dbp
I have obviously expressed myself unclearly which is my fault.
Neither overall market direction nor precise points of entry affect the raw selection of stocks but they are paramount in determining if and when to invest in those stocks.
The chart shows only the results of investing in everything thrown up by CANSLI*. The M is rather more subjective and not capable of 'objective' charting.
If the chart shows nothing else it indicates the methodology is potentially a good starting point.
I'll leave it now but hope that is a little clearer.
I have obviously expressed myself unclearly which is my fault.
Neither overall market direction nor precise points of entry affect the raw selection of stocks but they are paramount in determining if and when to invest in those stocks.
The chart shows only the results of investing in everything thrown up by CANSLI*. The M is rather more subjective and not capable of 'objective' charting.
If the chart shows nothing else it indicates the methodology is potentially a good starting point.
I'll leave it now but hope that is a little clearer.
dbphoenix
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I have a suggestion to make, Andy. You and I both have been involved with the purists who want to see CANSLIM practiced as written (they will head for the financial statements), those who want to make it as mechanical and trouble-free as possible (they will head for IBD and DailyGraphs), and the "EZ" contingent (to which I belong), who will let somebody else do the fundamental work and use their canned screens (Reuters, MSN et al). Of course, there is also the group who doesn't incorporate fundamentals at all and turns it into a momentum strategy using only N and L, but why bother associating it with CANSLIM?
In any case, to avoid the head-butting that so often is a result of this brew, perhaps you would consider three separate threads: Classic CANSLIM, Mechanical (IBD) CANSLIM, and CANSLIM EZ. The "letter" threads could be for general discussion rather than for arriving at any sort of conclusions. And the watchlists can come from a variety of sources as well (they would anyway).
Reduced to its essence, the point of CANSLIM is to find "good stocks" and buy them at the "best time". How one defines "good" and how one determines the "best time" is usually a personal choice and should not be cause for tumult. Perhaps putting each contingent in its own playgroup would forestall some of the problems with which we are acquainted.
In any case, to avoid the head-butting that so often is a result of this brew, perhaps you would consider three separate threads: Classic CANSLIM, Mechanical (IBD) CANSLIM, and CANSLIM EZ. The "letter" threads could be for general discussion rather than for arriving at any sort of conclusions. And the watchlists can come from a variety of sources as well (they would anyway).
Reduced to its essence, the point of CANSLIM is to find "good stocks" and buy them at the "best time". How one defines "good" and how one determines the "best time" is usually a personal choice and should not be cause for tumult. Perhaps putting each contingent in its own playgroup would forestall some of the problems with which we are acquainted.
Thanks for the invite!
ajaskey
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hal3000 said:
Thanx Hal,
I hope to contribute more soon, but work and kids have been taking about 23.5 hours a day. I've opted for sleep the other half hour.
I do get some time this weekend and am going to see Alexander Elder in Pittsburgh. It's only $125 for anyone within driving distance. I guess AAII is subsidising the rest of his regular fees.
Andy
Hey Andy!
I'm glad I found the new location here. In the past 12 months I've bought a house, gotten married and taken a new position in demographic research! Life basically. But I haven't paid as much attention to the market as I'd like. Hope all is well in Pa.
Larry in Birmingham
I'm glad I found the new location here. In the past 12 months I've bought a house, gotten married and taken a new position in demographic research! Life basically. But I haven't paid as much attention to the market as I'd like. Hope all is well in Pa.
Larry in Birmingham
ajaskey
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lholt said:
Hey Larry,
Glad to hear from you. Sounds like you had a busy year in 2005. Hope all is well with you and your new wife. I also hope you have a bunch of cash ready for this giant bull market that is about to take off. Lotsa stocks to pick from.
Keep in touch.
Andy
cassiopeia
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CANSLIM v Zweig strategies
I have recently re-read the CANSLIM 3rd Edition and reviewed the web for relevant articles about CANSLIM and similar strategies.
Although CANSLIM seems to have a successful long history, I am always nervous about using well documented strategies since they can be traded out as they become fashionable. For example, if everyone jumps on the boat there is nothing to stop the companies chosen reaching ridiculously high prices which cannot possibly be justified (like during the tech boom). I suppose the stop loss could offer some means of protection providing the price does not jump down after a surprise announcement.
A comparison of different strategies for US stocks going back 8 years is included in the table in this article. This includes 2 CANSLIM strategies*, which appear to have faired reasonably well.
http://www.investors.com/includes/edit/AAIIDec2005.pdf
I’m not sure how the total and variability figures are calculated (the totals don’t add up). However, it appears that a system based on Martin Zweig’s strategy has topped the list and also seems to be one of the most consistent in terms annual positive returns. The Zwieg system appears to be similar to CANSLIM in that it looks for consistently high profits and sales, but it also pays attention to PE ratios avoiding those greater than 1.5 times the average of the S&P 500. Surprisingly it also avoids very low PEs since it is perceived that these companies may have something wrong with them.
To me this last criteria sounds very contrived, and seems to question the validity of using PEs generally. Perhaps the only safe way when investing on fundamentals alone is to have detailed knowledge of the company by looking behind the veil of the balance sheet along Buffett lines. However the Zwieg system advises selling a stock if it drops roughly 15% below the purchase price then holding on for one year and then selling. The system also includes a relative strength element.
A more detailed explanation of the Zwieg system is included here
http://articles.moneycentral.msn.co...egies/MasterStrategistsSystemPicks15Gems.aspx
*A comparison of 2nd and 3rd edition CANSLIM strategies is included here for reference http://www.investors.com/includes/edit/presscenter/aaiicanslim.pdf
I have recently re-read the CANSLIM 3rd Edition and reviewed the web for relevant articles about CANSLIM and similar strategies.
Although CANSLIM seems to have a successful long history, I am always nervous about using well documented strategies since they can be traded out as they become fashionable. For example, if everyone jumps on the boat there is nothing to stop the companies chosen reaching ridiculously high prices which cannot possibly be justified (like during the tech boom). I suppose the stop loss could offer some means of protection providing the price does not jump down after a surprise announcement.
A comparison of different strategies for US stocks going back 8 years is included in the table in this article. This includes 2 CANSLIM strategies*, which appear to have faired reasonably well.
http://www.investors.com/includes/edit/AAIIDec2005.pdf
I’m not sure how the total and variability figures are calculated (the totals don’t add up). However, it appears that a system based on Martin Zweig’s strategy has topped the list and also seems to be one of the most consistent in terms annual positive returns. The Zwieg system appears to be similar to CANSLIM in that it looks for consistently high profits and sales, but it also pays attention to PE ratios avoiding those greater than 1.5 times the average of the S&P 500. Surprisingly it also avoids very low PEs since it is perceived that these companies may have something wrong with them.
To me this last criteria sounds very contrived, and seems to question the validity of using PEs generally. Perhaps the only safe way when investing on fundamentals alone is to have detailed knowledge of the company by looking behind the veil of the balance sheet along Buffett lines. However the Zwieg system advises selling a stock if it drops roughly 15% below the purchase price then holding on for one year and then selling. The system also includes a relative strength element.
A more detailed explanation of the Zwieg system is included here
http://articles.moneycentral.msn.co...egies/MasterStrategistsSystemPicks15Gems.aspx
*A comparison of 2nd and 3rd edition CANSLIM strategies is included here for reference http://www.investors.com/includes/edit/presscenter/aaiicanslim.pdf
