AAII Stock Screens FAQs
Screens are run at the end of each month using AAII’s Stock Investor. *NOTE: Because of the time needed for our financial analysts to compile all of the data in the formats that our Web department needs, 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.
IMPORTANT: The "as of" date posted on the passing companies tables and performance charts (i.e. "data as of 2/28/2005") refers to when the stock screens are run. It does not refer to the date that the stock screens were posted to the web site.
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.
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.
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.
The figure to the right shows the necessary math. The key item to keep in mind is that you cannot simply sum up a string of annual returns and divide by the number of years to calculate the annual compound rate of return.
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 companies that match each screen are only a first step in the investment process and further analysis should always be done before actually investing in a company’s stock.
To browse the archive of screening approaches, go to the Screen Performance Snapshots box on the Stock Screens landing page. These investment approaches are also included as predefined screens in the Stock Investor software program.
We do not keep files of the screening results from past months, so we don't have any prior lists of passing stocks.
We don't have the Stock Investor formulas on the Web site for the screens since they are included in the Stock Investor program, but you should be able to easily construct the screen with any program using the criteria described at the end of the explanatory article.
It is best to look at screening as a multi-stage process:
- You must first clearly define the objective of your screen.
- Next, you must construct primary criteria that locate the stocks that match your desired characteristics.
- Then, you will need to construct a set of secondary criteria that ensure the companies passing the primary screen did so because they truly meet your objective and not by coincidence.
- Keep in mind that even the best screen represents a starting point for in-depth analysis.
- And last, you may wish to construct a set of criteria to highlight companies in your portfolio that no longer match the objective of your screen.
The article “Constructing Winning Stock Screens” provides an overview of the stock screening process and illustrates how to design or select a stock screen that makes practical sense.