Naples, Florida IBD Meetup

April 6, 2017

What Is CAM SLIM Investing

What Can We Expect
How To Get Started

Lee Tanner
Non-Professional Amateur Volunteer
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 This Presentation Is:
• For Educational Purposes Only
• Not recommending any stocks/securities to
buy or sell
All Investing has Substantial Risk of Big Losses

CAN SLIM® Is The Registered Trademark Of Investors Business Daily (IBD ®)

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Questions?

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 Everything is from the Basic
CAN SLIM® Educational Material

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Learn From The Experts

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Learn From The Experts

5 IBD Live Workshops

8 IBD Home Study Programs

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This Presentation Is Recorded

I’ll Pause For Questions

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What Is CAN SLIM Investing?

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CAN SLIM Investing
High Growth Stock
Investing System

High Earnings Growth

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 Key Advantages of CAN SLIM
• High Annual Return Potential
• Very High Actually – Astonishing High Potential
• More On This Later
• Lower Risk
• Very Low Risk If I Follow The Rules
– Always Cut Losses Small, No Exceptions Ever
– Begin with Small Amounts of Capital - Peanuts
– Scale Up Only when Profitability Is Demonstrated
– If I Get Three Consecutive Losses I Stop & Study Some
More
– Never buy or sell unless it is per a written rules
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 More Key Advantages
• Anybody Can Do This
– It can be done part time while still working, or
retired
– There is abundant, excellent educational material
– It can be, should be, started with small capital,
peanuts
– The tools are inexpensive, available to all, and
easy to learn
– We can start simple and grow

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 Unique Combination
• Very High Earnings Potential
• Very Low Risk
• Can be learned and done by most people
• Lots of good educational materials
• Can be done part-time, actually better part time
than full time.
• Bill O’Neil and his professional portfolio
managers do it part-time.
• Nicolas Darvas – How I Made $2,000,000 in the
Stock Market, 1960

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Questions?

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CAN SLIM Investing
High Growth Stock
Investing System

High Earnings Growth

Rule Based System

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 CAN SLIM Stocks
• C – High Current (Quarterly) Earnings Growth
• A – High Annual Earnings Growth
• N – Something New Causing The High Growth

• S – Favorable Supply/Demand
• L – Leader
• I – Institutional Sponsorship
• M – Favorable Market

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 CAN SLIM Investing System
Sell For Profits
+20% to +25%

Forms Base

Breakout, Buy

Forms Base
-8%

CAN SLIM
Characteristics

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~ 50 Pages
8 Chapters
Describing CAN SLIM

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Questions?

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Basic CAN SLIM Investing System
Sell For Profits
+20% to +25%
Most of Time

Forms Base

Breakout, Buy

Forms Base Not Momentum Investing

Often There Is No Momentum At
The Breakout
CAN SLIM
Characteristics

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 Buying Base Breakouts
• Reduces Risk of An Immediate Loss
• The Stock Is Poised for Another 20% - 30%
Advance – Increases the Chance of A Quick
Gain for a Higher Compound Annual Growth
Rate (CAGR)
• Base on human nature so patterns repeat year
in and year out, decade in and decade out

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Cup with Handle 2016
117 Years Later

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Double-Bottom Base
116 Years Later

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 Base Patterns
• Represent human psychology involved in
buying and selling investments
– Assessments of price fairness
– Fear
– Excitement and eagerness to succeed
– Greed
• Human psychology changes very slowly
– Slower than glacial
– More like tectonic, if that fast

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~ 50 Pages
1 Chapter
Describing Bases
+
Hundreds of Examples

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 CAN SLIM System
Usually Sell Here

CAN SLIM Attraction

Breakout, Buy

Forms Base
Reduce Risk

CAN SLIM
Characteristics

Springboard To A Fast Advance

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 Bases Show Orderly Turnover In
Institutional Owners
• Distribution on the left with orderly price declines as
volume generally eases in normal profit taking.
• Price balances at the lows, ideally on quiet trade as
profit taking subsides.
• Price increases with increasing volume and signs of
accumulation on the right as accumulation increases.
• Patterns may include shakeouts and support.
• Institutional accumulation on the right constrains
supply of available shares.
• New demand triggers pronounced price rise to
stimulate new supply to meet the demand. This is the
breakout.
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 What Happens In A Base?
Prices reach balance,
trade quiets
Normal Profit Taking,
Orderly Distribution Final quiet
selling, handle

New demand,
accumulation

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What Happens In A Base?

