a crime. I'm sure Michael Dell would be amazed if people were to
pummel him for his willingness to actually *sell* a computer. Or that Warren
Buffett would say, no, no, don't buy a DQ Dude, a box of See's candy, or a
policy with Geico.

O'Neil has never once said, "you must buy this or you must buy that." One
can read the IBD for free at the local library and, while it's laborious,
one could actually use the reporting in the paper in conjunction with other
free tools on the internet for fundamentals and charting to select stocks.
Without a doubt, it's far easier to do CANSLIM with the right set of tools,
but the choices for doing so are far wider than they once were. All in all,
there are many many people who have changed their lives and their investing
success with what they have learned about investing by reading O'Neil's work
and there will always be those who want to blame the guru for their lack of
success. That sort of transference of responsibility in itself shows that
the person doesn't really get it. Because, above all else, what O'Neil
teaches is self-discipline and self-reliance. Someone said it here the other
day, though I don't remember the exact quote: "There are far more good
trading systems than there are good traders."

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of John Solarno
Sent: Sunday, July 13, 2003 7:41 PM
To: canslim@lists.xmission.com
Subject: [CANSLIM] AAII letter to the editor


I just received my July copy of the AAII Journal (published by the American
Association of Individual Investors.)  In the letter to the editor section,
there is a blistering objection to an article in the June issue by William
O'Neill called "The Big Picture: How to Determine the Stock Market's
Direction."

The letter, written by a Jon A. Ford, says that O'Neil acknowledged, in his
June article, that the bear market began in March of 2000. "What he doesn't
say," writes Ford, "is that his Investor's Business Daily failed to notify
investors that it was time to go into cash until February 13, 2003 - long
after a large chunk of investment savings had gone up in smoke.

"O'Neil's 'cut your losses at 7% rule' did not help," Ford continues,
"because for almost the entire duration of the bear market, the
encouragement was to continue buying newly identified stocks with sale
proceeds. This effectively sets up a series of 7% to 8% stock market
losses."

Ford reminds readers that "as good as CANSLIM and related O'Neil media may
be, the bottom line is for people to buy and sell stocks - and surpass
others- but using O'Neil and company's merchandise."

"Finally, after three years and 25% to 35% or more annual deterioration in
investors' stock portfolios," says Ford, "Investor's Business Daily finally
advised readers to go to cash - a recommendation that, if acted upon, would
have effectively crystallized losses and kept investors from participating
in the market increases only a month later."

Ouch!

I thought I'd throw this out to the group for comment.

John Solarno





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