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)
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)
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.