Stock has Gone from Weak Hands to Strong Hands

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 Basic CAN SLIM Investing System
Sell For Profits
+20% to +25%
Very Specific Stock – Not Just Any Stock

System
1. 30% prior advance
2. Top CAN SLIM Characteristics
3. Completed a proper, standard base
4. Has a good breakout
5. Market is favorable, bull market.

Breakout, Buy

Forms Base

8 to 12 Weeks
CAN SLIM
Characteristics Not Swing Trading

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 Post Analysis Questions
• Am I Buying Stocks With CAN SLIM Properties
that I’ve Prescreened for my WL?
• Am I Buying Just When They Breakout of A Full
Base Right At The Pivot Point?
• How long am I holding stocks; weeks or days?
• Do I Hold Many Until They Go Up 20%?
• Then Do I Sell Them At +20% While They Are
Still Going Up?
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 System
Don’t Remove
This Belt

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 CAN SLIM System

Breakout, Buy

Forms Base

CAN SLIM
Characteristics

Springboard To A Fast Advance

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 CAN SLIM Fast Advance
• 20% gain in 4 months: 75% CAGR*
• 25% gain in 3 months: 145% CAGR
• Three 20% gains in one year: 73%
• Three 20% gains and three 7% losses in one
year G-L-G-L-G-L : 24%
• Three 25% gains and three 7% losses in one
year; G-L-G-L-G-L: 73%

*CAGR = Compound Annual Growth Rate

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 Basic CAN SLIM Investing
Sell For Profits
+20% to +25%
While The Stock Is Still Advancing

Forms Base

Breakout, Buy

Forms Base

CAN SLIM
Characteristics

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 Profit-And-Loss-Plan

Page 258
How to Make Money In Stocks, By William J. O’Neil, 4th Edition
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Objective Of Every CAN SLIM Trade
Sell For Profits
+20% to +25%

Buy Breakout

Proper Base

8 to 12 Weeks
Top CAN SLIM
Characteristics

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Objective Of Every CAN SLIM Trade
Sell For Profits
+20% to +25%
Greedy – Don’t Want To
Sell Here, I Need Rules

Scared – Want To Sell

Here, I Need Rules

Buy Breakout

Proper Base

8 to 12 Weeks
Top CAN SLIM
Characteristics

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Questions?

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Simple Sell Rules To Get Started

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 Standard CAN SLIM Trade
¼ of My Best Picks Fail this Way
Sell Rule #1
Cut Losses Small
Stay In Business
Buy Breakout

Proper Base

-8% from buy price

Sell Here, Always, No Exceptions
Top CAN SLIM
Characteristics

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 CAN SLIM Sell Rules
1. Sell any stock that goes down 8% from the
buy price – always, no exceptions ever.

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Objective Of Every CAN SLIM Trade
Sell For Profits +20%

Sell Rule #2
Routine Profit Taking

Buy Breakout

Proper Base

Top CAN SLIM

Characteristics

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 CAN SLIM Sell Rules
1. Sell any stock that goes down 8% from the
buy price.
2. Sell all shares to take profits when the stock
advanced 20% above the standard base pivot
point. A key part of the revised profit-to-loss
plan.

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 Standard CAN SLIM Trade
It starts up but
then fails

If it declines too much it is

probably broke – sell it

Buy Breakout

Proper Base Sell Rule #3 – Decline

-8% From The Peak
Top CAN SLIM
Characteristics

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 Standard CAN SLIM Trade
Sell Rule #3 – Decline From The Peak Key Philosophy

Not Protecting Unrealized Gains

– Just Freeing Up Capital

Buy Breakout

Proper Base
-8%

Top CAN SLIM

Characteristics

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 CAN SLIM Sell Rules
1. Sell any stock that goes down 8% from the
buy price.
2. Sell all shares to take profits when the stock
advanced 20% above the standard base pivot
point.
3. After a stock is up 7% from the buy price
begin raising the sell point from -8% first up
to -5% then keep it 11% below the recent
intra-day peak.
These Sell Rules Are Objective – Specific Values, We Can Use Broker Stops
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 To Start 11% is a bit tight, but okay

The CAN SLIM System Philosophy

Not Protecting Unrealized Gains
- Stock Goes Up 15% from 100 to
115
- Come Down 12% Ends Up at 101

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 CAN SLIM Sell Rules
1. Sell any stock that goes down 8% from the
buy price.
2. Sell all shares to take profits when the stock
advanced 20% above the standard base pivot
point.
3. After a stock is up 7% from the buy price
begin raising the sell point from -8% first up
to -5% then keep it 11% below the recent
intra-day peak.
These Sell Rules Are Objective – Specific Values, We Can Use Broker Stops
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 Standard CAN SLIM Trade

