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From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2106 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 Friday, February 1 2002 Volume 02 : Number 2106 In this issue: Re: [CANSLIM] Follow Through Days RE: [CANSLIM] Due Diligence ---------------------------------------------------------------------- Date: Fri, 1 Feb 2002 21:46:09 -0600 From: "Katherine Malm" <kmalm@earthlink.net> Subject: Re: [CANSLIM] Follow Through Days This is a multi-part message in MIME format. - ------=_NextPart_000_0156_01C1AB69.DC635E20 Content-Type: multipart/alternative; boundary="----=_NextPart_001_0157_01C1AB69.DC635E20" - ------=_NextPart_001_0157_01C1AB69.DC635E20 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Lonnie, When I said "rally's dead" it was referring to the move up from the last = FTD 9/28/01. (In retrospect, I think all that action in December was the = "real" end of the rally) So, at this point, anything can happen. If you = look at the reversal day with a tail on 1/9, you could interpret that as = the beginning of a new downtrend. But we really don't know yet. 1/30 was = an accumulation day. It's possible that we could get a FTD 2/4-2/13 and = that would mark the beginning of a new uptrend. It's also possible that = we could go into a lengthier downtrend like the one we saw June-Sept = last year. In the meantime, there's some, but not much, quality stuff on = the verge of a breakout, but there are some strong stocks in strong = industries trying to finish bases. (Also plenty of stinky stocks in = stinky industries breaking down!) Katherine - ----- Original Message -----=20 From: Lonnie Brauner=20 To: canslim@lists.xmission.com=20 Sent: Friday, February 01, 2002 9:32 PM Subject: RE: [CANSLIM] Follow Through Days Hi Katherine, Thanks for the thorough notes!! (I could use some more discipline = there). So, in spite of all those DD's, is it not true that a follow through = of yesterday's up day on good volume would/could be a sign of a new = rally? Or, is the rally dead? Lonnie=20 -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Friday, February 01, 2002 8:57 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Follow Through Days Hi Andreas, I don't really remember what the IBD wrote mid-December, and as I've = finally worked through the foot high stack of IBD's, they're long gone = to the recyclers. I looked back in my trading journal and this is what I = noticed on the NASDAQ charts: 12/6/01--sign of stress?? new high on fairly high volume without = much upside progress 12/11 & 12/12--churning 12/13-Distribution Day (DD) following 3 days are churning....by itself it doesn't worry me, but = stacked up with the previous signals it's bad news 12/19--DD 12/20--DD--2 in a row...not good, especially with all the churning. = That's 3 total DD's now. 12/26, 27, 28--churning again 12/31--DD --think the rally's done but not completely clear cut = because there's a mix of churning and DD's 1/3/02 & 1/4/02--market begins to look ok...will start over with the = DD count 1/9--DD 1/14--DD 1/16--DD that's 3 in a row...bad news 1/22--DD that's 4 in 2 weeks 1/29--DD that's 5. Rally's dead. I use DGO charts for this....so won't include a graphic to go with = it. I like the red and blue...helps me see the DD's and Accumulation = Days more easily. Katherine ----- Original Message -----=20 From: Andreas Himmelreich=20 To: 'canslim@lists.xmission.com'=20 Sent: Friday, February 01, 2002 7:49 PM Subject: AW: [CANSLIM] Follow Through Days Hi Katherine, Thank you. Did IDB call the stall of mid 12/01? Regards Andreas > -----Ursprungliche Nachricht----- > Von: Katherine Malm [SMTP:kmalm@earthlink.net] > Gesendet am: Friday, February 01, 2002 9:30 PM > An: canslim@lists.xmission.com > Betreff: Re: [CANSLIM] Follow Through Days > > Hi Andreas... > > I'm doing this somewhat from memory...so please don't hold me to = the=20 exact dates-- > > Market top about 3/21/00-3/29/00 > FTD about 6/2/00 (I was at an IBD seminar in NYC, so remember = this one!)