Chapter 10 Security Screening

1
Chapter 10Security Screening

• Business 4179

2
This Chapter Explained...

• The investment universe is so large that it is
  necessary to use screens to sift for
  investments that satisfy certain criteria.
• This is necessary to save time and other scarce
  resources.
• What is a good screen?
• Easy to use
• relevant and appropriate
• acceptable to the user
• Sources of Information
• Value line Moodys Investment Service
• Standard and Poors Internet

3
Important Points

• The author of this chapter make a number of very
  good and important points (especially in the
  multiple-stage screening section). Please note
• EPS is not a very useful screening device.the
  PE normalizes the earnings by relating them to
  the cost of acquiring them. (ie. you had better
  know what you are looking for!)
• in choosing a growth stock, .it would not make
  sense to search initially for those with the
  highest dividend yield because growth stocks
  retain most of their earnings!!!, no company
  likes to reduce its dividend payout, a high
  dividend yield either means that the stock price
  has fallen considerably or that most of the
  companys earnings are not being retained in
  order to avoid cutting the dividend.

4
Stock Screeners

• Why not try a couple of engines
• Yahoo
• Morningstar