From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1686 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 Tuesday, September 18 2001 Volume 02 : Number 1686 In this issue: Re: [CANSLIM] LMT Hypothecating and shorting shares - a quick lesson (was Re: [CANSLIM] Analysts) RE: [CANSLIM] lowest Acc/Dis Numbers Re: [CANSLIM] Analysts ---------------------------------------------------------------------- Date: Tue, 18 Sep 2001 20:01:11 EDT From: SKutney@aol.com Subject: Re: [CANSLIM] LMT - --part1_6b.1adb843c.28d93a47_boundary Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit Ann, Both. When the price was down people at work were telling me that it can't go down any more. The company will come back. So I bought some shares through my 401K. It kept on sliding so I sold. Then main problem with a 401K plan purchase is that you can't put in a sell stop. I don't like that. LMT had a low EPS rank when it was 19. It has a higher rank now but is still low for a CANSLIM pick. If LMT fails to get some big contracts your going to see it drop and follow the rest of the crowd. When I worked for IBM I didn't know anything about CANSLIM and I didn't know why I should buy any stock. When the price was low I just kept on buying it. When the price got high I sold some shares and bought a house. It went down for a while and when the price got high I purchased another house. That is the way most people invest. I have an uncle who did the same with Proctor and Gamble. He ended up with 9,000 shares and considers himself a good investor but also a lucky one. This method actually requires less work. The problem is that your really not in control. The idea with CANSLIM is ride a bull market and go into cash in the bear markets or maybe go short if you have been around a while. The CANSLIM investor should be developing a good watch list during a bear market. This is what I need to do a better job of. The buy points are picked without emotion. The buy goes in when the bull market returns. I say it's best to stay in cash right now. Steve - --part1_6b.1adb843c.28d93a47_boundary Content-Type: text/html; charset="US-ASCII" Content-Transfer-Encoding: 7bit Ann,

Both. When the price was down people at work were telling me that it can't go down any more. The company will come back. So I bought some shares through my 401K. It kept on sliding so I sold. Then main problem with a 401K plan purchase is that you can't put in a sell stop. I don't like that. LMT had a low EPS rank when it was 19. It has a higher rank now but is still low for a CANSLIM pick. If LMT fails to get some big contracts your going to see it drop and follow the rest of the crowd.

When I worked for IBM I didn't know anything about CANSLIM and I didn't know why I should buy any stock. When the price was low I just kept on buying it. When the price got high I sold some shares and bought a house. It went down for a while and when the price got high I purchased another house. That is the way most people invest. I have an uncle who did the same with Proctor and Gamble. He ended up with 9,000 shares and considers himself a good investor but also a lucky one. This method actually requires less work. The problem is that your really not in control.

The idea with CANSLIM is ride a bull market and go into cash in the bear markets or maybe go short if you have been around a while. The CANSLIM investor should be developing a good watch list during a bear market. This is what I need to do a better job of. The buy points are picked without emotion. The buy goes in when the bull market returns.

I say it's best to stay in cash right now.

