We act as your investing partner, sharing our market commentary and stock pick ideas, helping you further your investing experience through our time and effort.
GMP strives to find the best growth stocks that have the potential to become winning breakouts. More than just finding good stocks, we also provide commentary on their price and volume action, and the action of the market in general. Many of the investing principles we use are based on the CANSLIM investing strategy invented by William J. O'Neil.
Our mission is to help other investors gain an understanding of how to apply different investing rules through the use of real-life breakouts.
We do not consider our stock picks to be recommendations. Rather, we use each stock as a case study in the world of investing. We also encourage individual research on the stocks in our lists.
If you have the desire to learn, then we would like to help. Check out our services and let us point you in the right direction.
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Get to know the CANSLIM philosophy and review our services. We believe GMP provides the best value for your money!
Read through some investing information for beginners, including our "Pitfalls to Avoid" page.
GMP now provides links to extensive information on Elliot Waves. We also have a large collection of financial links.
If you're in the mood for additional resources, then visit our book store. There are many links to books about CANSLIM.
As always, you can contact us here if you have any questions about our services or investing style.
CANSLIM: The C stands for "current quarterly earnings". Most of the big winners from the past had a large percentage increase in their most recent current quarterly earnings compared to the same quarter in the prior year before their breakout, or the quarter right after their breakout. For some stocks, there was an earnings increase of 25% while others made earnings increases of 50% to 100% or more. Many of these winning stocks also had increasing earnings over a few prior quarters. The CANSLIM Theory says this is the most important single characteristic for winning stocks.
CANSLIM: The A stands for "annual earnings". Most winning stocks from the past displayed decent annual percentage earnings increases for the last couple of years. It is good to look for increases of 25% or more over the prior year.
CANSLIM: The N stands for "new". For a stock to do well, it should be on the leading edge of its industry, thus giving investors a reason to demand its shares. This could be in the form of a new product, a new management, or a new 52-week high in price. A lot of winning stocks display more than one of these "new" characteristics.
CANSLIM: The S stands for "supply and demand". Companies are usually classified in three different areas - large cap, mid cap and small cap. When looking for a winning stock, it is usually better to stick with stocks on the smaller end of the scale. They tend to have fewer shares outstanding, which means that buying by institutions will drive the price up quicker. The smaller companies can also adapt better to the changing economic environment and are usually better innovators. Even the large companies of today once started out small.
CANSLIM: The L stands for "leader or laggard". When looking for winning stocks, try to pick stocks from those industry groups that are currently performing the best. Stocks tend to move in groups, which can add to your stocks' chances for success. Also, look for the best stocks within leading industry groups. The leaders within a group usually make the best gains. It is very important to constantly review your stocks to ensure you cut your laggards and concentrate on your leaders.
CANSLIM: The I stands for "institutional sponsorship". As most investors know, it is the institutions that really drive the market and individual stocks. They can't hide their tracks when they decide to take a position in a stock, and their buying power can keep the price moving higher. It is smart to follow the institutions as they have the manpower and knowledge to delve into a company and ensure there is a reason to buy. Individual investors can use that to their advantage by picking stocks that have at least a certain degree of institutional sponsorship.
CANSLIM: The M stands for "market direction". Without this one in your favor, there is not much use trying to buy breakouts. It is extremely important to follow the daily price and volume action of the market and the major averages to ensure that the market's trend is in your favor. CANSLIM looks for a rally attempt with a confirmation day between the 4th and 10th days of a new rally. That is the sign that it is safe to try and enter breakouts.
Every investor should take a serious look at the CANSLIM investing strategy. It can arm you with the knowledge to survive in what otherwise would be an almost hopeless situation.
Even the American Association of Individual Investors (AAII) had this to say about CANSLIM: "We have been testing the performance of a wide range of screening systems for over five years now and our interpretation of the CAN SLIM approach has proven to be one of the most consistent and strongest-performing screens during both bull and bear markets."
If you don't spend time researching your stock picks, then you won't learn how to spot good stocks and how to stay away from bad stocks.
The following are a basic list of steps to take before investing any real money:
1) Decide what your ultimate goal is. Do you want to invest for fun? Are you building up your savings? Do you just want some extra spending money? Whatever the reason, you should decide on it so that you know how to go about reaching that goal.
2) Decide how much money you want to risk to reach your goal. Notice we said RISK. You can be the best investor on Wall Street, and you'll still invest in some stocks that will go down. Be prepared to lose money, and understand the risks involved with investing.
3) Have an investing strategy. This includes what type of stocks to buy, when to buy them, and most importantly, when to sell them. We base our investing decisions on the CANSLIM strategy (developed by William O'Neil).
4) Set up an account with a broker. The online brokerage services are the best for individual investor. They cost much less than a traditional broker, and they give you the freedom to make the trades on your own. Once you pick your service, learn everything there is to know about how their trading system works.
5) Find your stocks and start trading. We recommend investing a very small part of your available cash(10%-15%) at the beginning until you gain some experience. You can even trade on paper for a while until you fell comfortable using real money.
This is a very general outline of the steps that are involved when starting out in the investing world. There are many online resources and books available that go into more detail.