This lesson introduces a fundamental stock valuation method, the "CAN SLIM" system, emphasizing the importance of Investors Business Daily (IBD) as a primary resource for identifying high-growth stocks, and blending these fundamentals with personal technical analysis for market timing.
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okay folks welcome back in June 2017 ICT mentorship
mentorship
stock trading Lesson Four valuation
okay folks uh mentioned this many times
in my free teachings I just one resource
I think as an investor
um you should have this you should have
this as part of your repertoire you need
to have it as a resource as a tool I
think it's valuable I don't have
high enough things to say about
Investors Business Daily I've used it as
a resource
since the late 90s
it's awesome awesome toll it gives you
in my opinion the best fundamental slant on
on
stocks than there then you can find
anywhere else I used to subscribe to the
Wall Street Journal as a young Trader
I felt uh stilted a little uh you know
stuffy yeah I guess the word I was I was
looking for and it just felt um you know
not friendly to me as a as a new Trader
Investors Business Daily has always been
presented in a a manner where it's easy
to understand it's very organized
um I like what they do I've always liked
what they've done with their resource
and they've always been on The Cutting
Edge as far as trying to crack the code
in terms of real supply and demand
factors behind stocks
so if there's a means of valuation from
a fundamental standpoint I believe that
there are fundamental reasons
to buy stocks
doesn't mean that those fundamentals are
sound or that they're going to equate to
future profitability for the company but
if we're going to number crunch
I think Investors Business Daily is the
number one resource in that regard
so everything I'm going to talk about
here is going to be highly dependent
upon you knowing
or getting familiar with Investors
Business Daily Newspaper uh they they
have it in digital form now you can do a
four week
free trial
um they do ask for a credit card but um
if you can cancel before they won't
charge you but the the point is
if you wait until like the second
week of September
wait and then ask for a four week
trial subscription okay so the second
week of September I'm going to remind
you all to subscribe to Investors
Business Daily with a free four-week
trial and no I'm not in business with
them no I'm not a
Salesman for them I I genuinely use
their service and I like it so part of
this mentorship was to learn what it is
I use to Come Away With My analysis
Concepts and this is one of them so
and I use it for currency stuff too and
I use it for commodity stuff as well but
when we get into uh post mentorship
stuff in September October whenever the
Divergence occurs in the stock market
that we're usually looking for for the
seasonal low we'll be tracking that week
by week and when it comes to fruition
I'll actually throw in a bonus teaching
because I just I promised you that I
would do a stock market analysis over
the shoulder so you guys can see how I
do it breaking down the industry groups
sectors leadership all that business and
using all the tools that I use for my
price action study but
I say that because I'm going to go over
and and kind of like in general terms of
what I use investors necessarily with
and like 80 of this teaching is
basically what you learn from Reading uh
William O'Neill's book how to make money
trading stocks to me um
um
I can't say it enough to Simply read
that book okay it's a really really good
book it's Timeless because the
information is
still pertinent today
but without using the Investors Business
Daily Newspaper it's kind of like well
you know it's just neat information it's
thanks for including it Michael but I'm
really not going to go that direction I
believe even if you don't trade stocks
you should be looking at this resource
uh you don't have to subscribe to it
either if you can get to a Newsstand
where you live at locally
um before I actually became a subscriber
to their service I used to go to the
newsstand in one of the local malls
where I lived at and I would go there on
the weekends I'd get the week weekend
edition which had like all the the bells
and whistles and the complete stock
breakdown and all the uh
the indicators they use for their
fundamental ratings
and I would literally pour over this
newspaper for hours on Saturday and I
loved it absolutely loved it and now
it's digital which it makes it very easy
to you know flip through and find what
you're looking for but truth be told I
still get the weekly printed Edition
because I like it I'm a dinosaur you
don't have to go that route but
to save money if you want to look at it
that way I guess you can
go there and buy the newspaper you know
once or twice a month
and then maybe uh you know that would be
one way for you to save some money uh
you don't need to see it all the time I
think once a month is is sufficient
enough especially if you're waiting for
something technically to align as we'll
discuss here in this teaching but I
can't say enough investors Mrs Daly
absolutely one of the best resources for
so we've learned about index stocks and
the Dow 30 NASDAQ 100 and S P 500 so you
have a universe of
630 stocks at your disposal
as a index base
this teaching is going to be talking
about valuation selections on growth stocks
stocks
and this is where the big
astronomical stock surges take place
okay it's going to be in this valuation format
and obviously I can't claim ownership of
this but I do subscribe to the theory
that William J O'Neal created and his
acronym he uses for it is can Slim and
we'll break down each one of these
components and I'll tell you how I segue
in from this information into
how I use my my price action analysis
Concepts but the first portion all the
way up to the letter M primarily this