Steve

- --part1_6b.1adb843c.28d93a47_boundary-- - - - -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: Tue, 18 Sep 2001 20:50:33 -0400 From: "Tom Worley" Subject: Hypothecating and shorting shares - a quick lesson (was Re: [CANSLIM] Analysts) This is a multi-part message in MIME format. - ------=_NextPart_000_0030_01C14083.909BAF20 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Ernie, No firm will loan shares to a shorter without the owner's permission. = That permission was given when the client signed the Account Agreement = with his (or her) Broker Dealer. Go back and read thru that agreement = and you will find a standard clause giving the BD the right to = "hypothecate" your shares. How can you prevent this? Easiest way is to take physical possession of = your shares. This means you become responsible for safekeeping of them = (the premium for the insurance policy should you lose them is about 3% = of their value when voided and replaced). You also have to deal with a = delay in selling as most BDs will not accept a sell order until the = shares are delivered into the account. This could cost you one or two = days in selling even if you deliver them in person. Another way, at some firms, is to stay off margin and keep the shares in = a cash account only. Check with your BD to see if this works there. I have also heard of a very few firms that would honor a letter from the = client stipulating that you do not want your shares loaned out. Since = you already agreed to it in the Acct Agreement, they would still have = the right, but if you are an important enough client, they might honor = it. Again, ask the BD. One thing a lot of people do not realize is that you lose the right to = vote if your shares have been loaned out. Who gets your right to vote? = Whoever bought the shares from the shorter. You are still entitled to = receive any dividend payments, though. Who pays you that dividend? The = shorter, because the dividend paid by the corporation went (you guessed = it) to the person who bought from the shorter. How can you fight it? Buy more and more shares and drive the price up = until the shorter is forced to cover at a loss, and give your shares = back (actually some just like them). But joking aside, shorting is a = part of the securities business. And we all love seeing a huge short = position just when really great news breaks and a stock jumps up, as = those shorters now represent powerful buying pressure. But just because you see a huge short position in a stock doesn't make = it a buy. Check carefully for any convertible bonds or preferreds, or = warrants. Arbitragers like to short a stock and use the cash to buy a = convertible, which typically pays a much better coupon or dividend than = they may owe on the common. If the price goes up and they get squeezed, = they simply convert the convertible and cover the short. If a shorter = thinks a stock is way over valued, in the absence of any convertibles, = he might short the stock and buy enough warrants to exercise and cover = if he has to. That way he has limited his risk to a maximum of the cost = of the warrant, plus the exercise price, minus the price where he = shorted (and transaction costs, of course). If the stock plunges as he = expects, the warrants go down in value as well, but probably a lot less = than the stock. Finally, if there are neither convertibles nor warrants, = check the open interest on the puts and calls. A large short position on = the puts would suggest that the shorter is hedging by selling puts. A = large long position on calls would also suggest hedging by buying the = calls to possibly cover shorted shares. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Hill, Ernie=20 To: 'canslim@lists.xmission.com'=20 Sent: Tuesday, September 18, 2001 1:52 PM Subject: RE: [CANSLIM] Analysts =20 =20 -----Original Message----- From: Ed McDonough [mailto:EMCDONOUGH@RJFS.com] Sent: Tuesday, September 18, 2001 12:00 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] Analysts =20 E =20 With all due respect, I suppose you are against banks making loans of = your deposits to those whose use might be detrimental to you. Sounds = great in theory but not in reality. Happens all the time, everyday. The = vast majority of bank customers know that their money is loaned out and = it is likely that only a tiny percentage of the loaned money is = detrimental to the person who deposited it. The majority of investors = have no idea their stock holdings are being loaned to others. No broker = ever informs anyone when his or her stock is loaned out. It should be = illegal for this reason alone. Also the person who deposits money is = being compensated with interest for the right to loan out their money. I = suspect you would be ticked if other things that you owned were being = loaned out by someone without your permission particularly if it were to = your detriment. =20 Understand the rules and play by them. Play to win!!! Canslim is = but one part of the story, albeit a good part. I can win and still take = the moral high ground. =20 Remember, when you buy that canslim stock, someone just sold it to = you. You are hoping they are wrong and they are hoping you are wrong.=20 =20 By the way, it is the institutions that are the largest short position = holders, not their clients!! Sounds like a huge conflict of interest to = me. Another good reason for it to be illegal. Don't get me wrong my = major objection with shorting is the fact that the stock is borrowed = from people who likely would not agree to it being done if they knew = about it. Dress it up any way you want it is wrong to borrow things = without the permission of the owner. =20 E =20 Good luck and good trading. =20 Call me crazy, Ed=20 =20 =20 -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Hill, Ernie Sent: Tuesday, September 18, 2001 12:07 PM To: 'canslim@lists.xmission.com' Subject: RE: [CANSLIM] Analysts Dan IMO shorting should be illegal without the permission of the owner = of the shares that are shorted. I know I would not allow my shares of a = company I expected to rise in price to be used against me. Yet brokerage = houses loan out the shares of their clients without getting their = clients permission to do so. It infuriates me and I refuse to short for = this reason. It is like borrowing something from your neighbor to do him = harm without his permission. =20 E =20 -----Original Message----- From: Dan Forant [mailto:dforant1@nycap.rr.com] Sent: Tuesday, September 18, 2001 6:06 AM To: canslim@lists.xmission.com Subject: [CANSLIM] Analysts =20 I get a kick out of the Analysts preaching Patriotism. They ask of us = to buy stocks during this time of severe market stress. These are the = same people that got many to invest on hype alone for a few years now. = They say shorting is not patriotic, what baloney. Analysts are like = weathermen, there wrong too much.=20 =20 DanF ****************************************************************** This email and any files transmitted with it from the ElPaso=20 Corporation are confidential and intended solely for the=20 use of the individual or entity to whom they are addressed.=20 If you have received this email in error please notify the=20 sender. ****************************************************************** ****************************************************************** This email and any files transmitted with it from the ElPaso=20 Corporation are confidential and intended solely for the=20 use of the individual or entity to whom they are addressed.=20 If you have received this email in error please notify the=20 sender. ****************************************************************** - ------=_NextPart_000_0030_01C14083.909BAF20 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Hi Ernie,
 
