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Constructing Winning Stock Screens

by John Bajkowski

Constructing Winning Stock Screens Splash image

Over the years, we have studied the works of many famous and successful investors.

Our goal has been to learn from the winning strategies and techniques of investment legends, modern day investment professionals with a proven record of long-term success and even prominent academic research on investing. We have found that it is easy to come up with a list of meaningful screening criteria, but building and applying a cohesive set of criteria can be challenging.

Screening is the application of quantitative criteria to a broad universe of stocks in order to narrow the list down to a few companies. It allows you to focus your attention on a smaller but more promising group of stocks. It also forces you to use a consistent framework to decide which stocks to add or remove from your portfolio. Discipline is a common trait shared with the successful investors that we have studied. It is too easy to let our emotions such as greed, fear and even pride take over the decision-making process and ignore the rational side of investing.

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John Bajkowski is president of AAII.


Discussion

Balakrishnan Shankar from Texas posted about 1 year ago:

Very good article.

I am a beginner and was looking for example for each of the screening examples with respective values.

Do you have any suggestion to get the values for the above screening criteria?


Mukesh Patel from Virginia posted about 1 year ago:

This will guide me to create my own method and I want to follow that while managing my IRA account rather then so called professional charging me hand and mouth to bring me no extra returns and at times even worst then their benchmark.


Dave Gilmer from Washington posted about 1 year ago:

This is a great article on stock screening and the development of screens, but does not talk about where there is a screening tool with the primary and secondary criteria, as mentioned, that anyone could use.


Vaidy Bala from posted 6 months ago:

Those who have discount brokerage account example Ameritrade has free access to Build their own screen parameters. In Canada TD Canada provides one, not the professional type, but something for individual investor. One has to check with your banker, most provide free because they collect commissions when you buy/sell stocks. Hope this helps.


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