| | | I agree not to tinker with screens in general, but if you are screening for companies with improving fundamentals then what is the point when you know the go-forward fundamentals are declining greatly. Same goes for screens that have Chinese microcraps in them. Or whatever.
I mean a little common sense goes a long way.
Just because it works as package, that doesn't prove it won't work if you use a subset. Personally, I know that my subset has done quite well over time, but I don't overthink things. I just take stuff out if there are really obvious red flags, but otherwise I stick with the screen. I try not to let my opinion or market sentiment sway me.
Examples:
If I am looking at an energy company with "improving" historical fundamentals based off of $100 oil and oil is now $50, I know that fundamentals are going to get a lot worse and that's not just sentiment. Buying it violates the very principle of the screen, so no go.
Or if I look at a Chinese microcap selling at 3 PE and issuing shares for acquisitions, I basically know that there is a high likely that stock is a scam, that the financials are not legit. -> No pass.
On the other hand, If I am looking at a convenience store and it is my opinion that convenience stores are a terrible business, I try to ignore that and go with the screen. That is where I think people get tripped up.
MC |
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