No firm will loan shares to a shorter without the = owner's=20 permission. That permission was given when the client signed the Account = Agreement with his (or her) Broker Dealer. Go back and read thru that = agreement=20 and you will find a standard clause giving the BD the right to = "hypothecate"=20 your shares.
 
How can you prevent this?  Easiest way is to = take=20 physical possession of your shares. This means you become responsible = for=20 safekeeping of them (the premium for the insurance policy should you = lose them=20 is about 3% of their value when voided and replaced). You also have to = deal with=20 a delay in selling as most BDs will not accept a sell order until the = shares are=20 delivered into the account. This could cost you one or two days in = selling even=20 if you deliver them in person.
 
Another way, at some firms, is to stay off margin = and keep the=20 shares in a cash account only. Check with your BD to see if this works=20 there.
 
I have also heard of a very few firms that would = honor a=20 letter from the client stipulating that you do not want your shares = loaned out.=20 Since you already agreed to it in the Acct Agreement, they would still = have the=20 right, but if you are an important enough client, they might honor it. = Again,=20 ask the BD.
 
One thing a lot of people do not realize is that you = lose the=20 right to vote if your shares have been loaned out. Who gets your right = to vote?=20 Whoever bought the shares from the shorter. You are still entitled to = receive=20 any dividend payments, though. Who pays you that dividend? The shorter, = because=20 the dividend paid by the corporation went (you guessed it) to the person = who=20 bought from the shorter.
 
How can you fight it? Buy more and more shares and = drive the=20 price up until the shorter is forced to cover at a loss, and give your = shares=20 back (actually some just like them). But joking aside, shorting is a = part of the=20 securities business. And we all love seeing a huge short position just = when=20 really great news breaks and a stock jumps up, as those shorters now = represent=20 powerful buying pressure.
 
But just because you see a huge short position in a = stock=20 doesn't make it a buy. Check carefully for any convertible bonds or = preferreds,=20 or warrants. Arbitragers like to short a stock and use the cash to buy a = convertible, which typically pays a much better coupon or dividend than = they may=20 owe on the common. If the price goes up and they get squeezed, they = simply=20 convert the convertible and cover the short. If a shorter thinks a stock = is way=20 over valued, in the absence of any convertibles, he might short the = stock and=20 buy enough warrants to exercise and cover if he has to. That way he has = limited=20 his risk to a maximum of the cost of the warrant, plus the exercise = price, minus=20 the price where he shorted (and transaction costs, of course). If the = stock=20 plunges as he expects, the warrants go down in value as well, but = probably a lot=20 less than the stock. Finally, if there are neither convertibles nor = warrants,=20 check the open interest on the puts and calls. A large short position on = the=20 puts would suggest that the shorter is hedging by selling puts. A large = long=20 position on calls would also suggest hedging by buying the calls to = possibly=20 cover shorted shares.
 
