From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1862 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 Wednesday, November 28 2001 Volume 02 : Number 1862 In this issue: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Re: [CANSLIM] Re: (CANSLIM) Things I Learned ---------------------------------------------------------------------- Date: Thu, 29 Nov 2001 00:38:11 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned This is a multi-part message in MIME format. - ------=_NextPart_000_0046_01C1786E.1FCABAC0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I differ a little from Katherine on this. I avoid the Investor = Relations person / office as much as possible. Instead, I direct my = enquiry whether by phone or email directly to the CEO or CFO. Make sure = you have done your homework, and ask intelligent questions, or you will = not likely get through to them a second time. Works much better with = small companies than with huge ones.=20 Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 2:16 PM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Hi Harvey, If it's not clear from the IR site or other news items, a good place = to go is Hoovers.com. They'll give at least the 2 top competitors under = their company capsule and often you can click through to the competitor's = capsules to uncover a few more. Unfortunately, you can't get access to Hoovers' = more thorough competitor analysis without coughing up the big bucks. Another trick I'll use is to call the IR rep directly. When the = company has a complex product line such as IVGN, for example, it's just easier to = talk with someone and ask them this question outright. This is also where = I'll go to clarify any financial questions or to better understand business strategy. This approach has never failed me, as IR is always happy to = talk about their company. Katherine ----- Original Message ----- From: "Harvey Brion" To: Sent: Wednesday, November 28, 2001 1:31 PM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned > Hi Katherine, What do you consider to be the best way to find out = the > direct competitors of a given company out of the many companies = within > an industrial group. I know you can pick this up from reading the > various news items on a company but I'd like to know if there's a = more > direct way. Thanks, Harvey > > Katherine Malm wrote: > > > >>If you have two stocks with high RS, this is enough to satisfy = the > > Group RS. This was news to me, and doesn't make a lot of sense, > > either. Tom, Chris I have a slightly different perspective on this > > one. Often times, when a group is composed of many members, you'll > > find that their business models don't really "match." In this = case, I > > always find the direct competitors of the stock in question and = look > > at its performance against just these stocks. If these are moving = up > > in tandem, it says something. Also, my belief is different than = WON's. > > I am always looking for *rising* industries, not necessarily *top* > > industries. If a particular stock is rising in a group that is not = yet > > a "top" industry, it is very often the strongest stock in the = group. > > But, you want to be sure there is some additional confirmation of = the > > move. WON *does* say that you do not want a lone wolf, you always = want > > to see at least one additional stock in the "group" moving up as = well. > > And just to be complete, the stocks should, of course have all the > > requisite fundamental characteristics: accelerating sales & = earnings, > > ROE>=3D17%, cash flow closely mirroring EPS, an "N", sound = financials, > > and sound strategic planning and execution. Katherine > > > - > -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. - ------=_NextPart_000_0046_01C1786E.1FCABAC0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
I differ a little from Katherine on this.  I = avoid the=20 Investor Relations person / office as much as possible. Instead, I = direct my=20 enquiry whether by phone or email directly to the CEO or CFO. Make sure = you have=20 done your homework, and ask intelligent questions, or you will not = likely get=20 through to them a second time. Works much better with small companies = than with=20 huge ones.
 
Tom Worley
stkguru@netside.net
AIM:=20 TexWorley
----- Original Message -----
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com =
Sent: Wednesday, November 28, = 2001 2:16=20 PM
Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

Hi Harvey,

If it's not clear from the IR site or = other=20 news items, a good place to go
is Hoovers.com. They'll give at = least the 2=20 top competitors under their
company capsule and often you can click = through=20 to the competitor's capsules
to uncover a few more. Unfortunately, = you=20 can't get access to Hoovers' more
thorough competitor analysis = without=20 coughing up the big bucks.