=20 to rally stall early 9/00 > Mini rally early 10/00 to end of month (can't remember if this = was an=20 "official" FTD) > Mini rally mid 1/01 to end of month (again, not sure if there = was an=20 official FTD) > FTD early 4/01 to stall early 6/01 > FTD about 9/28/01 until stall mid 12/01. > Mini rally beg. 1/02 until 5th distribution day hit 1/29/02. > Would have to see a FTD at this point to indicate a fresh rally = after the=20 up day 1/30/02. (would need to occur 4-10 days after, so that = would make it=20 2/5 to 2/13, just in time for Valentine's Day!) > > Katherine > ----- Original Message ----- > From: Andreas Himmelreich > To: canslim@lists.xmission.com > Sent: Friday, February 01, 2002 1:15 PM > Subject: [CANSLIM] Follow Through Days > > > Hi, > > just wondered, how many follow through days there where = between March=20 2000 and October 2001. > > I know of two in 2001 (the one which where followed by the = spring rally=20 and the last in October). > > Have there been other rallies that failed. > > Thanks > > Andreas > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > << Datei: ATT00000.htm >>=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_001_0157_01C1AB69.DC635E20 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4611.1300" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV>Hi Lonnie,</DIV> <DIV> </DIV> <DIV>When I said "rally's dead" it was referring to the move up from the = last=20 FTD 9/28/01. (In retrospect, I think all that action in December = was the=20 "real" end of the rally) So, at this point, anything can happen. If = you=20 look at the reversal day with a tail on 1/9, you could interpret that as = the=20 beginning of a new downtrend. But we really don't know yet. 1/30 was an=20 accumulation day. It's possible that we could get a FTD 2/4-2/13 and = that would=20 mark the beginning of a new uptrend. It's also possible that we could go = into a=20 lengthier downtrend like the one we saw June-Sept last year. In the = meantime,=20 there's some, but not much, quality stuff on the verge of a breakout, = but there=20 are some strong stocks in strong industries trying to finish bases. = (Also plenty=20 of stinky stocks in stinky industries breaking down!)</DIV> <DIV> </DIV> <DIV>Katherine</DIV> <DIV> </DIV> <DIV> </DIV> <DIV>----- Original Message ----- </DIV> <BLOCKQUOTE dir=3Dltr=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black">From:=20 <A title=3Dlonnie@hal-pc.org href=3D"mailto:lonnie@hal-pc.org">Lonnie = Brauner</A>=20 </DIV> <DIV style=3D"FONT: 10pt arial">To: <A = title=3Dcanslim@lists.xmission.com=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= </DIV> <DIV style=3D"FONT: 10pt arial">Sent: Friday, February 01, 2002 = 9:32=20 PM</DIV> <DIV style=3D"FONT: 10pt arial">Subject: RE: [CANSLIM] Follow = Through=20 Days</DIV> <DIV> </DIV> <DIV>Hi=20 Katherine,</DIV> <DIV> </DIV> <DIV>Thanks for=20 the thorough notes!! (I could use some more discipline=20 there).</DIV> <DIV> </DIV> <DIV>So, in=20 spite of all those DD's, is it not true that a follow through of = yesterday's=20 up day on good volume would/could be a sign of a new=20 rally?</DIV> <DIV>Or, is the=20 rally dead?</DIV> Lonnie <IMG height=3D74 = src=3D"cid:015501c1ab9c$26c3d260$0500a8c0@mindspring.com"=20 width=3D74> <DIV> </DIV> <BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px"> <DIV class=3DOutlookMessageHeader>-----Original Message----- From: <A=20 = href=3D"mailto:owner-canslim@lists.xmission.com">owner-canslim@lists.xmis= sion.com</A>=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of = Katherine=20 Malm Sent: Friday, February 01, 2002 8:57 PM To: = canslim@lists.xmission.com Subject: Re: [CANSLIM] Follow = Through=20 Days </DIV> <DIV>Hi Andreas,</DIV> <DIV> </DIV> <DIV>I don't really remember what the IBD wrote mid-December, and as = I've=20 finally worked through the foot high stack of IBD's, they're long = gone to=20 the recyclers. I looked back in my trading journal and this is what = I=20 noticed on the NASDAQ charts:</DIV> <DIV> </DIV> <DIV>12/6/01--sign of stress?? new high on fairly high volume = without much=20 upside progress</DIV> <DIV>12/11 & 12/12--churning</DIV> <DIV>12/13-Distribution Day (DD)</DIV> <DIV>following 3 days are churning....by itself it doesn't worry me, = but=20 stacked up with the previous signals it's bad news</DIV> <DIV>12/19--DD</DIV> <DIV>12/20--DD--2 in a row...not good, especially with all the = churning.