Tom Worley
stkguru@netside.net
AIM:=20 TexWorley
----- Original Message -----
From:=20 Hill,=20 Ernie
To: 'canslim@lists.xmission.com' =
Sent: Tuesday, September 18, = 2001 1:52=20 PM
Subject: RE: [CANSLIM] = Analysts

 

 

-----Original=20 Message-----
From: = Ed=20 McDonough [mailto:EMCDONOUGH@RJFS.com]
Sent: Tuesday, September 18, = 2001 12:00=20 PM
To: canslim@lists.xmission.com=
Subject: RE: [CANSLIM]=20 Analysts

 

E

 

With all=20 due respect, I suppose you are against banks making loans of your = deposits to those whose use might be detrimental to you. Sounds great = in=20 theory but not in reality.  Happens all the time,=20 everyday.=20 The vast = majority of=20 bank customers know that their money is loaned out and it is likely = that only=20 a tiny percentage of the loaned money is detrimental to the person who = deposited it. The majority of investors have no idea their stock = holdings are=20 being loaned to others. No broker ever informs anyone when his or her = stock is=20 loaned out. It should be illegal for this reason alone. Also the = person who=20 deposits money is being compensated with interest for the right to = loan out=20 their money. I suspect you would be ticked if other things that you = owned were=20 being loaned out by someone without your permission particularly if it = were to=20 your detriment.

 

Understand = the rules=20 and play by them.  Play to win!!!   Canslim is but one = part of=20 the story, albeit a good part.=20 I can win = and still=20 take the moral high ground.

 

Remember, = when you=20 buy that canslim stock, someone just sold it to you.  You are = hoping they=20 are wrong and they are hoping you are wrong.=20

 

By the=20 way, it is the institutions that are the largest short position = holders, not=20 their clients!!=20 Sounds = like a huge=20 conflict of interest to me. Another good reason for it to be illegal. = Don’t=20 get me wrong my major objection with shorting is the fact that the = stock is=20 borrowed from people who likely would not agree to it being done if = they knew=20 about it. Dress it up any way you want it is wrong to borrow things = without=20 the permission of the owner.

 

E

 

Good=20 luck and good trading.

 

Call me=20 crazy,

Ed=20

 

 

-----Original = Message-----
From: = owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On=20 Behalf Of Hill, Ernie
Sent: Tuesday, September 18, = 2001 12:07=20 PM
To:=20 'canslim@lists.xmission.com'
Subject: RE: [CANSLIM]=20 Analysts

Dan=20 IMO shorting should be illegal without the permission of the owner of = the=20 shares that are shorted. I know I would not allow my shares of a = company I=20 expected to rise in price to be used against me. Yet brokerage houses = loan out=20 the shares of their clients without getting their clients permission = to do so.=20 It infuriates me and I refuse to short for this reason. It is like = borrowing=20 something from your neighbor to do him harm without his=20 permission.

 

E

 

-----Original=20 Message-----
From: = Dan Forant=20 [mailto:dforant1@nycap.rr.com]
Sent: Tuesday, September 18, = 2001 6:06=20 AM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM]=20 Analysts

 

I get a = kick out of=20 the Analysts preaching Patriotism. They ask of us to buy stocks during = this=20 time of severe market stress. These are the same people that got many = to=20 invest on hype alone for a few years now. They say shorting is not = patriotic,=20 what baloney. Analysts are like weathermen, there wrong too much.=20

 

