From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1880 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Sunday, December 2 2001 Volume 02 : Number 1880 In this issue: Re: [CANSLIM] Re: market cycles [CANSLIM] Uh Oh Re: [CANSLIM] Re: market cycles Re: [CANSLIM] BRCM - image capture Re: [CANSLIM] Re: market cycles Re: [CANSLIM] Re: market cycles Re: [CANSLIM] Uh Oh Re: [CANSLIM] Market Cycles ( was: Clarify Group RS) ---------------------------------------------------------------------- Date: Sun, 2 Dec 2001 16:03:40 -0700 From: "rolf hertenstein" Subject: Re: [CANSLIM] Re: market cycles If we were heading into a 1966-to-1981-like period, seems like the simple answer is to short on market downtrends, buy long on the uptrends (HTMMIS, pg 66 shows 3 or 4 bull markets during that 15 year period, depending on how one counts). So the question that popped into my noodle: Does CANSLIM work in that kind od environment? Assuming the last couple of months have been a bull run in a bear market, seems like many (most?) b/o's have failed (from what I've been reading here) and generally CANSLIMers aren't doing as well. Even IBD recently discussed winners that in hindsight weren't all that 'CANSLIM'. Don't ask me what technique might work, I'm still looking to graduate to second grade. Rolf P.S. I was toying with warm-climate participants the other day - in reality I love the snow and cold of winter. - ----- Original Message ----- From: "Patrick Wahl" To: Sent: Sunday, December 02, 2001 1:30 PM Subject: Re: [CANSLIM] Re: market cycles > Looking at bonds with a very broad view, they have been in about a 20 year - - - -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: Sun, 2 Dec 2001 17:26:14 -0600 From: "Norman" Subject: [CANSLIM] Uh Oh I just replied the Al's question to Gene regarding inserting images into an email. However, seems that I should have deleted Gene's original image before attaching and sending mine; that created a rather large file for the list serve. I hope the reply, and 2 images on it, come thru; and I promise to be good from now on :-) Norm - - - -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: Sun, 2 Dec 2001 17:26:12 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] Re: market cycles This is a multi-part message in MIME format. - ------=_NextPart_000_0248_01C17B56.705F9240 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Rolf, I think what you bring up is the essence of the flat market. That is, = being very good at reading P/V action of a fundamentally sound stock as = it begins to rise, excellent buying, reading P/V action as it rises and = watching for the appropriate signs it's breaking down, then excellent = selling will become very critical. I think it also means widening the = net for finding CANSLIM candidates. If we're coming out of a period of = declining earnings, we have to be able to assess when the earnings of an = individual company are *beginning* to turn up again based on sound = business execution. So, a recent example from the IBD winners list: = MCAF. Think you'll see more like this than the types of setups we've = been seeing for the last 2 or 3 years. And I'd absolutely agree that an = aggressive CANSLIMer would short stocks breaking down when the market is = downtrending. If the market's going to go up and down, up and down, up = and down, it makes no sense to sit out 1/2 the time. Katherine PS *Toying* with us, huh? Somehow the lines from Longfellow's Song of = Hiawatha stick with me... Oh the long and dreary Winter! Oh the cold and cruel Winter!=20 But then, we have August. - ----- Original Message -----=20 From: "rolf hertenstein" To: Sent: Sunday, December 02, 2001 5:03 PM Subject: Re: [CANSLIM] Re: market cycles > If we were heading into a 1966-to-1981-like period, seems like the > simple answer is to short on market downtrends, buy long on the = uptrends > (HTMMIS, pg 66 shows 3 or 4 bull markets during that 15 year period, > depending on how one counts). So the question that popped into my = noodle: > Does CANSLIM work in that kind od environment? Assuming the last = couple > of months have been a bull run in a bear market, seems like many = (most?) > b/o's > have failed (from what I've been reading here) and generally = CANSLIMers > aren't > doing as well. Even IBD recently discussed winners that in hindsight > weren't all > that 'CANSLIM'. Don't ask me what technique might work, I'm still = looking > to graduate to second grade. >=20 > Rolf >=20 > P.S. I was toying with warm-climate participants the other day - in = reality > I > love the snow and cold of winter. >=20 > ----- Original Message ----- > From: "Patrick Wahl" > To: > Sent: Sunday, December 02, 2001 1:30 PM > Subject: Re: [CANSLIM] Re: market cycles >=20 >=20 > > Looking at bonds with a very broad view, they have been in about a = 20 year >=20 >=20 >=20 > - > -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_0248_01C17B56.705F9240 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Rolf,
 