=20 That's 3 total DD's now.</DIV> <DIV>12/26, 27, 28--churning again</DIV> <DIV>12/31--DD --think the rally's done but not completely = clear cut=20 because there's a mix of churning and DD's</DIV> <DIV>1/3/02 & 1/4/02--market begins to look ok...will start over = with=20 the DD count</DIV> <DIV>1/9--DD</DIV> <DIV>1/14--DD</DIV> <DIV>1/16--DD that's 3 in a row...bad news</DIV> <DIV>1/22--DD that's 4 in 2 weeks</DIV> <DIV>1/29--DD that's 5. Rally's dead.</DIV> <DIV> </DIV> <DIV>I use DGO charts for this....so won't include a graphic to go = with it.=20 I like the red and blue...helps me see the DD's and Accumulation = Days more=20 easily.</DIV> <DIV> </DIV> <DIV>Katherine</DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style=3D"FONT: 10pt arial">----- Original Message ----- = </DIV> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black">From:=20 <A title=3Djudgejimmy@web.de = href=3D"mailto:judgejimmy@web.de">Andreas=20 Himmelreich</A> </DIV> <DIV style=3D"FONT: 10pt arial">To: <A=20 title=3Dcanslim@lists.xmission.com=20 = href=3D"mailto:'canslim@lists.xmission.com'">'canslim@lists.xmission.com'= </A>=20 </DIV> <DIV style=3D"FONT: 10pt arial">Sent: Friday, February 01, = 2002 7:49=20 PM</DIV> <DIV style=3D"FONT: 10pt arial">Subject: AW: [CANSLIM] = Follow Through=20 Days</DIV> <DIV> </DIV>Hi Katherine, Thank you. Did IDB call the = stall=20 of mid 12/01? Regards Andreas >=20 -----Ursprungliche Nachricht----- > Von: Katherine Malm=20 [SMTP:kmalm@earthlink.net] > Gesendet am: Friday, February = 01, 2002=20 9:30 PM > An: <A=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= >=20 Betreff: Re: [CANSLIM] Follow Through Days > > Hi=20 Andreas... > > I'm doing this somewhat from = memory...so please=20 don't hold me to the exact dates-- > > Market top = about=20 3/21/00-3/29/00 > FTD about 6/2/00 (I was at an IBD seminar = in NYC,=20 so remember this one!) to rally stall early 9/00 > Mini = rally=20 early 10/00 to end of month (can't remember if this was an = "official"=20 FTD) > Mini rally mid 1/01 to end of month (again, not sure = if there=20 was an official FTD) > FTD early 4/01 to stall early=20 6/01 > FTD about 9/28/01 until stall mid 12/01. > Mini = rally=20 beg. 1/02 until 5th distribution day hit 1/29/02. > Would = have to=20 see a FTD at this point to indicate a fresh rally after the up = day=20 1/30/02. (would need to occur 4-10 days after, so that would make = it=20 2/5 to 2/13, just in time for Valentine's = Day!) > >=20 Katherine > ----- Original Message=20 ----- > From: Andreas = Himmelreich > =20 To: <A=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= > =20 Sent: Friday, February 01, 2002 1:15 PM > = Subject:=20 [CANSLIM] Follow Through Days > > > =20 Hi, > > just wondered, how many follow = through=20 days there where between March 2000 and October=20 2001. > > I know of two in 2001 (the one = which=20 where followed by the spring rally and the last in=20 October). > > Have there been other = rallies that=20 failed. > > = Thanks > > =20 Andreas > > - > -To=20 subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>" >= ; =20 -In the email body, write "subscribe canslim" = or > =20 -"unsubscribe canslim". Do not use quotes in your=20 email. > << Datei: ATT00000.htm >>=20 - -To subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>" -In= =20 the email body, write "subscribe canslim" or -"unsubscribe=20 canslim". Do not use quotes in your=20 email.</BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML> - ------=_NextPart_001_0157_01C1AB69.DC635E20-- - ------=_NextPart_000_0156_01C1AB69.DC635E20 Content-Type: image/gif; name="Image1.gif" Content-Transfer-Encoding: base64 Content-ID: <015501c1ab9c$26c3d260$0500a8c0@mindspring.com> R0lGODdhSwBLAPcAAP//////zP/M///MzP/Mmf+ZzP+Zmf+ZZv9mmf9mZsz//8z/zMzM/8zMzMzM mcyZzMyZmcyZZsxmmcxmZsxmM8xmAMwzmcwzZswzM8wzAMwAZswAM8wAAJnM/5nMzJnMmZmZzJmZ mZmZZplmmZlmZplmM5lmAJkzZpkzM5kzAJkAZpkAM5kAAGaZzGaZmWaZZmZmzGZmmWZmZmZmM2Zm AGYzZmYzM2YzAGYAM2YAADOZzDOZmTNmzDNmmTNmZjNmMzMzmTMzZjMzMzMzADMAZjMAMzMAAABm mQBmZgAzmQAzZgAzMwAAZgAAM7sAAKoAAIgAAHcAAFUAAEQAACIAABEAAAAiAAARAP///wAAVQAA RAAAIgAAEe7u7t3d3bu7u6qqqoiIiHd3d1VVVURERCIiIhEREQAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAACH5BAAAAAAALAAAAABLAEsA