William O'neil ''canslim'' method

Hype and BS

 

The real way to make money...buy them when they are going up and sell them when they are going down.

 

It is an excellent strategy, but right now is the wrong time for it. It is a bull market strategy that buys stength, i.e breakouts from congestion. Right now, those technical conditions are attracting sellers, not buyers. Some of the Canslim picks will still work, but not the way they used to.

 

I use the CANSLIM approach and have found it to be one of the best. Some of the earlier posts are correct... the "M" in CANSLIM stands for Market. The Market direction must be up in order for this strategy to work great. Currently, the best place to be is on the sidelines with the wallet on the hip. O'neil also discusses some shorting, specifically the head and shoulders pattern which I personally find to be very reliable.

In regards to the negative comments above. That is what I love to see. If all the comments on CANSLIM were positive I would run for the hills. I would say it probably only works successfully for maybe 1% of people that read O'neil's book. Most people just don't like the strategy because it isn't exciting enough, these types are better suited to day trading... which is fine because it helps provide the market with liquidity when I put in my order for 10K shares at Market Price.

In regards to performance... CANSLIM netted me over 20% on the October 2002 rally. Not amazing but a fairly good three month return. For people that need more proof... David Ryan and Lee Freestone both won medals in U.S. Investing Championships with CANSLIM. The U.S. Investing Championship is a real money contest with actual transactions. I believe Freestone came in second in 1991 and 1992 with returns of 279% and 120% respectively.

 

Does this involve ephedrine supplements?

 

I heard this guy ran a mutual fund that lost 59% of it's value in less than a year during the 73-74 market break

 

THIS SOUNDS LIKE ''MR.MARKET'S '' METHOD

 

actually:

HOW MY STOCK PICKING MODEL WORKS



I developed a stock-picking model when I was in graduate school to take advantage of the bullishness the market was exhibiting at the time. The premise was to invest in high beta stocks while trying to limit my downside exposure in the event of a stall or downturn. By using the quantitative steps in the model, stocks are selected that are experiencing sustainable price momentum. The model is a multistep screening and high-grade process that goes something like this:

First, create a universe of about 200 stocks that have demonstrated strong price appreciation and earnings growth in the last 12 months. You can find some pretty good easy to use screening tools on the Internet such as Stockpoint.com. I use the following screening criteria to build my universe of stocks:
Screen #1: Stocks making new highs with IBD EPS rating of 90 or higher

Screen #2: Stocks within 2% of their 52 week high with a 52 week price appreciation > 300%

Screen #3: Stocks within 5% of their 52 week high with a 52 week price appreciation > 150% and EPS growth of 25%

Screen #4: Stocks within 5% of their 52 week high with a 52 week price appreciation > 125% and P/E < 50

Screen #5: Stocks within 5% of their 52 week high with a 52 week price appreciation > 50% and P/E < 15

Screen #6: Stocks within 10% of their 52 week high with a 52 week price appreciation >100% and P/E < 100 and 3 year earnings growth of 50% and 5 year sales growth of 25%

Screen #7: Stocks with Investors Business Daily Ratings greater than 95 EPS and 95 RS.

Screen #8: Stocks with Investors Business Daily Ratings greater than 90 RS and PE less than 20.



Each screen will yield about 20 – 25 stocks. Rank these stocks on the following criteria: Price Appreciation, Price Appreciation divided by trailing 12 month P/E, Price Appreciation divided by forward 12 month P/E. Weight each criterion equally and rerank the database. This process favors stocks with more reasonable valuations and weeds out those with no earnings.
Take the top 20 stocks and rank by 12-month revenue growth.
Take the top 10 stocks and run a time series regression analysis on the daily prices for the last 12 months and rank by the highest r-squared correlation coefficient.
Take the top three stocks in order and perform due diligence to determine if there were any one time non – operating factors that affected the data just analyzed (asset sales, lawsuits, financing, etc.) or if there is any pending news of significance that could upset the applecart. Select the highest ranked stock that clears this hurdle.
Buy this stock. In a typical bull market, the stock will, on average, achieve a 15% gain within 4 to 6 weeks. Sell the stock and repeat the process. Why sell so soon? Well there are ever changing phenomena going on in the market that could make your selection criteria quite different a month after the signals told you to buy this stock. The theory here is that you are selling a potentially "tired" stock and trading it for a "fresh" one.
What this process is trying to do is to select a hot growth stock that has a little more juice left in it to get you that last 15% without being so hideously overvalued that it could drop like a rock. I don’t think I need to buy stocks with extended valuations to make a quick profit. There are stocks out there with good momentum that aren’t bad to hold if I make a wrong decision. I think my model finds them. My model has been successful in protecting me from real lemons. Preservation of capital is always important. Buying companies with real earnings protects me in the down markets. We all work hard for our money. It makes no sense to give it away. That’s why I believe it’s important to buy stock in companies with real earnings.

Tell me what you think of my model. I’d be happy to answer any questions about this process if you send me an E-mail.

http://groups.yahoo.com/group/mrmarketishuge/

 

i doubt that

 

That post was too long for my attention span.