DanF



*****************************************************************= *
This = email and=20 any files transmitted with it from the ElPaso =
Corporation are=20 confidential and intended solely for the
use = of the=20 individual or entity to whom they are addressed. =
If = you have=20 received this email in error please notify the =
sender.
*****************************************************************= *



********************************************************= **********
This=20 email and any files transmitted with it from the ElPaso =
Corporation are=20 confidential and intended solely for the
use of the individual or = entity=20 to whom they are addressed.
If you have received this email in = error=20 please notify the=20 =
sender.
**********************************************************= ********
 - ------=_NextPart_000_0030_01C14083.909BAF20-- - - - -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: Tue, 18 Sep 2001 21:12:23 -0400 From: Robert Subject: RE: [CANSLIM] lowest Acc/Dis Numbers the lowest i have found is 378 on 10/27/00 - -----Original Message----- From: Patrick Wahl [SMTP:pwahl@prodigy.net] Sent: Monday, September 10, 2001 7:30 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Acc/Dis Numbers Are 500 stocks with an A accumulation the lowest levels since you started this? I don't recall seeing a lower number. On 10 Sep 01, at 15:44, Robert wrote: > Here are the latest acc/dis numbers > > > > > > spread sheet version: > > Date,A,B,C,D,E,% of AB/A:E,%E,Market Posture > > 8/31/01,647,2277,1244,1000,392,53%,7%,Market in correction, > 9/4/01,601,2208,1265,1023,453,51%,8%,Market in correction, > 9/5/01,593,2180,1314,1015,446,50%,8%,Market in correction, > 9/6/01,565,2161,1297,1071,442,49%,8%,Market in correction, > 9/7/01,534,2109,1289,1095,481,48%,9%,Market in correction, > 9/10/01,502,1983,1283,1165,558,45%,10%,Market in correction, > > > Robert - - - -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. ------------------------------ Date: Tue, 18 Sep 2001 21:17:20 -0400 From: "Al French" Subject: Re: [CANSLIM] Analysts This is a multi-part message in MIME format. - ------=_NextPart_000_006D_01C14087.4D389140 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Those who don't want their broker to lend their shares can simply hold = them in their own name rather than leaving them with the broker in = street name. In fact, doing that may contribute to a short squeeze that = forces shorts to become buyers if they can no longer find shares to = borrow. WON notes that the May-June 1994 rally was a short squeeze = rally. Al French - ----- Original Message -----=20 From: Ed McDonough=20 To: canslim@lists.xmission.com=20 Sent: Tuesday, September 18, 2001 2:56 PM Subject: RE: [CANSLIM] Analysts The broker you use could very likely be shorting you that stock to = fill your order. Doesn't make it right, doesn't make it wrong. It is = simply your opinion that shorting is wrong and should be illegal. = However, the system doesn't care. It is how the system works. It is = what it is. Best of luck, E. Play the game to win! =20 Gotta run Call me crazy, Ed=20 - ------=_NextPart_000_006D_01C14087.4D389140 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Those who don't want their broker to = lend their=20 shares can simply hold them in their own name rather than leaving them = with the=20 broker in street name.  In fact, doing that may contribute to a = short=20 squeeze that forces shorts to become buyers if they can no longer find = shares to=20 borrow.  WON notes that the May-June 1994 rally was a short squeeze = rally.
 
Al French
 
----- Original Message -----
From:=20 Ed=20 McDonough
Sent: Tuesday, September 18, = 2001 2:56=20 PM
Subject: RE: [CANSLIM] = Analysts
 
The broker you use could very likely be = shorting you=20 that stock to fill your order. Doesn't make it right, doesn't = make it=20 wrong.  It is simply your opinion that shorting is wrong and = should be=20 illegal. However, the system doesn't care.  It is how the = system=20 works.  It is what it is.  Best of luck,=20 E.
 
Play the game to win! =20
 
Gotta run
 
Call me = crazy,
Ed 
- ------=_NextPart_000_006D_01C14087.4D389140-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #1686 ****************************** 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.