Another trick I'll use is to call = the IR rep=20 directly. When the company has
a complex product line such as IVGN, = for=20 example, it's just easier to talk
with someone and ask them this = question=20 outright. This is also where I'll go
to clarify any financial = questions or=20 to better understand business
strategy. This approach has never = failed me,=20 as IR is always happy to talk
about their=20 company.

Katherine

----- Original Message -----
From: = "Harvey=20 Brion" <hbrion@ieee.org>
To:=20 <canslim@lists.xmission.com= >
Sent:=20 Wednesday, November 28, 2001 1:31 PM
Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned


> Hi Katherine,  What do you = consider to=20 be the best way to find out the
> direct competitors of a given = company=20 out of the many companies within
> an industrial group.  I = know you=20 can pick this up from reading the
> various news items on a = company but=20 I'd like to know if there's a more
> direct way.  = Thanks, =20 Harvey
>
> Katherine Malm wrote:
>
> > = >>If=20 you have two stocks with high RS, this is enough to satisfy = the
> >=20 Group RS. This was news to me, and doesn't make a lot of = sense,
> >=20 either. Tom, Chris I have a slightly different perspective on = this
>=20 > one. Often times, when a group is composed of many members,=20 you'll
> > find that their business models don't really = "match." In=20 this case, I
> > always find the direct competitors of the = stock in=20 question and look
> > at its performance against just these = stocks.=20 If these are moving up
> > in tandem, it says something. = Also, my=20 belief is different than WON's.
> > I am always looking for = *rising*=20 industries, not necessarily *top*
> > industries. If a = particular=20 stock is rising in a group that is not yet
> > a "top" = industry, it=20 is very often the strongest stock in the group.
> > But, you = want to=20 be sure there is some additional confirmation of the
> > = move. WON=20 *does* say that you do not want a lone wolf, you always want
> = > to=20 see at least one additional stock in the "group" moving up as = well.
>=20 > And just to be complete, the stocks should, of course have all=20 the
> > requisite fundamental characteristics: accelerating = sales=20 & earnings,
> > ROE>=3D17%, cash flow closely = mirroring EPS, an=20 "N", sound financials,
> > and sound strategic planning and=20 execution. Katherine
>
>
> -
> -To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
>= ; -In=20 the email body, write "subscribe canslim" or
> -"unsubscribe=20 canslim".  Do not use quotes in your email.


