From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1199 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Sunday, March 11 2001 Volume 02 : Number 1199 In this issue: Re: [CANSLIM] Watching markets at work when their monitoring the Internet Re: [CANSLIM] From: daily news, yahoo [CANSLIM] DGO? [CANSLIM] MS Investor stock screener Re: [CANSLIM] DGO? Re: [CANSLIM] DGO? RE: [CANSLIM] DGO? Re: [CANSLIM] BKH Re: [CANSLIM] BKH Re: [CANSLIM] BKH Re: [CANSLIM] From: daily news, yahoo Re: [CANSLIM] M ramblings ---------------------------------------------------------------------- Date: 10 Mar 2001 20:11:04 -0800 From: "Tim Fisher" Subject: Re: [CANSLIM] Watching markets at work when their monitoring the Internet PFB is a professional organization. I volunteer my time. At 09:43 PM 3/10/2001 -0500, you wrote: >Tim, > > Just a question: If you are President, who's your employer? > > As for the person who wrote in asking how he can monitor his stocks >during working hours, I wouldn't mess around and quit my old job until you're >sure you have a better new job. A recession looks to be appearing on the >horizon. > > I believe it was Tom who had the best suggestion: Ask if you can check >the Internet during lunch hours, or even volunteer to stay after if the >department's work is suffering. The point is to work with, not against, your >employer/supervisor's workplace-interest and he/she will be more amenable to >your interests. > >jans > >- Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - - ------------------------------ Date: Sun, 11 Mar 2001 00:16:55 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] From: daily news, yahoo As long as Mr. G makes both inflation and recession a "phantom", I am happy. And I would disagree that NASDAQ does not represent the economy, in fact I think it is a clear representation of consumer spending above the level of absolute necessities. It more clearly than any index shows discretionary spending, and that is the best measure of the economy. Tom Worley stkguru@netside.net ICQ # 5568838 - ----- Original Message ----- From: Dan To: Sent: Saturday, March 10, 2001 11:05 PM Subject: [CANSLIM] From: daily news, yahoo http://dailynews.yahoo.com/h/nm/20010310/bs/stocks_week_dc_1.html Saturday March 10 10:56 AM ET Is Greenspan Fighting Phantom Recession? By Pierre Belec NEW YORK (Reuters) - Nearly two years ago, Alan Greenspan (news - web sites) began raising interest rates to head off ``inflation'' and now he's chopping away at rates to head off ``recession.'' As it turned out, he was fighting phantom inflation and people are wondering if he is now combating a phantom recession. One expert says the Federal Reserve (news - web sites) chairman has gotten it wrong before and he may be missing the bull's-eye, again. ``First, the Fed was raising rates to fight inflation, which did not exist and now it is lowering rates to fight a recession, which we feel does not exist,'' says Penny Russell, economist at H. C. Wainwright & Co., Economics Inc. While the Fed was raising interest rates to a 10-year high between 1999 and 2000, the Consumer Price Index (news - web sites), which tracks inflation at the retail level, edged up less than 1.5 percentage points and the core rate that excludes volatile food and energy prices went up even less. Greenspan's tight money policy succeeded too well as the economy's growth has nearly stalled. In January this year, the central bank launched a bold move: preemptive rate cuts for fear that the six interest-rate hikes had put the economy at risk of recession. Smart move? No, says Russell, dismissing the Fed's assurance that it can figure out to the nth degree when the economy is facing a killer problem, like a recession. ``What's happening is that we have been through an economic period when things were so extraordinary and when they go back to just ordinary, people seem to be more concerned than they should,'' Russell says. DID GREENSPAN's RATE HIKES CHOKE ECONOMY? ``So it would appear,'' says Russell. ``But the truth is that no one at the Fed -- not even its illustrious chairman -- is capable of managing a large and complex economy like the U.S. or of knowing just when to raise and when to lower interest rates to keep growth within a predesignated range.'' Greenspan, who worried that the stock market was too high-priced in 1999, went on a rate-raising spree instead of allowing Wall Street to correct its excess in its own sweet time. The result of this hands-on money policy: the rapid destruction of $3 trillion in stock market wealth and disillusioned households that caused consumer confidence to plunge. Falling stock prices made a lot of Americans feel poor because many of them looked at the market during the great boom years between 1995 