Credibility of CANSLIM and William O'Neil

[murray t turtle]

Almost all winners of the US Investing Championships are Canslim/modified Canslim traders.

Maybe it's pure luck and being in the right place at the right time,but this has been a Momo players paradise..
Ryan and Kullamagi have put up astronomical returns using a modified Canslim system..

I'll be the first to admit I am not a directional trader,but a modified Canslim approach would be my approach...
It employs money management, position sizing and leans towards technical factors with fundamental filters...

%%
Good points T qave;
but no such thing as luck.I would not even call a small sample luck ,which some can confuse as luck.[OK Webster does use luck like lucky rabbits foot, but we hunted rabbits kids, most were not lucky/LOL]
IBD, FFTY fund has not beaten SPY; but most dont.
I never could make the kind of money i wanted to with singles stocks; but still may do 10% of my AUM, single stocks.
I found his Investing-trading books real helpful; but with about 90% ETFs.
Warren Buffet warned he would probably not do as well as he had, i believed him also
And ProfiTtrading, good question; BRKA has not come close to SPY benchmark,YTD; + I got a lot more out of IBD + books than CBS fake news.
You know you are in a tough business when people on Wall Street bragg ''about breaking even''LOL''

 

[panzerman]

It has been twenty years or more since I read his book, but it seemed to me to all boil down to a pattern recognition methodology. As such, it was just way too subjective, much like many pattern recognition schemes.

Outside of defining rules around my own interpretation of CANSLIM, does O'Neil somewhere define an objective set of rules that could be turned into a computer algorithm?

 

[murray t turtle]

It has been twenty years or more since I read his book, but it seemed to me to all boil down to a pattern recognition methodology. As such, it was just way too subjective, much like many pattern recognition schemes.

Outside of defining rules around my own interpretation of CANSLIM, does O'Neil somewhere define an objective set of rules.....

Yes ;
i never did exactly recognize a ''cup with handle pattern'' in real time[ LOL Even though i could have done a little math on every cup with handle example + that would be close enough.]
But he has enough rules to make it worth while with discretion;555 page color chart newer edition book[Make Money With Stocks.[2 million seller ,orange cover]
Frankly sounds like you never read that newer orange copyright 2009book.
[A]But its an uptrend system so he admits that[200dma = late sell signal.............]
[a777]I did see a very few statements in his books, that were most likely not accurate, but it does not take an algo or much computer work to spot his error ''what is obvious in markets seldom works''LOL
[z] 7or8%[not subjective @ all numbers ]max loss onsome targets much better than that max loss ;
+ better max trends + supertrends sometimes uptrends.
I'm glad the original poster reminded me i was fine with not planning a single stocks mutual fund/long only fund. Thanks.{Admittedly, i wish he would have said 7% loss or 8% , not a choice ; i cant really say if he is worth 100 or $110 million, in a perfect world]

 

[ms33]

If Mark Minervini had $1 million in 2000 and doubled it every year, he should have $4.2 trillion by now. I believe he had $10 million in 2000. And he says he did better than 100% a year return every year. Do the terrifying math on that and he should have swept up every penny in the universe by now. Okay, that's chest thumping. He's still one of the best public-faciing mentors available.

$1 million * 2^22 = $4.2 trillion

 

[deaddog]

If Mark Minervini had $1 million in 2000 and doubled it every year, he should have $4.7 trillion by now. I believe he had $10 million in 2000. And he says he did better than 100% a year return every year. Do the math on that and he should have swept up every penny in the universe by now. Okay, that's chest thumping. He's still one of the best public-faciing mentors available.

I believe he spends some of what he makes.

 

[ms33]

I'm speaking to what he documents as his investment account.

 

[MKTrader]

For what it's worth, AAII's CANSLIM model has outperformed the S&P pretty impressively. I believe their models are 100% mechanical and I think they've tracked CANLSIM for a long time.
AAII

The only thing I don't know is how much of this performance is real-time vs. backtesting. Some services "tweak" their rules and post a new backtest whenever their models start underperfoming. I think AAII is pretty reputable but I've never subscribed to them.

 

[proftradingjourney]

If Mark Minervini had $1 million in 2000 and doubled it every year, he should have $4.2 trillion by now. I believe he had $10 million in 2000. And he says he did better than 100% a year return every year. Do the terrifying math on that and he should have swept up every penny in the universe by now. Okay, that's chest thumping. He's still one of the best public-faciing mentors available.

$1 million * 2^22 = $4.2 trillion

I don't think he kept most of his yearly winnings into his account, like Livermore he withdrew a ton of it and started from a fresh base again. Don't quote me on this, but I think this is the case. Keeping all that new money in the account causes a lot of sizing and liquidity problems.

 

[murray t turtle]

%%
FINE;
some are supertraders.
Thanks to mr Profittrading for the CBS link; even though typical CBS=anticapitalist from way back...................................................................................
I guessed correctly, CBS skipped the millionaire mutual fund teachings of IBD founding father; which is not subjective@ all.
Dave Ramsey noted the same thing/not subjective @ all.
Not a prediction.
Interesting IBD+ books also noted CBS /major media bias

 

[ms33]

As a subscriber to Marketsmith for two years, which incidentally I never made a nickel from following Mark Minervini's approach, I found it disconcerting that the cross-section of returns showed almost no predictability between 60+ Can-Slim factors and in-sample returns daily, weekly or monthly. The cross-section of returns is the correlation of all stocks for a single date and return on the same date. Even their central factor - Relative Strength - showed no predictability over the multiple looks I made. It did however show whether the trendline of a stock was pointed north or south. The only factors that showed any predictive power were earnings (I forget which permutation) specifically during earning season. Subdividing the 6000 stock universe into Cap ranges did not to raise a single Can-Slim factor to predictability.

It's hard not to imagine that their work has been arbitraged by the onslaught of quant models and by the thousands of portfolio managers all screening stocks based on close variants of Can-Slim factors. The only people who claim to make money on Can-Slim are its special adherents who work around the clock using it, base their pricey tutorials on it, but mostly refuse to document their track records even when they earn multi-100% returns in investing contests.

If it works, a dumbass like me should at least make a few bucks from it every once in a while. I'd put on a shiny classic-looking trade and it would go nowhere or promptly tank same day. Lots of 3-4% paper losses and then a week later maybe a 5-8% pop. Many picks made short-term money eventually but who had the patience? It seems to be common knowledge among the adherents that they fade the obvious picks as easy money. I'm far from solving the riddle of Can-Slim, but my provisional assessment is that it would take six years hard effort to make it pay off. I did make some money not following its rules - I bought extended names - and also made money following the scraps the adherents can't help but throw out there.