Go to Jeff Salisbury LWGate Home Page.From: Ian <ianstm@shaw.ca>
Subject: Re: [CANSLIM] Fwd: Why I hate Investor's Business Daily (another HITK, Toby Smith story)
Date: Mon, 18 Aug 2003 09:01:34 -0700
Next Article (by Date): [CANSLIM] Chart Reading - November 2002 "Gene Ricci"
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What a load of crap. If that guy was REALLY following CANSLIM he would have been buying SNDK as fast and hard as he could on April 17 (with the rest of the real CANSLIMers), paying $21-$22 for it, and never looking back for the next 4 months. SNDK was a CLASSIC breakout that day - the day after they reported blowout earnings for Q1 2003 - with a perfect chart setup. (Also, if he had been really following CANSLIM, he wouldn't have bought before that date, so he wouldn't have been stopped out with a loss on the 8% rule.) His real problem was mixing 2 different strategies - he bought independant of the chart based on his beliefs of what should happen in the future, and then he used a momentum-based sell rule, which violated his original strategy! BTW, a CANSLIMer who got into SNDK on April 17 still hasn't seen a definitive sell signal, although the recent low-volume upward slope from the drop to the 50-day is weak. Cheers, Ian - ----- Original Message ----- From: "Tim Katona" <tkat17@earthlink.net> To: <canslim@lists.xmission.com> Sent: Friday, August 15, 2003 8:03 AM Subject: [CANSLIM] Fwd: Why I hate Investor's Business Daily (another HITK, Toby Smith story) > All, > A friend just sent me this and I thought you would be amused. I took out all > the obvious sales pitches (try my site at...only $79 for 3 months, $499 for > 2 years). This is the same site that is telling people to buy HITK in the > low $20's, so take it with a grain of salt. Otherwise hit the 'delete' key. > My intent is not to discuss if he is right or wrong, just FYI (no flames > please!) > Tim > > August 14, 2003 > > Dear WaveRider, > > I have a love/hate relationship with Investor's Business Daily > (IBD). > > And it's important that you know why. So I'm going to tell you a > little story. If you value wealth, take a couple minutes to hear me > through. > > A subscriber just wrote me that he completely blew our SanDisk > (SNDK) recommendation, and it cost him more than $100,000 in > profits. > > Our research on demand for all-things digital showed these markets > were booming and would accelerate over 2003 and 2004 into a massive > ChangeWave. And this subscriber smartly started a position in SNDK > at $20 as suggested. But he then made a HUGE mistake. > > He used the IBD strategy of "Sell ANY stock than drops more than 8% > to protect yourself from catastrophic losses." > > So when we advised subscribers to "BUY MORE" and get their cost > basis as LOW as possible after it dropped under $18, he passed. > Later he patted himself on the back as SNDK dropped to around $16, > thinking, "Toby's intelligence is wrong and boy am I a smart guy for > getting out of this pig." > > The rest is sad history. > > SanDisk went from $16 to $55, where we advised subscribers to "SELL" > and take their profits. (Well over 100% gains and even more if they > averaged down.) > > He concludes, "In short, I'm mad at myself. I'm mad at IBD and I > promise to never confuse fundamental and momentum investing again." > > Dude, you just said the magic words. NEVER confuse fundamental and > momentum-based investing again. > > (... sales pitch) > > ATTACK OF THE CLONES > > I have nothing against Investor's Business Daily. > > In fact, I read it every day ... but not to find new stock ideas. > Mostly I read it to find out which one of our stocks have hit the > momentum investor universe I call the "momo zone." > > You MUST understand that there are a hundred thousand IBD followers > out there (I call them IBD clones) who can take a stock up 100% and > down 100% in a week for NO other reason than it appearing on their > "speed charts." > > In the last six months, several of our recommended stocks have > appeared on the IBD "hot list" at one time or another. If we are > doing our job right, they should -- especially when you watch the > 52-week new high list. I don't mind that at all. > > But when one of our stocks gets on the new "Top 100" stocks list or > one of the hot lists in their stock ratings, I start to get worried. > And you should, too. > > You now have people who will be buying your stock simply because it > is going up -- don't kid yourself. They are attaching themselves to > the bandwagon for as long as it's rolling, that's it. When it breaks > a 20- or 50-day moving average to the down side, they are gone. > > And stocks get CRUSHED as the momo players crash the exits. > > HERE'S HOW TO SUCCEED > > (... sales pitch) > > If you are using fundamental research to find industries and > companies that you are convinced have great growth ahead, DO NOT use > the "sell if its 8% down" IBD rule. > > It will cost you tons over time. SELL only if your fundamental > research is disproved. > > ADD MORE to your position if temporary market downdrafts give you a > chance for a lower cost basis. That's how to nearly double your > return on stocks like SanDisk. > > DO NOT use arbitrary "cut your losses at 8%" rules when you are > riding secular transformational changes. Our ChangeWave Investing > service gets you on these waves of growth before everybody else. > This is how we make market-beating profits, for crying out loud. > > SELL your stock when it has reached what you consider to be full > value based on the next 12-18 months of earnings potential. We > recommended selling SanDisk at $55 because our analysis showed full > valuation for the next six to 12 months at that level -- it was time > to move on. > > DO monitor any stock you own if it starts to show up on the IBD > speed charts. This means it will run up faster than normal and in > all likelihood will reach full value much faster than if it was not. > > What is full value for a growth stock? > > If you don't know, subscribe (... sales pitch) > > You don't risk a penny on this trial subscription. If you don't > make more money...if you don't have more fun, just call and cancel > and it costs nothing. > > You can take a full three months to decide. Cancel anytime in that > period-even the very last day-and your subscription costs NOTHING. > > Get all our current recommendations online immediately. (... sales pitch) > > Getting richer & loving it, > > Toby Smith > ChangeWave Investing > > (... sales pitch) > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -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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