and 1999 as a savings account with tremendously good yields. The market's monster reversal, which sent the Nasdaq down an eye-popping 55 percent from its high during a 12-month period, shook consumer confidence in a New York minute. The reason that the apprehension spread so fast was because more than 50 percent of U.S. households have a stake in the stock market through retirement accounts. Russell favors benign neglect and monetary neutrality rather than the Fed's jockeying, which she says destabilizes both the economy and stock market. ``Now, if the Fed could be persuaded to leave rates alone and let all the ripples die out, there is no reason that the economy could not get back on the fast track,'' she says. ``Noninterference would be even more stimulative than a tax cut.'' Greenspan and his fellow bankers have been known to fumble the ball. They misread the handwriting on the wall in 1990-91 when a recession was slamming the economy and fell asleep at the wheel. So the Fed, which is now racing to keep the economy from tipping into recession, is faced with a dilemma on whether to cut interest rates for a third time this year. It has made two cuts each of 50 basis points in January after boosting rates by 175 basis points from June 1999 to May 2000. Russell says that if interest rates had been left alone in 1999-2000, the economy would have slowed down by itself, ``gently not abruptly and we would have been enjoying higher growth than we are now.'' The betting is that the Fed again will lower by 50 basis points at its March 20 policy-setting meeting. Recession Isn'T In The Cards Even the numbers crunchers say that an old reliable measuring stick -- the nation's money supply, also known as M2 -- is not emitting signals of a recession. M2 has jumped at an annual rate of more than 10 percent over the last three months, which means the Fed is printing more money to pump up the softening economy. ``Since the M2 series began in 1959, the U.S. economy has never entered a recession with the real M2 growth this high,'' says Paul Kasriel, head of economic research at Northern Trust Co. ``The additional 50 basis points of cuts we are forecasting to occur by March 20 would be expected to boost nominal M2 growth still more.'' Russell says the Fed appears to be focusing too much on momentary changes in the economy. ``The central bank is overreacting to what is happening in the economy,'' she says. ``It was astounding how precipitous the Fed was in lowering interest rates in January,'' she says. ``It was completely out of character for the central bankers to lower interest rates twice in the same month.'' Russell says that the Fed chairman raised interest rates in 1999 and 2000 because he saw inflation ghosts, then he cut rates in January simply out of ``fear of fear itself.'' ``The current economic situation does not justify January's rate cuts,'' she says. ``Just a year or two ago, monetary policy appeared to be focused on fighting phantom inflation, now it appears to be focused on fighting a phantom recession.'' Even some Fed officials don't see a recession on the horizon. This week, Federal Reserve Bank of Dallas President Robert McTeer struck an upbeat note on the U.S. slowdown, saying he expected the country to avoid a recession and was encouraged by the latest economic conditions. Also, Richmond Fed President Alfred Broaddus said recently that chances were ``pretty high'' that the United States was not facing a broad economic drop, but rather a slowdown centered in manufacturing companies. Not The Stuff Recessions Are Made Of The nation's jobless rate held steady at 4.2 percent and payrolls outside the farm sector jumped by 135,000 in February after gaining 224,000 in January. New cars are still rolling off the nation's dealership lots. Americans bought vehicles at an annual rate of 17.5 million in February, despite an economic slowdown and a plunge in consumer confidence. In January, consumers snapped up automobiles at the fastest pace in four months. The Bank of Tokyo-Mitsubishi and UBS Warburg's Weekly Chain Store Sales Snapshot estimated that retail sales in February grew by 2.5 percent vs. a year ago. Housing starts were the highest in nine months in January as mortgage rates tracked the downward slide in the Fed's interest rates and sales of previously owned homes rose 3.8 percent in January. Additionally, the service sector that generates a whopping 80 percent of the nation's jobs held steady in February, even though manufacturing, which creates only 20 percent of the jobs, was in recession. For the manufacturers, it was a self-inflicted wound because they ignored signs last summer that the economy was slowing and kept producing goods until they gagged on their bloated inventories. Another