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From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1975 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 1975 In this issue: RE: [CANSLIM] Point of View: John Adair ---------------------------------------------------------------------- Date: Wed, 19 Dec 2001 22:12:57 -0600 From: "John Adair" <xjadair@brightok.net> Subject: RE: [CANSLIM] Point of View: John Adair This is a multi-part message in MIME format. - ------=_NextPart_000_0057_01C188DA.50DA0CC0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable X-MIME-Autoconverted: from 8bit to quoted-printable by mail4.brightok.net id WAA19944 Hi Gene , How is this? - -----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 John, please take pity and use a larger font and black color. Your posts are very difficult to read. Thanks for your consideration, Gene - ----- Original Message ----- From: John Adair <mailto:xjadair@brightok.net> To: canslim@lists.xmission.com <mailto:canslim@lists.xmission.com> Sent: Wednesday, December 19, 2001 7:14 PM Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals? 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. - -----Original Message----- From: owner-canslim@lists.xmission.com <mailto: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? Hi John, >>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?<< 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 h= elp ensure that the industry is not topping out, even though the buy candidat= e 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 pla= y a hand in my sell rules: (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 t= he 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 kne= w 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 bette= r 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. (2) If fundamentals are deteriorating. This is a WON rule. That is, if th= e 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 w= as out completely by Fall of 99. Absolutely everybody I knew thought I'd los= t 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. (3) Financial shenanigans. There's just no way to know how things will lo= ok 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, bu= t I can't wait to see what happens. >>If that=92s correct then would you begin to identify some of the patter= ns in the stocks you evaluate. I have purchased Bulkowski and trying to make se= nse out of it. The patterns never seem to match his diagrams.<< I wrestle with technicals every day. I wouldn't say I'm the best person o= n the list to address this question, as there are so many others here who a= re 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. Katherine - ----- Original Message ----- From: John Adair <mailto:xjadair@brightok.net> To: canslim@lists.xmission.com <mailto:canslim@lists.xmission.com> Sent: Tuesday, December 18, 2001 7:35 PM Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals? Hi Katherine I read with interest your procedure The last paragraph seems indicate yo= u do use fundamentals and sector rotation for your screening. Then you use total technical analysis from that point including exits. Correct? If that=92s correct then would you begin to identify some of the patterns= in the stocks you evaluate. I have purchased Bulkowski and trying to make se= nse out of it. The patterns never seem to match his diagrams. John A - ----- Original Message ----- From: Katherine Malm <mailto:kmalm@earthlink.net> <snip> 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 undiscover= ed 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 th= e price? Can you determine when is becoming overowned and sell it for as mu= ch as possible? Can you make money on it? I believe you can. Fundamentals te= ll 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. Here is my answer to this question. As you can see, it is different than everyone else's. 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" an= d 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. <snip> - ------=_NextPart_000_0057_01C188DA.50DA0CC0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <html xmlns:v=3D"urn:schemas-microsoft-com:vml" = xmlns:o=3D"urn:schemas-microsoft-com:office:office" = xmlns:w=3D"urn:schemas-microsoft-com:office:word" = xmlns=3D"http://www.w3.org/TR/REC-html40"> <head> <meta http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <meta name=3DProgId content=3DWord.Document> <meta name=3DGenerator content=3D"Microsoft Word 9"> <meta name=3DOriginator content=3D"Microsoft Word 9"> <link rel=3DFile-List href=3D"cid:filelist.xml@01C188DA.4ECA1880">  <style>  </style>  </head> <body bgcolor=3Dwhite lang=3DEN-US link=3Dblue vlink=3Dblue = style=3D'tab-interval:.5in'> <div class=3DSection1> Hi Gene = ,<o:p></o:p> How is = this?