From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1976 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Wednesday, December 19 2001 Volume 02 : Number 1976 In this issue: Re: [CANSLIM] Point of View: John Adair ---------------------------------------------------------------------- Date: Wed, 19 Dec 2001 22:39:42 -0600 From: Gene Ricci Subject: Re: [CANSLIM] Point of View: John Adair This is a multi-part message in MIME format. - ------=_NextPart_000_01B2_01C188DE.0D3970B0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable John, EVERY-TING EES VUNDERBAR! Thanks, Gene ----- Original Message -----=20 From: John Adair=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 19, 2001 10:12 PM Subject: RE: [CANSLIM] Point of View: John Adair Hi Gene , How is this? =20 -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene Ricci Sent: Wednesday, December 19, 2001 9:23 PM To: canslim@lists.xmission.com Subject: [CANSLIM] Point of View: John Adair =20 John, please take pity and use a larger font and black color.=20 Your posts are very difficult to read. =20 Thanks for your consideration, Gene ----- Original Message -----=20 From: John Adair=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 19, 2001 7:14 PM Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals? =20 Hi Katherine, I like your reply it shows a very disciplined approach to investing. = How long have you been at investing? I assume you are retired and = fulltime investing for the most part. By the way thanks for suggesting Bulkowski. =20 -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Wednesday, December 19, 2001 4:02 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Point of View: Why bother with fundamentals? =20 Hi John, =20 >>The last paragraph seems indicate you do use fundamentals and = sector rotation for your screening. Then you use total technical = analysis from that point including exits. Correct?<< =20 That is for the most part correct, though industry analysis (sector = rotation) enters in both screening and in buy/sell decisions. I look for = something with a fundamental story and if I like it, I watch it until = the industry and technical analysis stars align. As part of my buy = review process, I look at the action in all players in the industry. = This will help ensure that the industry is not topping out, even though = the buy candidate looks technically sound. I also look at industry = players to be sure that moves off the bottom show that at least 2 strong = stocks are moving. One alone, and I wait. Once I own a stock, part of my = sell rules include continued review of other stocks in the industry. If = they begin breaking down, but my holding is strong, it goes on warning. = If other technical warning signs kick in, out it goes. My entries and = exits are definitely driven by technicals. There are times, however, = where fundamentals do play a hand in my sell rules: =20 (1) This is really a combined fundamental/technical sell rule: Sell if = a stock gaps down on earnings news. I don't have a perfect example of = this from my own recent sells, but one that is close. I owned IRF = earlier in the year. In early June it started flashing all sorts of = technical warnings. On 6/11 it gapped down with no explanation. That was = enough for me, as I knew earnings were upcoming. I was out on the 12th. = On 6/15 it gapped down on earnings news. If I hadn't already sold, I = would have within a day or two of the gap. The day or two lag is only so = that I can catch the last little bounce before it gives up the ghost. = There are plenty more examples better than this one where the stock went = on to drop into oblivion, but I can't think of one off the top of my = head. =20 (2) If fundamentals are deteriorating. This is a WON rule. That is, if = the earnings growth begins decelerating 2 quarters in a row, something's = up. This is what prompted me to begin scaling out of DELL in early 99. = Technicals were also getting iffy, but the earnings news clinched it. I = was out completely by Fall of 99. Absolutely everybody I knew thought = I'd lost it. That doesn't mean I don't think DELL's a great company. I = do. It just means my sell rules worked when it mattered. =20 (3) Financial shenanigans. There's just no way to know how things will = look when the smoke clears. You can get an example like TYC where it = turns out to be ok. Then you can get a MSTR or ENE or LU. I just don't = think the odds favor these things working out for the best, so I'd = rather watch the dust clear from the sidelines. The latest is TTWO. I = haven't ever owned it, but I can't wait to see what happens. =20 =20 >>If that's correct then would you begin to identify some of the = patterns in the stocks you evaluate. I have purchased Bulkowski and = trying to make sense out of it. The patterns never seem to match his = diagrams.<< =20 I wrestle with technicals every day. I wouldn't say I'm the best = person on the list to address this question, as there are so many others = here who are very good technicians. I can identify the plain and simple, = but if I can't read it I will rely on industry analysis, technicals in = other players, or will just write it off as "too hard to read--wait and = see what happens." This happened recently while I was watching JEC. I = wasn't considering it for a buy, but was watching it for other reasons. = I just couldn't figure out the chart and it' the reason why I posted the = question to the list. Strangely enough, JEC showed up in an Investor's = Corner the other day. Imagine that. =20 Katherine =20 =20 ----- Original Message -----=20 From: John Adair=20 =20 To: canslim@lists.xmission.com=20 Sent: Tuesday, December 18, 2001 7:35 PM Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals? =20 Hi Katherine I read with interest your procedure The last paragraph seems indicate = you do use fundamentals and sector rotation for your screening. Then you = use total technical analysis from that point including exits. Correct? If that's correct then would you begin to identify some of the = patterns in the stocks you evaluate. I have purchased Bulkowski and = trying to make sense out of it. The patterns never seem to match his = diagrams. John A ----- Original Message -----=20 From: Katherine Malm=20 =20 =20 The point is, a company can have the potential to be a great company, = but if there is no demand for the stock, the price will not go up. Or, = sometimes, the price of a stock of a seeming worthless company will go = up. Until it doesn't. Every once in a while you will watch a very good = company become a great company and the stock will go up, and up, and up, = and up. Until it doesn't. All you need to know is market history to know = that this is true. You don't need exhaustive statistical studies. You = can find example after example. But can you find a good company that is = underowned or undiscovered and has the potential to become a great = company? Can you determine when demand is beginning to overwhelm supply = so that you can buy it at a good price? Can you tell if there is = continued demand for it that drives up the price? Can you determine when = is becoming overowned and sell it for as much as possible? Can you make = money on it? I believe you can. Fundamentals tell the story of a good = company. Due diligence tells the story of potential. Technicals tell the = story of supply and demand. CANSLIM has all of these in its toolbag. How = you chose to use them is your choice. =20 Here is my answer to this question. As you can see, it is different = than everyone else's. =20 Narrowing down the universe of candidates based on excellent = fundamentals and company/industry potential allows me to ride price = movement with a bonus. If the market is healthy and this stock is not = yet "discovered" and the company fulfills its potential, I may be able = to ride it much longer than the intermediate term. This stock could = easily become the next DELL, MSFT, INTC, CSCO, or HD. Fundamentals, well = considered, put the odds for selecting a "big winner" in my favor.=20 - ------=_NextPart_000_01B2_01C188DE.0D3970B0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
John, EVERY-TING EES = VUNDERBAR!
 
