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Computerized Investing > September/October 2007

Rule #1 Stock Screening

PRINT | | | | COMMENTS (5) | A A   Reset

by Wayne A. Thorp, CFA

While there have been numerous successful value investors throughout the years, Warren Buffett is probably the most famous. According to Mr. Buffett, there are only two rules to investing: Rule #1: Don’t lose money, and Rule #2: Don’t forget rule #1. In a new book, “Rule #1” (2006, Crown Publishers), author Phil Town lays out an investment strategy that attempts to follow Mr. Buffett’s rules.

In this article we develop and apply a stock screen based on Town’s book “Rule #1.” Also, additional information on the Rule #1 methodology, including the backtesting results of our use of this screen, will appear in the October 2007 issue of the AAII Journal.

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Discussion

W from OK posted over 2 years ago:

i would rather buy stocks that are currently up the most during the last 12 months


Wayne from IL posted over 2 years ago:

Applying a momentum filter to value-oriented approaches such as this can yield profitable results, as demonstrated by the likes of O'Shaughnessy Wayne A. Thorp, CFA, editor, Computerized Investing


JOse from Florida posted 6 months ago:

Okay, I understand the formulas and the purpose but where can you get the 10 or 5 years ROIC, EPS, Revenue Etcs ?
Any recommendations?


Dave from CA posted 2 months ago:

The shadow stock portfolio has all the specific buy and sell rules documented on aaii website but all the other screens are flying in the dark as far as how the buys and sells are performed but specific performance IS documented, which is meaningless unless specifics of the portfolio management are known.


Wayne Thorp from IL posted 2 months ago:

@Dave,

We explicitly outline the backtesting methodology for all our Stock Screens. Please check the Stock Screens FAQ area.

Wayne


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