Three Strikes Rule

Stay In Business

Buy Breakout

Proper Base

-8% from buy price

If this happens three straight times
Top CAN SLIM
STOP and figure out what is wrong
Characteristics

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 CAN SLIM Sell Rules
1. Sell any stock that goes down 8% from the buy
price.
2. Sell all shares to take profits when the stock
advanced 20% above the standard base pivot
point.
3. After a stock is up 7% from the buy price begin
raising the sell point from -8% first to -5% then
keep it 11% below the recent intra-day peak.
4. If you have three (3) straight failures to trigger sell
rule #1, STOP buying and do post analysis. Don’t
buy again until you see and fix the problem.
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Four Simple Sell Rules To Start

Very Objective Rules

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Questions?

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Special Big Gain Stocks

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 Profit-And-Loss-Plan

Page 258
How to Make Money In Stocks, By William J. O’Neil, 4th Edition
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The Certain-teed Exception Rule

The Eight-Week Hold Rule

Two 8-Week Holds

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Life-Changing Very Special Stocks

1,696 CAGR
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380% CAGR
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HANS (MNST) Modeled
for
Petaluma IBD Meetup
by Michael Nestler

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 Sell All
Weekly 7/14/2006

11 Add-On Buys

Sold and Bought Again

Start Buying

On the IBD 100, Very High Earnings Growth

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 HANS (MNST) Results
• $20,000 in margin account.
• Cash used for initial position – no margin loan
• Margin loan used only for add-on buys
• Stock Gained 1,587% in 23 months
• Portfolio grew from $20K to nearly $1 million.
• Portfolio gained 4,877% in 23 months – the
power of using margin.
• 700% CAGR
• Life style changing
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Holding Onto and Adding To Big Winners Is Key Part
Of CAN SLIM System

Jesse Livermore said something like, “It

is the sitting that makes us the money.”

Big Gains Made by

Holding Onto Winners

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 HANS (MNST) Summary

Less than one trade per month on average

Steady Hand, Easy Work – Not Swing Trading

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2004

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HANS Was Great Then

But, What About Now?

Weibo (WB) - Maybe

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 One Year Exactly

+193%

4/6/2016

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Questions?

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What Can We
Expect?

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 What Can We Expect?
• How much might we make?
• How much will it cost to learn this?
• How long will it take to learn this?
• When might I start making a little money?
• When might I make big money?
• When can I quit the day job/retire?

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How Much Can We Make?

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 American Association Of
Individual Investors (AAII)

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AAII – 21.3% CAGR Since 1/1/1998

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AAII.com >> Computerized Investing

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 Computerized CAN SLIM ‘Index’
• Based on picking stock with CAN SLIM
properties
• Dropping them when they lose those
properties
• No Market Timing
• No Base Breakout Rules
• No Revised Profit-to-Loss Plan
• No Protective Sell Rules
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I Can Most Likely Better the AAII Screen Results

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IBD 50 Index Performance

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IBD 12/12/2016

What Is The Significance Of This?

I Can Surely Do Better

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 Why Might I Do Better
• Have the IBD 50
• Don’t Buy Extended Stocks
• Don’t Buy Declining Stocks
• Only buy stock breaking out of good bases
• Have sell rules
• Have portfolio management rules
• Even more selective on CAN SLIM properties
than the IBD 50

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IBD 12/12/2016

With Sell Rules & PM Rules

Avoid Big Drawdowns

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IBD 12/12/2016

44% CAGR

3/6/2009
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Bill O’Neil’s Expedience

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 Bill O’Neil’s Start
• Joined Hayden, Stone and Co. in 1958
• Began developing the system soon after
• Refined in in 1960-1961
• Turned about $6,000 into over $200,000 in
1962 - 1963

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Study Model Stocks

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 Model Stocks
• Front of How to Make Money in Stocks
• HANS (MNST) posted 5/21/2016
• Weibo posted 10/2/2016
• AMN Health Care posted 8/17/16
• Sketchers (SKX) posted 12/11/2015
• Ambarella (AMBA) posted 8/18/2015
• GMCR posted 6/2/2015
• Littleton, CO Example Stock (Unknown Until After
It Is Picked) posted 5/18/15
• Lululemon Athletica (LULU) posted 12/20/2013
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Model Portfolios

