As time has passed since first publishing my book, “Choose Stocks Wisely,”  in late 2013, a recurring question comes up. In fact, I’ve noted it coming up more often very recently from new purchasers of my book. I’ll express the question this way; “the screen from your book is producing almost no (to none) stocks.” I decided to share today my response to one reader over recent days because it reflects best what my thoughts are on this matter.

I believe there are likely at least two reasons in play:
-an extended bull market where very deep values are few and far between
-a growing group using my 7 criteria screen

Expounding on the second reason, by sharing my screen I gave away a trade secret, if you will. Of course, anyone could have previously used this particular screen but it’s unlikely that the exact set of screen filters (7 of the 63 total available finviz filters) and exact choices within the filters was being used; odds are astronomical against it. Since it delivered to me potentially off-radar, small inexpensive quality company names for further examination, it wouldn’t take many doing exactly what I was doing to bring discovery via that filter combination. In fact, in a question and answer chapter in my book, I posed the an answer to a hypothetical question about what might happen if enough people started using my personal unique methodology.

Considering this in addition to the matter of an overall lofty stock market, finding the deepest values means shopping harder.

I’d say the key filters I personally don’t want to relax are:
P/B
Quick Ratio
Current Ratio
Country

Relaxing the
P/E
P/S
Insider Transactions
might provide some options. These are not balance sheet (or regulatory — I. E. country) based criteria.

Finally, I’ve had all kinds of interesting discussions with readers. Some like the big company names but want to be sure of balance sheet strength. My screen again, even with relaxing per the above is unlikely in a market like the present one to produce many big names. Most will not be trading at less than book value, one of the screen filters. Remember, the Scorecard, via parts A and B, can probe for balance sheet quality on any company. That is, parts A and B can help scrutinize the balance sheet for health.

The real help from my book, in my view, is its contribution to balance sheet understanding and its emphasis on the balance sheet relative to minimizing risk. I believe the balance sheet is too often missing in the stock market’s attempts at company valuation.

Once again, I appreciate each one of you reading my posts. Thank you for all your support of my efforts.

See you next time.