I think what you bring up is the = essence of the=20 flat market. That is, being very good at reading P/V action of a = fundamentally=20 sound stock as it begins to rise, excellent buying, reading P/V action = as it=20 rises and watching for the appropriate signs it's breaking down, then = excellent=20 selling will become very critical. I think it also means widening the = net for=20 finding CANSLIM candidates. If we're coming out of a period of declining = earnings, we have to be able to assess when the earnings of an = individual=20 company are *beginning* to turn up again based on sound business = execution. So,=20 a recent example from the IBD winners list: MCAF. Think you'll see more = like=20 this than the types of setups we've been seeing for the last 2 or 3 = years. And=20 I'd absolutely agree that an aggressive CANSLIMer would short stocks = breaking=20 down when the market is downtrending. If the market's going to go up and = down,=20 up and down, up and down, it makes no sense to sit out 1/2 the=20 time.
 
Katherine
 
PS *Toying* with us, huh? Somehow the = lines from=20 Longfellow's Song of Hiawatha stick with me...
 
Oh the long and dreary Winter!
Oh = the cold and=20 cruel Winter!
 
But then, we have August.
 
----- Original Message ----- =
From: "rolf hertenstein" <rolfh@mindspring.com>
To: <canslim@lists.xmission.com>
Sent: Sunday, December 02, 2001 5:03=20 PM
Subject: Re: [CANSLIM] Re: market=20 cycles

> If we were heading into a 1966-to-1981-like period, seems = like=20 the
> simple answer is to short on market downtrends, buy long on = the=20 uptrends
> (HTMMIS, pg 66 shows 3 or 4 bull markets during that 15 = year=20 period,
> depending on how one counts).  So the question that = popped=20 into my noodle:
> Does CANSLIM work in that kind od = environment? =20 Assuming the last couple
> of months have been a bull run in a = bear=20 market, seems like many (most?)
> b/o's
> have failed (from = what=20 I've been reading here) and generally CANSLIMers
> aren't
> = doing as=20 well.  Even IBD recently discussed winners that in = hindsight
>=20 weren't all
> that 'CANSLIM'.  Don't ask me what technique = might=20 work, I'm still looking
> to graduate to second grade.
> =
>=20  Rolf
>
> P.S. I was toying with warm-climate = participants the=20 other day - in reality
> I
> love the snow and cold of=20 winter.
>
> ----- Original Message -----
> From: = "Patrick=20 Wahl" <pwahl@prodigy.net>
> To:=20 <canslim@lists.xmission.com>
>=20 Sent: Sunday, December 02, 2001 1:30 PM
> Subject: Re: [CANSLIM] = Re:=20 market cycles
>
>
> > Looking at bonds with a = very broad=20 view, they have been in about a 20 year
>
>
> =
>=20 - -
> -To 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. - ------=_NextPart_000_0248_01C17B56.705F9240-- - - - -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: Sun, 2 Dec 2001 17:19:32 -0600 From: "Norman" Subject: Re: [CANSLIM] BRCM - image capture This is a multi-part message in MIME format. - ------=_NextPart_000_021E_01C17B55.81C45990 Content-Type: multipart/alternative; boundary="----=_NextPart_001_021F_01C17B55.81C45990" - ------=_NextPart_001_021F_01C17B55.81C45990 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Al, You can do the same thing with ScrnPrnt and Paint. Just hit the PrtScn = button in the upper right of your keyboard. Then open up Paint and = paste the image into a current view. Save the image as a gif file with = a name of your choosing. Then just follow Gene's instructions for = inserting into an email. I've done this with the 51KB file below which = will require only about 10-15 seconds to downloat at 26Kbps. If you = don't want the entire desktop as you see below, just select the screen = you want (i.e. a Word window) and hit Alt-PrtScn. You will get only the = window you selected. Norm ----- Original Message -----=20 From: Al French=20 To: canslim@lists.xmission.com=20 Sent: Sunday, December 02, 2001 4:38 PM Subject: Re: [CANSLIM] BRCM Gene- I'd sure like to know how you capture and transmit that screen. If I could do that, I could send you a chart that shows BRCM has = outperformed the Semi - IC index since January and that both have moved = up nicely since October 3. ;-) Al French ----- Original Message -----=20 From: Gene Ricci=20 To: canslim@lists.xmission.com=20 Sent: Sunday, December 02, 2001 5:16 PM Subject: [CANSLIM] BRCM After the discussion of BRCM, and on a friend's recommendation I = decided to not miss BRCM's next big move and put in a limited - buy - = stop order a bit over $50.00.... - ------=_NextPart_001_021F_01C17B55.81C45990 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Al,
 
