Re: [CANSLIM] New Investors needs help... a short story

From: Yien T Lung <ylung@engin.umich.edu>
Subject: Re: [CANSLIM] New Investors needs help... a short story
Date: Mon, 4 Aug 2003 15:03:55 -0400 (EDT)
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Hi DMC and ppls,

I finished reading WON's book and the lessons extracted from IBD's
website.

From my understanding, my best bet in getting the next CSCO is to look out
for stocks with RS greater than 87 and EPS greater than 70's. In addition
to that, I try to find stocks that have a ACC/DISTR of A/A+. But even
then, there are a lot of stocks to scan through. Is there any other
criteria I should look for?

The reason why I am reluctant to work purely on the IBD 100 list is
because I have a feeling that a lot of these stocks are over-extended.
Optimally, the best thing to do is to find a stock when it is popping out
of its first base right?

Yien

On Mon, 4 Aug 2003, DMC197807 wrote:

> Yien,
>
> You have to scan to get rid of the cats and dogs.
>
> Out of 7000 names there are generally fewer than 500  that you would be
> interested in in a MILSCAN world.  Scan down by capitalization, volume,
> price share, relative strength, accumulation distribution, etc.
>
> Below is the text of an earlier message to Lonnie on this board concerning
> tc2k.  If you pay for Stockcharts you can create and save your own scans
> there as well.  You can also scan stocks with free programs such as:
>
> http://screen.yahoo.com/stocks.html
>
> There are others but I couldn't locate them immediately,
>
> DMC
>
>
> Lonnie,
>
> When I originally programmed my own canslim, I just used existing PCFs.  But
> Steve Goodwin was kind enough to send me the following, which I have been
> playing with over the weekend (I now have 3 versions, but that's just me):
>
>       First create these 4 PCF s and then update all.
>       1 Name: Canslim Volume % Change
>       Formula: ((V-AVGV50)/100)
>       2 Name: Canslim Relative Strength
>       Formula: (C/(C250+.001))
>       3 Name: Canslim Dahl (89)
>       Formula: ((AVGC89-AVGC89.27)>0)
>       4 Name: Canslim Acc/Dis
>       Formula: AVG(BOP,65)
>
>
>
>
> Then (the rest of the message won't copy), set a new easy scan at:
>
> capitalization at 1 - 95
> earnings growth rate 5 year at:  74-99
> eps percent change latest year at 56-99
> canslim acc dist at:  80-99
> canslim dahl
> canslim rel str value  at:  80 to 99
> canslim vol % change at 85 to 99
> price as percent of 52 week high price H:  64-99
> price per share H at:  54-99
>
> If this one doesn't give you enough candidates, you may want to keep it as
> CANSLIM #1 and add an easier version by changing the parameters as CANSLIM
> #2, etc.
>
> (This is why I'm now playing with 3 versions).
>
> DMC
>
>
>
>
>
> ---- Original Message -----
> From: "Lonnie Brauner" <lonnie@hal-pc.org>
> To: <canslim@lists.xmission.com>
> Sent: Sunday, July 27, 2003 6:57 PM
> Subject: RE: [CANSLIM] Another mystery plunge
>
>
> > DMC,
> >
> > Could you share the programming?
> >
> > "As for programming the TC2K for canslim, I did it in about 5
> > minutes--it was pretty easy. "
> >
> > Thanks, Lonnie
> >
> > Long time TC2000 user.
> >
> >
>
> ----- Original Message -----
> From: "Yien T Lung" <ylung@engin.umich.edu>
> To: <canslim@lists.xmission.com>
> Sent: Monday, August 04, 2003 11:02 AM
> Subject: Re: [CANSLIM] New Investors needs help... a short story
>
>
> > thanks DMC and Pete for your replies,
> >
> > My question to you is... if the universe of stocks is so large... what are
> > your criterias that you look for that justify putting the stock in your
> > watchlist?
> >
> >
> > yien
> >
> >
> > On Mon, 4 Aug 2003, DMC197807 wrote:
> >
> > > Yien,
> > >
> > > You are learning some lessons about the investing world.  The easiest
> and
> > > most delightful story that investor windbags like to tell and retell is
> the
> > > folksy tale of Uncle Warren who "bought and never sold" shares like KO
> and
> > > the Washington Post.  It is an easy and wonderful tale to tell, and what
> the
> > > naive derive from it is 1) that we can all do it, too and 2) that "buy &
> > > hold forever" is a viable methodology.
> > >
> > > Both are wrong.  Instead of listening to others' silly and erroneous
> > > distillations of what Uncle Warren did and didn't do, it's better to get
> a
> > > copy of Lowenstein's biography of Warren and see how he did it.  First
> of
> > > all, without a doubt WB could recognize good value and run an insurance
> > > company to beat the band.  With the cash flow from the insurance company
> > > (all he had to do was beat the premium payout requirement, which he did
> > > quite easily) he could afford to buy and hold forever.  However, since
> few
> > > of us own profit gushing insurance companies, the idea of buy & hold
> forever
> > > is almost impossible.  We want to buy low and sell high, lather, rinse,
> > > repeat.  (Of note as well are WB's various other activities, including
> risk
> > > arbitrage, currency and commodity speculation and a few disastrous
> > > investments in companies).
> > >
> > > In any event, WB caught the great bull wave, but he's gone nowhere in
> the
> > > last 5 years:
> > >
> > >
> http://stockcharts.com/def/servlet/SC.web?c=BRK/A,uu[h,a]mahlyiay[d19900804,
> > > 20030804][pb40!f][vc60][iut]&pref=G
> > >
> > > You know, thinking about investing like WB is like thinking about having
> a
> > > movie career in Hollywood like Tom Hanks.  Tom did it, but it's hard to
> see
> > > someone else doing it.  We all have to find our way differently.
