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Valyooo (34.57)

If you're using a stock screener, you've probably got the wrong idea



March 02, 2012 – Comments (14)

Stocks are dynamic, not static.  There are many variables that are not in the numbers that come up on a screener.  The chart, the management, analysis of the sector, analysis of the economy, guidance, earnings history, investor sentiment, comparative companies, news, etc. When people use stock screeners, they are trying to find a company that fits some form of magic formula.  There really isn't a formula.  There is a reason some companies trade at low P/E's. If there was a magic formula, it would be exploited too easily.  Also if you are bullish on oil, read oil articles books and need to screen for companies.


I am athiest and anarchist, and the last person to ever suggest using feeling and guesswork and experience over numbers and science, but I do see investing as much more of an art than a science.  I don't mean to come across harsh, but I used to use screeners.  I think Buffetts advice, "read everything in sight", is a lot more helpful than screeners.

14 Comments – Post Your Own

#1) On March 02, 2012 at 12:17 PM, JaysRage (78.17) wrote:

Screeners are just a way to get some ideas....the starting point for analysis.   They are a tool, just like anything.    I agree that you shouldn't make a stock decision purely on a screener, but they are a nice tool if you are looking to add some companies to your watch list and that might be worthy of some analysis. 

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#2) On March 02, 2012 at 1:16 PM, chk999 (99.96) wrote:

What JaysRage said. Analysis starts with the screener, not ends with it.

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#3) On March 02, 2012 at 1:30 PM, constructive (99.97) wrote:

Agree with #1 and #2.

If I didn't use a screener to help identify stocks for my watchlist and further review, my stock selection would probably take 5x as long to produce a similar quality portfolio. 

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#4) On March 02, 2012 at 1:50 PM, valuemoney (< 20) wrote:

Agree with #1, #2, and #3! Enough said.

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#5) On March 02, 2012 at 2:19 PM, rodnog (37.14) wrote:

Agree with #1, #2, #3 and #4. Also, it's atheist, not athiest. Unless you're saying that you're athier than anyone else, in which case i apologise.

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#6) On March 02, 2012 at 2:40 PM, SkepticalOx (98.57) wrote:

Agree with #1, #2, #3, #4, and #5... but there are traders out there who trade based on "formulas" that crunch numbers, ratios, correlations, and whatever else... It's just that the PHD's programming the supercomputers may have a slight edge on you!

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#7) On March 02, 2012 at 2:43 PM, Valyooo (34.57) wrote:

I am saying I am athier than all of you

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#8) On March 02, 2012 at 8:19 PM, HarryCaraysGhost (88.16) wrote:

Ok dude, now I'm totally confused so this is you-

and I agree with #1,#2,#3,#4,#5,#6 and myself at #8.

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#9) On March 03, 2012 at 11:07 AM, rofgile (99.26) wrote:

I agree with #9.  And, I mostly agree with 1-8.

Are you Athier than Thou? 

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#10) On March 05, 2012 at 9:58 PM, batkotji (< 20) wrote:


The way I see it, is I like to concentrate my stock holdings into 5-10 stocks, and then have a ton of ETFs, and short some leveraged ETFs. At any given time, I am likely to be up a few percent on at least one of those ETFs, so I sell that to buy the cheap stock when the opportunity arises. A mix between low yield bonds, high yield bonds, small caps, large caps, EMs, gold....SOMETHING has to go up. If everything goes down really badly, I will just dip into my emergency savings and buy stocks, because they wont all crash at once unless a march 09 situation happens "

Valyoo... this sums up my investment/trading style as well except. Do you short leveraged etfs in pairs or just bear or bull etfs ?

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#11) On March 07, 2012 at 2:04 PM, ryanalexanderson (< 20) wrote:

I agree with #12. 

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#12) On March 07, 2012 at 5:57 PM, Valyooo (34.57) wrote:

ryanalexanderson is smelly

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#13) On March 07, 2012 at 8:22 PM, HarryCaraysGhost (88.16) wrote:

#12- Agreed.

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#14) On March 08, 2012 at 1:49 PM, somrh (85.27) wrote:

I agree with all of the prime numbered comments.

Since everyone is disagreeing with you (I do to an extent as well), I'll let you know you're in good company:

Our research process reverses the analytical framework that most traditional value investors use. Many value investors determine whether a security is cheap. If it is, they seek to determine whether it is cheap for good reason. A typical process to identify opportunities is through computer screens that identify statistical cheapness, such as low multiples of earnings, sales, or book value combined with risiing earnings estimates. Then, they evaluate the identified companies as possible investments.

Greenlight takes the opposite approach. We start by asking why a security is likely to be misvalued in the market. Once we have a theory, we analyze the security to determine if it is, in fact, cheap or overvalued. In order to invest, we need to understand why the opportunity exists and believe we have a sizable analytic edge over the person on the other side of the trade. The market is an impersonal place. When we buy something, we generally do not know who is selling. It would be foolish to assume that our counterparty is uninformed or unsophisticated. In most circumstances, today's seller has followed the situation longer and more closely than we have, has previously been a buyer, and has now changed his mind to become a seller.
-David Einhorn


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