Quote:
Originally Posted by AU Doc
I'd be interested to hear a few details to everyone's approach to screening stocks. Over the past few days I've taken a few minutes here and there to play with the stock screener provided by my online brokerage house. My criteria were as follows:
Dividend > 4%
Stock Price > $5 (just to weed out the penny stocks)
growth > or = to the S&P 500 (I'm not entirely sure how the screener is applying this)
It narrows things down to 200-300 stocks, which is a pretty good chunk. Out of those remaining, I only see a handful that I recognize, and none that look to consistently beat the S&P over the past several years. So Even with a 4%-5% dividend, I would be better off with an index fund that's returning 12% or so.
It's likely I'm overlooking something, or didn't setup my charts to show what I think they're showing. I didn't have more than a few minutes to play around with it.
Is there something obvious that I'm missing? I'm looking for the first pass to get things down to a reasonable number of stocks to look through to find good candidates.
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Do some more reading here..... otherwise I'm just repeating and repeating everything that's been asked - exactly what you're asking - has been discussed a zillion times.
In a nutshell though --- the 5% rule is going to have you invested in 20 names TOPS - if you have 100K to invest -- if you have 10K to invest - I'd go with less than 10 names.
Rather than look at every stock in the market - most of which you'd have ZERO clue who they are or what they do.... ask yourself a few questions - where do you shop -- where do you buy gas - where do you bank - where do you buy building materials etc. IN OTHER WORDS ---- BUSINESSES YOU FREQUENT.
Then start comparing them against their competitors. i.e., Do you shop at Home Depot or Lowes - compare them.... Cost basis - dividend - growth - total return.... and go with what you feel or not.
Use a cell phone? Your provider is? Compare them against the others?
Who's your power provider?
Then once you gather a few names ---- names of businesses you know and trust and frequent..... start to diversify them by their category.... "financial" - "energy" - "retail" - etc.... so you don't end up with 5 names in the retail space etc.
Investing is NOT about when things are going great and everything is going up -- investing is about making money when things aren't going well in the markets -- and being able to ADD to your holdings when they're "on sale" -- so the only way most people are comfortable doing that is by starting out with businesses they know and understand and frequent.... Don't forget that you become a part owner in those businesses. Best to actually like them to begin with.
Now --- nobody can tell you who to invest in - and we don't do that in this thread -- this is about teaching you to fish - not catching you a fish.... everyone is different - everyone's finances are different - everyone's age is different.... So it's up to you to figure out how much TIME you have -- how much risk you're willing to accept - and what you're guts are going to feel like when your account is DOWN 20%.... because at some point it will be. Like about a week after you make your first buys... LOL
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