INVESTOR'S BUSINESS DAILY Does the CAN SLIM formula really work?

Question

Has anybody taken the CAN SLIM Method very seriously over a PERIOD OF TIME; and invested ENOUGH CAPITAL to know for sure whether it really works; or is it all hype?

Answer 1

Yes, it works. There have been some valid points brought up, and some less so.

CANSLIM is a good system to identify fundamentally strong stocks which have a good chance of moving. There are more than just a couple of entry points throughout the year. After all, you're investing for a longer period, so if the stock has run from 40 to 50, who's to say you had to get in at 40 or you missed your chance.

In just over a year, HANS ran up and was worth 6X its value in that short period. Some people would stay out thinking that it's too late to get in while others would wait for a "pause that refreshes" and enter there.

Sure the key is to know when to buy, but an even bigger key is to learn both when to buy and sell. Since most stocks don't go straight up or straight down, there are several opportunities to enter/exit trades.

The key is to get some good rules and follow them.

In the example, if it ran from 40 to 50, you could get in at say 48, with a stop at maybe 44 (x% below the trendline) and stay with the trade moving up your stop until it broke your trendline.

That's just one example. Anyways, CANSLIM works. Read the rest of O'Neill's stuff so you know when to enter/exit.

Hope that helps!

Answer 2

Yes, of course it works. There are two main problems in its implementation, I've discovered:

1) Which stock? There are 100 on the IBD 100 list. Which to invest in? #1 is usually the stock that's already gone up the most, so it's not necessarily the best one to buy. And there is a new list published every day. Often, the first stock to hit a buy point in a new bull market is the best, but not always. Often several stocks will breakout on the same day. Which do you buy?

2) When? The buy point is the most important part of the CANSLIM method. Unfortunately, you often have only 2-3 buy points A YEAR for each stock, and often only 2 or 3 days at the buy point (or within 5%) to buy it. Many people are too impatient to wait for them (I know I am), but it is the safest way to invest casually.

Personally, I think CAN SLIM is the best investing method for the casual investor - the person who only checks his stocks once a day. There are other, better, methods if you like being glued to your computer screen every single day. But yes, it works.

Just keep my two points in mind. Oh, hell, you'll run into them immediately once you get started, but don't say I didn't warn you.

Answer 3

Yes it works for me.

The most important rule is to cut losses fast, when you are 8% below a proper buy point. And only to buy within 5% of a proper buy point (the S in CAN SLIM - Supply and demand). This is the golden rule and it is also difficult for 90% of people to follow, because we lack the discipline and patience. Once you get this, everything else will fall in place. Also it takes some training to recognise a proper buy point, I don't think William O'Neil explains it as well as some of his disciples, though in fairness he does give over 100 examples).

The second most important rule is to choose stocks that have strong recent quarterly growth, +25% revenue AND EPS growth over the past 3 quarters AND accelerating growth (e.g. 25%, 30%, 30%) (The C in CAN SLIM) AND strong relative strength (i.e. there share price has gone up more than the market indexes over the past 6 months) (RS of 75 or more is good - i.e. outperformed 75% of all other stocks) (This is the L in CAN SLIM).

The third most important rule is to buy during a bull market and sell during a bear market (the M - Market Direction)

The fourth most important rule is to sell when you have made a 25% gain, and then wait for another buy point (like the sell after 8% loss, this is not part of the acronym but clearly articulated in the books).

If you can follow only these four rules, then you

Answer 4

IBD gives you a list of stock which are fundamentally strong and due to their high Relative Strength they also are in an uptrend. The trick is to educate yourself to find right entry point and take precaution to minimize losses in case the trade goes against you. As to how long to hold and when to close out a position, you need more education. This is all spelled out in WM. O'Neil's book, "How to Make Money in Stocks".
In short, it is not a system for lazy, inattentive investors. There is no system for such individuals that can succeed.

Answer 5

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/fb19f

Answer 6

IBD Can Slim works depending upon your entry point to that stock. Don't buy a stock just because it is in Can Slim. You could loose money.

Answer 7

In my experience if its recommended by Investors Business Daily its going to work. It is the most unbiased, investment and tax savvy publication out there. Its not for sale to anyone so their opinions are based on experience and expertise.

Answer 8

IT works if you put in the time and energy otherwise there are fund out there that use can slim, put some $ there