Thanks,
Gene
----- Original Message -----
From:=20 John=20 Adair
Sent: Wednesday, December 19, = 2001 10:12=20 PM
Subject: RE: [CANSLIM] Point of = View:=20 John Adair

Hi=20 Gene ,

How=20 is this?

 

-----Original=20 Message-----
From: = owner-canslim@lists.xmis= sion.com=20 [mailto:owner-canslim@lists.xmission.com]On=20 Behalf Of Gene Ricci
Sent: Wednesday, December 19, = 2001 9:23=20 PM
To: canslim@lists.xmission.com=
Subject: [CANSLIM] Point of = View: John=20 Adair

 

John,=20 please take pity and use a larger font and black color. =

Your posts=20 are very difficult to read.

 

Thanks for=20 your consideration,

Gene

----- = Original=20 Message -----

From: John = Adair=20

To: canslim@lists.xmission.com= =20

Sent: = Wednesday, December=20 19, 2001 7:14 PM

Subject: RE: = [CANSLIM] Point=20 of View: Why bother with fundamentals?

 

 Hi=20 Katherine,

I like=20 your reply it shows a very disciplined approach to investing. How long = have=20 you been at investing? I assume you are retired and fulltime investing = for the=20 most part.

 By the way thanks for = suggesting=20 Bulkowski.

 

-----Original=20 Message-----
From: = owner-canslim@lists.xmis= sion.com=20 [mailto:owner-canslim@lists.xmission.com]On=20 Behalf Of Katherine Malm
Sent: Wednesday, December 19, = 2001 4:02=20 PM
To:=20 canslim@lists.xmission.com
Subject: Re: [CANSLIM] Point of = View: Why=20 bother with fundamentals?

 

Hi=20 John,

 

>>The last = paragraph=20 seems  indicate you do = use=20 fundamentals and sector rotation for your screening. Then you  use total technical analysis = from that=20 point including exits. Correct?<<

 

That is = for the most=20 part correct, though industry analysis (sector rotation) enters = in both=20 screening and in buy/sell decisions. I look for something with a = fundamental=20 story and if I like it, I watch it until the industry and technical = analysis=20 stars align. As part of my buy review process, I look at the action in = all=20 players in the industry. This will help ensure that the industry is = not=20 topping out, even though the buy candidate looks technically sound. I = also=20 look at industry players to be sure that moves off the bottom show = that at=20 least 2 strong stocks are moving. One alone, and I wait. Once I own a = stock,=20 part of my sell rules include continued review of other stocks in the=20 industry. If they begin breaking down, but my holding is strong, it = goes on=20 warning. If other technical warning signs kick in, out it = goes. My=20 entries and exits are definitely driven by technicals. There = are=20 times, however, where fundamentals do play a hand in my sell=20 rules:

 

(1) This = is really a=20 combined fundamental/technical sell rule: Sell if a stock gaps down on = earnings news. I don't have a perfect example of this from my own = recent=20 sells, but one that is close. I owned IRF earlier in the year. In = early June=20 it started flashing all sorts of technical warnings. On 6/11 it gapped = down=20 with no explanation. That was enough for me, as I knew = earnings were=20 upcoming. I was out on the 12th. On 6/15 it gapped down on earnings = news. If I=20 hadn't already sold, I would have within a day or two of the gap. = The day=20 or two lag is only so that I can catch the last little bounce = before it=20 gives up the ghost. There are plenty more examples better than = this one=20 where the stock went on to drop into oblivion, but I can't think of = one off=20 the top of my head.

