Retirement Investing

An Overview Of Canslim Investing

The term 'canslim' was coined and developed by William O'Neil as a result of observing and analyzing decades of top winning stocks and formulating a set of rules for buying and selling. Can Slim investing is a multidimensional approach because it uses both technical and fundamental analysis to establish a set of rules for choosing stocks that are entering high growth periods. The technique covers the stock selection process, how to manage stocks, and when to exit stocks. The process is time tested and has stood the test of time as a valid approach to picking winning stocks. O'Neil, in his book 'How to Make Money in Stocks' indicates that he has a file of over 500 cases studies of savvy investors that have used to process to select winning stocks that have made substantial gain. The main components of the approach are discussed below:

C - Qualifying criteria for Quarterly Earnings Per Share

A - Qualifying Criteria for Annual Earnings Increases (Growth)

N - New Products, Management Requirements, New High And Buying At The Right Time

S - Characteristics of Supply and Demand

L - Stock Characteristics (Market Leader or lagger)

I - Institutional Ownership Characteristics

M - Criteria for market direction

The fundamental approach to can slim investing seeks to establish a framework to select stocks that have distinctive fundamental characteristics that have empirically proven to be an effective approach to grading stocks that are primed and ready to start advancing. This is covered by the C, A and N aspects of the methodology. The approach continues to work on an ongoing basis because it is a scientific approach based solely on how the market works as opposed to personal opinion or brokers opinions. Although the factors have been tested on the American market, the fundamental pillars remain the same and can be applied to any stock market.

The technical analysis part of can slim investment is used to grade stocks on price performance by comparing similar companies within similar industries and grading the market according to the best performing sectors. O'Neil stresses the importance of volume and makes reference to price patterns and footprints on a chart that provide telling signs about stock direction. His comprehensive rules based approach is also a risk management framework for individuals to manage entry, protect profits and exit stocks to protect capital when they do not continue to perform according to the models characteristics.

You can learn more about 'canslim investing' at the official Canslim website and by reading the book 'How to Make Money in Stocks'. There are several subscription options and free introductory articles on the specifics of each pillar of this approach. You will learn how to manage your investments.

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