QAj/ALEIHEiwoMGDCBMqXMhwyA0TJlIwnEixokUsD00MYbhkiZKPF0OKzDgkxsceH5Wg7JGkBcog HYN8TOLBC8skSXp0aXBkBZQoOXLgWIHigtELE5KSqEFmTIgGAKJK7ULVSwMZB0n2QKnEBc6tSmQG 8aGyJYicOEG0+BhkLJgGXaTKlepFjBkSEAroLfDgwYC/gL9gRUhyxQoWP3NEiQKFheHHjzdIZhFl CpUpUCCveML5SeQNLKZMYSFZMuTSPqdUyaGQpBgxIcB8mf3lAe0GuL1Q7fJlTBUpjjU/RoECg3EU Un47Lo3apxQjRqQ0NswiYUYjixcHzQ6lOwsWnKGo/xZJfuL18ujTF7yRwoQR9fDjy59fsYrDGzfo 62eoVWVKsjL1AIILRxzx0RJCeOTBTUokAUIDMSSxwgaHRSGFaDk0xhlklF04hRSKZZddDlJkBdEQ PpDlg0llscSiR0qE0MMRaTWQBI009eBDGLHpNldUO4VRBhlgxPWjXF2EQdiJWzGohA8yncQSjUe0 0AJOOQXRxBJBCDGhaaeh9tyXzJVpGhWtnbgCDttNJ9xnFEpBBXaafffdhhP6RAVwZqL2RGVV0LmC dSc+5YVVDdCm6BcN/NVACGQIIQYEBkBgKQR9MdroAA2AIYMZVORgGHObQfFcdNOV9sR7S7q336uE tf/HKqy01mrrrbgSVAV7EJmQX676kQTsfiThlFJYXKWUkwdKLLHFFlsSdKwSi3Vn4azBnnhSW1Km RCNKS2wZQoM5eXEWlknA1WkYYoQBxqFecJqopSTYgMNQZJK6AmsG9TcWWSqBsNURXCX4kU1Y9gDA uUkosZQNNhBn3MQYGGbqnFGQ1qdpUFRhokZckcWVC2E1e5ISNLog8I0trdWsYlB41udmUVBBRRRP 6JvvYR5/PERXKoEF5Vgl99DCty3TmGJHS6BwQlJJHSX1BShQYcOlWGcNgQQkpKnRblaBEcLYb+nW hQAC7FbVF2GMQYYMEGwqL26bxjtACGaM8AVgfPf/DQEZC5HUwAMhhMFj2WqrPZVgQsjwhZFgm20k AF3gHQLf8Ka99hhm2NA1oRoFJRRxpJceJgo2FFFGGF5Q3sWhdNMN2N9lFHkk5V6EMIYQTmkK+hBS MGZnd8R7Bx51yU2BAtRGlY6CZjhUIcS7P+7k6dtPTT6Yz28OR9wJSFGtGp8UPuaZZ9RdfFmIIqp3 3rD0vQ+/fPLPDx+v2NqfHnsp5K///wAMoAAHaJD7EFAku+qVrw54EYdAJAUbYaBFhCXBCZ6oghbU yLQ2qKyGKWELBySJy1LiAjCQTFkt8IISmlCGJpDLWOT6yJcOk4MpGOFD/KKftnrwBTAALCU8PMtH /3zQkY+sbGQtiNADrAKBetlLQ3WCQg1BlJnmbIYyPhvXsXwgG5RgKQQ+aEKCgoCWnNxkRkkIAQTY 1a63JO51nZLBGMRAvSO9Tkn90pYSYiC2aekEBM0SgsEi1KSWfAUlKwAKzIIDmSdIETpSWAHFzGQY /2HkRF9I1kdc0IArDXEMHnHBjAqklhnNyCU+GFsIvtC66nkBDGQogw2eBjUJ2FICWPtcHjX4kVWe sGElNFkYZtICD+CoSkJUQhGGUpypSQ11ZhjDEgUwALv1rQB/a9UQeqjJFHIlCGKYiQeuhJMjjNOD RGQmxdaJARREDzNk0gxqovA7IJrLgzEiIU+w5P8BYzYsBkRcghjgcjupNMBtXyioXLwAOG26oAvk /AgYWKSEL5AzJ11gWAxc0BEiZqZ7qMlBFaIQzzBJ5gkl+p3ZrNJDVTJKcm+MY1PC0ICVwutQavsC GQaaOJyqzQt4/B2YErkYk1JyBacSVfc+sy8qQEFnO4vCb7w2hMfgYDH4elOZ1mSEIthgAreEmljF eoK77K1vgNFLE8tQhhBQ9ZWF4xGmFjUbuQ3gCyQQQufA50ykjHUCNjBCvmaWAyr8BgpUVeQi7cTY 4+VJPFWYwgyXmieR1gCXWrtlvdgqg7L97jWxqSm8YufTqAC1DGN4lwBuetOfhoCtRelr83AAnQyt oe93bMrY8IgnTwpFwQihyhN17ISnChlWVOw8Dg6K4FW8YA23ziMOZBrjWPGYQQytdN3r4LWbR8Wy s3a9axNtUAavSmxilhQISWQzmweAgb11rSlVANAAu9CpfIZBn2Z+G9mM7YwFOQBudEJEPMv8brfF I96daGizKbBPsSICioFhRUGFgCgoFawfBgMHkfRueJce/jBBNCzirMiqxIE7MYqto+IVm7h/LiZI QAAAOw== - ------=_NextPart_000_0156_01C1AB69.DC635E20-- - - - -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: Fri, 1 Feb 2002 22:22:26 -0600 From: "John Adair" <xjadair@brightok.net> Subject: RE: [CANSLIM] Due Diligence This is a multi-part message in MIME format. - ------=_NextPart_000_000E_01C1AB6E.ED8A4A60 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Hi Kathlene I hope you are saving the url and name of each of the requests. It will come in handy for your next lecture and future ones. - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Wednesday, January 30, 2002 11:11 AM To: canslim@lists.xmission.com Subject: [CANSLIM] Due Diligence Hi all, One of the parts of my investment discipline that I feel very strongly about is the due diligence step. I call this "making a case for the stock" or "the 2 minute elevator speech." Gerald Loeb calls it "having a single ruling reason." Wise advise from a gentleman that's known for his successful career. Here's a terrific article on the subject that I'm placing in the front of my CANSLIM binder in the section marked "sell rules.": - --Katherine Investment Ideas Have Expiration Dates 28-Jan-02 11:50 ET [BRIEFING.COM - Robert V. Green] You probably wouldn't drink milk in your refrigerator that is a month past the expiration date. Why are you still holding on to the stock whose investment idea has expired? Stock Purchase Premises We believe strongly that when you buy a stock, you should have an investment premise. A premise is an reasoned explanation or idea for why the stock price for your chosen investment will rise. This includes ideas such as: * Revenue and earnings will grow because the company has great distribution in an expanding market. * The company will be acquired because it fits well with XYZ's stated expansion plans. * The company will continue its strong demonstrated