-
-To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
-In= the=20 email body, write "subscribe canslim" or
-"unsubscribe = canslim".  Do=20 not use quotes in your email.
- ------=_NextPart_000_0046_01C1786E.1FCABAC0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Thu, 29 Nov 2001 00:53:30 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned This is a multi-part message in MIME format. - ------=_NextPart_000_0060_01C17870.43B9B9C0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Katherine, In principle, I guess logically I agree with you. Certainly a weak, even = declining, group can hold the best of stocks back from full potential = performance. I do glance at GRS when I find a good stock chart, but it = does not factor into my decision making whether strong or weak. Now = that I can look at group charts at the DGO beta (at least I think that's = there), I will be interested in seeing how the groups represented in my = VRfund have done by comparison. In particular, I am interested in seeing = if my style of picking stocks also happened to put me into mostly rising = groups. I will also be looking to see if any of those groups also rose = 40% or better since the Sept lows. But the fact remains that I have made nice money off stocks where the = GRS was in single or very low double digit numbers. GRS has never scared = me off a stock, nor made me any more interested in buying it. But then I = also think my style would not likely work for very many others, even if = they were risk takers. My comment, however, was primarily geared around the comment from the = seminar that if you had two stocks with high RS, then the GRS element = was satisfied. For those who find GRS rating an integral part of their = stock selection methodology, I would be disturbed by that notion. At a = minimum, I would think that concept would also have to be combined with = a requirement that GRS already be rising, even if still at a low number. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 9:07 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Hi Tom, =20 Here's the problem and the reason why my approach would still hold, = i.e., you replied: >>.So I find it hard to understand how having only two performers in a = large group that is otherwise trending down would be sufficient to = offset the negative group trend. =20 I would never be interested in a industry that was *declining*. I am = only interested in a group that is *RISING.* Very different animal = there. I never mine for candidates based on GRS because it hides rising = groups and rising stocks. If the GRS is low, but there are stocks in the = group that are doing well, that speaks to me. In particular, in a bear = market, I want to be mining for stocks that show their ability to buck = the trend. Very important for uncovering the gems. Similarly, if you = mine for candidates based on "high" GRS, you are more likely to be = focused on groups that are getting ready to top out. My motto: top = stocks top out and then they decline. I don't want to be there. I want = to be in the stocks coming up in ranks as they *become* top stocks. When = their run is over, I get out. In the Great Bull, this may have taken = months or years. In the Great Bear, this process can take a few weeks. =20 >>I am not a "group follower", and give very little weight to GRS =20 I think this is a dangerous practice. Witness TARO as our list's = recent example, so good in fact that the IBD chose to use it themselves = as an example. Being unaware of group action hides the "truth" about = institutional money's "feel" about the group. A bit like letting the = big dog do the sniffing for you. To make big money over a long period of = time, we *must* be in the right stocks in the right industries. =20 Katherine =20 ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 8:05 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Hi Katherine, I am not a "group follower", and give very little weight to GRS, = contrary to WON's guidance (just one of my many CANSLIM sins). But I = know that many members of this group use the group ranking, strength or = trends as their starting point in finding picks. So I find it hard to = understand how having only two performers in a large group that is = otherwise trending down would be sufficient to offset the negative group = trend. I agree with what you say below, certainly some groups are a real = hodge podge of companies. And the stellar performance and fundies of one = can be confirmed by the performance of a competitor. But likewise, = another competitor could also offset that. And a broader industry group = could also provide a broader indication of the generalized industry = trend, to which one or two companies have simply failed to follow, YET. If Group RS is a fundamental part of your process in picking stocks, = I just don't see how you can disregard the group RS if you have two good = stocks in that group. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 8:34 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned >>If you have two stocks with high RS, this is enough to satisfy = the Group RS. This was news to me, and doesn't make a lot of sense, = either. =20 Tom, Chris =20 I have a slightly different perspective on this one. Often times, = when a group is composed of many members, you'll find that their = business models don't really "match." In this case, I always find the = direct competitors of the stock in question and look at its performance = against just these stocks. If these are moving up in tandem, it says = something. Also, my belief is different than WON's. I am always looking = for *rising* industries, not necessarily *top* industries. If a = particular stock is rising in a group that is not yet a "top" industry, = it is very often the strongest stock in the group. But, you want to be = sure there is some additional confirmation of the move. WON *does* say = that you do not want a lone wolf, you always want to see at least one = additional stock in the "group" moving up as well. And just to be = complete, the stocks should, of course have all the requisite = fundamental characteristics: accelerating sales & earnings, ROE>=3D17%, = cash flow closely mirroring EPS, an "N", sound financials, and sound = strategic planning and execution. =20 Katherine ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 6:25 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Chris, I would also like to add my thanks for you spending your = time in effort in giving us this report. I found it informative and well = worth reading, as well as some new material. I have thrown in some = comments below. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Chris Mc=20 To: canslim@lists.xmission.com=20 Sent: Tuesday, November 27, 2001 7:02 PM Subject: [CANSLIM] Re: (CANSLIM) Things I Learned =20 Well - here goes - I hope Paul is right! I recently attended the IBD Seminar in L.A. and wanted to = share a few of my learnings with you. Please know that I am still in = the learning curve and just starting my second reading of HTMMIS so this = is my understanding of some of the comments and perhaps you can answer a = few questions for me. Asset allocation - 30-40% in this market, 3 to 4 stocks. = WON compared this market to a 75 mph freeway and it's now at 5 mph - = slow and tough. It's down so much, there's no base and we are gradually = coming off the bottom, but a slow process and sooner or later the = momentum will return. Doing what it should be doing. Hit bottom and = turned. Correcting for euphoria similar to the 1962 period which took = time to recover because it was damaged so seriously. Could be 3 - 6 - 9 = - - 18 months before we see patterns - coming out of the grave. Patience, = and time. I thought because of M we shouldn't be in the market at all = but I guess if you are confident in what you're doing, it's o.k. to = break a few rules?? It's not so much that you are breaking rules to be = partially invested at this point. While a switch from bear to bull was = only confirmed by the DOW 30 (only one to gain 20% from the low), "M" = has been much stronger since Sept 21. So limited investing is still = within CANSLIM guidelines. That also goes to the other comment of no = pyramiding up, buy it right, but don't add to the position (something I = have been violating in my VR Fund with some success, so personally don't = agree with this point). =20 Small or large cap - Doesn't make any difference. Funds = have gotten bigger and bigger, and they have enormous buying power for = big cap stocks as well as small ones. The key thing is that, is the = pattern exactly right, are the earnings there, the market right, all the = other things. AOL was trading 7 Million shares a day, it was a big cap = stock and went up 400-500%. I think the difference still remains that is = is far easier for a small cap to show 20-50% or more earnings growth = than for a big cap. But the big cap gives you more stability and safety = in this kind of "M". Chart discussions of PECS, CYTC, EASI, L3 - straight off the = bottom, no pullback. These are the ones that are risky in this market = environment -they run too far, too fast. 2 out of 3 stocks like this = aren't making it. If you know enough about the company and you're = convinced everythings alright, maybe it'll work. Bigger cap stocks are a little bit safer and sounder because = if you're wrong, it's going to cost you more than 1 or 2 points.=20 Pivot - in this market, buy at the pivot. No pyramiding in = this market. OK to buy within 5% of pivot in a bull market. =20 Have you heard this before or is this a "Revision"? I would = say it's a reflection of "M" and the number of failed breakouts. Take a = partial position and manage it. If you bought right, make a limited = amount of money. But if you pyramid, and it then fails, your follow on = buys will wipe out your success from the first buy. =20 Charts - A lot of the charts don't seem to be working, a lot = of the breakouts seem to be failing. It's not that the charts are not = working, you're buying bad bases that are faulty and have something = wrong with them, they're incorrect bases. Handles can be looser and cups may be deeper coming out of a = bear market. Cups and handles should be porportional - small cup, small = handle. Big cup, longer handle. If it's not a C&H, not a double bottom, not a flat base, = it's a nothing. After you go through all the models, it has to fit or = it's a nothing. (My den is now wallpapered in Chart Patterns) There are very few sound bases - not there yet. Easy to get = sucked in - great story, great earnings, but we're in a tough market and = you can't play aggressively. AZO is an exception and one of the few = stocks that worked although extended now. =20 Tom - do you think the pattern broke on EPIQ and do you see = anything that caused it to break or was it just a function of the = market? When you do the WWW, are you looking at Daily or Weekly charts? = Aside from the article in IBD, and the downgrade by AG Edwards, you can = add in that the company has been moving very fast with two stock splits = this year, plus registering 1.3 million restricted shares, plus having = options trading, plus another cash acquisition, plus up several hundred = percent for the year. The two stocks splits are worrying some investors = according to a board I visited on yahoo. Because of the added liquidity, = and likely now the options, short position is up 13% to 8.3 days. That = equates to better than 1.6 million shares, or 21% of the float. Of = course, that may have dropped a lot in the past week. The collapse on = 11/21 didn't quite break the pattern, and we saw a small recovery. But = yesterday's fall, which broke to the bottom of the short base at $30, = did end the breakout pattern and further weaken the chart. I am not = trying to buy just now, and would not be surprised by further price = deterioration, where I will buy because of my belief long term in the = business model. For WWW, I use Daily Charts and only look at the latest six = months. =20 Fallen Angels - There were lots of chart discussions - CSCO, = SUNW, ORCL and it seemed alot of them were similar. No base, thick = overhead supply, no prior uptrend, have probably hit bottom but are they = going to be leaders again? Sooner or later they get into a big = stalling thing, they just don't do much for 3 - 4 - 5 months while = something else is moving better.=20 =20 It seems every chart I look at has the same pattern. So we = wait for a base to form but while we're waiting, it's gone up 50-100%?? = Not that many have gone up that far, even from their recent lows. And = remember many are down as much as 90% from their high of the past 12-18 = months, so even a double from recent lows still leaves them a very long = way to go for a true new high. =20 9/11 - Caused a panic and a bad break in a lot of things and = it explains it but don't make an alibi for the stock and say it broke 20 = points but the reason was this, therefore it's o.k.? Is the pattern = right or not? Don't make excuses or alibis for stocks. =20 If you don't have the C & A, you better have the N & L. = (Isn't this another mortal sin?) M counts for at least 50% of the whole = ballgame.=20 =20 If you have two stocks with high RS, this is enough to = satisfy the Group RS. This was news to me, and doesn't make a lot of = sense, either. =20 Lots of revisions in next edition of HTMMIS - should be out = in January. (I suppose to some extent we learn of revisions as they = develop, i.e. buy within .10 of pivot and not .13 but I think it's good = there are some revisions as conditons change - ?) =20 I thought the seminar was well organized, staff friendly and = welcoming. WON spoke for almost the entire session, except an hour in = the AM and an hour in the PM, had a group constantly surrounding him and = even took questions during lunch. It was such a terrific opportunity to = see and listen to WON and I would highly recommend the seminar to anyone = interested in the market, although they do call it "Advanced" and you = need to have some understanding of CANSLIM. They did not push IBD or = DGO, but merely explained the services offered and were very = accommodating in answering questions. =20 =20 The seminar was extremely worthwhile for me but it seems the = more I learn, the more I have to learn. Did anyone else attend? = Comments appreciated. =20 Chris Mc =20 - ------=_NextPart_000_0060_01C17870.43B9B9C0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Hi Katherine,
 