You can do the same thing with ScrnPrnt and Paint.  Just = hit the=20 PrtScn button in the upper right of your keyboard.  Then open up = Paint and=20 paste the image into a current view.  Save the image as a gif file = with a=20 name of your choosing.  Then just follow Gene's instructions for = inserting=20 into an email.  I've done this with the 51KB file below which will = require=20 only about 10-15 seconds to downloat at 26Kbps.  If you don't want = the=20 entire desktop as you see below, just select the screen you want (i.e. a = Word=20 window) and hit Alt-PrtScn.  You will get only the window you=20 selected.
 
Norm
 
3D""
 
----- Original Message -----
From:=20 Al=20 French
Sent: Sunday, December 02, 2001 = 4:38=20 PM
Subject: Re: [CANSLIM] = BRCM

Gene-
 
I'd sure like to know how you capture = and=20 transmit that screen.
 
If I could do that, I could send you = a chart that=20 shows BRCM has outperformed the Semi - IC index since January and that = both=20 have moved up nicely since October 3.  ;-)
 
Al French
 
----- Original Message -----
From:=20 Gene = Ricci
Sent: Sunday, December 02, = 2001 5:16=20 PM
Subject: [CANSLIM] BRCM

After the discussion of BRCM, and = on a=20 friend's recommendation I decided to not miss BRCM's next big = move=20 and put in a limited - buy - stop order a bit over=20 $50.00....
 
3D""
- - - -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: Sun, 2 Dec 2001 19:56:37 -0500 From: "Dan Forant" Subject: Re: [CANSLIM] Re: market cycles This is a multi-part message in MIME format. - ------=_NextPart_000_007E_01C17B6B.739D72A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Any serious stock investor should short when he situation arises. I've = heard all the taboos about shorting, unpatriotic, risky, it's all = baloney. What goes up, must come down. Instead of calling it CANSLIM, it = should be called SLIMPICKENS in this market. DanF ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Sunday, December 02, 2001 6:26 PM Subject: Re: [CANSLIM] Re: market cycles Rolf, I think what you bring up is the essence of the flat market. That is, = being very good at reading P/V action of a fundamentally sound stock as = it begins to rise, excellent buying, reading P/V action as it rises and = watching for the appropriate signs it's breaking down, then excellent = selling will become very critical. I think it also means widening the = net for finding CANSLIM candidates. If we're coming out of a period of = declining earnings, we have to be able to assess when the earnings of an = individual company are *beginning* to turn up again based on sound = business execution. So, a recent example from the IBD winners list: = MCAF. Think you'll see more like this than the types of setups we've = been seeing for the last 2 or 3 years. And I'd absolutely agree that an = aggressive CANSLIMer would short stocks breaking down when the market is = downtrending. If the market's going to go up and down, up and down, up = and down, it makes no sense to sit out 1/2 the time. Katherine PS *Toying* with us, huh? Somehow the lines from Longfellow's Song of = Hiawatha stick with me... Oh the long and dreary Winter! Oh the cold and cruel Winter!=20 But then, we have August. ----- Original Message -----=20 From: "rolf hertenstein" To: Sent: Sunday, December 02, 2001 5:03 PM Subject: Re: [CANSLIM] Re: market cycles > If we were heading into a 1966-to-1981-like period, seems like the > simple answer is to short on market downtrends, buy long on the = uptrends > (HTMMIS, pg 66 shows 3 or 4 bull markets during that 15 year period, > depending on how one counts). So the question that popped into my = noodle: > Does CANSLIM work in that kind od environment? Assuming the last = couple > of months have been a bull run in a bear market, seems like many = (most?) > b/o's > have failed (from what I've been reading here) and generally = CANSLIMers > aren't > doing as well. Even IBD recently discussed winners that in = hindsight > weren't all > that 'CANSLIM'. Don't ask me what technique might work, I'm still = looking > to graduate to second grade. >=20 > Rolf >=20 > P.S. I was toying with warm-climate participants the other day - in = reality > I > love the snow and cold of winter. >=20 > ----- Original Message ----- > From: "Patrick Wahl" > To: > Sent: Sunday, December 02, 2001 1:30 PM > Subject: Re: [CANSLIM] Re: market cycles >=20 >=20 > > Looking at bonds with a very broad view, they have been in about a = 20 year >=20 >=20 >=20 > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email.=20 - ------=_NextPart_000_007E_01C17B6B.739D72A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Any serious stock investor should short = when he=20 situation arises. I've heard all the taboos about shorting, unpatriotic, = risky,=20 it's all baloney. What goes up, must come down. Instead of calling it = CANSLIM,=20 it should be called SLIMPICKENS in this market.
 