 

(2) If = fundamentals=20 are deteriorating. This is a WON rule. That is, if the earnings growth = begins=20 decelerating 2 quarters in a row, something's up. This is what = prompted me to=20 begin scaling out of DELL in early 99. Technicals were also getting = iffy, but=20 the earnings news clinched it. I was out completely by Fall of 99. = Absolutely=20 everybody I knew thought I'd lost it. That doesn't mean I don't think = DELL's a=20 great company. I do. It just means my sell rules worked when it=20 mattered.

 

(3) = Financial=20 shenanigans. There's just no way to know how things will look when the = smoke=20 clears. You can get an example like TYC where it turns out to be ok. = Then you=20 can get a MSTR or ENE or LU. I just don't think the odds favor these = things=20 working out for the best, so I'd rather watch the dust clear from the=20 sidelines. The latest is TTWO. I haven't ever owned it, but I can't = wait to=20 see what happens.

 

 

>>If=20 that’s correct then would you begin to identify some of the = patterns in the=20 stocks you evaluate. I have purchased Bulkowski and trying to make = sense out=20 of it. The patterns never seem to match his=20 diagrams.<<

 

I=20 wrestle with technicals every day. I wouldn't say I'm the best person = on the=20 list to address this question, as there are so many others here who = are very=20 good technicians. I can identify the plain and simple, but if I can't = read it=20 I will rely on industry analysis, technicals in other players, or will = just=20 write it off as "too hard to read--wait and see what happens." This = happened=20 recently while I was watching JEC. I wasn't considering it for a buy, = but was=20 watching it for other reasons. I just couldn't figure out the chart = and it'=20 the reason why I posted the question to the list. Strangely enough, = JEC showed=20 up in an Investor's Corner the other day. Imagine=20 that.

 

Katherine

 

 

----- Original Message -----=20

From: John = Adair=20

 

To: canslim@lists.xmission.com= =20

Sent: Tuesday, = December=20 18, 2001 7:35 PM

Subject: RE: = [CANSLIM] Point=20 of View: Why bother with fundamentals?

 

 Hi=20 Katherine

I read=20 with interest your procedure The last paragraph seems  indicate you do use = fundamentals and=20 sector rotation for your screening. Then you  use total technical analysis = from that=20 point including exits. Correct?

If=20 that’s correct then would you begin to identify some of the = patterns in the=20 stocks you evaluate. I have purchased Bulkowski and trying to make = sense out=20 of it. The patterns never seem to match his=20 diagrams.

John=20 A

----- = Original=20 Message -----

From: Katherine Malm=20

 

 

<snip>

The point = is, a=20 company can have the potential to be a great company, but if there is = no=20 demand for the stock, the price will not go up. Or, sometimes, the = price of a=20 stock of a seeming worthless company will go up. Until it doesn't. = Every once=20 in a while you will watch a very good company become a great company = and the=20 stock will go up, and up, and up, and up. Until it doesn't. All you = need to=20 know is market history to know that this is true. You don't need = exhaustive=20 statistical studies. You can find example after example. But can you = find a=20 good company that is underowned or undiscovered and has the=20 potential to become a great company? Can you determine when demand is=20 beginning to overwhelm supply so that you can buy it at a good price? = Can you=20 tell if there is continued demand for it that drives up the price? Can = you=20 determine when is becoming overowned and sell it for as much as = possible? Can=20 you make money on it? I believe you can. Fundamentals tell the story = of a good=20 company. Due diligence tells the story of potential. Technicals tell = the story=20 of supply and demand. CANSLIM has all of these in its = toolbag.=20 How you chose to use them is your choice.

 

Here is my = answer to=20 this question. As you can see, it is different than everyone=20 else's.

 

Narrowing = down the=20 universe of candidates based on excellent fundamentals and = company/industry=20 potential allows me to ride price movement with a bonus. If the market = is=20 healthy and this stock is not yet "discovered" and the company = fulfills its=20 potential, I may be able to ride it much longer than the intermediate = term.=20 This stock could easily become the next DELL, MSFT, INTC, CSCO, = or HD.=20 Fundamentals, well considered, put the odds for selecting a "big = winner" in my=20 favor. 

<snip>

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