positive indicator is the stock market. The Dow Jones industrial average is within flirting distance of the 11,000-point level, which would seem to contradict the view that the economy is going to hell in a handbasket. The Nasdaq market, which sent technology stocks through the roof during the Great Bull Run, may be down a bone-jarring 55 percent, but that market does not truly reflect the economy. ``These are hardly a recession signal,'' says Russell. ''Further, when the stock market and short-term interest rates are in agreement on a forecast for the economy -- as they are now -- they are rarely wrong.'' Bill Valentine, president of Valentine Ventures LLC, says the stock market traditionally leads the economy by six to nine months. ``That means the market falls before the economy does and recovers in advance as well,'' he says. ``If this is a recession, we won't get official confirmation of such until April of 2001 and by then, it will be seven months old -- and too late to do anything about it.'' Over the last 30 years, in every recession except in 1973-75, the market had bottomed out or would start to rally within three months of the time people got a whiff that there was a recession. Valentine's bet: even if a recession occurs, stocks will hold up because Wall Street has already assumed that it is an accomplished fact. ``If we do get a recession, it will be very slight and short, by historical standards -- two or three quarters, max,'' he says. ''The arsenal of interest rates and (President George W. Bush (news - web sites)'s) tax cuts will stave off an economic catastrophe.'' For the week, the Dow Jones industrial average was up 178.31 points at 10,644.62. The Nasdaq Composite Index was off 64.85 at 2,052.78 and the Standard & Poor's 500 index slipped 0.76 of a point to 1,233.42. - -- Dan http://www.globexplorer.com/cfviewer/start.cfm http://www.corazon.org/ - - - - ------------------------------ Date: Sun, 11 Mar 2001 02:44:31 -0500 From: "Robert McGill" Subject: [CANSLIM] DGO? I haven't started receiving my papers yet so I haven't accessed any of the online info but I have a question. On the www.investor.com page I notice a blank on the upper right side where you can put a stock in and get a chart, then on the bottom of this page is a link to Daily Graphs Online. Is this the same info? With a subscription to IBD do you get access to DGO? - - ------------------------------ Date: Sun, 11 Mar 2001 00:22:31 -0800 From: "Perry Stanfield" Subject: [CANSLIM] MS Investor stock screener Does anyone use this screen? I started here, back when momentum supermodels were in vogue. Got me into AMCC a year ago; thank Goodness I got out last month with a WON influenced stop loss order I placed...... Anyway, I started fiddling with this screen again, and tried to screen for Canslim's. It doesn't do too bad; some of the stocks are not in the weekend review, but are strong IBD rated. I'm sure I can do better. My criteria thusfar: Qtr vs. Qtr EPS >70% Yr vs. Yr.EPS >35% Qtr vs Qtr Rev >25% Yr vs Yr Rev >25% Profit Margin >15% Return on Equity >17% Avg Volume > 300000 Closing price, within 8% of 52 week high higher or lower Some of the stocks are LLUR, some are big cups, some have nice bases. A lot like IBD stocks in the news, or weekend review stocks. Examples: APC XTO UTX CPN ADVP GLM NBL SGR NE APA CIT HP JNY UCU SYK CEFT NFB BMET IGT SDS BBBY CF These 22 stocks were out of the 50 screened, nearly all are A or better overall, 80-80 BBB or better, all are 77-90-CBB or better. Some are strangers to me, some are comfortable ones I've seen around. Funny some I'd expect in the Weekend review are NOT there. Any thoughts about improving this preliminary screen or any other input on speeding up the process of indentifying stocks for a watch list would be appreciated. Perry - - ------------------------------ Date: Sun, 11 Mar 2001 00:26:45 -0800 From: "Perry Stanfield" Subject: Re: [CANSLIM] DGO? You used to have access, when the Beta version was running. Sure do miss it. - ----- Original Message ----- From: "Robert McGill" To: Sent: Saturday, March 10, 2001 11:44 PM Subject: [CANSLIM] DGO? > I haven't started receiving my papers yet so I haven't accessed any of the > online info but I have a question. On the www.investor.com page I notice a > blank on the upper right side where you can put a stock in and get a chart, > then on the bottom of this page is a link to Daily Graphs Online. Is this > the same info? With a subscription to IBD do you get access to DGO? > > > - > - - ------------------------------ Date: Sun, 11 Mar 2001 06:47:25 -0600 From: "Norman" Subject: Re: [CANSLIM] DGO? Hey Robert, The chart on the upper right side is not a DGO chart but is good and seems to be improving every week. It has RS, 