If you are willing to share, what do you first go through? Every Sat. the Investor’s Business Daily newspaper puts out IBD 100, supposedly 100 stocks that beat the benchmark by a (supposedly) ridiculous margin. Does anybody use it for investment ideas?
Doesn’t everyone start out with 50 darts and the newspaper?
I use a magic 8 ball.
I’ll try to answer it seriously…I presume you’re an individual investor. If you’re in a fund and looking for some idea this way, you’re doomed. MSN money has a plugin for excel, that would give you some stats. I filter my universe by PE, and some algorithm I wrote myself to show liquidity and mean reverting power. Not rocket science but if all I want is to narrow down the universe, it does the job.
Thanks Takumi. I was wondering if such widely available information like IBD’s top 100 stocks of the week would be a very poor way to find new securities and mispricings.
if you are a daytrader i think you should be going in and out of these stocks… AIB, BAC, RF, UYG,LYG AA,LVS,MGM
I’m interested in a serious methodology as well. Starting out I only used ETFs. My portfolio has grown a bit where I could look at some individual securities sometime down the road. Though I have no professional or personal experience with screening.
I think you are using the term screening here incorrectly (or at least in a confusing way). In investment work, screening is usually a process of selecting a subset of your investment universe for special treatment, which might be just more thorough investigation, or could be selected overweight or underweight stocks. What you’re talking about is searching for investment ideas. After which you might “screen” them to eliminate the bad ones and select the good ones. Most of my ideas tend to come from having a mental model of how the world works; the different investment strategies out there, and the economic and behavioral conditions under which they tend to work or not. Getting that model has taken years of study and observation, and I’m not sure I could write down the model in full even if I tried. Most updates I get seem to come from reading newspapers and The Economist. I’ve been meaning to look at IBD at some point just to see how much value is in there. The general message of the CFA is that you should hold a diversified investment portfolio that approximates the market and has a volatility consistent with your risk tolerance unless you have good reason to think you can outperform. This suggests that you can use ETFs for most of your portfolio and then select a few stocks or other funds to “spice things up” (or, more realistically, practice) with a small percent of the portfolio.
Yes, my mistake. I meant searching for investment ideas rather than filtering through them. In the face of all the information out there, I’ve been struggling to develop a mental model for investment idea generation myself- I’m trying to expand the qualitative inadequacies in my education (mainly industry, management strategy, politics, and economics) to build up this ability.
Ako Wrote: ------------------------------------------------------- > if you are a daytrader i think you should be going > in and out of these stocks… > > AIB, BAC, RF, UYG,LYG > > AA,LVS,MGM I’m not a day trader, but thanks for the recommendations.
nocareer Wrote: ------------------------------------------------------- > If you are willing to share, what do you first go > through? > > Every Sat. the Investor’s Business Daily newspaper > puts out IBD 100, supposedly 100 stocks that beat > the benchmark by a (supposedly) ridiculous margin. > Does anybody use it for investment ideas? Yeah, I use the IBD 100, frequently. For short ideas. Not kidding. Almost all my best shorts came off that list.
NakedPuts Wrote: ------------------------------------------------------- > Yeah, I use the IBD 100, frequently. For short > ideas. Not kidding. Almost all my best shorts > came off that list. LOL. Why is that, exactly? The newspaper suspiciously markets the IBD 100 for the opposite reason.
I think the assumption is that unless you can identify a good reason that the stocks rose by an enormous amount (and are therefore on the list), then it is likely that there will be some kind of mean reversion toward more typical return levels. In other words, if you can’t identify a concrete reason why a stock has risen dramatically in price, chances are that it is now overpriced and therefore a candidate for shorting.
In no particular order: 1) Stock Screeners 2) Hedge Fund 13-F’s 3) Mutual Fund Holdings 4) Newspapers 5) Interviews In short, read as much as you can and something will pop up.