From: canslim-owner@xmission.com (canslim Digest) To: canslim-digest@xmission.com Subject: canslim Digest V1 #227 Reply-To: canslim@xmission.com Sender: canslim-owner@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Tuesday, June 17 1997 Volume 01 : Number 227 In this issue: [CANSLIM] oneill transcript Re: [CANSLIM] Market Top??? Re: [CANSLIM] A Few [OTC] Questions Re: [CANSLIM] oneill transcript Re: [CANSLIM] oneill transcript [CANSLIM] stocks with big bases that have yet to break out [CANSLIM] Technical Scan Question Re: [CANSLIM] Technical Scan Question [CANSLIM] He's baaaccckkkk??? re: [CANSLIM] He's baaaccckkkk??? [CANSLIM] Re: Re: [CANSLIM] A Few [OTC] Questions Re: [CANSLIM] He's baaaccckkkk??? Fw: [CANSLIM] Securities Industry (was Earnings Pre-announcements) See the end of the digest for information on subscribing to the canslim or canslim-digest mailing lists and on how to retrieve back issues. ---------------------------------------------------------------------- Date: Mon, 16 Jun 1997 22:04:02 +0100 From: Joan Sherman Subject: [CANSLIM] oneill transcript >From: JSherm4@aol.com >Date: Mon, 16 Jun 1997 20:12:17 -0400 (EDT) >To: joani@mindspring.com >Subject: oneill transcript >MIME-Version: 1.0 > >Content-ID: <0_1175_866506211@emout04.mail.aol.com.11342> >Content-type: text/plain > > > >Content-ID: <0_1175_866506211@emout04.mail.aol.com.11343> >Content-type: text/plain; > name="O'Neil Live A/Q/Commercial Tran" > >Subj: O'Neil Live A/Q/Commercial Transcript >Date: 13 Jun 1997 07:30:27 EDT >From: RANord >Message-ID: <19970613113000.HAA15088@ladder02.news.aol.com> > >Heard that some on the board missed WONs Q and A. Here is an edited >trasncript. Enjoy. > >Roger > >IBD Jim: Good evening. I will be your moderator for tonight's > event. Tonight's special guest is one of today's most > successful stock market investor's. He is the author > of the best selling investment book "How To Make Money > In Stocks" and the Chairman of Investor's Business > Daily, America's leading source for business, > financial, and econimic news. He is also the creator > of the proven CAN SLIM investment method which has > helped hundreds of thousands of individual investors > realize big profits in the stock market. Now, it is > my pleasure to introduce to you, Mr. William J. O'Neil. > >WmONEIL: Thanks, Jim. It's a pleasure to be here this evening. > >Question: I immensely enjoy IBD but is there is a way to > > simplify investing and still make money? > >WmONEIL: Anything that's worthwhile isn't simple. It takes > some work. We think the CAN SLIM formula has > simplified it for you, breaking it down to 7 > characteristics to look for in your stock selections. > You want all of those seven. > >Question: Has CANSLIM criteria investing fallen short of your i > expectations the market this calender year? > >WmONEIL: No. There have been a large number of stocks that > have acted very well. There's been a shift toward > larger cap situations like Coca Cola Pfizer, > Microsoft. It's worked fine. We went through a sharp > correction in the Nasdaq averages for two months, and > that hurt a number of stocks that were very extended, > but basically stocks fitting the criteria coming out of > bases with accelerating sales and earnings have done > very well. > >Question: how is your cup and handle chart method affected by > the tremendous rise in the market or does it apply to > any bull or bear ??? > >WmONEIL: You find cup with handle formation with every single > market. That goes back more than 40 years. We've > built models and they show up year after year. > >Question: I would like Mr. O'Neill to review for me the big > question....When do I sell a stock? > >WmONEIL: You should get my book, How To Make Money in Stocks. > There are two chapters there that talk about when to sell > stocks. There are 20 some odd specific rules that tell > you the symptoms to look for when a stock is topping. > >Question: How long can the market ignore the unfavorable > economic reports, which indicate a rate hike is > likely? > >WmONEIL: The rate hike we had was only a quarter percent, and > the indications are that the next one, if it occurs, > will on be another quarter percent, and that is not a > devasting rate increase. Actually your finance and > insurance stocks have been acting very strong in the > recent market. > >Question: Is it the right to to look in to small cap stocks > >WmONEIL: Historically, small caps have always performed better. > However, in the last year, there has been a shift in > larger cap stocks. > >Question: Today I received my first day subscription to IBD. > What should I first do to "unlock" the papers vast > information on investing? > >WmONEIL: Make sure you play the audio or video tape you > received. Study all the materials that we provide so > that you truly understand how to use the unique > features in IBD You should also get a copy of my book > because it explains in detail how to use the paper in > your stock selections. > >Question: what is the Can Slim method? > >WmONEIL: The CAN SLIM method was based upon building models of > successful stocks starting in 1953. We found from > that that there were 7 basic characteristics that > showed up year after year in these companies. The C > was the first characteristic. It stand for current > earnings per share being up a substantial amount. The A > stand for annual earnings being up each year for at > least the last 3 years at a rate of 25% or more. The > N stand for New Highs, stocks coming out of bases. It > also pertains to newer companies and companies with > newer products. The S stands for Supply and Demand. > The small to medium sized companies perform better, > and you want to track volume figures very carefully in > your stocks. Volume represents supply and demand. 'The L > means you want leaders, not laggards. The average > relative strength from all the models from 1953 to now > showed an average relative price strength of 87 at the > beginning point before the stocks had enormous price > advances. The I stands for institutional sponsorship > and the M stands for General Market. You want to be > in a favorable market. > >Question: Do you go into a stock when it hits the 99 EPS and 99 > Relative Strength or do you get into stocks that look > like they are moving in that direction but are in the > 70's at the present time > >WmONEIL: I would not buy a stock at 70 moving in that > direction. You want to have a minimum of 80 on EPS > and RS normally. > >Question: What is your opinion of investment clubs? They seem to > be real popular. > >WmONEIL: I think they're outstanding for people who want to > learn more about investments, but you've got to be > careful about the materials you're using. People should > be using IBD and not several of the other philosophies > that some investment clubs promote. > >Question: Do you use the CANSLIM formula regardless of PE's, > even if they are outlandishly high... witness QGENF, > EPS 99 RS 99 PE=123!! > >WmONEIL: Our model book study of all the big market winners > showed that PE was not a cause of great performance, > but an end effect of substantial earnings increases. > Therefore, we look for major earnings and sales > growth, and we don't feel that PE's are that critical. > >Question: I've been using your system for a few years now with > good success. I've found the "M" in Can Slim the hardest > to pick up on. We seem to be in a renewed bull market > do you see this continuing for a while? > >WmONEIL: If you look at our general market page, the Dow and > S&P are acting fine. Look for 5 or 6 major days for > distribution. > >Question: In your book you say to limit your loss to 7 or 8%. > In today's volatile market the stocks can move more > than that in brief period of time. Is the 7% figure > still realistic because there may be frequent > turnover. > >WmONEIL: The key is to learn to read charts and buy a stock > exactly right off a base at a buypoint. If you do > this, the stock will rarely drop 8% If on the other > hand, you don't use charts or buy stocks that run up or > are extended, you are vulnerable to shakeouts that > occur. The point is to buy the stock right and you > don't have that trouble. Also, the 8% pertains to > cutting an actual loss. It does not pertain to when > you have a substantial profit. Once you're ahead > signfiicantly, you can give a stock much more room for > normal fluctuation. > >Question: how much is too much institutional sponsorship? > >WmONEIL: We don't have a precise number. Stocks like Coca Cola > and Phillip Morris for many years have had huge > sponsorship and have continued to perform well. > >Question: Where do you go first after you think a stock looks > good and what is the process of research you go > through? > >WmONEIL: I analyze a daily and weekly chart carefully to make > sure a stock is under accumulation to make sure it is > acting proper. I then check out every element of > CANSLIM making sure that the earnings, sales and other > v variables are all strong. Next, I would want to > read up a little bit to understand what the company > makes, what they do, what the basic story is. What is > it that is so unusual that should make this company do > well. > >Question: Should the average investor be in for the long haul or > take quick profits when they arise > >WmONEIL: I don't think either is the right answer. You try to > buy stocks that are great companies and great earnings > and great sales at the right time, and you hold them > as long as they're acting well. Some may be held for > a few months. Some for several years. > >Question: one problem I have with canslim is that I get to many > selections - how do you handle this > >WmONEIL: Try to concentrate in the industry group that's > leading the market. One way you can tell this is by > looking at IBD 'IBD's new high list which is ordered > by the industry groups with the most stocks making new > highs. The top 6 or 7 groups in this new high list > are your leading sectors. > >Question: Bill , DO You Ever Short a Stock or BUY / Sell > Options? Great paper .... > >WmONEIL: I don't want to short unless I think I'm in a bear > market. Why fight the general direction of the > market? I don't buy options. If you want to buy options, > I think you should limit them to 10 to 15% of your > portfolio because they're all or nothing bets. > >IBD Jim: **You are live with William O'Neil** Please use the > interact key to post questions. > >Question: How do you know if you have truly missed an > opportunity and should wait? How does a stock who has > exhibited a consistent rise, especially this market, off > its base? > >WmONEIL: Normally you want to buy a stock when it's breaking > out of a base and up 5% and then stop. Sometimes you > can buy a stock on its first correction. If it's a > great growth stock, you can buy it on the first 20% > correction sometimes. Or if it pulls back to its 10 > week moving average line. Furthermore, if the stock > is really great, it will probably build another base, > and you will have another shot at it in time. > >Question: how do you make money in a down market? > >WmONEIL: No one makes much money in a down market. You're > usually selling a few stocks and playing more > conservative. Aggressive people might try shorting. > >Question: Bill, are you saying anyone can be a great stock > picker? > >WmONEIL: No. I don't believe that, because most people are not > willing to do the concentrated work and study to be good > at it. > >Question: Should an averag einvestor forget about stocks and > stick with mutual funds? > >WmONEIL: I believe that somebody who is willing to put in the > time and effort to learn it can do well. It may take a > process of two to three years to learn it. The > average investor would probably do better by buying a > growth fund and never selling it However, if you're > dedicated and willing to do the work, you could do a > much better job. > >Question: What determines small, mid, and large cap? Everyone > has a different standard. > >WmONEIL: Generally companies with less than 20 million share > outstanding are considered small. Companies with > 20 to 60 million shares might be considered mid cap. > Those will 100 million might be considered large cap. > These are generalities. > >Question: i am new to investing..what book should i buy > >WmONEIL: My book, How To Make Money In Stocks. Read it. Take > notes in it. We are also producing video tapes that > all subscribers to the paper should receive in the next > 30 days or so. You should also check this out. > >Question: If an investor has limited time, what would be the > most importan information to access on a daily basis > as far as market indicators? > >WmONEIL: Learn to study the General Market page in IBD. and > check out the day to day price and volu volume movements > in the Dow, S&P, and Nasdaq. That's more valuable > than dozens of other indicators, such as > Advance/Decline lines, overbought/oversold indicators, > etc. > >Question: Should I ignore the general economic news and market > when using a specific stock picking method such as > yours? > >WmONEIL: Economic indicators are a very poor way to try and > judge the stock market. Markets anticipate and discount > data, and you should use market measurements not > economic measurements. > >Question: When is the best time to buy stocks featured in the > New America? They often have jumped a point or two as > soon as the market opens. > >WmONEIL: The New America stories are only available in our > print edition. These are not recommendations. > They're just stories on unique, growing, newer > companies. I would immediately look at a chart to > see if these stocks are in a buying area or if they're > in an extended area, and therefore more risky. > >Question: Where can I find the defiinition of the "Cup and > Handle" and what it means? > >WmONEIL: Check out our education modules here on AOL. Also, we > have a great deal of chart information in my book, as > well as the 45 minute video I mentioned earlier which > will go out to all IBD subscribers. > >IBD Jim: can you tell us more about the videos you are coming >out with? > >WmONEIL: People getting a two week free trial get a 15 minute > video. Anyone who subscribes to IBD will get a 45 > minute technical video that explains how to use all the > information in IBD. > >Question: Does IBD list the float supply of a stock? > >WmONEIL: Float is shown in some tables and not others. The > best place to find float and shares outstanding is > usually in a chart book. Our chart service, Daily > Graphs, has a great deal of useful charts with this > information Also, float is found everyday in the > Nasdaq stock tables. > >Question: What are leading industry groups in today's market? > >WmONEIL: Finance, banks, insurance medical, retail, > telecommunications. computers. Consumer stocks and > retail companies have been making more appearances in > recent months. > >Question: I have found that it is very easy to miss a buy point > for a given stock (it jumps more than 5% in one day) > when it meets the criteria of CAN SLIM. Do I need to > anticipate and watch a stock live when it appears to > be getting close? > >WmONEIL: That is the best way to do it. If you're not able to > watch the stock you have to work closely with a broker > and tell them what you're looking for. Or check IBD > each day and if the stock gets very close to a pivot > or buypoint, you know you have to check the stock more > frequently. > >Question: When are you going to archive all past IBD issues, so > I can use IBD in my research? > >WmONEIL: We're studying this and will likely make it available > at some point. > >Question: I'm not totally clear how to determine when a stock > has actually topped and is not market driven instead? > >WmONEIL: You have to get my book and read the chapter on when > to sell a stock when you have a profit. It lists 20 > different things. For example, exhaustiion gap, climax > run ups, etc. > >Question: Many new companies have not been around long enough to > have a three year track record. Do you avoid these? > >WmONEIL: There are a few companies that maybe show two and a > half years of earnings. Normally if a company shows 2 > or 3 quarters of earnings, that's not enough history > to be reliable. We would accept companies with a little > of 2 years of earnings records. > >IBD Jim: Mr. O'Neil, thank you for spending your evening with > us here on AOL Live. Do you have any closing comments? > >WmONEIL: My suggestion is to get books, tapes, videos and read > and study. You'll get more knowledge and in time, > your results should materially improve. > >IBD Jim: We all appreciate your efforts in helping educate the > individual investor. To get a free trial subscription > to IBD, goto Keyword: IBD Good night. > >OnlineHost: Copyright 1997 America Online, Inc. > > Joan Sherman, /\~~~/\ Babe and /\~/\ /\~/\ and > < Lucky, ^ ^ ^ ^ Courtney and > * * < our Clapton, a Tabby Samoyeds and a Maine Coon Help support animal rescue ------------------------------ Date: Tue, 17 Jun 1997 15:40:31 +0900 From: Andrew Poon Subject: Re: [CANSLIM] Market Top??? I too am concerned that we might be near a blow-out market top. Last night I was looking at the Dow's chart and noticed that although the Dow is making new highs almost everyday, the volume isn't. In fact since the volume peak in January, the Dow's volume has been patchy. I know that we are in the slow summer months, and a lot of people are on holiday. But it still seems disturbing to me. Given that volume usually leads prices by 5 to 6 months. Andrew ------------------------------ Date: Tue, 17 Jun 1997 06:45:27 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] A Few [OTC] Questions > From: George > > So as a general rule, any stock that has a spread of, say, 1/2+ point > should probably be avoided. And then again, if this only happens to > thinly traded stocks, we shouldn't really be trading them anyway, right? Unfortunately, a half point spread on NASDAQ stocks is pretty normal. Around 3/4 I start to think about using a limit order, any more than that and I forget the stock. Patrick Wahl ------------------------------ Date: Tue, 17 Jun 1997 12:16:54 -0700 From: Sam Funchess Subject: Re: [CANSLIM] oneill transcript Thank you so much for posting the interview. Also does anyone think that WDC is considard to have a high tight flag? Sam Joan Sherman wrote: > > >From: JSherm4@aol.com > >Date: Mon, 16 Jun 1997 20:12:17 -0400 (EDT) > >To: joani@mindspring.com > >Subject: oneill transcript > >MIME-Version: 1.0 > > ------------------------------ Date: Tue, 17 Jun 1997 23:40:59 GMT+7 From: Peter Christiansen Subject: Re: [CANSLIM] oneill transcript ** Reply to note from Sam Funchess Tue, 17 Jun 1997 12:16:54 -0700 > Also does anyone think that WDC is considard to have a high tight flag? It doesn't look anything like a HTF to me. It kinda looks like a stock that is topping out. Peter Christiansen Bangkok, Thailand Connected with OS/2 Warp 3.0 & The Post Road Mailer _____________________________________________________________________________________ Get the facts first - you can distort them later! ------------------------------ Date: Tue, 17 Jun 1997 14:12:33 -0700 From: Harlan Subject: [CANSLIM] stocks with big bases that have yet to break out The following are issues with the fundamental characteristic similiar to those of the model book study of the biggest winners in history with big bases that have yet to break out. All that remains are the technical aspects to consider. GLM-Global Marine 5+ month cup in process of forming a handle. 25.0 is the breakout with volume. overall opinion-group improving, stock starting to show strong vol. daily. VTS-Veritas DCG 8+ month base, this ones more of a sideways base but a base none the less. 24 is breakout with vol. NE-nobel drilling 6 month cup in process of forming a handle. 23.5 is breakout with vol. Overall opinion needs chart time. MTZ- Mastec Big Cup in process of forming a handle. breakout is 46. with vol. overall opinion is that this issue could use a little chart time going between 40-46. Lastly look at all the drillers with strong earnings . They're charts all tell the story. JUST CALLING IT AS I SEE IT. Don't forget your stops. As Tom would say any statements or opinions are strictly my own and not that of my employer.My comments should not be intrepeted as a recomendation of any kind. I am a liscenced broker and an active investor. All investors should do they're own research prior to any investment, especially one learned on the Internet. this is strictly for informational purposes only. ------------------------------ Date: Tue, 17 Jun 1997 16:43:46 -0400 From: Richard Karst Subject: [CANSLIM] Technical Scan Question Hi group... This question may show my naivety in Canslim , how ever has anyone "coded" the criteria for a cup and handle formation in Trade Station, Supercharts , a pattern recognition software, or any other TA program ? By doing a "fundamental" screen and then a "technical" screen one could search an industry group very quickly. Am I trying to automate a process that is very subjective ? As I am new to this area your thoughts and experiences on this TA screening would be appreciated. Richard ------------------------------ Date: Tue, 17 Jun 1997 16:41:18 -0500 From: "Richard Estes" Subject: Re: [CANSLIM] Technical Scan Question This is a multi-part message in MIME format. - ------=_NextPart_000_01BC7B3D.4774F500 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: quoted-printable People have tried for years, afraid it is a visual thing. Which differs = from person to person. I seen O'neil show C&H that I wouldn't call one.=20 Richard Estes ---- From: Richard Karst To: canslim@xmission.com Date: Tuesday, June 17, 1997 3:47 PM Subject: [CANSLIM] Technical Scan Question Hi group... This question may show my naivety in Canslim , how ever has anyone "coded" the criteria for a cup and handle formation in Trade Station, Supercharts , a pattern recognition software, or any other TA program ? By doing a "fundamental" screen and then a "technical" screen one could search an industry group very quickly. Am I trying to automate a process that is very subjective ? As I am new to this area your thoughts and experiences on this TA screening would be appreciated. Richard - ------=_NextPart_000_01BC7B3D.4774F500 Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable

People have = tried for=20 years, afraid it is a visual thing. Which differs from person to person. = I seen=20 O'neil show C&H that I wouldn't call one.

Richard = Estes

----
From: Richard Karst <rkarst@inforamp.net>
To: canslim@xmission.com
Date: Tuesday, June 17, 1997 3:47 PM
Subject: [CANSLIM] Technical Scan Question

Hi group...

This question may show my naivety in Canslim , how ever has anyone
"coded" the criteria for a cup and handle formation in Trade=20 Station,
Supercharts , a pattern recognition software, or any other  TA = program=20 ?

By doing a "fundamental" screen and then a = "technical"=20 screen one could
search an industry group very quickly. Am I trying to automate a = process
that is very subjective ?

As I am new to this area your thoughts and experiences on this TA
screening would be appreciated.

Richard

 - ------=_NextPart_000_01BC7B3D.4774F500-- ------------------------------ Date: Tue, 17 Jun 1997 21:24:33 -0400 From: "Tom Worley" Subject: [CANSLIM] He's baaaccckkkk??? One of the neat things about living in the tropics (Miami, FL) is that Mother Nature is rarely boring. On the other hand, lightning strikes can do interesting things. I got home last night to find my refrigerator dead, and subsequently my modem unable to detect a dial tone. Don't ask me how these two are connected, they are a floor apart, so can't imagine they're having an affair! Well, after a certain amount of grunting and pushing, finally managed to bypass the power supply for the fridge and get some ice cubes under construction for a much needed drink. Next I tackled the modem, not that it was second priority, just the second thing I found in trouble (had already reset the alarm clocks by then). However, no amount of cussing and swearing, plugging and unplugging, swapping phone cords, etc could get me onto the net. Finally gave in and made a call to Utah to my personal tech support person. Diagnostics from 2700 miles away being what they are, best guess was a lightening strike hit my phone line and zapped my modem. Tonight took modem back to Circuit City (here's the stock mkt part) and in no time at all had a credit voucher for a replacement (I bot it six months ago) which I was told they had in stock. Ended up asking the store manager (without realizing he wasn't just another floor salesman) for help when I couldn't find it on the shelf. He personally went and pulled a modem from the stock room, adjusted the voucher since it was a model higher than what I had returned, and expedited my completion of my mission. In less than half an hour, I had returned an apparent bad modem for an even better one for no extra charge. May not say a lot about their profit margin, but really impressed me with their service. And I never had a chance to get uppity and annoyed, even. So, now that I have a modem that runs even faster than before, does this mean I can post longer email??? tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. ------------------------------ Date: Tue, 17 Jun 1997 21:40:47 -0400 From: Michael A Langston Subject: re: [CANSLIM] He's baaaccckkkk??? > So, now that I have a modem that runs even faster than before, does > this mean I can post longer email??? naw, it only means that you have to type it in faster ;^] ------------------------------ Date: Tue, 17 Jun 1997 21:46:32 -0400 From: "Tom Worley" Subject: [CANSLIM] Re: No offense was given or taken by your remarks, I actually encounter many brokers who seem to think this industry is largely manipulated (not sure why they are in it unless they think they must be part of the "inner circle", otherwise they should be thinking that they will always be on the losing side). One thing that confuses the picture of how a house analyst works is the time difference between when he "makes his recommendation" and when that recommendation is "published" to the general investment community. I think when it is made his firm is neutral (e.g. his comments are not made with regard to whether his firm is long or short or flat the stock). I personally choose to believe that his firm does not "front run" his advice, if so I think they could be sanctioned and anyone who can cite to the contrary feel free to educate me, however I will likely pass it on the the SEC for investigation as this conduct wouldn't be right (also a good way to convince brokers to leave that firm, if they can't trust their own employer to honor their responsibility to their clients). On the other hand, by the time the investing community knows why a stock is in play on the basis of a house analyst (up or down), it is usually hours later, and