would you recommend the canslim methodology?
Answers
312 points
Market101 answered one year ago …
I'm not the biggest fan of CANSLIM or O'neill, but there are concepts he discusses that are certainly useful when making trading decisions. For example, I think only going after companies who have shown massive earnings growth can leave you poorer at the end of the day...reason being, this information has probably already been added to the price of the stock and you're likely buying it at a high point rather than when it's cheap.
But the "M" portion, meaning following market trends makes a lot of sense to me. If a market/sector is trending upward and you get to buy a cheap stock early on, you have the opportunity to really ride a powerful wave.
So, to sum up -- it's not something I'd follow religiously, but there are certainly useful components in the methodology. I'd also look into some of Joel Greenblatt's books just to balance your own personal methodology out.
4085 points
EthanR answered one year ago …
Market is correct that CANSLIM sometimes has you buying high. But O'Neil's point is that you buy high and sell higher. He says that a stock that goes to $200 will get there by hitting new highs all the time, so if you buy at a new high of $100, after that it will go to $101, then $102, etc.
CANSLIM method is big on buying stocks that show great earnings growth and strong relative strength against their peers or the market in general. I think that is good advice as well. Personally I would try to buy CANSLIM stocks when they pull back to their moving averages. That might improve your gain. But I do think the method has validity, and IBD is a great source of information.