50dma, 200dma, EPS, vol, average vol, hyprlink to company, hyperlink to Stock Checkup and daily OHLC/volume numbers (R click on the chart). Alas, Perry is right, we print-only subscribers no longer have access to DGO; it was great while it lasted. But they seem to be upgrading their site weekly; adding new stuff all the time. Norman - ----- Original Message ----- From: "Robert McGill" To: Sent: Sunday, March 11, 2001 1:44 AM Subject: [CANSLIM] DGO? > I haven't started receiving my papers yet so I haven't accessed any of the > online info but I have a question. On the www.investor.com page I notice a > blank on the upper right side where you can put a stock in and get a chart, > then on the bottom of this page is a link to Daily Graphs Online. Is this > the same info? With a subscription to IBD do you get access to DGO? > > > - > > - - ------------------------------ Date: Sun, 11 Mar 2001 08:45:40 -0500 From: Surindra Subject: RE: [CANSLIM] DGO? Bob: I do not have answer to your question, but if you click on the link, it will take you to msn investors page. It should be www.investors.com. - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Robert McGill Sent: Sunday, March 11, 2001 2:45 AM To: canslim@lists.xmission.com Subject: [CANSLIM] DGO? I haven't started receiving my papers yet so I haven't accessed any of the online info but I have a question. On the www.investor.com page I notice a blank on the upper right side where you can put a stock in and get a chart, then on the bottom of this page is a link to Daily Graphs Online. Is this the same info? With a subscription to IBD do you get access to DGO? - - - - ------------------------------ Date: Sun, 11 Mar 2001 08:45:41 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] BKH I see it basically the same way, the chart looks good because defensive money flowed into it. This same money roared out of it in early January when it looked like techs were going to recover, and since have flowed back in as the rallies failed. Despite the sharp increase in both revenues and earnings in the final two quarters of 2000, the analysts obviously don't see this continuing, as you mention only a 1% increase in earnings for 2001 is being forecasted. And five year earnings growth is only 10%, pretty typical for a utility. While ROE is a surprisingly high 18%, and funds only own 10%, management has no stake, and debt is high at 74%. They are the # 1 in the group as well. I would expect this stock to hold value as long as the bear market continues. But just as happened in early January, I would expect the price to struggle if / when / whenever the techs rally again. Tom Worley stkguru@netside.net ICQ # 5568838 - ----- Original Message ----- From: To: Sent: Saturday, March 10, 2001 10:05 PM Subject: Re: [CANSLIM] BKH Norman, I agree. The chart does look pretty darn good: You can see where the funds unloaded after the left lip was reached. The trough is kind of V-shaped, but there was a lot of support at the $31 level. To me it looks like a nice C&H-especially with RS rising so nicely. And if you'll notice it has already broken out from its pivot point of 40 1/8 Now, why I don't think I would have bought it: Annual Earnings will accelerate only 1% in 2001 (I believe WON likes around 17% annual earnings growth). Also, quarerly earnings aren't growing. The last quarter, as a matter of fact, had a -1 or -2% surprise. The point is one only has subjective probabilities that a stock will break out or won't. The CANSLIM formula quantitates those probabilities as far as fundamentals are concerned. The chart displays another set of probabilities. So while the chart looks good (and it may very well go up another 5-10 points), I wouldn't have bought it because of annual and quarterly EPS. In essence, then, the probability of it going up rather than consolidating or going down is not in my favor. (To me, I believe it will go only to the 45 area and then will correct-especially since we're in a bear market. If it's losing money (or not gaining it very fast) why would funds buy it?) Tom, Tim and Earl: How would you analyze it? - - - - ------------------------------ Date: Sun, 11 Mar 2001 07:59:38 -0600 From: "Norman" Subject: Re: [CANSLIM] BKH Thanks for the analysis folks. The moral: an interesting chart, is just that; an interesting chart - not necessarily an interesting investment. Norman - ----- Original Message ----- From: "Tom Worley" To: Sent: Sunday, March 11, 2001 7:45 AM Subject: Re: [CANSLIM] BKH > I see it basically the same way, the chart looks good because > defensive money flowed into it. This same money roared out of it > in early January when it looked like techs were going to recover, > and since have flowed back in as the rallies failed. > > Despite