Newbie to CANSLIM method...Does it work for you?How does the performance of CANSLIM compare to the performance of value investments?Thanks in advance
First, it is wrong to compare CANSLIM to so-called "value investing" as if CANSLIM had no value component. There is lots of value in CANSLIM. However, people who practice CANSLIM do not look at a company that has been "beaten down" and see that as a buying opportunity. Many companies get beaten down for a good reason, like bad management.Second, there is obviously no way to compare the two, since there is no set and predictable outcome from either. In both cases, one scans a list of stocks for buy criteria and selects what appear to be the best. Since no two people would be likely to scan the same lists (whether they are CANSLIM or value), and the final selection necessarily has subjective components, there is no way to make a good comparison.In addition, of course, different people with have different sized portfolios, and so hold different number of stocks.But if you want to know what I think about value investing, at least as portrayed in the Morningstar article, seehttp://www.actwin.com/kalostrader/Presentation/ValueInvesting.htmI posted the bulk of that somewhere on this board, but it is way in the past.
I wasn't comparing the systems of value and CANSLIM I was asking individuals to compare their performances using both (if they have).Thanks for the help.
Most people don't really follow CANSLIM to invest. I started a fantasy portfolio (which is close to my much smaller real portfolio) last February and am up about 20% this year. I could have done much better but I don't have the time it takes to manage a million dollars. A few of the stocks were not really CANSLIM but, hey, I get bored. Sometimes I "buy" a stock there just to learn what it is like to have a position in a stock like that. Although it isn't exactly the same as risking real money, it is does tone down the craziness and provide added "pressure" because it is out there for the world to see. If I managed the money full time I would trade around the core position more - which is impossible with a fulltime job. I recommend that anyone who is serious about CANSLIM should create an open blog/journal. It forces you to get serious and records all stupid things you "will" do. A private journal is ok, but nothing beats having the world as Monday morning quarterbacks... ;)As an aside, I have been using a combination of Gann and Elliott wave to determine buy/sell points. This works very well as an alternative CANSLIM entry/exit strategy.http://www.trade2win.com/boards/journal.php?s=&journalid=27792&action=viewAndy
Allrighty HFguy, I will give you the lowdown.You wont find too many people that actually use CANSLIM in its pure form. DbPhoenix, who as far as I can tell has not used CANSLIM for years and posts at other places on the web now. The other is Mkunka, who rarely ever posts here any more. Mkunka is the only one who has provided LT results. Here are his results.1997 Results - parts 1,2 and 3http://boards.fool.com/Message.asp?mid=10072281&sort=usernamehttp://boards.fool.com/Message.asp?mid=10072313&sort=usernamehttp://boards.fool.com/Message.asp?mid=10072355&sort=username1998 Results - parts 1 through 4http://boards.fool.com/Message.asp?mid=10494647&sort=usernamehttp://boards.fool.com/Message.asp?mid=10494650&sort=usernamehttp://boards.fool.com/Message.asp?mid=10494658&sort=usernamehttp://boards.fool.com/Message.asp?mid=10494665&sort=username1999 Results - parts 1 through 5http://boards.fool.com/Message.asp?mid=11736323&sort=usernamehttp://boards.fool.com/Message.asp?mid=11736326&sort=usernamehttp://boards.fool.com/Message.asp?mid=11736328&sort=usernamehttp://boards.fool.com/Message.asp?mid=11736333&sort=usernamehttp://boards.fool.com/Message.asp?mid=11736338&sort=username2000 Results http://boards.fool.com/Message.asp?mid=14004196&sort=username2001 Results - He emailed out to anyone interested. 45 pages in a word document.http://boards.fool.com/Message.asp?mid=16371845&sort=username2002 Results - Again, he emailed it out and also said that it would probably be the last year that he would put it all together.http://boards.fool.com/Message.asp?mid=18361788&sort=usernameIt has been pretty common over the years that someone will come along and pose a question much like yours. They would like to know about putting CANSLIM into practice and what returns can be expected. Well, unfortunately it usually turns out with finger pointing and the like. Here are a couple of examples.Here is a thread on "Considering Canslim" from about a year ago with 47 posts.http://boards.fool.com/Message.asp?mid=20588771&sort=whole#20593192Here