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Hi All,

I've uploaded the latest CANSLIM Hunting list to:

http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine/CANSLIMHunting<= SPAN=20 class=3D906271822-11012003>022103.xls ( quite slow to load)

http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine/CANSLIMHunting<= SPAN=20 class=3D171303916-23022003>022103.zip=20 ( a zipped version for download)

*Please note that these spreadsheets were prepared with Excel 2000 = for=20 Windows. If you have older versions of Excel or use a Mac version, you = will not=20 be able to view them properly. If you do not have Excel, see http://= office.microsoft.com/downloads/2000/xlviewer.aspx for=20 a free viewer.

If you'd like to look at last month's hunting list, you will find = it=20 at:

http= ://www.cwhcharts.com/katherine/CANSLIMHunt= ing011003.zip

In order to make it to the list, the stock had to have a forward = growth=20 rate of at least 15%, Price at least 6, Avg Daily Vol at least 30K, RS = at least=20 60, no more than 15% below the 50 day SMA, and at or above the 200 day = SMA. This=20 is what I consider to be "bare bones" requirements for CANSLIM quality = stocks.=20 (Note that if you follow stricter CANSLIM guidelines, you can use the = autofilter=20 feature in each column and view only Price>=3D$12 (or 15) and=20 AvgVol>=3D100000.) Other information included is industry name = (slightly=20 different than DGO's names, but close), price, avg vol, and links = to=20 graphs and due diligence sites on the internet.=20 You'll find a column for the % change=20 in price since the market low 10/10/02 and another column which shows = the=20 direction of the RS Line since the 10/10 market low. If the RS = Line (RS=20 compared to S&P500) has been going up since that date (indicating=20 outperformance relative to the market), it is indicated with a = "+". Be sure to note that there are 4 = sheets in the=20 workbook. The first sheet has the listed stocks;=20 others include a list of stocks dropped from the list, a summary = of=20 stocks by sector, and a sheet with misc. links for free info on the = web.

This month there are 415 names, down 95 names from the list I posted = last=20 month. This month, 227 names fell from the = list, 131 = names are new=20 and 284 names are = repeats.

Dave Frank's comments = regarding the=20 "death of CANSLIM" and the ensuing discussion in = this weekend's thread=20 (entitled "POSS") sent my brain cells spinning and thought it might be = an=20 interesting exercise to go back to the CANSLIM Hunting list from a year = ago and=20 perform some comparison. Before I give some statistics, I thought I = might make=20 some general comments on the CANSLIM methodology. I think that if you = look at=20 the core of CANSLIM, you could characterize it as an "intermediate term = growth,=20 long position strategy for fundamentally sound stocks" Break that down = instead=20 into these questions:

-Is the market favorable to long=20 strategies? =

-Is the market favorable to = fundamentally=20 sound growth stocks?

-Is=20 the market favorable to intermediate term entry/exit = strategies?

There's no secret that any long = strategy=20 works best when the majority of stocks are going up. The odds are just = better=20 that you can pick a stock, go long and profit. You can be a sloppy stock = picker=20 and make sloppy executions and the odds are still in your favor. If 3 = out of 4=20 stocks are going up, it's difficult to make costly mistakes even if you = only=20 apply a modicum of expertise. If the underlying long term trend is up = and people=20 are pumping loads of extra cash into the market, it's just *easier* to = use a=20 CANSLIM strategy. If, however, the underlying longer term trend is down, = the=20 best you can do is be smart about the shorter lived upswings and use = long=20 strategies only during the upswing. (The same would be true of = sideways=20 markets where the cycle is continuously up/down, with no longer term = underlying=20 uptrend). It also means that you have to be darned good with both = stock=20 picking and execution to eek profits out the upswing. It's left to the = investor=20 to decide if they want to choose CANSLIM-quality stocks for the = upswings, or=20 simply ride it with the stocks du jour.

Are growth stocks always the = "best" stocks=20 for long positions? Are fundamentally sound stocks always the best for = long=20 positions? I'd say without hesitation that they are not always "best", = but the=20 more important question is does it work against you to invest in = fundamentally=20 sound companies that are growing their business? I think it would be = hard to=20 argue against that one, because the history of markets over longer = periods of=20 time prove that stinky companies eventually get their comeuppance and = for the=20 most part, good companies that grow the business reward the investor. = However,=20 there's still the question of timing and I think to discount the = importance of=20 entry/exit or in favor/out of favor is dangerous to a portfolio. If = you're a=20 "CANSLIM investor", I think it simply means that you are committed to = focusing=20 buying attention on fundamentally sound stocks with growth = characteristics and=20 that you ignore the cyclicals and defensives. That also means that the = CANSLIM=20 investor has to interpret whether the market favors growth stocks and = hold off=20 on making substantial equity investments when it does not.

I've always interpreted = "intermediate term"=20 as a period of a few weeks to a few months. That means that as a CANSLIM = investor, I look to ride the mid-waves in the longer term trend. I think = the=20 biggest problem with interpretation of CANSLIM is that there is still = the=20 misperception that CANSLIM is a longer term strategy and that one would = or could=20 purchase a stock and hang on to it for years. If one really looks at the = rules=20 of CANSLIM, that's not the case. The idea is to purchase a stock that = has shown=20 outperformance over a period of time and grab it as it pushes through = it's=20 latest area of consolidation. It's the "early beanie baby syndrome." Get = it=20 while everybody else is figuring out it's hot, then ride it just until = there=20 interest begins to wane. Not "buy it after it's become the most = popular=20 thing on the block and ride it until the last person in the world hates = beanie=20 babies." I think that simply means that you have to be good at figuring = out when=20 something is showing under-recognized strength, ride it up, take your = profits=20 and then move on to the next new hot thing. That also means that as long = as=20 there is an uptrend that lasts a few weeks to a few months, there's good = long=20 positions to be had in CANSLIM quality stocks. In all, I interpret = CANSLIM as a=20 trading strategy, not an investment strategy. As a trader taking long = positions=20 in short upwaves, the job is just a heck of a lot tougher and a high = skill level=20 is particularly key if you're to make money consistently. I'd agree with = Dave=20 that the market has been "right for CANSLIM for the 16th time." In = between, it=20 "wasn't right." If you're more rigid in your interpretation of the "M" = in=20 CANSLIM, then as a CANSLIM trader, you would also wait for the = underlying longer=20 term trend of the market to be up, meaning that the market hasn't been = "right"=20 since March of 2000. As many others stated in the thread, that means = that as a=20 CANSLIM investor, you simply aren't investing in long positions, happily = sitting=20 on the super gains of the 90's. If/when the longer term trend ever turns = up,=20 then it'll be time for new positions.

Some statistics on the Hunting = list 2/20/02=20 vs. 2/21/03. (Note: I've added a column to this month's list indicating = whether=20 the stock also appeared on the list last year. You'll see some familiar = names=20 including Tom's EPIQ, SBUX, WFMI, APOL, CECO, AMZN, and yes, = POSS)

(1) Total number of stocks on the=20 list:

2/20/02: 510

2/21/03: 415

Conclusion: if the list of stocks = isn't=20 growing over the year, it's unlikely the longer term trend in the market = is=20 up.

(2) Stocks on the list 2/20/02 = that are=20 still on the list 2/21/03: 95.

Conclusion: Growth stocks weren't=20 necessarily the "favored" group of stocks during the last year. Less = than 20% of=20 the growth stocks on 2/20/02 are still holding up a year later. At the = same=20 time, the total number of stocks has not fallen significantly, meaning = that=20 there is a pool of respectable size from which to draw trading = possibilities.=20 Timing is obviously key, however. I took a quick stab at categorizing = the 95=20 stocks into cyclical (economically and/or interest rate sensitive), = defensive=20 (safe havens during economic downturns), or growth. There's no perfect=20 categorization along these lines, because a business can be from an = industry=20 that is traditionally considered defensive or cyclical and still have = growth=20 characteristics. In fact, that's how they make it to the = list. Here's how=20 the numbers pan out:

Defensive: 12

Cyclical: 41

Growth: 42

That's 42 stocks out of an active = set of=20 stocks traded on the major exchanges (about 7500), or less than 1%. That = certainly demonstrates that the market hasn't favored traditional growth = stocks=20 over the last year. Has CANSLIM been the "best" or the "easiest" = strategy over=20 the last year? No. Was it possible to make money on the long strategy = during=20 certain times over the last year? Yes. Is CANSLIM dead forever? No = way... read=20 Buffett, Graham & Dodd or any market history book and see that = there's=20 always room for a strategy that focuses on fundamentally sound stocks = with=20 growth characteristics.

Happy Hunting,

Katherine

PS=20

You can see a list of stocks on = the 2/20/02=20 list at:

http://<= SPAN=20 class=3D906271822-11012003>cwhcharts.com/katherine/CANSLIMHunting<= SPAN=20 class=3D171303916-23022003>022002.zip