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Non-Tech : C-A-N-S-L-I-M: A Simple, Easy to Use Stock Picking System
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To: John T. who wrote (19)7/12/1999 8:57:00 PM
From: The Other Analyst   of 42
 
You say it's completely different. Actually I don't think so. Underlying most screening systems (at least the ones that work) are three types of screens. In my opinion, the reason they work is that they exploit the human tendency to be overly optimistic or overly pessimistic. The computer has no such bias, although it does have blinders on and cannot handle non-quantitative data well.
The three types of screen are (1) a way to seek out value-creation by looking for growth and/or profitability, (2) a way to exclude highly valued stocks where there is likely to be excess optimism (using price to sales, or earnings, or book value, or cash flow) and (3) a measure of relative price strength, which exploits the tendency of stock prices (i.e. humans) to be slow in fully recognizing changes.
CANSLIM uses such screens, as do most other systems. There is nothing sacred about any one system.
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