In principle, I guess logically I agree with you. = Certainly a=20 weak, even declining, group can hold the best of stocks back from full = potential=20 performance. I do glance at GRS when I find a good stock chart, but it = does not=20 factor into my decision making whether strong or weak.  Now that I = can look=20 at group charts at the DGO beta (at least I think that's there), I will = be=20 interested in seeing how the groups represented in my VRfund have done = by=20 comparison. In particular, I am interested in seeing if my style of = picking=20 stocks also happened to put me into mostly rising groups. I will also be = looking=20 to see if any of those groups also rose 40% or better since the Sept=20 lows.
 
But the fact remains that I have made nice money off = stocks=20 where the GRS was in single or very low double digit numbers. GRS has = never=20 scared me off a stock, nor made me any more interested in buying it. But = then I=20 also think my style would not likely work for very many others, even if = they=20 were risk takers.
 
My comment, however, was primarily geared around the = comment=20 from the seminar that if you had two stocks with high RS, then the GRS = element=20 was satisfied. For those who find GRS rating an integral part of their = stock=20 selection methodology, I would be disturbed by that notion. At a = minimum, I=20 would think that concept would also have to be combined with a = requirement that=20 GRS already be rising, even if still at a low number.
 
Tom Worley
stkguru@netside.net
AIM:=20 TexWorley
----- Original Message -----
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com =
Sent: Wednesday, November 28, = 2001 9:07=20 AM
Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

Hi Tom,
 
Here's the problem and the reason why = my approach=20 would still hold, i.e., you replied:
 
>>.So I find=20 it hard to understand how having only two performers in a large group = that is=20 otherwise trending down would be sufficient to offset = the negative group trend.
 