increase in its net profit and gross margin percentages, thereby earning an increased market multiple. * The company's market multiples are low in comparison with comparable companies, and will eventually reach parity. * The historical stock price chart indicates a coming change in the stock price. * A new product introduction will generate a new stream of revenue and earnings that are not yet factored into the price. * The company is the sole provider of a product, demand for which will increase. These are examples of the conclusion of an investment premise. A fully developed premise includes a financial projection and assumed market multiples in the future that predict the future stock price. (For the moment, we will ignore the problem of buying a stock without an investment premise. This far too common practice deserves its own separate treatment.) Even the best researched and thought out investment premises do not always come true. How you address your investment at this moment is a key element of investment success. Sell When It Does Not Work Out An investment premise imposes a discipline upon the buying decision. It also can be a key element of the sell decision. When it becomes clear that an investment premise is wrong, you have only two choices: 1. Sell. 2. Develop a new premise. Failure to take either of these two paths means that "hope" is now the premise on which your money is invested. While "hope" is a great motivator in our emotional lives, it is a very poor reason to make an investment. When you learn or decide that your investment premise is wrong, and you cannot develop a new investment premise, you must sell, even if it means a loss. Failure to take losses at this point only subjects your money to "uncalculated risks." If you have no reason for why the stock price will rise, you have no understanding of what is driving the stock. As an extreme example, consider Exodus Communications. The investment premise behind many owners of the stock in 1999 and 2000 was that the world-wide boom in web site build-outs would lead to an increased customer base for Exodus with strong revenue growth and earnings growth. This was actually a very reasoned and rational investment premise at the time. However, this investment premise was destroyed in April of 2001, when Exodus reported sequential revenue declines were coming. At that point, the price of the stock was $9. Investors who had bought on the growth premise were faced with large losses. The stock had traded above $50 just six months prior and $100 one year earlier. [Katherine's note--technical sell rules got you out of this stock *long* before the fundamental slowdown kicked in. If you missed the technical sell rules, the lone fundamental rule of slowing earnings/revenue would have saved you.] But anyone who sold EXDS at a loss in April 2001 because the growth premise had been disproved, saved the additional $9 a share they would have lost if they continued to hold the stock. "Avoiding investment loss" is the same as "making money." When you sell at a loss because your investment premise has not worked out, you often save yourself from further losses. [Katherine's note--another CANSLIM sell rule, cut your losses short and move on] Expiration Dates Investment premises have expiration dates. If you have strong investment discipline, you can sell when you know your investment premise is wrong. But what if time elapses and there is no conclusive evidence that the premise is either right or wrong? What then? [Katherine's note--think this is an investing discipline that transcends all styles] You should decide, in advance, how long you can wait for the premise upon which you based your investment decision to develop. Patience may be a virtue, but investment patience that is not backed up by progress eventually becomes "hope" and not a true premise. Business progress towards a business goal is called "traction." If your premise is based upon a company's business fundamentals you need to look for traction in the earnings reports. Failure to produce traction is often a contradiction of a growth premise, even if the company's stock price does not move. You should decide how long it "should take" for the business