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Search Strategy


Shane
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Do most of you screen based on criteria or simply read and network for stock idea's?

 

I'm trying to move away from watching 13F filings for stock idea's and become more independent, mostly because I think I can gain an advantage by looking at the very small companies most of the people I follow would not even notice.  I would be interested to know what criteria you use for screens?  Magic Formula I know is a good one but i'd be interested in creating my own!

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I had an account on stockscreen123 that I would use to screen for companies that had met specific profitability criteria.  For example, I had one screen for companies that had earned at least 15 % on equity for 15 years.  Then I'd go through them and read a little on the internet about them to see if it was anything I'd have a hope of understanding. 

 

Ss123 is worth checking out if you are into screening.  You can make about any screen you can think of on there.

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I would identify my strategy two ways:

 

1) Network for ideas - I will have a stock recommended to me that I look at, sometimes it works out, most of the time I don't invest.  Often in researching I'll come across other ideas that are as or more interesting that I eventually invest in.  So networking is a great starting point.

 

2) Brute Force - This is the worst way to find stocks, but has also been the most rewarding.  I have picked countries and gone through their stocks A-Z looking at each one.  Most of the time you can quickly pass on a company so it makes it quicker.

 

I've also done this with lists of net-net stocks, start at the top and work to the bottom.

 

Most recently I've been moving through the Walkers Manual like this, A-Z.  Each stock that's interesting I make a note in a notebook and then work to follow up later. 

 

I hate to say it but brute force has uncovered the best and most original ideas I have.  Often the companies I'll stumble on won't come back in any screens.  The problem is this method takes a lot of work, lots and lots of sifting for not many researchable companies.  And out of the stack of researchable companies not that many companies I'd actually want to invest in.

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