occasionally the next day. I suspect that more and more analysts are starting to use some TA along with their review of fundamentals, the industry, economy, etc. One of the areas of "downgrades" that I find most distressing is when a stock is downgraded cuz it hit an earlier price target. This implies that the earlier set target was correctly determined by analysis, and was hit too soon; rather than maybe the target wasn't high enough for now existing mkt conditions. Far too often I have seen these stocks roar far higher after only a brief setback. There seems little effort in reevaluating the situation in its current form before concluding that the earlier analysis was right. Being the cynic that I am, I suspect at least some of this being little more than sanctioned, institutional grade churning. Gives the broker an excuse to call the client and say something like " Mr/s Client, remember we bot XYZ due to the recommendation of my staff analyst, well he just lowered his rating on it as it has moved to our target already, I think we should take our profits before it begins to drop and, oh by the way, I have a new recommendation here we can pick up". Anybody ever used a full service broker and heard anything like that before??? And let's see, what was WON's concept, something about holding the winners and selling the losers??? In the industry, it's called "proceeds transactions", selling something so you can buy something else, thus generating two commissions. Not always wrong, but sometimes used for the wrong reasons. Ok, alright, I'll climb off my soap box, still got a lot of email to wade thru, and also gotta put my PC back together, still got pieces laying around, guess not too safe that way. tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: Dbphoenix@aol.com > To: canslim@mail.xmission.com > Subject: > Date: Monday, June 16, 1997 4:28 PM > > Tom, I did not mean to imply that analysts and brokerages are in any way > crooked or that they engage in "criminal behavior". There are brokers who > still cold-call and churn, but I have no idea what portion of the brokerage > community they represent. Even so, their behavior is hardly criminal. > > I assume that the vast majority of brokers do not engage in any sort of > hanky-panky at all. The point I was trying to make with regard to > recommendations was that one can assume that when a brokerage initiates a buy > recommendation, much less reiterates one, it already has the stock in its > coffers, and that one can assume also that the reverse is true when it issues > its downgrades. > > Whether this is true or not, I have no idea. However, several broker friends > tell me that a number of analysts do use TA to determine when to issue buy > and sell recs. But again, I have no idea how common the practice is, any ------------------------------ Date: Tue, 17 Jun 1997 22:09:41 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] A Few [OTC] Questions A stock is "in play" when there is either a lot of supply, or a lot of demand. The mkt is one of the purest forms of supply/demand dynamics that still exists. Let's say a stock that normally carries a point and a half spread is now in demand. Some will simply throw in a mkt order to buy, others will see the large spread and stick a limit order in. Whether or not the stock is one of the 900 or so (or is it now 1500 or so) under the new rules designed to tighten spreads, what happens is the BD with that limit buy order will arrange to have that limit presented to the mkt, thus tightening the spread as the bid goes up. Meantime, with a tighter spread, others may decide to just pay mkt, or be paniced by the higher bid (this includes some BDs who may be short), thus creating more pressure on the offer, possibly moving it higher and opening out the spread again, thus inducing more (higher) limit orders and continuing the process. Meantime, some of the earlier "limit order owners", seeing the bid move past their nr, may change it to a higher limit or even mkt, again increasing the "demand" equation on the offer. Many people (brokers, investors, etc) assume that Broker Dealers (BDs) make more money on OTC stocks if the spread is larger. Truth is, if it's not trading volume, they typically make squat, yet still have costs as a market maker that must be overcome if they are to stay in business. Even thinly traded stocks may have 8-12 market makers. Even if one was to get half the trades of a stock with a 1.5 pt spread, and doing 15K shares a day, he could still make far more on one with a qtr pt spread and where he trades 50K shares a day, and he could do so with a far greater comfort factor as well. I'll be glad to discuss this whole issue privately, but suspect most are bored by it, esp since I could probably talk for hours!!! tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: George > To: canslim@mail.xmission.com > Subject: Re: [CANSLIM] A Few [OTC] Questions > Date: Monday, June 16, 1997 12:19 PM > > Tom Worley wrote: > > > > Some thinly traded ones will often have a pt to several pts > > when they are not "in play". > > When a stock is out-of-play, I assume that means that whoever is making > a maket in that stock is wanting to restrict trading for some reason or > other? If so, how are they able to increase the spread that much? I > thought there were new rules on things like that. > > So as a general rule, any stock that has a spread of, say, 