to truly live up to the promise of your premise. If traction doesn't occur in the timeframe you expected, start considering selling. This is the reason that growth stock prices decline so drastically upon poor earnings reports. Disciplined professionals dump the stock when their premise is disproved by poor results. The refuse to hold the stock, even if the losses are severe. [Katherine's note--another important sell rule...inexplicable gaps down near earnings dates and/or gaps down on earnings news.....get out of the way. Another sell rule--tails near the top on high volume indicate institutional selling...pay attention and make sure you have big ears when the market speaks.] If your investment premise is based upon technical analysis, expiration dates are even easier to define. Most TA approaches forecast chart moves within a timeframe. When it turns out that the expected turn did not happen within the timeframe expected, your investment premise has expired! [Katherine's note--another sell rule...if a stock breaks out and has not follow-thru within a reasonable timeframe, move on] New Premises When the milk in your refrigerator expires, you pour it out and get a new gallon. The same practice should apply to investment premises. [Katherine's note--another CANSLIM principle, dump the losers, pyramid into the winners. If your sell rules kick in and there is nothing of quality setting up to buy, you wait in near-cash. If you are more aggressive you can practice "upside-down CANSLIM" and go short.] It is extremely distasteful to take a deep drink of sour milk unknowingly. Equally unpleasant is holding a stock long after the reason you bought it has been explicitly disproved through contradiction, or implicitly disproved through the absence of traction. Only you can decide how long your investment premise should last, but without an expiration date, you may well find that your investments have curdled while you weren't looking. Comments may be emailed to the author, Robert V. Green, at rvgreen@briefing.com <mailto:rvgreen@briefing.com> - ------=_NextPart_000_000E_01C1AB6E.ED8A4A60 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@01C1AB6E.CD18EE80">  <style>  </style>  </head> <body bgcolor=3Dwhite lang=3DEN-US link=3Dblue vlink=3Dblue = style=3D'tab-interval:.5in'> <div class=3DSection1> Hi= Kathlene<o:p></o:p> I = hope you are saving the url and name of each of the requests. It will come in handy for your next = lecture and future = ones.<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 Katherine Malm Sent: Wednesday, January = 30, 2002 11:11 AM To: = canslim@lists.xmission.com Subject: [CANSLIM] Due = Diligence <![if = !supportEmptyParas]> <![endif]><o:p></o:p> Hi = all,<o:p></o:p><= /p> <o:p></o:p><= /p> One = of the parts of my investment discipline that I feel very strongly about is the = due diligence step. I call this "making a case for the stock" or "the 2 minute elevator speech." Gerald Loeb calls it = "having a single ruling reason." Wise advise from a gentleman that's known for his successful career. Here's a terrific article on the subject that I'm = placing in the front of my CANSLIM binder in the section marked "sell = rules.":<o:p></o:p><= /p> <o:p></o:p><= /p> --Katherine<o:p></o:p><= /p> <o:p></o:p><= /p> <table border=3D0 cellspacing=3D0 cellpadding=3D0 width=3D"100%" = style=3D'width:100.0%; mso-cellspacing:0in;margin-left:.5in;mso-padding-alt:3.0pt 3.0pt 3.0pt = 3.0pt'> <tr> <td style=3D'padding:3.0pt 3.0pt 3.0pt 3.0pt'> Investment Ideas Have = Expiration Dates<o:p></o:p><= /p> </td> </tr> <tr> <td style=3D'padding:3.0pt 3.0pt 3.0pt 3.0pt'> 28-Jan-02 11:50 = ET<o:p></o:p><= /p> </td> </tr> <tr height=3D8 style=3D'height:6.0pt'> <td height=3D8 style=3D'padding:3.0pt 3.0pt 3.0pt 3.0pt;height:6.0pt'> <![if !supportEmptyParas]> <![endif]><o:p></o:p></p= > </td> </tr> <tr> <td style=3D'padding:3.0pt 3.0pt 3.0pt 3.0pt'> [BRIEFING.COM - Robert V. Green] You probably = wouldn't drink milk in your refrigerator that is a month past the expiration = date. Why are you still holding on to the stock whose investment idea has = expired? <o:p></o:p><= /p> <h3>Stock Purchase = Premises<o:p></o:p><= /b></h3> We believe strongly that when you buy a