> > >
> > > Good, that's a bunch of information that you can't use.  Now, for some
> you
> > > can.  There are only 3 numbers which matter, when all the dust is
> settled.
> > > They are NOT p/e, d/e, current ratio, PEG, profit margin or inventory
> > > turnover.
> > >
> > > THEY ARE:  Price paid for shares, Price received for shares, Time held.
> > >
> > > Now, MILSCAN (Canslim to some of you) is a very interesting approach,
> and
> > > can possibly, with strong position and money management systems, help
> you to
> > > buy low and sell high in a timely timeframe.
> > >
> > > Here's how I think of these factors, in descending order of importance:
> > >
> > > M is for the market and the market trend.  We are at an inflection point
> > > here, so it's lookout below, or perhaps lookout above.
> > >
> > > N is for new highs in the stock, breaking out above the pivot point
> > >
> > > L is for an relative strength rating of 70 or better
> > >
> > > A is for annual earnings growth (this is for additional comfort)
> > >
> > > C is for current quarterly earnings (this is for additional comfort)
> > >
> > > I is for institutional sponsorship  (this is a timing issue--I think I
> trust
> > > the chart over this, for some reason)
> > >
> > > S is for supply of stock (looking for a relatively low no. of
> shares--here I
> > > want to exclude the over-issued monsters like CSCO and INTC where it
> will
> > > take a ton of momentum to move the billions of shares outstanding).
> > >
> > > In closing, using TA and FA together is a good idea, but when in
> conflict,
> > > trust the TA.  Remember, out of 7000 stocks we are looking for 1 or 2
> names
> > > a week on which to carefully place our hopes.  As the emperor said, "Ni
> ban
> > > zhi, wo fang xin."
> > >
> > > DMC
> > >
> > >
> > >
> > > ----- Original Message -----
> > > From: "Yien T Lung" <ylung@engin.umich.edu>
> > > To: <canslim@lists.xmission.com>
> > > Sent: Monday, August 04, 2003 9:47 AM
> > > Subject: [CANSLIM] New Investors needs help... a short story
> > >
> > >
> > > >
> > > > Hi all,
> > > >
> > > > I am quite new to this forum and I was hoping that some of you, more
> > > > experienced canslim users, would kindly offer me some starting tips or
> > > > share your procedure in the search for new potential buys.
> > > >
> > > > Let me continue by sharing my initial experience with you guys. I
> started
> > > > investing 2 years ago after my friend recommended me to read books
> about
> > > > Value Investing, more specifially, books about Warren Buffett. I read
> and
> > > > summarized almost every single book I could get my hands on about
> Warren
> > > > Buffett...and was almost too eager to start my road to be a
> millionaire.
> > > >
> > > > So what is value investing? Basically, I intepret it as investing in
> > > > securities that are currently being traded at a value below its true
> > > > "intrinsic value". The idea is that the market has been too harsh and
> > > > pessimist about the prospects of a particular stock,..and you as a
> > > > investor believes that this company has the potential to get back on
> track
> > > > and that the current problems it is facing is only temporary.
> > > >
> > > > Sounds easy, but I found the hard way that it is not.
> > > >
> > > > In my impulsive and eagerness to make money? I plunged my hard earned
> cash
> > > > into securities like Qwest (Q), Tyco (TYC),...among others. I bought Q
> > > > when it was trading around 8.50. I thought to myself...this is a
> company
> > > > that has a book value of at least 20 dollars. If only half of that
> book
> > > > value is written off, I will still be safe. So I bought the stock, and
> saw
> > > > it plunge in value to less than 1 dollar. Again, I thought it was ok
> > > > because I am a "value investor"...and I need to hold my buys for the
> "long
> > > > run"... A new management comes in and the stocks starts doing
> better...
> > > > However, the new management finds out that there are a lot of improver
> > > > entries and must restate earnings. That restatement totally wipes out
> the
> > > > book value of the company!!! This taught me never to believe on BS
> alone.
> > > > Now, even after two full years, the stock has not yet recouped to my
> > > > entry level.
> > > >
> > > > My other experience was TYC. I bought it when it was 26. I read a lot
> of
> > > > news from respected value managers that Tyco is a very sound company
> with
> > > > a lot of small businesses that generate lots of free cash flow. Good
> hein?
> > > > Well, I thought so too. I bought it and it went up all the way to 35.
> I
> > > > thought, I should "stay for the long run" and let it run its way up..
> But
> > > > the next thing, the stock began to go south. That was the time when
> there
> > > > was a lot of talk about the ex CEO being a crook and stuff like that.
> I
> > > > held the stock for quite some time...and I will be very hopeful if the
> > > > stock trades at around the price I got in....
> > > >
> > > > So here I am today. After losing a lot of hard earned cash, I decided
> to
> > > > give Mr. O'Neill's methodology a try. If you read some of this value
> > > > investing, a lot of these people dont believe that technical analysis
> > > > works..and my friend (a Buffett believer) doesnt think too highly of
> Mr
> > > > O'Neills methodology. But I am willing to give it a try. Please help
> me
> > > > get started.
> > > >
> > > > Thanks
> > > >
> > > > Yien
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
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