DanF
----- Original Message -----
From:=20 Katherine=20 Malm
Sent: Sunday, December 02, 2001 = 6:26=20 PM
Subject: Re: [CANSLIM] Re: = market=20 cycles

Rolf,
 
I think what you bring up is the = essence of the=20 flat market. That is, being very good at reading P/V action of a = fundamentally=20 sound stock as it begins to rise, excellent buying, reading P/V action = as it=20 rises and watching for the appropriate signs it's breaking down, then=20 excellent selling will become very critical. I think it also means = widening=20 the net for finding CANSLIM candidates. If we're coming out of a = period of=20 declining earnings, we have to be able to assess when the earnings of = an=20 individual company are *beginning* to turn up again based on sound = business=20 execution. So, a recent example from the IBD winners list: MCAF. Think = you'll=20 see more like this than the types of setups we've been seeing for the = last 2=20 or 3 years. And I'd absolutely agree that an aggressive CANSLIMer = would short=20 stocks breaking down when the market is downtrending. If the market's = going to=20 go up and down, up and down, up and down, it makes no sense to sit out = 1/2 the=20 time.
 
Katherine
 
PS *Toying* with us, huh? Somehow the = lines from=20 Longfellow's Song of Hiawatha stick with me...
 
Oh the long and dreary Winter!
Oh = the cold and=20 cruel Winter!
 
But then, we have = August.
 
----- Original Message ----- =
From: "rolf hertenstein" = <rolfh@mindspring.com>
To: <canslim@lists.xmission.com>
Sent: Sunday, December 02, 2001 5:03=20 PM
Subject: Re: [CANSLIM] Re: market=20 cycles