<o:p></o:p> <![if = !supportEmptyParas]> <![endif]><o:p></o:p> -----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 <![if = !supportEmptyParas]> <![endif]><o:p></o:p> John, please take pity and use a larger font and black = color. <o:p></o:p><= /p> Your posts are very difficult to read.<o:p></o:p><= /p> <o:p></o:p><= /p> Thanks for your consideration,<o:p></o:p><= /p> Gene<o:p></o:p> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> ----- Original Message ----- <o:p></o:p> <p class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; margin-left:39.75pt;background:#E4E4E4;border:none;mso-border-left-alt:so= lid black 1.5pt; padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'> <div style=3D'font-color:black'>From: <a href=3D"mailto:xjadair@brightok.net" title=3D"xjadair@brightok.net">John = Adair</a> </div> <o:p></o:p>= To: <a href=3D"mailto:canslim@lists.xmission.com" = title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a> <o:p></o:p></span= > Sent: Wednesday, = December 19, 2001 7:14 PM<o:p></o:p> Subject: RE: [CANSLIM] Point of View: Why bother with = fundamentals?<o:p></o:p> <![if = !supportEmptyParas]> <![endif]><o:p></o:p><= /p> <s= pan style=3D"mso-spacerun: yes"> Hi = Katherine,<o:p></o:p> 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.<o:p></o:p> <s= pan style=3D"mso-spacerun: yes"> By the way thanks for = suggesting Bulkowski.<o:p></o:p> &n= bsp;<o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> -----Original Message----- From: <a href=3D"mailto:owner-canslim@lists.xmission.com">owner-canslim@lists.xmis= sion.com</a> [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?<o:p></o:p><= /p> <o:p></o:p><= /p> Hi John,<o:p></o:p> <o:p></o:p><= /p> >>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?<<<o:p></o:p><= /p> <o:p></o:p><= /p> 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:<o:p></o:p> <o:p></o:p><= /p> (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.<o:p></o:p><= /p> <o:p></o:p><= /p> (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.<o:p></o:p> <o:p></o:p><= /p> (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.<o:p></o:p><= /p> <o:p></o:p><= /p> <o:p></o:p><= /p> >>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.<<<o:p></o:p><= /p> <o:p></o:p><= /p> 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.<o:p></o:p><= /p> <o:p></o:p><= /p> Katherine= <o:p></o:p><= /p> <o:p></o:p><= /p> <o:p></o:p><= /p> ----- Original Message ----- <o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt; background:#E4E4E4'> <div style=3D'font-color:black'>From: <a href=3D"mailto:xjadair@brightok.net" title=3D"xjadair@brightok.net">John = Adair</a> </div> <o:p></o:p><= /p> <![if = !supportEmptyParas]> <![endif]><o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> To: <a href=3D"mailto:canslim@lists.xmission.com" = title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a> <o:p></o:p></span= > Sent: Tuesday, = December 18, 2001 7:35 PM<o:p></o:p> Subject: RE: [CANSLIM] Point of View: Why bother with = fundamentals?<o:p></o:p> <o:p></o:p><= /p> Hi Katherine<o:p></o:p> 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?<o:p></o:p> 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.<o:p></o:p> John = A<o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> ----- Original Message ----- <o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> <div style=3D'font-color:black'>From: <a href=3D"mailto:kmalm@earthlink.net" = title=3D"kmalm@earthlink.net">Katherine Malm</a> </div> <o:p></o:p><= /p> <![if = !supportEmptyParas]> <![endif]><o:p></o:p><= /p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> </f= ont><o:p></o:p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> <snip><o:p></o:p><= /p> </div> <div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in = 0in 4.0pt'> 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.<o:p></o:p><= /p> <o:p></o:p><= /p> Here is my answer to this question. As you can see, it is different than everyone else's.<o:p></o:p><= /p> <o:p></o:p><= /p> 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. <o:p></o:p><= /p> <snip><o:p></o:p><= /p> </div> </div> </body> </html> - ------=_NextPart_000_0057_01C188DA.50DA0CC0-- - - - -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 #1975 ****************************** 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.