stock, you = should have an investment premise. = <o:p></o:p><= /p> A premise is an reasoned explanation or idea for = why the stock price for your chosen investment will rise. This includes ideas = such as:<o:p></o:p> <ul type=3Ddisc> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>Revenue and earnings will grow because the company = has great distribution in an expanding market. <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>The company will be acquired because it fits well = with XYZ's stated expansion plans. <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>The company will continue its strong demonstrated = increase in its net profit and gross margin percentages, thereby earning = an increased market multiple. <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>The company's market multiples are low in comparison = with comparable companies, and will eventually reach parity. = <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>The historical stock price chart indicates a coming = change in the stock price. <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>A new product introduction will generate a new = stream of revenue and earnings that are not yet factored into the price. = <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l1 level1 lfo1;tab-stops:list .5in'>The company is the sole provider of a product, = demand for which will increase. <o:p></o:p><= /li> </ul> These are examples of the conclusion of an = investment premise. A fully developed premise includes a financial projection and assumed market multiples in the future that predict the future stock = price. <o:p></o:p><= /p> (For the moment, we will ignore the problem of = buying a stock without an = investment premise. This far too common practice deserves its own separate = treatment.)<o:p></o:p><= /p> Even the best researched and thought out = investment premises do not always come true. How you address your investment at = this moment is a key element of investment success. <o:p></o:p><= /p> <h3>Sell When It Does Not Work = Out<o:p></o:p><= /b></h3> An investment premise imposes a discipline upon = the buying decision. <o:p></o:p> It also can be a key element of the sell decision. = <o:p></o:p><= /p> When it becomes clear that an investment premise = is wrong, you have only two = choices: <o:p></o:p><= /p> <ol start=3D1 type=3D1> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l0 level1 lfo2;tab-stops:list .5in'>Sell. <o:p></o:p><= /li> <li class=3DMsoNormal = style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt: auto;mso-list:l0 level1 lfo2;tab-stops:list .5in'>Develop a new premise. <o:p></o:p><= /li> </ol> Failure to take either of these two paths means = that "hope" is now the premise on which your money is invested. = While "hope" is a great motivator in our emotional lives, it is a = very poor reason to make an investment. <o:p></o:p><= /p> When you learn or decide that your investment = premise is wrong, and you cannot develop a new investment premise, you must sell, = even if it means a loss. = Failure to take losses at this point only subjects your money to "uncalculated risks." If you have no reason for why the stock price will rise, = you have no understanding of what is driving the stock. = <o:p></o:p><= /p> As an extreme example, consider Exodus = Communications. The investment premise behind many owners of the stock in 1999 and = 2000 was that the world-wide boom in web site build-outs would lead to an = increased customer base for Exodus with strong revenue growth and earnings = growth. This was actually a very reasoned and rational investment premise at the = time. <o:p></o:p><= /p> However, this investment premise was destroyed in April of 2001, = when Exodus reported sequential revenue declines were coming. At that point, the = price of the stock was $9. Investors who had bought on the growth premise were = faced with large losses. The stock had traded above $50 just six months = prior and $100 one year earlier. [Katherine's note--technical sell rules got you out of this = stock *long* before the fundamental slowdown kicked in. If you missed the = technical sell rules, the lone fundamental rule of slowing earnings/revenue = would have saved you.]