> If we were heading into a 1966-to-1981-like period, = seems like=20 the
> simple answer is to short on market downtrends, buy long = on the=20 uptrends
> (HTMMIS, pg 66 shows 3 or 4 bull markets during that = 15 year=20 period,
> depending on how one counts).  So the question = that=20 popped into my noodle:
> Does CANSLIM work in that kind od=20 environment?  Assuming the last couple
> of months have = been a bull=20 run in a bear market, seems like many (most?)
> b/o's
> = have=20 failed (from what I've been reading here) and generally = CANSLIMers
>=20 aren't
> doing as well.  Even IBD recently discussed = winners that=20 in hindsight
> weren't all
> that 'CANSLIM'.  Don't = ask me=20 what technique might work, I'm still looking
> to graduate to = second=20 grade.
>
>  Rolf
>
> P.S. I was toying = with=20 warm-climate participants the other day - in reality
> I
> = love=20 the snow and cold of winter.
>
> ----- Original Message=20 -----
> From: "Patrick Wahl" <pwahl@prodigy.net>
> To:=20 <canslim@lists.xmission.com>
> Sent: Sunday, December 02, 2001 1:30 PM
> = Subject:=20 Re: [CANSLIM] Re: market cycles
>
>
> > Looking = at=20 bonds with a very broad view, they have been in about a 20 = year
>=20
>
>
> -
> -To subscribe/unsubscribe, email=20 "majordomo@xmission.com"
> -In=20 the email body, write "subscribe canslim" or
> -"unsubscribe=20 canslim".  Do not use quotes in your email.=20 - ------=_NextPart_000_007E_01C17B6B.739D72A0-- - - - -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: Sun, 2 Dec 2001 18:54:30 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] Re: market cycles Hi Patrick, When Volker took the reins from Miller in '79, he knew the only way to beat inflation was to manage the money supply. I still remember the people across the street in early '81 paying this huge mortgage rate when prime was running around 20 or 21%. Volker was a savvy player and cranked up the interest rates to decrease the money supply and the resultant inflation rates. He was a master and knew when it was appropriate to lower the rates and many credit the bull run from the early 80's to his moves. Greenspan has followed in Volker's footsteps and I'd agree, has managed to do a pretty good job managing the money supply. (at least, so far) I agree with you that effective supply chain management has allowed companies to control their inventories more effectively. Companies like Dell got religion during the 386 era. But business is business and they cannot make necessary capacity appear at the snap of their fingers. That's what makes business cycles so tough. Plant, people, equipment. These investments take time to put into place and forecasting errors to the upside have created excess capacity in many industries such as telecom. When demand for product stops, these companies end up with involuntary inventories and capacity they can't use. It then takes time to "reset" and that resetting trickles throughout the economy in nasty ways. For example, every dollar spent on building a new home recirculates to the tune of 6 to 1. Imagine the implications if the homebuilding cycle were to come to an end. On top of that, there's the leftover excess valuations of the general stock market euphoria we've got to work through. Fasten your seatbelts... Katherine - ----- Original Message ----- From: "Patrick Wahl" To: Sent: Sunday, December 02, 2001 2:30 PM Subject: Re: [CANSLIM] Re: market cycles > Looking at bonds with a very broad view, they have been in about a 20 year bull > market, going up since the 20% (or whatever it was) interest rates from the Paul > Volcker years in about 1980. Of course, there have been some long counter trend > moves in that period, but bonds are near their 20 year low (under 5% a few years > ago), and far from the 20 year high. I get the idea that the Fed has become better > at managing the economy and does not let inflation get out of hand anymore, plus I > think companies manage inventories and such things better than they used to, so > economic cycles have been smoothed out a little bit. > > On 2 Dec 2001 at 11:35, Kent Norman wrote: > > > OK, I will throw another wrench in the works. > > > > After looking over the long cycles of good market/poor > > market, does anyone have a chart to compare real > > estate (or bonds, or other alternatives) to the cycles > > in the market? > > > > I wonder if big money seeks alternative investments > > during the 15 year flat markets? > > > > Kent Norman > > > > --- jeff.salisbury@xmission.com wrote: > > > Dec 2001 10:46:47 PST > > > Date: Sat, 1 Dec 2001 10:46:47 -0800 (PST) > > > From: John Kruger > > > Subject: RE: [CANSLIM] (CANSLIM) Clarify Group RS > > > To: canslim@lists.xmission.com > > > MIME-Version: 1.0 > > > Content-Type: text/plain; charset=us-ascii > > > > > > I don't disagree with the likelyhood of a multi-year > > > flat world economy > > > (although all projections of what the economy will > > > do in the far future > > > tend to be wrong), but I would note that this would > > > only be bad news > > > for those planning on buy index funds and hold them > > > for 15+ years. > > > > > > John > > > > > > -----Original