I would never be interested in a = industry that=20 was *declining*. I am only interested in a group that is *RISING.* = Very=20 different animal there. I never mine for candidates based on GRS = because it=20 hides rising groups and rising stocks. If the GRS is low, but there = are stocks=20 in the group that are doing well, that speaks to me. In particular, in = a bear=20 market, I want to be mining for stocks that show their ability to buck = the=20 trend. Very important for uncovering the gems. Similarly, if you mine = for=20 candidates based on "high" GRS, you are more likely to be focused on = groups=20 that are getting ready to top out. My motto: top stocks top out and = then they=20 decline. I don't want to be there. I want to be in the stocks coming = up in=20 ranks as they *become* top stocks. When their run is over, I get out. = In the=20 Great Bull, this may have taken months or years. In the Great Bear, = this=20 process can take a few weeks.
 
>>I am not a=20 "group follower", and give very little weight to = GRS
 
I think this is a dangerous practice. = Witness=20 TARO as our list's recent example, so good in fact that the IBD chose = to use=20 it themselves as an example. Being unaware of group action hides the = "truth"=20 about institutional money's  "feel" about the group. A bit = like=20 letting the big dog do the sniffing for you. To make big money over a = long=20 period of time, we *must* be in the right stocks in the = right=20 industries.
 
Katherine
 
----- Original Message -----
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com =
Sent: Wednesday, November 28, = 2001 8:05=20 AM
Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

Hi Katherine,
 
I am not a "group follower", and give very = little weight=20 to GRS, contrary to WON's guidance (just one of my many CANSLIM = sins). But I=20 know that many members of this group use the group ranking, strength = or=20 trends as their starting point in finding picks. So I find it hard = to=20 understand how having only two performers in a large group that is = otherwise=20 trending down would be sufficient to offset the negative group=20 trend.
 
I agree with what you say below, certainly some = groups are=20 a real hodge podge of companies. And the stellar performance and = fundies of=20 one can be confirmed by the performance of a competitor. But = likewise,=20 another competitor could also offset that. And a broader industry = group=20 could also provide a broader indication of the generalized industry = trend,=20 to which one or two companies have simply failed to follow,=20 YET.
 
If Group RS is a fundamental part of your = process in=20 picking stocks, I just don't see how you can disregard the group RS = if you=20 have two good stocks in that group.
 
Tom Worley
stkguru@netside.net
AIM:=20 TexWorley
----- Original Message ----- =
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com =
Sent: Wednesday, November = 28, 2001=20 8:34 AM
Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

>>If you have=20 two stocks with high RS, this is enough to satisfy the Group RS. = This was news to me, and doesn't make a lot of = sense,=20 either.
 
Tom, = Chris
 
I have a=20 slightly different perspective on this one. Often times, when = a group=20 is composed of many members, you'll find that their business = models don't=20 really "match." In this case, I always find the direct competitors = of the=20 stock in question and look at its performance against just these = stocks.=20 If these are moving up in tandem, it says something. Also, my = belief is=20 different than WON's. I am always looking for *rising* industries, = not=20 necessarily *top* industries. If a particular stock is rising in a = group=20 that is not yet a "top" industry, it is very often the strongest = stock in=20 the group.  But, you want to be sure there is some additional = confirmation of the move. WON *does* say that you do not want a = lone wolf,=20 you always want to see at least one additional stock in the = "group" moving=20 up as well. And just to be complete, the stocks should, of course = have all=20 the requisite fundamental characteristics: accelerating sales = &=20 earnings, ROE>=3D17%, cash flow closely mirroring EPS, an "N", = sound=20 financials, and sound strategic planning and = execution.
 
Katherine
----- Original Message ----- =
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com
Sent: Wednesday, November = 28, 2001=20 6:25 AM
Subject: Re: [CANSLIM] = Re:=20 (CANSLIM) Things I Learned

Chris, I would also like to add my thanks = for you=20 spending your time in effort in giving us this report. I found = it=20 informative and well worth reading, as well as some new = material. I have=20 thrown in some comments below.
 
