CANSLIM Inquiry; Model Portfolio Performance & Buy/Sell Alerts

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

A member recently wrote in with the following questions:

I came across your site the other day when searching CANSLIM. I find your site very interesting, and would like to ask you a few questions if you don’t mind.

1. How is your portfolio doing this year, and what’s the YTD return?
2. I am new to CANSLIM, in your opinion, will it be a good approach for casual trader?
3. In the beginning, I may need to follow your trade closely to get myself familiar with CANSLIM. Will you give buy/sell signal with reasons? Will you treat each trade the same in asset allocation, or differently because some may be more speculative play?

That’s all for now, and thank you very much for your time.

My Response:

Let me begin by saying that while I do use a CANSLIM approach to a certain degree, I use a much more flexible approach and implement my own variation- for example at times I use big momentum swing trades based purely on technicals when the time is right.  I also use extensive short trading during times of market weakness to profit on the other side.  So, while the core of my strategy focuses on buying the best companies and holding for several weeks/months, my strategy will ultimately depend on what the market gives me.  As far as cutting losses at 8% which the CANSLIM method recommends, again I choose to be more flexible.  Sometimes I cut my loss at 2% and other times it may be as much as 12%.  Generally, speaking though I adhere to the principle of keeping losses small.  This is critical.  My average loss over the past few years is right around 5%.

1.  The SelfInvestors Model portfolio is up just over 9% this year.  I’m going to have a tough time duplicating my 27.6% gain last year but given this incredibly volatile, sometimes irrational market I’m not at all unhappy with the performance thus far which is still more than double the S&P.  Each and every week I do a short review of the my performance in the Weekly Report released on Sundays.  I believe in complete transparency.  Hyping a few big winners while sweeping the losers under the rug seems to be the status of quo of many advisory services. 

2.  The CANSLIM approach is quite research intensive because you are focusing on technicals and fundamentals as well as gauging the health of the overall market.  Going this alone will consume much of your free time which is why I developed the tracking system and buy/sell alerts.  I do all the work and my tracking systems spit out the best candidates near a breakout or still in a buyable range.

3.  Absolutely.  All buy and sell signals (received within a few minutes of the transaction) come with a fairly detailed explanation of the trade and the size of each trade will depend upon the overall health of the market and the risk level of the trade.  For example a purchase in Cisco or Google will be much larger than a swing trade in a 3 dollar stock.

Here’s an example of a trading alert in Nastech Pharmaceuticals (NSTK) sent to members today:

"It’s been a very long time since I’ve initiated a QSP trade.  The conditions just haven’t been ripe recently and as I’ve said before I’m not going to initiate alerts for entertainment purposes.  There may be times when I go a few weeks without a new trade (although that will be rare).  While the overall market conditions remain volatile and uncertain making big bets on either side risky there is a sector that is seeing some big money coming in recently.  It’s possible that the next round of market leaders will come from this space.  That space is biotech.  NSTK is one such biotech stock that has seen some big buy volume behind it and it’s been featured in the #1 longs list for some time now.  I believe the time is right to initiate a small QSP trade in NSTK.  I’m in at 14.43 with a $10K position.

There are a few others you might look at in the sector such as IDP and ACEL.  I’ll have a special report on the biotechs for you this weekend."

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