1/2+ point > should probably be avoided. And then again, if this only happens to > thinly traded stocks, we shouldn't really be trading them anyway, right? > ------------------------------ Date: Tue, 17 Jun 1997 22:59:35 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] He's baaaccckkkk??? Long as you'll forgive the typos! tom w - ---------- > From: Michael A Langston > To: canslim@mail.xmission.com > Subject: re: [CANSLIM] He's baaaccckkkk??? > Date: Tuesday, June 17, 1997 9:40 PM > > > So, now that I have a modem that runs even faster than before, does > > this mean I can post longer email??? > > naw, it only means that you have to type it in faster ;^] ------------------------------ Date: Tue, 17 Jun 1997 22:56:57 -0400 From: "Tom Worley" Subject: Fw: [CANSLIM] Securities Industry (was Earnings Pre-announcements) My apologies, I didn't check the header on this, in my excitement at getting back on the net. I intended this for general dissemination, so here it is. tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: Tom Worley > To: Brenda > Subject: Re: [CANSLIM] Securities Industry (was Earnings Pre-announcements) > Date: Tuesday, June 17, 1997 10:54 PM > > Sadly, there are far too many brokers "full service" or not, who > are not professionals. I have known many over the years who could > go home and sleep well even if a client lost heavily that day. I > was not, and am not (even tho I am my only client) one of those. > One reason I "burned out" was that I cared about my clients and > took their trust in me as sacred. On the other hand, the industry > breeds "black humor", and there is nothing racist about the term. I > and my former clients have been sandbagged by bad analysts, frauds, > incompetent CEOs, and general mkt conditions. When you have acted > professionally, done your homework, talked to CEOs and CFOs, > studied 10Qs and 10Ks till you were falling asleep, and still > couldn't anticipate a bad surprise, you either don't care, lose > your mind, or burn out. Sounds like you've been dining too much in > the company of the first case. Unfortunately, there are too many > around like that. The sooner the industry moves away from a > commission based system and into an asset based and/or performance > based compensation, the better for everyone, broker and investor > alike. > > On the other hand, my comments were directed toward analysts, who > by not dealing with the general public, somehow tend to be far more > rational and professional in their opinions. > > And to be blunt, James, can you honestly say you would call the SEC > or NASD first, BEFORE unloading your client's shares, if you > stumbled across a fraud that you had recommended to your clients? > If so, then IMHO, it's disloyal to your clients, who have the right > to your first priority. The same logic applies to a "house > analyst", his intellectual properties are owned by his firm, they > have the right to use them first, and frankly have no obligation to > even publicly disseminate them. > > I've had clients who held accts at wirehouses worth over $3 mil, > and they got no better service than anyone else. I guess if they > could have added a zero or two, then it might have changed, but > wasn't the case so can't comment. > > As far as "hot IPOs" today, the system has been totally > prostituted, IMHO. The LAW requires that it be a "public offering", > thus brokers and other associated persons and family members cannot > participate except in the after market. In truth, what goes on > nowadays, is that any "hot" IPO goes almost exclusively to mutual > funds, and some other institutional investors, who will > willingingly sell it back the same day for huge profits so the > investment bankers will have a supply to sell to the demand in the > after market. Because it goes to mutual funds, who in turn > "represent" individual investors, this is deemed a "public" > offering. And these funds will be allocated hundreds of thousands > of shares on an issue known to be "hot" because they will give it > back, and also because they will subsequently support it in the > aftermarket. If the regs were changed to limit quantity to no more > than a few thousand shares per client, it would force the funds out > and again make this process a true "public offering". As it is, > many mutual fund shareholders never know their fund may have > briefly (for a few hours) owned an issue like BOST, all they will > see is what the fund still owned at the end of the qtr, and the > gains for the qtr, without knowing that a large part of those gains > came from day trading hot IPOs. At most wirehouses, the manager of > a major office will be lucky to get a few thou shares to allocate > to his most favored clients, the brokers won't see a single share. > The hotter the IPO, the less available to retail. Often, I have > seen as much as 95% given to funds and other institutional clients. > Take 5% of, say, a 15 mil share issue, and divide it between the > two or three wirehouses doing the deal, then divide that again > amongst the senior managers and top producing brokers, and you > quickly get a idea of how much actually reaches the true > "individual" investor. If funds were buying for a reasonably long > term hold, I might feel different, but since most just day trade > these "gems", then the system needs changing. > > As a final comment, who's going to do the individual stock > analysis, much