is another 45 post thread on Canslim vs. LTB&H.http://boards.fool.com/Message.asp?mid=17510689&sort=wholeAnd here was actually a good 85 post thread started by none other than one of the most famous TMF posters of all time, Bruce Brown.http://boards.fool.com/Message.asp?mid=14452575&sort=wholeSince I have followed this board for about 7 years, I would recommend going back to the inception and reading through the first 5000 posts to find the real meat on how people put CANSLIM to work for them. There was a large following of people that did their homework and shared in a constructive way. Yeah, 5000 posts seems like a daunting number, but you can just click on whole tread and scan through many of them that way. Or you could sort the board by auther and then read the posts by that auther that look good.From the late 90's and early 2000 and 2001 I would recommending these authors.tm2001 did not post here for long, but provided a lot of excellent information about his trading business plan. Here is a response he gave to me. Just click "whole thread" to read it all. Tons of good info.http://boards.fool.com/Message.asp?mid=14393317&sort=recommendationsDb .. http://boards.fool.com/Profile.asp?uid=70904mkunka .. http://boards.fool.com/Profile.asp?uid=30560joelinda1 .. http://boards.fool.com/Profile.asp?uid=13620Vic3 .. http://boards.fool.com/Profile.asp?uid=77692gassah .. http://boards.fool.com/Profile.asp?uid=13208135EdMay .. http://boards.fool.com/Profile.asp?uid=11607steel .. http://boards.fool.com/Profile.asp?uid=127436hcourtney .. http://boards.fool.com/Profile.asp?uid=40471855tradecraft .. http://boards.fool.com/Profile.asp?uid=354390 (This is hoeing who writes for smart money now)asfarley .. http://boards.fool.com/Profile.asp?uid=30108947 .. the author of "Master Swing Trader" .. used to post on this board and a couple others as well.sleevesrolledup .. http://boards.fool.com/Profile.asp?uid=9933607fine, I will float my own boat, I actually used to contribute here too ... prestone .. http://boards.fool.com/Profile.asp?uid=148048Here is what I would recommend. Find some good info in the first 5000 posts.The books below are absolutely must Read:How To Make Money In Stocks - O'NeilRemiscenses of a Stock Operator - Edwin LeFevreSecrets of Profiting in Bull and Bear Markets - Weinstein.Nature of Risk - MamisWhen to Sell - MamisHow to Buy - MamisTrader Vic-Lessons of a Wall Street Master - Victor SperandeoRemiscenses of a Stock Operator - Edwin LeFevreTrading for a living - Alexander ElderThere are about 10 other ought-to-reads.If you have actually fought through all this I will give you my own personal answer to your question. Yes, CANSLIM in its true form can work. I think the book does not cover enough of what needs to be known, but the other 20 will supplement. Making money and lots of it by what I would call position trading, which is what I would say that all those books have in common, can be the most profitable form of ... and I use this word loosely ... investing. I could tell you that I have made more money than I ever deserved to make from the markets, but that would not matter one bit, because every person has their own make-up and they have to discover what that is in order to be successful. It took me a long time to discover that I could not replicate what other successful 'investors' do. I had to find the type of 'investing' that suited my personality. That is why I gave you all those links above and the book list. Dont give your money away to the very few people that actually make money in the markets by putting real money to work in a new investment philosophy before you have armed yourself with all the tools that you will need to be successful. That is just what most poeple do. So, read through the posts, and skim through a couple of books at the bookstore or library before buying them to try to get an idea of this is the type of 'investing' that suits your personality.Best of luck,Prestone
