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INM Oct '06 - Don't Buy CAN SLIM® Brand Adulterations And Throw Away The Key To Success
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


(Editor's note: An additional follow-up article about mutual funds and this investment system can also be found here. ) 

Just a little over one year ago, one of the more active contributors to the CANSLIM.net Discussion Boards, a fellow who goes by the name “dodgerblue”, posted a message concerning the new CAN SLIM®  Select Growth Fund.  It is a low load fund that has been licensed to operate based upon the CANSLIM Select list found at www.investors.com.  A number of members sounded off on the subject since, and most seemed skeptical.  Now let’s check on how things are going!

 

The fund’s current fact sheet confirms that thus far it has not kept pace with an unmanaged index representative of the market for U.S. small-cap and mid-cap growth stocks, the Russell 2500 Growth Index. Its underperformance may likely come as a disappointment to many investors who had higher expectations.  It should not shock our readers.   

 

Now let’s review some quotes from the CAN SLIM Certification Level IV workbook (pg. 194):

 

  • “Concentration is the key, not diversification; we put all out eggs in just a few baskets and watch  them carefully while having rules to protect us.“
  • “It’s only risky if you don’t follow the rules.”
  • “Key to your success: How many stocks do you own?” 
  • “Don’t own more than 8; Greatness is not achieved with a 20-stock portfolio.  More aggressive portfolio managers invest in only 6. During a bull market, this number can decrease.”

As of June 30, 2006 the Dow Jones Industrial Average was +4.04%, the S&P 500 index was +1.76%, and Nasdaq lost -1.52% in the first six months of 2006.  So, to its credit, the fund beat the three major averages.  However, the active management and focus on the long list of CAN SLIM® Select stocks has actually resulted in “below average” results if you are using the Russell 2500 Growth Index as your benchmark. 

 

If concentrating your investment dollars in a small handful of stocks is “the key” to great investing, what are investors who go along with these adulterations of the system doing?  They are throwing away the key!

 

In fact, I was recently contacted by an individual who expressed great disappointment with his brief experience with another company that was supposed to be helping him to properly invest using the proven tactics of this winning system.  The portfolio that had been assembled by these “experts” did not match up with his understanding of the rules.  He and his wife both wondered, “Why does it seem like we are running a mutual fund?”  They owned 29 stocks, and their portfolio still had approximately 1/3 of the funds in cash.  Does that mean they would own about 45 stocks if the portfolio eventually got to be 100% fully invested?  After they realized that they were not going about investing the way it was described to them in all prior teachings on the subject, they decided to take action and make the necessary moves toward getting their portfolio properly aligned with the CAN SLIM® investment system.  In short, they called my office and opened an account with Source Capital Group, where I and my team will give them specific input.

 

I find it frustrating to see the CAN SLIM® brand associated with products that are not following the rules of the investment program.  The truth is that the tactics involved are best suited for individual investors, and they are not appropriate for large fund managers.  Your greatest advantages as an individual investor are your ability to make swift moves and your ability to concentrate funds in just a few smart places.  Meanwhile, institutional money managers are forced to diversify to such a degree that their efforts become diluted.

 

In the near future I aim to introduce a new service which can help investors get their portfolio on track toward investing within the guidelines of the CAN SLIM® investment system.  The idea is to fully evaluate investors’ entire portfolios and suggest how it would be best to narrow down the holdings and align the funds in a concentration of the high-ranked leaders with the most potential to generate big gains.  While I am still evaluating the ways the ways to price and package the service, call my office if you think you may have a need for this kind of help.

About Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net :
Kenneth J. Gruneisen has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen became a Registered Representative in 1987 and his career includes experience offering personalized assistance to investors with more than a decade of experience as a Registered Principal managing a branch office.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.


Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.

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The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

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