the sharp increase in both revenues and earnings in the > final two quarters of 2000, the analysts obviously don't see this > continuing, as you mention only a 1% increase in earnings for > 2001 is being forecasted. And five year earnings growth is only > 10%, pretty typical for a utility. > > While ROE is a surprisingly high 18%, and funds only own 10%, > management has no stake, and debt is high at 74%. They are the # > 1 in the group as well. > > I would expect this stock to hold value as long as the bear > market continues. But just as happened in early January, I would > expect the price to struggle if / when / whenever the techs rally > again. > > Tom Worley > stkguru@netside.net > ICQ # 5568838 > > > ----- Original Message ----- > From: > To: > Sent: Saturday, March 10, 2001 10:05 PM > Subject: Re: [CANSLIM] BKH > > > Norman, > > I agree. The chart does look pretty darn good: You can see > where the > funds unloaded after the left lip was reached. The trough is > kind of > V-shaped, but there was a lot of support at the $31 level. To me > it looks > like a nice C&H-especially with RS rising so nicely. And if > you'll notice it > has already broken out from its pivot point of 40 1/8 > > Now, why I don't think I would have bought it: Annual > Earnings will > accelerate only 1% in 2001 (I believe WON likes around 17% annual > earnings > growth). Also, quarerly earnings aren't growing. The last > quarter, as a > matter of fact, had a -1 or -2% surprise. > > The point is one only has subjective probabilities that a > stock will > break out or won't. The CANSLIM formula quantitates those > probabilities as > far as fundamentals are concerned. The chart displays another > set of > probabilities. So while the chart looks good (and it may very > well go up > another 5-10 points), I wouldn't have bought it because of annual > and > quarterly EPS. In essence, then, the probability of it going up > rather than > consolidating or going down is not in my favor. (To me, I > believe it will go > only to the 45 area and then will correct-especially since we're > in a bear > market. If it's losing money (or not gaining it very fast) why > would funds > buy it?) > > Tom, Tim and Earl: How would you analyze it? > > - > > > > - > > - - ------------------------------ Date: Sun, 11 Mar 2001 10:13:55 -0700 From: esetser Subject: Re: [CANSLIM] BKH WON tends to stress the looks of the right side of the cup rather than the left, so the steep sell-off shouldn't be an issue. The rest of the cup looked pretty well formed. The quarterly earnings and sales numbers are impressive the last 2 quarters, but estimates for 2001 are only for 1% earnings growth, so this is a BIG concern. Another concern is Industry group of C, which keeps it out of any consideration for me. From a purely technical perspective, the chart looks pretty good, particularly if you could get a nice handle at this point. (Remember, I'm not buying anything now due to M.) At 10:05 PM 3/10/01 EST, you wrote: >Norman, > > I agree. The chart does look pretty darn good: You can see where the >funds unloaded after the left lip was reached. The trough is kind of >V-shaped, but there was a lot of support at the $31 level. To me it looks >like a nice C&H-especially with RS rising so nicely. And if you'll notice it >has already broken out from its pivot point of 40 1/8 > > Now, why I don't think I would have bought it: Annual Earnings will >accelerate only 1% in 2001 (I believe WON likes around 17% annual earnings >growth). Also, quarerly earnings aren't growing. The last quarter, as a >matter of fact, had a -1 or -2% surprise. > > The point is one only has subjective probabilities that a stock will >break out or won't. The CANSLIM formula quantitates those probabilities as >far as fundamentals are concerned. The chart displays another set of >probabilities. So while the chart looks good (and it may very well go up >another 5-10 points), I wouldn't have bought it because of annual and >quarterly EPS. In essence, then, the probability of it going up rather than >consolidating or going down is not in my favor. (To me, I believe it will go >only to the 45 area and then will correct-especially since we're in a bear >market. If it's losing money (or not gaining it very fast) why would funds >buy it?) > > Tom, Tim and Earl: How would you analyze it? > >- > > > - - ------------------------------ Date: Sun, 11 Mar 2001 14:54:56 -0500 From: "Dan Forant" Subject: Re: [CANSLIM] From: daily news, yahoo Time for Greenspan to go bye bye. He served his purpose well for years, now his foresight is failing him. Dan F - ----- Original Message ----- From: "Dan" To: Sent: Saturday, March 10, 2001 11:05 PM Subject: [CANSLIM] From: daily news, yahoo > http://dailynews.yahoo.com/h/nm/20010310/bs/stocks_week_dc_1.html > > Saturday March 10 10:56 AM ET > Is Greenspan Fighting Phantom > Recession? > > By Pierre Belec > > NEW YORK (Reuters) - Nearly two years ago, Alan Greenspan > (news - web sites) began raising interest rates to head off > ``inflation'' and now he's chopping away at rates to head off > ``recession.'' As it turned out, he was fighting phantom inflation > and people are wondering if he is now combating a phantom > recession. > > One expert says the Federal Reserve (news - web sites) > chairman has gotten it wrong before and he may be missing > the bull's-eye, again. > > ``First, the Fed was raising rates to fight inflation, which did not > exist and now it is lowering rates to fight a recession, which we > feel does not exist,'' says Penny Russell, economist at H. C. > Wainwright & Co., Economics Inc. > > While the Fed was raising interest rates to a 10-year high > between 1999 and 2000, the Consumer Price Index (news - > web sites), which tracks inflation at the retail level, edged up > less than 1.5 percentage points and the core rate that excludes > volatile food and energy prices went up even less. > > Greenspan's tight money policy succeeded too well as the > economy's growth has nearly stalled. In January this year, the > central bank launched a bold move: preemptive rate cuts for > fear that the six interest-rate hikes had put the economy at risk > of recession. > > Smart move? No, says Russell, dismissing the Fed's > assurance that it can figure out to the nth degree when the > economy is facing a killer problem, like a recession. > > ``What's happening is that we have been through an economic > period when things were so extraordinary and when they go > back to just ordinary, people seem to be more concerned than > they should,'' Russell says. > > DID GREENSPAN's RATE HIKES CHOKE ECONOMY? > > ``So it would appear,'' says Russell. ``But the truth is that no > one at the Fed -- not even its illustrious chairman -- is capable > of managing a large and complex economy like the U.S. or of > knowing just when to raise and when to lower interest rates to > keep growth within a predesignated range.'' > > Greenspan, who worried that the stock market was too > high-priced in 1999, went on a rate-raising spree instead of > allowing Wall Street to correct its excess in its own sweet time. > The result of this hands-on money policy: the rapid destruction > of $3 trillion in stock market wealth and disillusioned > households that caused consumer confidence to plunge. > > Falling stock prices made a lot of Americans feel poor > because many of them looked at the market during the great > boom years between 1995 and 1999 as a savings account > with tremendously good yields. > > The market's monster reversal, which sent the Nasdaq down an > eye-popping 55 percent from its high during a 12-month > period, shook consumer confidence in a New York minute. The > reason that the apprehension spread so fast was because > more than 50 percent of U.S. households have a stake in the > stock market through retirement accounts. > > Russell favors benign neglect and monetary neutrality rather > than the Fed's jockeying, which she says destabilizes both the > economy and stock market. > > ``Now, if the Fed could be persuaded to leave rates alone and > let all the ripples die out, there is no reason that the economy > could not get back on the fast track,'' she says. > ``Noninterference would be even more stimulative than a tax > cut.'' > > Greenspan and his fellow bankers have been known to fumble > the ball. They misread the handwriting on the wall in 1990-91 > when a recession was slamming the economy and fell asleep > at the wheel. > > So the Fed, which is now racing to keep the economy from > tipping into recession, is faced with a dilemma on whether to > cut interest rates for a third time this year. It has made two cuts > each of 50 basis points in January after boosting rates by 175 > basis points from June 1999 to May 2000. > > Russell says that if interest rates had been left alone in > 1999-2000, the economy would have slowed down by itself, > ``gently not abruptly and we would have been enjoying higher > growth than we are now.'' > > The betting is that the Fed again will lower by 50 basis points > at its March 20 policy-setting meeting. > > Recession Isn'T In The Cards > > Even the numbers crunchers say that an old reliable measuring > stick -- the nation's money supply, also known as M2 -- is not > emitting signals of a recession. M2 has jumped at an annual > rate of more than 10 percent over the last three months, which > means the Fed is printing more money to pump up the > softening economy. > > ``Since the M2 series began in 1959, the U.S. economy has > never