<o:p></o:p> But anyone who sold EXDS at a loss in April 2001 = because the growth premise had been disproved, saved the additional $9 a share they would have lost if they = continued to hold the stock. <o:p></o:p> "Avoiding investment loss" is the same = as "making money." When you sell at a loss because your = investment premise has not worked out, you often save yourself from further = losses. [Katherine's note--another = CANSLIM sell rule, cut your losses short and move on]<o:p></o:p><= /p> <h3>Expiration = Dates<o:p></o:p><= /b></h3> Investment premises have expiration dates. = <o:p></o:p><= /p> If you have strong investment discipline, you can = sell when you know your investment premise is wrong. But what if time = elapses and there is no conclusive evidence that the premise is either right or = wrong? What then? [Katherine's note--think this is an investing discipline that transcends all = styles]<o:p></o:p><= /p> You should decide, in advance, how long you can = wait for the premise upon which you based your investment decision to develop. Patience may be a virtue, but investment patience that is not backed = up by progress eventually becomes "hope" and not a true premise. = <o:p></o:p><= /p> Business progress towards a business goal is = called "traction." If your premise is based upon a company's = business fundamentals you need to look for traction in the earnings reports. = Failure to produce traction is often a contradiction of a growth premise, even = if the company's stock price does not move. You should decide how long it "should take" for the business to truly live up to the = promise of your premise. If traction doesn't occur in the timeframe you expected, start considering selling. = <o:p></o:p><= /p> This is the reason that growth stock prices = decline so drastically upon poor earnings reports. Disciplined professionals = dump the stock when their = premise is disproved by poor results. The refuse to hold the stock, even if the = losses are severe. [Katherine's note--another important sell rule...inexplicable gaps down near = earnings dates and/or gaps down on earnings news.....get out of the way. = Another sell rule--tails near the top on high volume indicate institutional = selling...pay attention and make sure you have big ears when the market = speaks.]<o:p></o:p><= /p> If your investment premise is based upon technical analysis, expiration dates are even easier to define. Most TA = approaches forecast chart moves within a timeframe. When it turns out that the = expected turn did not happen within the timeframe expected, your = investment premise has expired! [Katherine's note--another sell rule...if a stock = breaks out and has not follow-thru within a reasonable timeframe, move = on]<o:p></o:p><= /p> <h3>New Premises<o:p></o:p><= /b></h3> When the milk in your refrigerator expires, you = pour it out and get a new gallon. The same practice should apply to investment premises. [Katherine's note--another CANSLIM principle, dump the losers, pyramid into the = winners. If your sell rules kick in and there is nothing of quality = setting up to buy, you wait in near-cash. If you are more aggressive you can = practice "upside-down CANSLIM" and go short.]<o:p></o:p><= /p> It is extremely distasteful to take a deep drink = of sour milk unknowingly. Equally unpleasant is holding a stock long after the = reason you bought it has been explicitly disproved through contradiction, or implicitly disproved through the absence of traction. Only you can = decide how long your investment premise should last, but without an expiration = date, you may well find that your investments have curdled while you weren't = looking. <o:p></o:p><= /p> Comments may be emailed to the author, Robert V. = Green, at <a href=3D"mailto:rvgreen@briefing.com">rvgreen@briefing.com</a> = <o:p></o:p><= /p> </td> </tr> </table> <![if = !supportEmptyParas]> <![endif]><o:p></o:p><= /p> </div> </body> </html> - ------=_NextPart_000_000E_01C1AB6E.ED8A4A60-- - - - -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 #2106 ****************************** 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. 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