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 IBD Market Simulations
(Model Portfolios)
• March 2003 – November 2003: Gained 390% (>700% CAGR)
– 2004 Masters Course
– Used +25% profit goal
• March 2003 – April 2005: Gained 1104% (227% CAGR)
– May 2005 Masters Course
– Used +20% profit goal
• August 2004 – April 2006: Gained 454% (165% CAGR)
– April 2006 Masters Course
– Used +20% profit goal
• March 2007 – June 2008: Gained 462% (510% CAGR)
– June 2008 Masters Course
– Used +20% profit goal
• August 2006 – November 2007: Gained 445% (257% CAGR)
– Advanced Strategies 2012 (And Home Study)
– Used +20% Profit Goal

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 More IBD Simulation Info
• Margin accounts using 50% margin.
• Held about 6 or 7 stocks
• Scaled in 50%, 30%-35%, 20%-15%.
• -8% cut loss sell points applied to each buy point.
• Sometimes made buy backs +10%
• Didn’t use the rule not to take profits in first eight weeks in any of
the simulation. (Petaluma IBD Meetup Example SR#14, HTMMIS
page 271)
• All used the Certain-teen exception 8-week hold rule.
• Follow-up buy points:
– 10-week bounce
– 3WT or more
– Base Breakouts

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One Of Lee’s Model Portfolios

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Stocks in the Model Portfolio

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Started With:
$50,000 in Margin Account
$100,000 in Retirement Account
Ended with $542,731 Total
Total Gain 262%
CAGR 458%

Picking from IBD 100/50 Lists

Completing Full Bases
Just Following The Rules

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 Summary of Return Guestimate
• AAII – 21%
• IBD 50 Approximation – 44%
• Model Stocks – Individually 100% - 600%,
more
• Average of Model Portfolios – 380% CAGR
(Can we do ⅟10 of that 38%)

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 What Can We Expect?
• How much might we make? 25% Annually?

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This Is Why I Use CAN SLIM
+100% in 3 Months

~4,000% CAGR

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But, …

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 The Same Stock One Year Later
Sell Rule #1 Is Immutable

$10,000 evaporated to $2,500

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 What Can We Expect?
• How much might we make?
• How much will it cost to learn this?
• How long will it take to learn this?
• When might I start making a little money?
• When might I make big money?
• When can I quit the day job/retire?

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 What Can We Expect?
• How much might we make? 25% Annually?
• How much will it cost to learn this?

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 How Much Will It Cost?
• Computer
• High Speed Internet
• Subscription to IBD
• Books
• Place to work
• Discount Brokerage Account
• Eventually Subscription to Market Smith

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Learn From The Experts

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Learn From The Experts

5 IBD Live Workshops

8 IBD Home Study Programs

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 What Can We Expect?
• How much might we make? 25% Annually - Eventually?
• How much will it cost to learn this? Several $ Thousand
• How long will it take to learn this?

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How Long Will It Take To Learn?

How Difficult Is It?

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116 Pages
Three Page Table of Contents

The Details Are Important

But We Can All Learn Them

We All Follow Rules When We

Drive, Mostly – We Can Also
When We Invest

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These Five Books

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Files

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 Common CAN SLIM Pitfalls
• Arrogance and Big Ego
– Not Adopting the Whole System (Don’t Understand It)
– Not Spending Enough Time Learning The System
– Mixing CAN SLIM with Other Systems
– Knowing Better – Prior Knowledge Gets In The Way
– Don’t have or don’t follow rules
• Impatience
– Buying stocks before ready
– Inability to patiently follow the rules
– Selling good stock too soon
• Pessimism
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 Why Must We Have & Use
Written, Specific Rules
• CAN SLIM investing is intricate
• The details are important
• Correct actions are often counter to our
natural emotional instincts
• Our psychology will derail us if we don’t follow
specific rules

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 Pessimism: CAN SLIM Will Not Work
Any More
• Times and markets have changed greatly – yes,
but:
– CAN SLIM is based on the psychology of investing that
has not changed at all
– And on the needs of big money investors which has
not changed
• Everybody knows about CAN SLIM so it can’t keep
working – Not so:
– Everybody knows but nobody does
– Big investors can’t buy base breakouts just as we do
and can’t buy and sell in one mouse click. We have a
big advantage of being nymble.
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Pessimism: The Market Is Bad
Nasdaq Composite – Monthly
26 Years

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 More CAN SLIM Snags
• Not staying focused on one system
• Can’t stand being wrong – big ego problem

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What Can We Expect?