entered a recession with the real M2 growth this high,'' > says Paul Kasriel, head of economic research at Northern > Trust Co. ``The additional 50 basis points of cuts we are > forecasting to occur by March 20 would be expected to boost > nominal M2 growth still more.'' > > Russell says the Fed appears to be focusing too much on > momentary changes in the economy. > > ``The central bank is overreacting to what is happening in the > economy,'' she says. ``It was astounding how precipitous the > Fed was in lowering interest rates in January,'' she says. ``It > was completely out of character for the central bankers to lower > interest rates twice in the same month.'' > > Russell says that the Fed chairman raised interest rates in > 1999 and 2000 because he saw inflation ghosts, then he cut > rates in January simply out of ``fear of fear itself.'' > > ``The current economic situation does not justify January's rate > cuts,'' she says. ``Just a year or two ago, monetary policy > appeared to be focused on fighting phantom inflation, now it > appears to be focused on fighting a phantom recession.'' > > Even some Fed officials don't see a recession on the horizon. This > week, Federal > Reserve Bank of Dallas President Robert McTeer struck an upbeat note on > the U.S. > slowdown, saying he expected the country to avoid a recession and was > encouraged by > the latest economic conditions. > > Also, Richmond Fed President Alfred Broaddus said recently that chances > were ``pretty > high'' that the United States was not facing a broad economic drop, but > rather a slowdown > centered in manufacturing companies. > > Not The Stuff Recessions Are Made Of > > The nation's jobless rate held steady at 4.2 percent and payrolls > outside the farm sector > jumped by 135,000 in February after gaining 224,000 in January. > > New cars are still rolling off the nation's dealership lots. Americans > bought vehicles at an > annual rate of 17.5 million in February, despite an economic slowdown > and a plunge in > consumer confidence. In January, consumers snapped up automobiles at > the fastest pace > in four months. > > The Bank of Tokyo-Mitsubishi and UBS Warburg's Weekly Chain Store Sales > Snapshot > estimated that retail sales in February grew by 2.5 percent vs. a year > ago. > > Housing starts were the highest in nine months in January as mortgage > rates tracked the > downward slide in the Fed's interest rates and sales of previously > owned homes rose 3.8 > percent in January. > > Additionally, the service sector that generates a whopping 80 percent > of the nation's jobs > held steady in February, even though manufacturing, which creates only > 20 percent of the > jobs, was in recession. For the manufacturers, it was a self-inflicted > wound because they > ignored signs last summer that the economy was slowing and kept > producing goods until > they gagged on their bloated inventories. > > Another positive indicator is the stock market. The Dow Jones > industrial average is within > flirting distance of the 11,000-point level, which would seem to > contradict the view that the > economy is going to hell in a handbasket. The Nasdaq market, which sent > technology > stocks through the roof during the Great Bull Run, may be down a > bone-jarring 55 percent, > but that market does not truly reflect the economy. > > ``These are hardly a recession signal,'' says Russell. ''Further, when > the stock market and > short-term interest rates are in agreement on a forecast for the > economy -- as they are > now -- they are rarely wrong.'' > > Bill Valentine, president of Valentine Ventures LLC, says the stock > market traditionally > leads the economy by six to nine months. > > ``That means the market falls before the economy does and recovers in > advance as well,'' > he says. ``If this is a recession, we won't get official confirmation > of such until April of 2001 > and by then, it will be seven months old -- and too late to do anything > about it.'' > > Over the last 30 years, in every recession except in 1973-75, the > market had bottomed out > or would start to rally within three months of the time people got a > whiff that there was a > recession. > > Valentine's bet: even if a recession occurs, stocks will hold up > because Wall Street has > already assumed that it is an accomplished fact. > > ``If we do get a recession, it will be very slight and short, by > historical standards -- two or > three quarters, max,'' he says. ''The arsenal of interest rates and > (President George W. > Bush (news - web sites)'s) tax cuts will stave off an economic > catastrophe.'' > > For the week, the Dow Jones industrial average was up 178.31 points at > 10,644.62. The > Nasdaq Composite Index was off 64.85 at 2,052.78 and the