Hi HFGuy,I can't remember the name of the organization – something like Association for Individual Investors – the one that IBD uses to validate their results – but if you dig into their results (which try to build portfolios based on a strict interpretation of systems like CANSLIM), you find that companies that fit ALL of the CANSLIM criteria are few and far between. I think that most investors who try to wait it out, decide they can start trimming back certain criteria, and all of a sudden they are off of the CANSLIM path. I looked into CANSLIM and Gorilla investing on paper, and decided that it takes a ton of time, and costs a lot on long-term capital gains taxes. I have in this last year signed up for Hidden Gems, and am beating the S&P and the Russell 2000 my a factor of 2-5 times on any given day with about and hour a month plus scorekeeping.If you really like the IBD / CANSLIM methodology, I always thought it might be better to create my own mutual fund from the IBD 100 or the 85/85 (or whatever it is called) – they quote the success and define the methodology on their site and in the paper. Perhaps the top 50 of the IBD 100 rotated as they come in and out of the ranks. After the initial purchases, you would have a few buys and sells each week – which is more manageable than following the CANSLIM method.I hope this helps – good luck!-David
"You wont find too many people that actually use CANSLIM in its pure form. DbPhoenix, who as far as I can tell has not used CANSLIM for years and posts at other places on the web now."Depends on what you mean by "years". I followed it at what for now was the bear market bottom three years ago. However, the market has been drifting sideways for two years now, and I find nearly all the posts here to have too much of a desperate quality about them, trying to shoehorn CANSLIM into a hostile environment.At times like these, i.e., the past two years, the trader has to look elsewhere. But that particular search and those particular trades are irrelevant to CANSLIM and create a false impression of what CANSLIM is.As for "other places", I post only at T2W these days. Most of the websites out there depress me (seems no one has learned hardly anything from the crash . . .)
I respect CANSLIM...but I diverged a bit when I read Stan Weinstein's book. I'm 80% Weinstein.I have also been influenced by Edwards and Magee(recycled Shabacher) to a degree(good technical foundation). I have moved away from the fundamentals somewhat...to the pure technicals. My results have been signifigantly better since. note: Magee married Schabacher's daughter and inhereted all of Schabacher's notes...for what its worth.
regarding Gann...he was not a successful trader...and he could not support his family by trading. Gann earned his living selling instructional materials. ..and didn't get rich doing that.
regarding Gann...he was not a successful trader...and he could not support his family by trading. Gann earned his living selling instructional materials. ..and didn't get rich doing that.I'll pass that on next time we talk...
shatterd,I have moved away from the fundamentals somewhat...to the pure technicals. My results have been signifigantly better since.Would you care to share your technical approach? Which indicators have you found to be useful? Can you describe your trading plan? If you don't feel like doing it on this board, maybe the Technical Analysis board (although that has been real quiet lately).dt
As for "other places", I post only at T2W these days. Most of the websites out there depress me (seems no one has learned hardly anything from the crash . . .) ==================================================so u have yet to be banned at T2W???? :.))))tim
"Would you care to share your technical approach? Which indicators have you found to be useful? Can you describe your trading plan? If you don't feel like doing it on this board, maybe the Technical Analysis board (although that has been real quiet lately)."===================================================================...well I have become quite comfortable with Weinstein's methods. I like his 4 stage analysis and his system of trailing his stops. He also emphasizes the weekly charts and the 30 week moving average. I have really taken to the 30 week MA over the typical 50 day and 200 day(10 week and 40 week).I like to look at a lot of charts. I think the trader that analyzes a lot of charts visually will develop a keen chart sense. I generally look at 2000 charts or more in a week. I spend time with them and draw lots of trendlines over the trends and bases. Bullish charts are set aside on a dynamic watchlist that is purged regularly. By looking at so many...I tend to get a good feel for the market and the various sectors by default. I think the trader that purges through 2000 charts a week will develop a better chart sense than the trader that purges 100 charts a week...especially if he is following up regularly. I'm a very visual trader...which explains the attraction to charts and TA. This is just the way I do it...which is not to say that it is the best way or the only way.I have studied Edwards and Magee a fair amount..so I respect the chart and volume patterns. I also read Bulkowski...but find him a bit boring since his material is so academic, repetitious, and statistics driven. His