AAII Stock Screens

Using the Stock Screens Area

Offering a plethora of investing approaches, the AAII Stock Screens area allows you to compare stock-picking strategies by viewing lists of passing stocks and performance-tracking charts. As a popular area of our Web site, the Stock Screens segment generates many comments and questions among members. To help you make the most of this member benefit, we present answers to the most common questions we receive.

The Stock Screens area is accessed by clicking on Stock Screens in the left-hand navigation bar at AAII.com. To access the archive of screening approaches, click on the gray All Screens bar in the right-hand column of any Stock Screens page. These investment approaches are also included as predefined screens in the Stock Investor software program.

Do the results of the screens represent actual stocks picked by a strategist?

No. The criteria for each screen are defined by our own interpretations of the investment approaches. A strategist may or may not actually invest in a passing stock.

Do you take sell rules that are different from buy rules into account when performing the screens?

The screens are simply reapplied using each subsequent month’s data. Thus, a stock is “sold” (no longer included in the portfolio) if it ceases to meet the initial criteria, and new stocks are added if they qualify. Stocks that no longer qualify are dropped even if the guru behind a particular approach suggests different sell rules versus buy rules. No additional screens or tests are applied in constructing the hypothetical portfolios.

How often are the stock lists updated?

Screens are run each month using AAII’s Stock Investor (they are then posted to the site around the middle of each month that follows the most current run of stock screen data). A new table of passing companies is presented for each screen. The list of passing companies represents a hypothetical portfolio, which is used to track the screen’s performance on a chart. NOTE: The “as of” date posted on the passing companies tables and performance charts (i.e., “data as of 3/28/2002”) refers to the day the stock screens were run. It does not refer to the date that the stock screens are posted to the Web site.

If I like an approach, can I simply invest in the list of passing companies each month?

AAII provides these stock screens as a learning tool. The screens are not meant as investment recommendations, only as examples of the companies you would find when applying a specific investment technique. Each screen attempts to identify a different type of company for a different type of investment style. The list of companies that matches each screen only comprises a first step in the investment process and further analysis should always be done before actually investing in a company’s stock.

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Do the performance charts show what I could have done using the screen?

The charts reflect buying and selling every month at the month-end closing. Only the portfolio’s price gains are tracked (dividends are excluded). The impact of factors such as commissions, bid-ask spreads, dividends, and time-slippage (time between deciding to buy a stock and the actual purchase) are ignored. While this makes the reported performance unachievable even in a best-case scenario, all approaches are subject to the same conditions and procedures. High turnover approaches would tend to benefit from our simplifications. The goal of tracking the performance of the screens is to help gain an understanding of how each approach reacts in different market conditions.

Are the portfolios rebalanced periodically?

Stocks are purchased in equal dollar amounts at the start of the month and sold/rebalanced at the end of the month. This, in effect, rebalances the portfolios each month.

Do you post the actual formulas that are used in the Stock Investor program for each screen?

We don’t have the Stock Investor formulas on the Web site for the screens since they are included in the Stock Investor program itself. However, you should be able to easily construct a screen with any program using the criteria described at the end of each screen’s explanatory article.

Can I see past screen results for the last year?

We do not keep files of the screening results from past months, so we don’t have any prior lists of passing stocks.