Screen using Fair Value and Margin of Safety
I was against it, but many of you wanted it.
After all, it’s your tool.
My reason against screening using margin of safety or valuation still stands.
It should be part of the qualitative process, not the quantitative.
I still firmly believe you’ll grab onto too many value traps so proceed with caution and always remember that the default numbers are not 100% reflective of company’s current state.
Watch this short 2 min video of how it works.
A quick way is to first eliminate a lot of the junk out there with a sniff test.
A sniff test is the same as a simple checklist.
The purpose is to build guardrails so that you don’t step into dangerous territory.
It doesn’t work out as well because value investors get attracted to cheap stuff and growth investors get attracted to charismatic managers and glamour stories.
If you invest, you have one goal in mind.
For your investments to be profitable.
What you and I can also agree on is that we don’t like being fooled by ourselves or others. We certainly don’t want to make bad decisions.
But we do it all the time.
Over and over again.
And many people refuse to do anything about it.
Ahoy!
We’ve released a highly requested feature to the Old School Value Online Screener to make it even easier on your workflow.
You want to be able to view data that you prefer instead of having to stick with the default settings or whatever I set as the default list.
Currently there are 9 different results settings to view the stocks that show up in the screener. But not a fully customizable feature.
Most likely, the data you want to see is different to the next person.
Learn how to value stocks using a simple formula created by Ben Graham. A quick way to estimate the range of a stock for value investors using growth numbers. Download the companion Graham formula spreadsheet.
Here are the rules for the portfolio.
No changes until end of the year, UNLESS a company is bought out and needs to be replaced.
20 stocks @ $5k each for a $100k portfolio
A grade stocks (but can include B if not enough A’s)
No OTC stocks due to many people not wanting or being able to buy them (nothing wrong with OTC stocks though)
2016 was the first year our Old School Value Action Score that you see on the Old School Value stock analysis software took to the streets.
What is an “Action Score”?
In a nutshell, it’s a set of 9 (mostly value based) metrics used to score a stock between 0-100. Stocks are then graded based on their scores.
The #1 goal of the Action Score is to reduce the time spent trying to find ideas.
If you believe in the 80/20 rule, you’ll see that you tend to spend 80% of your time looking for stocks. Less (much less) than 20% of the time is spent on analyzing, thinking, valuing and learning about companies.
The #2 goal of the Action Score is to utilize a mix of uncommon metrics and fundamentals to create a quantitative strategy for people who are short on time, yet enjoy the DIY investing approach.
Results are in.
First, I’ll be going over results of the free value stock screeners and then in a few days, I’ll post the results of the Action Score with a breakdown of how each grade did.
I’m also excited to share a report later this month where the Action Score was independently tested to verify the accuracy and expected returns of the Old School Value Action Score.
In 1932, Ben Graham became a freelance writer for Forbes during the bottom of the Great Depression.
Talk about timing.
With the economy sinking, it would have been tough to write about stocks will go back up. But true to form, in the middle of crashes and people’s accounts getting wiped out, Graham wrote about why the market was cheap with a healthy dose of common sense and objectivity.
An explanation of the Action Score: How the Action score is created using Q,V,G factors; What metrics make up Q,V and G; backtested results showing 20% CAGR over 17 years. Plus a free download of the top 50 Action Score Stocks.
We are driven to provide useful value investing information, advice, analysis, insights, resources, and education to busy value investors that make it faster and easier to pick money-making value stocks and manage their portfolio.