less the in-depth (at least sometimes) market > analysis, once we do away with all full svc firms? If the discount > firms start doing it, they will also start charging for every > research report. Please don't suggest you would trust a "paid for > publication" report over what is currently available. Look at the > changes going on in the industry. The original "discount" brokerage > house, Schwab, now offers all kinds of levels of service, up to and > including what amounts to full service, unlimited research, > personal attention, with prices and charges not that different from > any other major house. > > James, the industry is a long ways from perfect, but it's still > capitalism at some of its finest. You can't have the "inside track" > at every major wirehouse simultaneously, unless you got big bucks > to spread around. I certainly don't support, nor foresee, a day > when all analysts, and all brokers, work universally for a govt > agency that will dissiminate every opinion instantly to the world > without regard to profit motivation. Short of this, I guess we just > have to rely on doing our homework and making our own decisions. Oh > well!! > > tom w > > Any statements or opinions are strictly my own and not that of my > employer. My comments should not be intrepreted as a recommendation > of any kind. I am a licensed (inactive) broker and an active > investor. All investors should do their own research prior to any > investment, especially one learned about on the Internet. > > ---------- > > From: Brenda > > To: Up, Up and A Way Main List ; Tom > Worley > > Subject: Re: [CANSLIM] Earnings Pre-announcements > > Date: Monday, June 16, 1997 1:32 PM > > > > > > > From: Tom Worley > > > To: canslim@mail.xmission.com > > > Subject: Re: [CANSLIM] Earnings Pre-announcements > > > Date: Saturday, June 14, 1997 9:03 PM > > > > > > First, I do not subscribe to the "theory" that analysts, or > anyone > > > else for that matter, is actively "playing a game" > > > > Obviously you have not been privy to conversations over lunch or > dinner at > > a restaurant where the table behind you is a table full of > brokers. Nor, at > > a cocktail party where they are discussing the debackle of the > day and how > > humorous it was that one investor made out like... while another > got > > creamed. I know this is your field Tom but it did not get the > reputation it > > did because everybody is so honest, above board and so, so > interested in > > making their clients money. > > > > Keep in mind that an analyst's pay check is funded by the house > he works > > for. They are entitled to his research and analysis as > intellectual > > > > Just one more example of how they really couldn't care less about > each > > individual investor. More of how they get their rap. > > > > Seems only fair that the employees (brokers, fund mgrs, etc) of > that house > > should be able to act on the info first since it is the > commissions they > > generate that ultimately pay that analyst his paycheck. > > > > 100% correct in their thinking and 100% correct while more and > more people > > are getting the picture CRYSTAL clear just as you state it. 100% > correct in > > why brokers are being used less and less and less. 100% correct > why the > > discount houses are having such a tough time handling the > overload. Maybe > > before long ALL will know the truth. > > > > The truth - LARGE investors are called ahead of time. Given > opportunities > > that MOST can not take advantage of. The bigger your balance, the > more > > "secret" opportunities you are given. Who do you think gets in on > the IPO's > > at those ridiculously low entry prices. THEN, they sell almost > immediately > > taking very, very HEFTY profit to the bankafter only owning the > stock > > publically for a few hours or even MINUTES. Fair? In whose mind? > The rich? > > I'm sure. I've been on both sides of the fence and it stinks, to > me, on > > both sides. > > > > Keep in mind too that when a brokerage house downgrades (or > upgrades) a > > stock, it can come as a result of news about that company or its > industry, > > > > Once again, done publically ONLY AFTER they and the favorites > have gotten > > in or out. Fair? IMHO, it stinks and I would not be bothered at > all if > > there were NO MORE full service brokers. Sorry, if you are one. > Personally, > > > > I know you wrote your post in defense but it only confirms what > more and > > more people are learning the hard way. At their own personal > expense while > > the broker lines his pockets. Just my view, but one that get > confirmed, day > > after day after day > > > ------------------------------ End of canslim Digest V1 #227 ***************************** To subscribe to canslim Digest, send the command: subscribe canslim-digest in the body of a message to "majordomo@xmission.com". If you want to subscribe something other than the account the mail is coming from, such as a local redistribution list, then append that address to the "subscribe" command; for example, to subscribe "local-canslim": subscribe canslim-digest local-canslim@your.domain.net A non-digest (direct mail) version of this list is also available; to subscribe to that instead, replace all instances of "canslim-digest" in the commands above with "canslim". Back issues are available for anonymous FTP from ftp.xmission.com, in pub/lists/canslim/archive. These are organized by date.