The Problem With Stock Screeners

28 03 2010

The greatest question of value investing: How do you find an undervalued stock?

I screen for companies with a low price/free cash flow and hope to find a hidden gem. Most of the companies returned by the screen have very negative future outlooks. Still, there are ones that are worthy of real attention. Also, these screens won’t include companies trading at mediocre multiples with high growth expectations (take Buffett’s famous investment in Coke).

So, how does Warren Buffett recommend that we look for stocks (more importantly, why does he recommend this)?

Here is a great blog post on the subject: http://valuevista.blogspot.com/2007/06/warren-buffett-50-returns.html

Basically, looking through every publicly traded company gives you a great bank of knowledge to increase your circle of competence, and consequently, your rate of return. That’s why I’m “starting with the A’s.”

Advertisements

Actions

Information

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s




%d bloggers like this: