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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (55009)	3/6/2015 10:40:15 AM
From: MCsweet	Read Replies (2) of 78748

Piotroski, here is my final take on it: Purpose (taken from article #1) The F-Score was designed to hunt out value opportunities that are profit-making, have improving margins, don't employ any accounting tricks and have strengthening balance sheets. When you know for a fact that steel and oil companies going forward won't have improving margin and strengthening balance sheets due to low commodity prices, I think buying them because they have a good historical F-score is silly. I put faith in the screen, but you have to understand the purpose of the screen and apply a little common sense IMO. Thus, I use F-score for companies where I don't have any reason to expect deteriorating performance. I try not overthink things and override my screens, but it seems obvious to me in this case that the original screen purpose is not being met. This has worked pretty well for me over time. I think screens still should be used to consider energy companies, but they should be focused on which ones are good values and are likely to be succeed in a low energy price environment. MC

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