Standard & > Poor's 500 index > slipped 0.76 of a point to 1,233.42. > > -- > Dan > > http://www.globexplorer.com/cfviewer/start.cfm > > http://www.corazon.org/ > > > > - > - - ------------------------------ Date: Sun, 11 Mar 2001 15:09:37 -0700 From: "Patrick Wahl" Subject: Re: [CANSLIM] M ramblings On 10 Mar 01, at 19:27, Norman wrote: > Could the DOW be played by using the Fool portfolio, 'Dogs of the Dow"? > I found an article and a link to another article on the subject, these are both pretty interesting - http://www.investorhome.com/dogs.htm In the Data Mine, There Is Seldom a Pot of Gold By MARK HULBERT AFTER eight years of publication, one of the investment newsletters that I monitor called it quits over the summer. The newsletter, named Beating the Dow, was one of several that recommend stocks known as the Dogs of the Dow - those among the Dow Jones industrials that offer the highest yields. Because advisory letters come and go, I usually would not consider the demise of one of them newsworthy. But this case is different, because it teaches us something about a dangerous practice called data mining - in which advisers continually run investment strategies through databases until they find one that has beaten the market. It seems that almost all strategies that emerge from such a process, sometimes known as back- testing, stop working after we start to follow them. To determine whether an apparently successful strategy is worth a bet, we first need to know how many other strategies were also back-tested. An adviser might have tested 99 strategies that failed before coming across one that succeeded. If that is the case, the odds are overwhelming that the 100th strategy will eventually fail, too. After all, we should expect that a few randomly picked strategies will appear to work but don't - a phenomenon known in the scientific world as "false positives." Because few advisers reveal how many of their strategies were failures, the best practical defense against data mining is to test the apparently successful strategy over a different period than used initially. Few advisers have the patience for these tests because they typically require years to complete. As a result, most investors are unwitting participants in the real-time tests of their advisers' data mining. I am not suggesting that Beating the Dow was engaging in data mining simply because it favored high-yielding stocks. But I detect signs of data mining in two of the specific portfolios the letter recommended. Consider the Five-Stock System, one of the letter's recommended strategies. That system calls for buying the five lowest- priced stocks among the 10 highest-yielding Dow companies. As far as I can tell, there was no basis for this approach other than the fact that the stocks did better in back- testing. That is a sure sign of data mining, according to Grant McQueen and Steven Thorley, finance professors at Brigham Young University. They suggest that investors be on guard for any strategy in which the only motive for tweaking a portfolio is that it improves back-tested results. Data mining was also evident in another of the newsletter's strategies, the Penultimate Profit Prospect. That approach calls for buying just one stock: the second-lowest- priced issue among the Dow's highest yielders. (The lowest-priced stock did not do as well in back-testing.) Given these signs of data mining, it is no surprise that these strategies were laggards. According to The Hulbert Financial Digest, simply buying the 10 highest-yielding blue chips produced a 13.9 percent annualized return from the end of 1992 through June 30 of this year. In contrast, the Five- Stock System gained 11.7 percent and the one-stock strategy lost 1.6 percent. UNFORTUNATELY, a number of other advisers have yet to learn such lessons. One of the best-known proponents of these strategies is the Motley Fool, the online investment site. It recommends the Foolish Four strategy, whose portfolio construction rules are constantly being tweaked by back-testing. Initially, the strategy worked like this: Start with the Five- Stock System, but eliminate the lowest- priced stock and give double weight to the so-called Penultimate Profit Prospect. In the face of subsequent back-testing, this rule was tweaked to eliminate the double weighting and to add a few other features. In response to its disappointing performance, Motley Fool is now searching for yet more construction rules. Ann Coleman, a Motley Fool writer, said the approach was to "test and tweak and brainstorm and test some more." Sounds like data mining to me. Finally, a capitulation, of sorts: - - ------------------------------ End of canslim-digest V2 #1199 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.