Tom Worley
stkguru@netside.net
AIM:=20 TexWorley
----- Original Message ----- =
From:=20 Chris=20 Mc
To: canslim@lists.xmission.com
Sent: Tuesday, November = 27, 2001=20 7:02 PM
Subject: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

 
Well - here goes - I hope = Paul is=20 right!
 
I recently attended the IBD = Seminar in=20 L.A. and wanted to share a few of my learnings with = you. =20 Please know that I am still in the learning curve and = just=20 starting my second reading of HTMMIS so this=20 is my understanding of some of the comments and = perhaps=20 you can answer a few questions for me.
 
Asset=20 allocation - 30-40% in this = market, 3=20 to 4 stocks.  WON compared this market to a 75 mph = freeway and=20 it's now at 5 mph - slow and tough.  It's down so much, = there's=20 no base and we are gradually coming off the bottom, but a = slow=20 process and sooner or later the momentum will return.  = Doing=20 what it should be doing.  Hit bottom and turned. =20 Correcting for euphoria similar to the 1962 period which = took time=20 to recover because it was damaged so seriously.  Could = be 3 - 6=20 - 9 - 18 months before we see patterns - coming out of the=20 grave.  Patience, and time.
 
I thought because of M = we=20 shouldn't be in the market at all but I guess if you are = confident=20 in what you're doing, it's o.k. to break a few rules?? = It's not so much that you are breaking rules = to be=20 partially invested at this point. While a switch from bear = to bull=20 was only confirmed by the DOW 30 (only one to gain 20% from = the=20 low), "M" has been much stronger since Sept 21. So limited = investing=20 is still within CANSLIM guidelines. That also goes to the = other=20 comment of no pyramiding up, buy it right, but don't add to = the=20 position (something I have been violating in my VR Fund with = some=20 success, so personally don't agree with this = point).
 
Small or large cap=20 - Doesn't make any difference.  Funds = have gotten=20 bigger and bigger, and they have enormous buying power for = big cap=20 stocks as well as small ones.  The key thing is that, = is the=20 pattern exactly right, are the earnings there, the market = right, all=20 the other things.  AOL was trading 7 Million = shares a day,=20 it was a big cap stock and went up 400-500%. I think the difference still remains = that is is=20 far easier for a small cap to show 20-50% or more earnings = growth=20 than for a big cap. But the big cap gives you more stability = and=20 safety in this kind of "M".
 
Chart=20 discussions of PECS, CYTC, EASI, L3 - straight off the = bottom, no=20 pullback. These are the ones that are risky in this = market=20 environment -they run too far, too fast.   2 out = of 3=20 stocks like this aren't making it.  If you know enough = about=20 the company and you're convinced everythings alright, maybe = it'll=20 work.
 
Bigger cap stocks are a little=20 bit safer and sounder because if you're wrong, it's = going=20 to cost you more than 1 or 2 points. 
 
Pivot - in this=20 market, buy at the pivot.  No pyramiding in this = market. =20 OK to buy within 5% of pivot in a bull market.
 
Have you heard this = before or is=20 this a "Revision"? I would say = it's a=20 reflection of "M" and the number of failed breakouts. Take a = partial=20 position and manage it. If you bought right, make a limited = amount=20 of money. But if you pyramid, and it then fails, your follow = on buys=20 will wipe out your success from the first = buy.
 
Charts - A = lot of the=20 charts don't seem to be working, a lot of the breakouts = seem to=20 be failing.  It's not that the charts are not working, = you're=20 buying bad bases that are faulty and have something wrong = with them,=20 they're incorrect bases.
Handles can be looser and = cups may be=20 deeper coming out of a bear market.  Cups and handles = should be=20 porportional - small cup, small handle.  Big cup, = longer=20 handle.
If it's not a C&H, not = a double=20 bottom, not a flat base, it's a nothing.  After you go = through=20 all the models,  it has to fit or it's a nothing.  = (My den=20 is now wallpapered in Chart Patterns)
There are very few sound = bases - not=20 there yet.  Easy to get sucked in - great story, = great=20 earnings, but we're in a tough market and you can't play=20 aggressively.  AZO is an exception and one of the few = stocks=20 that worked although extended now.
 
