Ot: Yeah, maybe closer to 8000 -g-. I can dismiss several thousand immediately as not being suitable for me.
Okay, there are several things going on here. My presumptions and assumptions and my methods given those.
The screening is basically very easy. I use Yahoo. Of course I have some criteria which enable me to quickly determine if a stock is for me or not. I'm basically an old line value investor, and so I look for typical value measures such as roe, p/sales, p/e, p/bk. If these numbers look okay, then I look at historical numbers going back as far as I can.
Aside: On this thread, for dividend plays, I look for yield, and history of dividends. I also like to check historical dividend yield vs S&P dividends over time. This is called the 'relative dividend yield" model, developed by Tony Spare. He's written a couple of books. Also his former assistant Nancy Tengler (see Google or Amazon) has published a related book. This method requires getting hold of or keeping good dividend yield data - not such an easy thing to come by.
I keep a LARGE number of stocks in my portfolio, so my positions are generally small. Small positions sometimes enable me to manage risk better. Otoh, sometimes sectors are out of favor, and I make a large sector bet. I find stocks in the downtrodden sector I like, but which to buy? The one with the most debt, most leveraged or should I buy the best capitalized, best for rebound, the acknowledged sector leader by size, the most innovative, the ones the analysts like best? I never choose right, so I bet on a package. So for example, from downtrodden '09, I have picked up maybe 20 different utility stocks. Insurance was beat up, and many companies were selling below stated or tangible book value. I chose a package of those. Have you looked at business development companies for distribution yields? I've found 7 or 8 I like (and have accumulated positions and am just monitoring them on Yahoo).
Someone here buying stocks for the dividends should not have to follow all their stocks in detail. If the dividend is going to be cut either it'll be a surprise and nothing but the most astute diligence would have predicted it, or else the stock will lag and there'll be time to exit before dividend is cut (GE maybe, for example, although the on-going stock decline hurt more than the div. cut). Somebody with etfs, cefs, bond funds -- they are involved with maybe a couple hundred stocks and only presume the fund managers are doing decent research that is helpful.
Some assumptions/presumptions.
I disagree with the conventional academic studies that say you are diversified if you have maybe 30 different stocks. That is nowhere near enough imo. How can it be when there are sectors like small cap growth, large cap growth, small cap value, large cap value, commodity, reit, bond funds? And multiply those by two or three or more to get domestic, foreign or bric exposure. Also, I disagree with the academics who say the more diversified you are, the less return you should expect.
What is the purpose of detailed research before investing? Is it to find an "ah ha"--- the secret, hidden stuff in the 10k that enables the astute investigator to know something important that few other people know and so get an advantage? I've never had consistent luck with that.
Now if it's as you say, "I have trouble following more than 50 stocks as deeply as I am comfortable with before investing in any of them", then I ask this (of myself too): Is being comfortable a requirement for making an investment? Given levels of comfort, has it turned out that the times we have been most comfortable making an investment, those are the times and investments that have been most profitable? For me, I say no. Sometimes my most uncomfortable buys have subsequently turned out to have been my most profitable.
If I am a value investor, then I am, imo, generally buying out of favor stuff, stocks that have declined, are declining, and often decline further after I buy them. (As opposed to being a growth or momentum or TA player who buys stocks as they move up.) Therefore, for me, I don't expect to be comfortable when I enter a position, and comfort is not that important to me. (I am trying to train myself to believe that -g-.)
Well, we're all different. For you, given your experience and expertise in the oil business, you might have very good knowledge, maybe almost an insider's perspective of something like DO, which you might have followed for many many years. So if you were betting on DO, you might make it 5, 10, 15% of your portfolio. How about me as an outsider looking at it? I look at its good history, it's relatively low p/e, and my general reading that this sector should prosper as oil fields are developed. Achh, and if I actually did some research, I'd notice that the Yahoo dividend is "incorrect" in that the company also gives a nice special year-end distribution. And if I were looking at other similar stocks in the sector (e.g. RIG), I might come across an SI thread that discusses these. And I might spot a JimisJim -- somebody other people highly respect for his opinions on the oil industry, oil, oil business. So when the man says DO is deep value, that's a good clue.
In total, maybe 15 minutes research for me. Now if the price is near historical or yearly lows, I might buy it. Probably not as much as 1% of my portfolio. But if it's a value, I will want to buy some. And buy it when I see it. Not wait around. Time enough over the next few weeks, months, year to look, cogitate, consider if I want to add more.
That's kinda how I operate.
Aside: In DO for for a few shares since 10/08
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