20 de mayo de 2007

Components of CANSLIM


From Wikipedia, the free encyclopedia

Jump to: navigation, search

CANSLIM is an acronym for an investment strategy based upon claimed common characteristics shared by best-performing stocks.



[edit] The investing mechanism and process

CANSLIM is a growth stock investment strategy based on a study of 500 of the stock market winners dating back to 1953 in the book How to Make Money in Stocks: A Winning System In Good Times or Bad. This strategy uses both technical analysis and fundamental analysis.

The goal of the strategy is to discover leading stocks before they make major price advances. These pre-advance periods are "buy points" that are emerging from price consolidation areas (or "bases") of at least 7 weeks on weekly price charts.

[edit] Components of CANSLIM

Each letter in CANSLIM stands for common characteristics which are claimed found in the greatest stock market leaders over the past 50 years[1]:

  • C = Current earnings per share. They must be up 18 to 20% or more.
  • A = Annual earnings. They should be up 25% or more in each of the last three years.
  • N = New. The company should either be under new management, have a new product, or have a new service. It should also have a new high for its stock price.
  • S = Shares of common stock Outstanding:Keep it small. The price of a common stock with 300 million shares outstanding is hard to budge up because of the large supply of stock available.
  • L = Leader or laggard? Within an industry, always choose the company that is leading the way, not one that is following in another's footsteps.
  • I = Institutional sponsorship. Make sure large mutual fund companies (and other institutions) are investing in your stock - you can ride on their capital. Also, focus on the better performing institutions buying your stock.
  • M = Market trends and market indices. Recognize the cup and handle pattern, as well as other market correction footprints. Know when a stock has peaked out. Also, buy stocks only when the Dow, S&P 500, and Nasdaq are going up.

[edit] Cutting losses

The strategy is one that strongly encourages cutting all losses at no more than 7% or 8% below the buy point, with no exceptions, to minimize losses and to preserve gains. It is stated in the book, that buying stocks from solid companies should generally lessen chances of having to cut losses, since a strong company (good current quarterly earnings-per-share, annual growth rate, and other strong fundamentals) will usually shoot up--in bull markets--rather than descend.

O'Neil has stated that the CANSLIM strategy is not "momentum investing", but that the system identifies companies with strong fundamentals--big sales and earnings increases which is a result of unique new products or services--and encourages buying their stock when they emerge from price consolidation periods (or "bases") and before they advance dramatically in price.

[edit] References

  1. ^ Jae K. Shim, Anique Qureshi, Jeffrey Brauchler, and Joel G. Siegel (2000). International Encyclopedia of Technical Analysis, p. 49.

[edit] Books Referencing CAN SLIM

  • How to Make Money in Stocks: A Winning System In Good Times or Bad, William J. O'Neil, 3rd Edition (May 23, 2002), ISBN 0071373616.
  • Master Traders: Strategies for Superior Returns from Todays Top Traders (Wiley Trading), by Fari Hamzei and Steve Shobin (Hardcover - Oct 6, 2006)
  • Technical Analysis: The Complete Resource for Financial Market Technicians, by Charles D. Kirkpatrick and Julie R. Dahlquist (Hardcover - Aug 18, 2006)

No hay comentarios: