EWZuber
1,373 posts
msg #62327
- Ignore EWZuber |
5/8/2008 11:34:11 AM
rharmelink, CANSLIM is fine but are you aware that Oneal's fund went belly up at one point?
He failed to identify that his system does not work in bear markets or in long term distribution.
His big shortcoming, IMO, is that he does not recognize the value of stochastics and has a very weak argument against them. With the use of stiochastics he would have been able to identify the disrtribution phases before they nailed him.
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rharmelink
81 posts
msg #62375
- Ignore rharmelink |
5/8/2008 7:58:24 PM
>> are you aware that Oneal's fund went belly up at one point?
True. IMO, a mutual fund can't do CANSLIM -- the companies are too small. The screening criteria I used to use was $10 per share or more and under 20 million shares of stock. How many $200 million companies can a fund invest in without affecting the price on entry or exit from a position?
Besides, whenever I looked at the top 20 holdings of O'Neils' New America fund, there were usually only 1 or 2 of them that I would have considered to be CANSLIM stocks. And they were rarely in the top 10 holdings. It's one reason I never used the fund.
David Ryan won the stockbrokers' championships, which used real money, three years in a row. If I remember correctly, he had a 1600% compounded return between the three years.
I've not seen returns like that... :)
>> He failed to identify that his system does not work in bear markets or in long term distribution.
Hmmm? The "M" in CANSLIM stands for Market trend. According to O'Neil, it is critical. But it is one of my complaints about CANSLIM. If I could correctly identify the direction and turns of the market, why would I need a stock selection method?
>> Trying to time a stock using FA is a joke.
Agreed. FA is about stock selection, not timing.
>> With TA these distribution phases can be indentified and either shorted or avoided.
I'm not sure I agree. If that were the case, investing would be easy, wouldn't it?
>> With the use of stiochastics he would have been able to identify the disrtribution phases before they nailed him.
Not sure how. How would you know it was not basing instead of reversing?
>> I could show you hundreds of charts where fundamentals were great but the stock continued lower and lower due to distribution.
Depends on the fundamentals that are looked at. A company can report great earnings for the quarter, but have the stock price drop because somewhere in the quarterly report it mentions that sales are expected to slump for the next year or so.
For CANSLIM, since one is used TA to time the entry and exit, you would be out before it goes lower and lower. Since you are buying CANSLIM stocks at the point of a breakout or on the expectation of a breakout, any downward move would be confirmation that the breakout identification was incorrect. O'Neil says to exit most before you have a 4-5% lost, but to try and limit the loss to no more than 8%.
For my part, I disagree that that decision can be made without market context or other factors. For example, I've seen a 15% drop in a stock when an institutional investor bails out, but stayed in it because I liked the fundamentals -- to see it steadily climb back up after the drop, after supply and demand comes back to normal ebb and flow.
Hmmm. Sounds like a CANSLIM testimonial. But it's just one of many methods, and definitely not for everyone.
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