Message----- > > > From: owner-canslim@lists.xmission.com > > > [mailto:owner-canslim@lists.xmission.com]On Behalf > > > Of Katherine Malm > > > Sent: Saturday, December 01, 2001 8:49 AM > > > To: canslim@lists.xmission.com > > > Subject: Re: [CANSLIM] (CANSLIM) Clarify Group RS > > > > > > Chris, > > > > > > Believe it or not, that wasn't a typo. I have one of > > > those big wall > > > charts from IBD called "50 Years of News & Markets" > > > purchased back in > > > '98. Sometimes I put it very, very far away from me > > > across the room and > > > remind myself, that over 50 years the faint black > > > line I see is > > > trending up. But then, every once and a while I get > > > up very close and > > > look at the detail. What has always struck me about > > > this chart is the > > > period from 1965-1981. It has oscillations up and > > > down, but when you > > > draw a trend line, it's sideways. Sideways for 16 > > > years! Criminey, 16 > > > YEARS. After such a period of reckless squandering > > > of investment > > > dollars and a very long period of "up," I'd put the > > > odds of that > > > happening again way up there. So, just in case, I'm > > > preparing myself > > > for such an environment. > > > > > > Katherine > > > > > > __________________________________________________ > > > Do You Yahoo!? > > > Buy the perfect holiday gifts at Yahoo! Shopping. > > > http://shopping.yahoo.com > > > > > > - > > > -To subscribe/unsubscribe, email > > > "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your > > email. > > > > > > ===== > > Opportunities always look bigger going than coming. > > > > __________________________________________________ > > Do You Yahoo!? > > Buy the perfect holiday gifts at Yahoo! Shopping. > > http://shopping.yahoo.com > > > > - > > -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. - - - -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: Sun, 2 Dec 2001 19:59:09 -0500 From: "Dan Forant" Subject: Re: [CANSLIM] Uh Oh Isn't it just wonderful for Microsoft having this feature, and it's free. DanF - ----- Original Message ----- From: "Norman" To: Sent: Sunday, December 02, 2001 6:26 PM Subject: [CANSLIM] Uh Oh > I just replied the Al's question to Gene regarding inserting images into an > email. However, seems that I should have deleted Gene's original image > before attaching and sending mine; that created a rather large file for the > list serve. I hope the reply, and 2 images on it, come thru; and I promise > to be good from now on :-) > > Norm > > > - > -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: Sun, 2 Dec 2001 18:33:22 -0700 From: "Patrick Wahl" Subject: Re: [CANSLIM] Market Cycles ( was: Clarify Group RS) I find this macro market stuff pretty interesting, but its not CANSLIM, it probably doesn't help in investing, so I don't comment on it too much.... But since we started, I'll toss out one more comment - The market is pretty much the economy, and Warren Buffet pointed out a couple years ago that the market can't outperform the economy indefinitely, it has to reflect the growth of the underlying businesses that make up the market, and that growth was much lower than the 20% returns the market provided for 5 years or so, or was it even more for longer? Anyway, you have to do something to regress to the mean, which the market certainly did in the last year, but it may need an even longer sideways period, given the excesses we just went through. I'm not enough of a bean counter type to work those numbers out, but I know the S&P still has a P/E in the twenties (yes, those are recession earnings, so other things have to be factored in to evaluate that number). (one other thing I find interesting is that there are a lot of people that don't seem to grasp this simple principle. half of the 30-40 year olds in this country in 1999 thought the market would go up like that forever and they would all be able to retire in 4 or 5 more years.) On 2 Dec 2001 at 11:29, Katherine Malm wrote: > Whew...cat out of the bag indeed! > > Thought I'd try and collect the related thoughts here into the thread that > we can continue... > > From Barry M--market history > From Patrick W--stagnant periods > From John K--flat markets and index funds > From John A and Warren K--how to prepare? mental or strategic? > From Kent N--math and regressing to the mean, heretofore called the "RTTM > curse" in his honor. > > It would be easiest for me to first stage this from a personal perspective. > It really started with the IBD wall chart I bought at the seminar in May > '98. Though I'd been a student of market history up to that point, I don't > think it really hit me until I saw how "real" that long flat period was. > About a month after that a new book, "The Bear Book" by John Rothchild, came > out. How amazing that he was able to get this published at the height of the > mania. By then, we'd had the late '97 rude awakening, but we certainly > hadn't been through the late '98 reckoning , the bubble mania, the Big Bear. > I read it in one sitting and realized I'd have to go back and reread my > market history with a new sense of urgency and attentiveness. > > What that