portion of the acronym
that's where I get my fundamental basis from
from
so when I
View a stock on a fundamental level
whether being bullish or bearish I'm
using the
method of breaking down the stock
with these
letters here that we'll look at closer
and finally the last one here is the
technical basis which is my own
input into it I don't believe that
William J O'Neill's um
approach to timing the market was
sufficient enough
and by my own analysis Concepts and by
using my s p trading and such I I
adopted obviously the canceling method
from the fundamental standpoint
but I can time the market as we've seen
in the market in the mentorship and
prior to the mentorship I can time the
market pretty good uh in regards to
whether they're bullish or bearish and
we know
how to select certain times of the year
to do that so we have timing and we have
seasonals and we have fundamentals
together wow do we have a Dandy of a
so fundamentally speaking the first one
in the acronym can slime is C and when
Jane the old
basically was referring to current earnings
earnings
and you'll be looking for stocks with
earnings growth of at least 25 in the last
last
reported quarter and larger growth is
even better
but you're going to be also looking to
see earnings accelerate over the last
three quarters and for example
one-quarters earnings may be up 25
percent in the next quarter of fifty
percent in the most recent up 90 sale
ideally you want to see the increase building
building
not just a steady growth Pythagoras
and the a in the acronym stands for
annual earnings and you want to see
annual earnings growth of at least 25
each of the last three years
and you also find that the greatest
stocks over time have had the best
margins in the industry group and return
on equities at least 17 percent
and there's some of these things are
going to go right over your head and
without actually doing it with real
stock selections and going through the
process which you'll actually see me do
in the fall so just know that the folks
that are here at the end of this
mentorships content delivery
during those three months
you'll actually see me do this uh spend
I don't know how long it's going to take
me it's probably gonna be a long video
or a long live session but it'll get
it'll be done on a Saturday and you'll
see exactly how I do it but I'll break
down all the things that's shown here
and I'll show you how you can get this information
information
apart from Investors Business Daily for
some of it but other things you're going
to have to rely
solely on Investors Business Daily like
annual earnings and quarterly earnings
and stuff that's kind of like common
knowledge stuff you can pull that up on
a simple thing a bar chart or market
watch something like that you can pull
okay the end in the acronym
stands for the new Factor and the
biggest canceling winners or stocks that
are found to be selected by this method
it always had something new okay and it
could be a new product it could be a new
service new leadership New Management
new price high or new condition in the
industry and an important factor is to
look for newer companies
so Studies have shown the greatest stock
winners showed that 75 of them went
public within the last eight years
so this new economy this new growth
growth
that scene wide way of like for instance
like social media okay Facebook for
example the company came out with an IPO
and I remember telling some of my
friends that uh you want to wait for it
to trade down to around 20 a share and
then buy it and wait for it to go over
100 to share within about three and a
half years
went to exactly to script A lot of them
bought it initially and ended up paying
a little bit more and sat through a
little bit of a pullback on it but it
was a new company it was a new IPO but
it was a fresh idea it was everybody
wanted to be a part of it and just at
the time of this recording now you know
it hit a new mile marker with several
billion uh users a month or on Facebook
now I don't personally have a Facebook
anymore I did have one but the point is
you want to be looking for New Horizon
opportunities and
while there may not be new companies
coming on the same in terms of publicly
traded stocks there may be a company
that's coming out with a fresh idea or
new spin on something or revamping
something okay and I'll give you an
example like apple every time they do a
new iPhone update and I'm looking
forward to the iPhone 8 this fall
the uh that always obviously generates a
new more interest in that particular
stock or that that company so if we have
a change in in management a lot of times
that will spur on a new interest in
buying so always look for things new and this
this
this portion of can slim is best used
for once you identify a stock that has
strong current earnings and annual
earnings you want to start looking in
like a simple Google search the company
list that you build a stock watch list
of that has strong earnings quarterly
and annually the next thing you want to
start looking through is the Google
search on those stocks see if there's
anything new coming up if there's any
any kind of uh new idea a new spin on
something something that's going to draw
investors attention to it because if
that's happening it's also going to be
happening on an Institutional level as
well and who has more money
Joe schmoe on you know the corner that's
Johnny shoes and puts money into an IRA
or the folks that run these mutual funds
or work for insurance companies
obviously the latter so anything new is
going to be beneficial to you in terms
of seeing potentially new purchasing
more appreciation in the share price
coupled with strong current earnings and
okay the letter S and the acronym
standing for supply and demand and no
supply and demand as it relates to
technicals all right so one of the most
basic economic principles is the law
supplying demand which is most sharply demonstrated