stuff is great for reference in my opinion. Basically recycled Edwards and Magee..like so much other stuff.So I do trade off the daily charts when using the typical chart patterns. When I do this I will generally use the minimum price objective of these patterns...which often falls under the swing rule.. for price targets. These are scalps in a sense...and I like to scalp now and then...always using trailing stops. I'll trade a H&S bottom or a double bottom from time to time. I do not like to get too active in this because the turnover costs are always signifigant..especially when trading the smaller patterns which offer smaller rewards. I try to go with the fat pitches. No revelations here.I am a top down trader..like most others around here. I really like O'Neils system of tracking the averages with distribution days, rallies, and follow throughs. That's one piece of CANSLIM that has stayed with me. I look at a few breadth indicators when analyzing the major markets. My favorite is the ratio adjusted summation index. It's a very smooth indicator that doesn't whipsaw very often...and seems to filter a lot of noise. Generally, when the summation index turns up or down it is often signifigant. I'll often use it with a moving average..or a pair of short moving averages to get crossovers signals. I'll use the 3 and 8 or the 13 and 20 combos. I'll use a simple MA as the longer MA..and an exponential as the shorter MA. This works for me. I guess I am somewhat of a hybrid..but definitely use and depend upon Weinstein's stuff.I like to get out when the risk is high...as when markets are turning down(lower highs, lower lows, breaking support and trendlines, turning down from resistance, grossly overbought, no breadth, etc). No need to give back any profits to the market. The secret(IMO)to winning big "on balance" and over a long period of time..is to maintain whatever you get out of the bull market advances...and not to erode your capital in high risk situations...or sailing against the gale. It's not only how much you make..but how much you do not lose. Losses compound in a very dynamic manner...and the math works against us over a long period. Sometimes we just have to sit tight and do nothing. That is very difficult for those who crave action at all times. Time is not money. Time is time and money is money(Jesse Livermore)Again...the 30 week MA has been good to me. On the weekly charts it always stands out dependably as supporting prices during advances, and acting as a cieling during declines. Generally it levels out at tops and bottoms and prices will tend to whipsaw the 30 week while forming bases...and tops as well. The bases are often compact, long, and quiet at bottoms(weekly charts). Coversely... they are often short and volatile at tops(I'm talking about individual stocks here). I think these characteristics often foretell if the base is to become a top or a continuation. That said..the breakout gives the final verdict on that. This is all part of Weinstein's 4-satge analysis. so in essence...I'm watching the price action in relation to its 30 week MA...plus the slope of the 30 week MA is to be considered in this analysis. The 30 week MA is my visual shortcut to determining which stage the stock is in of the 4 stages. I buy a stock as it breaks out of the base(stage 1 basing)...and enters stage 2(advancing stage). That's when the trailing stops are put to work. Stage 3 is the topping or continuation stage. Stage 4 is the decline. They do not always follow the cycles as in 1, 2, 3, 4 then repeat. Often it is 1,2,3,2,3,4. In other words..the stage 3 top can and often will be a continuation base leading into another stage 2. I guess it's all in his book.Weinstein likes to use a relative strength indicator. So I want to see a RS breakout in synch with the stage 1 base breakout...as well as volume infusion. Basically the way I have my charts set up is with weekly OHLC bars(at least 2 years of data on the chart...usually more), a 30 week moving average, volume bars with a 20 period volume MA, and a RS line(versus the S&P 500) with a 30 period RS moving average. The MA on the RS panel acts as a trendline...albeit a curving one.again...I'm not nearly as active as many traders. One of my favorite quotes is from Blaise Pascal..."many of man's misfortunes are often derived from not being able to sit quietly alone in a room". You only need a few really good ideas per year. Many cannot resist the urge to trade in all seasons. So I think temprament is crirical(sitting alone quetly in a room). As Seykota said..we all get what we want from the markets. Some simply want the excitement. Some want to make money.
