Quote:
Originally Posted by unclemick
heh heh heh  . So what criteria do you put into your stock screener before you search for stocks? |
For what it is worth, here are mine. (Not sure it will be of much reference to anybody else, though.)
Large cap stocks:
Exchange: Tokyo Stock Exchange, Section 1
Market Cap.: >2500 oku yen (>~2.1 billion USD)
P/E: 0-23
P/B: 0-2
Small cap stocks:
Exchange: Tokyo Stock Exchange, Section 2 (preferably -- but will shop in the low end of Section 1 if run out of candidates in Section 2)
Market Cap.: <2500 oku yen (all stocks in Section 2 are below this anyway)
P/E: 0-18
P/B: 0-1
Liquidity: Greater than 100 lots/day traded on average in last 25 days (this measure is provided by brokerage screening tool)
Notes: The upper ranges of P/E and P/B are the median numbers
for the respective exchanges and capitalization ranges. These
numbers get revisited periodically as the market moves as a whole.
The combination of P/E and P/B cuts leaves about 1/4 of the stocks in
each capitalization range available. (P/E and P/B turn out to be
surprisingly uncorrelated.) For the small caps, the liquidity
requirement cuts the available universe down by another factor
of 5 or so.
When I have money to invest, I run either the large-cap or small-cap
screen (depending on which class needs to be rebalanced into), and
filter the results for sub-lot sizes or multiples thereof that match
the amount of money I have to invest that day. (Typical lot sizes are
100-1000 shares, and my broker offers low-cost window trades in units of 1/10 lot.)
Then it is time to get out the darts.
Ok, I
will peek at a few things:
1) Industry classification, to ensure diversification;
2) Dividends: some preference for at least 1% yield, but no hard and fast rule;
3) List of major shareholders, with some preference for less closely-held companies;
4) A glance at cashflow and debt numbers (not obviously bleeding to death).
However, if I find myself taking more than an hour or two dithering over
which candidate to pick, I pour myself a shot, make an offering to the
spirits of the efficient market, and force myself to just pick the largest
cap stock on the list. After all, there is always next month.
I never (willingly) sell, and always put new money into new names.
And that's how I make a DIY index fund.
I look at technical and fundamental analysis regarding a stock, and will buy into weakness or strength depending on positive long-term signs, like increasing cash flows, increased R&D spending or acquisition of another firm's patents, etc. It's not pure fundamental amalysis...........
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