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 Bill O’Neil’s Start
• Joined Hayden, Stone and Co. in 1958
• Began developing the system in 1959
• Refined in in 1960-1961
• Turned about $5,000 into over $200,000 in
1962 - 1963
5 Years to Develop the CAN SLIM System and
Make Big Money

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 What Can We Expect?
• How much might we make? 25% CAGR is Fair
• How much will it cost to learn this? Several
Thousand Dollars, maybe $5 to $10 thousand.
• How long will it take to learn this? 3 - 7 Years
• When might I start making a little money? 1 – 2
Years
• When might I make good money? 5 – 7 Years
• When can I quit the day job/retire? Not Too
Soon

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Easy to Get Started

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 The CAN SLIM Business
1 2 3
Make a
Study &
Watch List
Buy Just
Write Rules Right

6 5 4
Sell Just Manage a
Review
Right Portfolio

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 The CAN SLIM Business
1 2 3
Make a
Study &
Watch List
Buy Just
Write Rules Right

6 5 4
Sell Just Manage a
Review
Right Portfolio

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 Start Learning CAN SLIM
1 2
Make a
Study &
Watch List
Write Rules
No Money Needed No Money Needed

Compare our WL with

stock that broke out that
we should have been
6 watching

Review
No Money Needed
Personal Breakout List
of Qualified Stocks

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 Getting Started Plan
• Study and read a certain amount of time each week.
• Keep a notebook of studies
• Write and/rewrite some rules every week
– Stock Picking Rules/Guidelines – Making The WL
– Stock Buying Rules
– Portfolio Management Rules
– Add-on Buy Point rules
– Sell Rules
– Post Analysis (Data to save for example)
• Keep references for your rules
• Make a watch list (ready list, buy list) every week and save
them.
• Keep a personal breakout list current with notes.
• Compare personal breakout list to watch list each week.

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 Pick Watch List Stocks
• Only from the IBD 50 at first
• That have nearly completed full and proper
bases
NVDA
NTES
ESNT
MCHP
CRUS

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 Personal Breakout List
• Stocks that breakout that have the type of
CAN SLIM properties you look for to qualify
stock for your watch list, and
• Have completed full and proper bases
• These are stocks that were on your WL or
should have been, or were close to going on
your WL.

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IBD 50 4/3/2017

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Personal Breakout List of
Qualified Stocks That
Broke Out Recently

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 Finding Personal Breakout List Stocks
• WL Stocks That Breakout
• During your WL preparation process
• Market Pulse: Leaders Up or Down In Volume
• The Big Picture
• Stocks On The Move
• Weekly Stocks On The Move
• IBD Meetup Discussions

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 Start Learning CAN SLIM
1 2
Make a
Study &
Watch List
Write Rules
No Money Needed No Money Needed

Compare our WL with

stock that broke out that
we were or should have
6 been watching

Review
No Money Needed
Personal Breakout List of
Qualified Stocks That
Broke Out Recently

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 The CAN SLIM Business
1 2 3
Make a
Study &
Watch List
Buy Just
Write Rules Right

6 5 4
Sell Just Manage a
Review
Right Portfolio

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Getting Started

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 Starter CAN SLIM Approach
1. Each week pick only 4 or 5 watch list stocks with top CAN SLIM
properties and that are completing full and proper bases. Starting by
looking on the IBD 50, IPO Leaders, Sector Leaders and Big Cap 20.
2. Don’t invest money using the CAN SLIM system until you are making
watch lists every week for a few months and see some of those stocks
breakout and advance at least some.
3. Then, allocate small amounts of money initially for CAN SLIM investing,
peanuts, but use real money.
4. Buy within 1% of the ideal buy price, better yet within 0.5%. Making
only one buy; no scaling in yet. Trigger the buy based on price only,
don’t worry about the desired +50% Volume.
5. Hold the stock until it triggers a written sell rule in your personal sell rule
set.
6. Use the short sell rule set similar to that on the next slide.
7. After some successes gradually increase the amount of money for CAN
SLIM investing, begin scaling into initial positions, and expand your sell
rule set.

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 Beginning Sell Rule Set
This Rule Is Immutable
1. Sell -8% from buy price, intra-day. (Cut Loss Sell Rule)

2. Take gains +20% above pivot point,

immediately. (Profit goal sell rule)

3. When profitable by 7% move the -8% sell

point up to -5% from the buy price. After
that keep a trailing sell point 11% below the
highest intra-day high. (Decline from the peak sell rule)
4. If you have three straight -8% failures, stop
buying and study these failed trades to see
what is wrong before resuming. (Three-Strikes Rule)
 Be Patient While Learning
It Takes Time

It Involves Some Un-Learning

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 This Concludes
Naples, Florida IBD Meetup
April 6, 2017

Lee Tanner
Amateur Volunteer

~ Happy and Profitable Investing to You All ~

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