Adapting the Kimmel Approach: AAII's Simple & Complex MAGNET Screens
The article starting here outlines Jordan Kimmel’s MAGNET investment philosophy. How can individual investors adapt the MAGNET investing approach?
As part of our AAII Stock Screens series, AAII developed two MAGNET screens—a Simple MAGNET screen, and a more stringent Complex MAGNET screen—using AAII’s Stock Investor Pro fundamental stock screening and research database program. Stock Investor Pro covers a universe of over 9,500 NYSE, Amex, and NASDAQ over-the-counter stocks.
In keeping with Kimmel’s approach, both of AAII’s MAGNET screens combine relative strength measures along with growth measures to find growth stocks that are “on the move,” but also use value measures to protect against overpaying for growth.
Figure 1 reports backtesting results for both the MAGNET Simple and MAGNET Complex screens, both of which have outperformed the various S&P market cap indexes by a wide margin since the start of 1998.
Despite some wild fluctuations over the period, the MAGNET Simple screen has generated a cumulative gain of 645.3%, and the MAGNET Complex screen an even more impressive 839.1% gain. By comparison, the S&P 500 index has lost 5.9% over the same period.
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