I did not say the content was atrocious. I said SOME of it was and mentioned writers from Wall Street City. To be much more specific, here is a sample I copied from the site:
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Stocks with a High Sales/Cash Flow Ratio
by Blair G. Jeffery
Senior Investments Analyst, Wall Street City
Special to CNBC.com
Today's screen is High Sales/Cash Flow Ratio which is a pre-built search, found in the
Pre-Built Search page of our Tools section. The search finds stocks with strong sales and
cash flow growth over the previous five years.
In the past, this search has produced solid, albeit inconsistent returns.
According to the backtesting results (tallied on the bottom of the result page),
large cap stocks are the most consistent issues within this search. Large cap
stocks have positive returns in each of the last twelve months. Additionally,
the 8 to 12 month returns are significantly higher than the S&P 500's
performance. For example, the search returned 54% over the last 10 months,
compared to the S&P 500's return of 21%.
Medium, small and micro cap stocks appear more volatile and more risky
compared to large caps based on the same backtesting chart. In fact,
medium and small caps even posted negative returns over the last twelve
months.
One reason for large caps outperforming the other groups using this search is
that fundamental factors of stocks are more important the larger the stock is.
Many smaller companies concentrate on growth and growth only, neglecting
cash flow altogether. For this reason, the search is more selective when it
comes to large cap stocks, thus giving you a better searching system.
Be sure to check back daily to find stocks with strong sales and cash flow
growth over the last five years.
END OF QUOTE FOLLOWING ARE MY COMMENTS
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Backtesting any strategy over a period as short as 12 months is invalid. Ask any academic researcher or statistician.
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"One reason for large caps outperforming the other groups using this search is that fundamental factors of stocks are more important the larger the stock is." Huh?? Fundamental factors of stocks? What would that be exactly? If it means news about specific company developments, then he's wrong. Broad trends like the dollar and interest rates tend to have more impact on larger stocks than is the case with smaller caps. A small cap's performance tends to be more influenced by specific developments unique to that company. If GE loses a customer, the stock won't feel it. If the xyz company loses one of its 3 customers, it is going to get hit.
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"Many smaller companies concentrate on growth and growth only, neglecting cash flow altogether." Growth? Growth of what? sales? reported earnings? cash flow? This statement makes no real sense. Small companies neglect cash flow? The ones that go out of business, maybe. But not the ones that survive.
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"Be sure to check back daily to find stocks with strong sales and cash flow growth over the last five years." Daily? why should I check back daily? If the screen is based on quarterly SEC filings, wouldn't daily be a bit much?
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If you want to know about what screens work best, read James P. O'Shaughnessy's book, What Works on Wall Street. |
