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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: waverider who wrote (18085)	4/5/1998 1:08:00 PM
From: Thean	Read Replies (1) \| Respond to of 95453

Diamond - IDB is very successful based on volume growth and this is a fact. I can say I benefited from the CANSLIM principle overall but not on the drillers. As to William O'Neil's mutual fund, I know nothing about it. It would help if we know what stocks he buy in that fund. If he can buy only 10 stocks and they are all internet and pharmaceutical stocks, I think his fund should beat the market by much. However, if he needs to diversify and invest in drillers for example, his method will not work as well. It really helps to know what his funds buy and how diverse his fund holdings are before jumping into CANSLIM does not work conclusion.

To: waverider who wrote (18085)	4/5/1998 2:42:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 95453

Diamond, like all purely mechanical systems CANSLIM will fail. I think one of the particular idiocies in the system is the dictum to sell if the price drops by 15% from your purchase price. Considering the fact that transaction costs are so small, and neglecting taxes for the moment, it seems to me that if you are a trader, then the only consistent way to look at the market is if you had the market value of your stocks as cash in hand each day. But O'Neil's system depends on a price memory -- the price you paid. Here's how it could get very silly (this is real life!): suppose you bought Dell during the summer and paid $40/share (DELL was a definite CANSLIM stock). Compare that to the fellow who bought it during the fall for $50. Now along comes November and the stock is trading at $37. Why should it make more sense for the trader who bought it at $50 to bail than the one who bought it at $40? BTW, the stock is currently trading at about $68, so the investor who bought it in the fall would have an unrealized gain for the period of 36%, or, on an annualized basis, 69.4%. Regards, Paul