Tom - do you think the = pattern=20 broke on EPIQ and do you see anything that caused it to = break or was=20 it just a function of the market?  When you do the WWW, = are you=20 looking at Daily or Weekly charts? Aside=20 from the article in IBD, and the downgrade by AG Edwards, = you can=20 add in that the company has been moving very fast with two = stock=20 splits this year, plus registering 1.3 million restricted = shares,=20 plus having options trading, plus another cash acquisition, = plus up=20 several hundred percent for the year. The two stocks splits = are=20 worrying some investors according to a board I visited on = yahoo.=20 Because of the added liquidity, and likely now the options, = short=20 position is up 13% to 8.3 days. That equates to better than = 1.6=20 million shares, or 21% of the float.  Of course, that = may have=20 dropped a lot in the past week. The collapse on 11/21 didn't = quite=20 break the pattern, and we saw a small recovery. But = yesterday's=20 fall, which broke to the bottom of the short base at $30, = did end=20 the breakout pattern and further weaken the chart. I am not = trying=20 to buy just now, and would not be surprised by further price = deterioration, where I will buy because of my belief long = term in=20 the business model.
 
For WWW, I use Daily = Charts and only=20 look at the latest six months.
 
Fallen = Angels - There=20 were lots of chart discussions - CSCO, SUNW, ORCL and it = seemed alot=20 of them were similar.  No base, thick overhead supply, = no prior=20 uptrend, have probably hit bottom but are they going to be = leaders=20 again?   Sooner or later they get into a big = stalling=20 thing, they just don't do much for 3 - 4 - 5 months while = something=20 else is moving better. 
 
It seems every chart I = look at has=20 the same pattern.  So we wait for a base to form but = while=20 we're waiting, it's gone up 50-100%?? Not=20 that many have gone up that far, even from their recent = lows. And=20 remember many are down as much as 90% from their high of the = past=20 12-18 months, so even a double from recent lows still leaves = them a=20 very long way to go for a true new high.
 
9/11 - = Caused a panic=20 and a bad break in a lot of things and it explains it=20 but don't make an alibi for the stock and say it = broke 20=20 points but the reason was this, therefore it's o.k.?  = Is the=20 pattern right or not?  Don't make excuses or = alibis=20 for stocks.
 
If you don't have the C = & A, you=20 better have the N & L.  (Isn't this another = mortal=20 sin?)  M counts for at least 50% of the whole=20 ballgame. 
 
If you have two stocks with = high RS,=20 this is enough to satisfy the Group RS. This was=20 news to me, and doesn't make a lot of sense,=20 either.
 
Lots of revisions in next = edition of=20 HTMMIS - should be out in January.  (I suppose to = some=20 extent we learn of revisions as they develop, i.e. buy = within .10 of=20 pivot and not .13 but I think it's good there are some=20 revisions as conditons change - ?)
 
I thought the seminar was = well=20 organized, staff friendly and welcoming.  WON spoke for = almost=20 the entire session, except an hour in the AM and an = hour in the=20 PM, had a group constantly surrounding him and even took = questions=20 during lunch.  It was such a terrific opportunity to = see and=20 listen to WON and I would highly recommend the seminar = to=20 anyone interested in the market, although they do call it = "Advanced"=20 and you need to have some understanding = of CANSLIM. =20  They did not push IBD or DGO, but merely = explained the=20 services offered and were very accommodating in answering=20 questions. 
 
The seminar was extremely=20 worthwhile for me but it seems the more I learn, = the more=20 I have to learn.  Did anyone else attend?  = Comments=20 appreciated.
 
Chris Mc
 
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