Screening – A short guide

Screening – A short guide

Introduction

Finding investments can be done in a series of different ways – some being tedious and time consuming.
I use a few different methodologies.

Methodology (screening)

Screening by ratios

• Often quality companies enjoy high profitability and or low debt while less liquid companies might enjoy depressed valuations due to being overlooked or unavailable to big institutions (Lynch, 2000). Thus screeners such as MarketScreener are sometimes used.

Noticing real life companies

• Noticing an upcoming product or a quality service might lead to noticing companies or trends before the rest of the market (Lynch, 2000).

Financial commentators

• Other analysts, podcasts or youtubers might provide insights into companies. Though, this is my least desireble way to find companies – sometimes, something exciting will come up.

Trends & themes

• Selecting stocks from theme based funds, can be a way to get exposure toward companies with macroeconomic tail – or headwinds. Often macro economists and investment analysts, will under-perform based on macroeconomic forecasts (Taleb, 2005). Thus, I try to find quality companies with depressed valuations due to headwinds.

References

Peter Lynch. One Up Wallstreet. Book. 2000.

Nassim Nicholas Taleb. Fooled By Randomness. Book. 2005.