yielded is a perspective. That is, while the businesses and the > economy goes through certain cycles, the market goes through cycles as well. > I'm not talking about Elliott wave theory and all that stuff...this is > BUSINESS and MONETARY POLICY related cycles. I'm also not talking about > predictive models. What I really like about CANSLIM and WON's approach is > that he says...you do not need to predict, you only need to be able to read > the signs. So, you have business going through capacity adjustments, > inventory adjustments, product and market innovation, restructuring, > strategic refocusing, etc. etc. You have the Fed going through tightening > and loosening cycles to manage liquidity during crisis, international > turmoil, Y2K, etc etc. You have fiscal policy which affects dollars flowing > or not flowing to certain parts of the economy. Then, you have a bunch of > people, market players, with all these emotions, risk-taking or risk-less > behaviors, psychology, etc. etc. > > If you're investing in equities, there are universal truths. And that is, > price is an expectation about something in the future. Earnings, inflation, > interest rates. If you make forecasting errors, you might over or under > estimate earnings. I saw this all the time in consulting with manufacturing > companies. Their forecasts were *always* wrong, and that meant that their > additions and deletions of capacity were always wrong. But as long as a > current trend continued in the same direction, their errors weren't all that > awful. They could make minor adjustments in capacity and materials > utilization that would absorb the error. But as soon as something major > happened and the trend changed, they were sitting ducks. To make up for the > forecasting error, they had to scurry about and make major sweeping changes > that had huge impact on the business. Very bad. So, imagine that same effect > on market pricing and expectations. What if our tendency to project the > current trend is always wrong? At some point it catches up with us....we get > a bear market. Now add to that all the complexities of changing expectations > about inflation and interest rates, deflation of a bubble, changing global > economies, etc. etc. It's very likely that in regressing back to the mean, > we have to go through a long period where everybody gets all their > expectations in order. Result? Long, relatively sideways market with > oscillations up and down, a la 65-82 or thereabouts. > > More to the point, what does that mean for us as individual investors? If > the market *as a whole* goes relatively sideways, indexing is decidedly out. > Add to that the tendency of most mutual fund managers to be closet indexers > and you're really cooked. Where do the oscillations in the market come from? > Business innovation and restructuring, industry restructuring and > innovation, monetary and fiscal changes, expectation changes, and more. That > leaves us with rebalancing our portfolio overall to adjust (bonds, cash, > equities). And for the equity portion, it means we have to very, very, very, > very good at riding the cycles up AND down. There's no margin for error like > there used to be. It's not an ever-rising tide, so you can't pick any boat > and ride it up, up, up. You cannot be a "buy and holder." Why? Because > between now and the next 15 or 16 years, your real return vs. inflation will > be negative. > > So lets say I'm all wrong about the sideways market thing. Let's say we > return to a long uptrend. You have lost nothing by being an excellent > investor who understands a business and how it translates strategy and > execution into accelerating earnings and revenues. You've lost nothing by > understanding industry cycles and fashions. You've lost nothing by being > superb in candidate selection, buying skills, selling skills. No matter what > the market looks like, you win. But if you have sloppy habits and the market > it sideways, you lose big. > > Katherine > > > ----- Original Message ----- > From: "Barry Marx" > Sent: Saturday, December 01, 2001 11:31 PM > > > > On the subject of flat vs. trending markets, below is pasted a message I > saw > > a while back on one of the fool.com boards. I'm not sure how accurate the > > numbers are, but from eyeballing the Dow chart, at least the basic > > weak/strong cycle idea seems to be correct. > > > > Barry > > > > -------- > > > > I read an interesting article recently on the major market cycles since > > the birth of the modern stock market around 1900. Here are the cycles > > identifed, with average annual market return (DJ Ind, I think) > > after inflation: > > > > CYCLE YEARS LENGTH AVG RTN > > > > WEAK 1902-1921 19 years 0.0% > > STRONG 1921-1929 8 years 25.2% (Roaring Twenties) > > WEAK 1929-1949 20 years 0.9% (Depression) > > STRONG 1949-1966 17 years 14.0% > > WEAK 1966-1982 16 years -1.4% > > STRONG 1982-1999 17 years 14.9% > > > - > -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. ------------------------------ End of canslim-digest V2 #1880 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. 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