shatterd,I just wanted to thank you for your detailed post, you provided some very good information and explanation of your process. My study of TA is still relatively new so I have quite a bit to learn.As I digest the information and increase my list of required reading materials, there are a few questions that came to mind.1. What site/service have you been using for your charts? I tend to visit stockcharts.com but would be interested to hear what you are using.2. How do you select the list of stocks that you are reviewing on a weekly basis? Are you applying some sort of filter to narrow the list down to your 2000 or so? (Not that 2000 is a narrow list.)Thanks again for the information. Being new to the concepts of TA, I always find it beneficial to hear how others are applying different theories and indicators in their trading. At this point, the indicators that I have been looking at most frequently are the RSI, MACD and Wilder's DMI.dt
1. What site/service have you been using for your charts? I tend to visit stockcharts.com but would be interested to hear what you are using.----------------------------------------------------------------------I use Telechart by Worden Bros. It's cost is equal to a cup of Starbuck's coffee per day. As good as you are going to get for the money. Cut me an e-mail to firstname.lastname@example.org and I will show you some graphic samples. It has built in screens that you can set up and program in your own criteria based on fundamentals and technicals. Fundamental data is available on all stocks such as earnings by quarter, debt, annual and 5 year earnings growth, sales, margins, etc. Very easy and user friendly. All the basic indicators are in there(MACD, RSI, ADX, Stochastics, MA envelopes, Bollinger bands, Rate of Change, Linear Regression, OBV, etc..plus lots of extras to include all the market indicators(summation index, A/D line, New high/new low ratio, McClellan Oscillator, etc etc etc). all the industry group charts are in there plus all the ETF's(exchange traded funds). I have screens set up on mine to find CANSLIM stocks, Value stocks, and I also have built a screen based on Martin Zweig's criteria. It's essentailly a charting playground. You can set up a plethora of watchlists. When I'm scanning charts and see something good...I simply right click my mouse and send it to a specified watchlist in seconds. It allows you to draw trendlines on the charts, text, and fib overlays. Couldn't live without it. You can download the software from Worden.com and get a free one month trial I believe. If you decide to use it and have any questions I'll be glad to assist. 2. How do you select the list of stocks that you are reviewing on a weekly basis? Are you applying some sort of filter to narrow the list down to your 2000 or so? (Not that 2000 is a narrow list.)-----------------------------------------------------------------------I do not narrow the list down to 2000. I look at 2000...then may end up with 40 or so charts that are really interesting. Those 40 go onto one of several watchlists where they are followed. With Telechart..I'm also able to scan through all the industry group charts and sector ETF's. Sometimes the scans(screens) lead me to some interesting charts as well.
As good as you are going to get for the money. Cut me an e-mail to ...@gmail.com and I will show you some graphic samples.Email has been sent, thank you for the offer!I do not narrow the list down to 2000. I look at 2000...then may end up with 40 or so charts that are really interesting. Those 40 go onto one of several watchlists where they are followed. With Telechart..I'm also able to scan through all the industry group charts and sector ETF's. Sometimes the scans(screens) lead me to some interesting charts as well.I guess my question really was where do you pull the 2000 from that you are initially looking through? For instance, I use a product right now called OmniTrader and it requires me to create portfolios of stocks that will then be available for analysis. But it does not automatically make every ticker symbol available to me unless I create a portfolio with each ticker symbol.Does Telechart do something similar or can you browse every ticker? Maybe I will have to investigate Telechart as I believe you are correct that there is a free trial.Thanks again,dt
shatterd,I got tired of all the clicking to move items around in TC2K5 and so I became more familiar with the "hot keys". For example, Ctlr-M for watchlists. It takes a little time to get them memorized, but now I dont even have to think about it.I think the charts are good, but not great. I stick with the service because it is so easy for organization and click-overs to sub-industries when I see a couple that look promising.There is a TC2000 board here, but it has been dead for a long time.Prestone
I can browse every ticker. I may start with the Nasdaq 100....then maybe the Dow 30... The Russell 2000 stocks.... The S&P 400 midcaps... S&P 600...etc etc. I also have every ticker grouped by industry and sector. They are all ther grouped and sorted in telechart.
Yes...I agree. I like the speed amd simplicity. It's amazing how fast I can flip through the charts. Can't do that with internet based charting. The sofware is very good for organizing your charts into watchlists.
Just as a confirmation, does Weinstein only have the one book (Secrets for Profiting in Bull and Bear Markets)? I did a quick search online and at Amazon and that is the only book that I have found.Looked online at my local library and they don't seem to have a copy of this book, I have an old gift card to Borders so I may make a trip to take a look.Thanks,dt
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