Taking the Stock Market Away From the Dinosaurs
Back in the land before time (at least 25 years ago) when dinosaurs roamed the Earth and successful traders rode them to Wall Street, stock screening was a virtually unknown concept. It was a great idea, screening the stocks of hundreds of companies every day looking for the trends that would lead to buying only the hot stocks. Truth of the matter is, before the Internet, investors either relied on advice from brokers who only got paid when transactions occurred, or on basic stock information that could be gleaned from annual reports, 10-Qs and various other documents that were out-dated by the time they were received. Stock screening was an idea that was out of the question.
Now fast forward to the 21st Century. The Internet has become the source of an incredible amount of data about everything. Computers have become powerful tools, able to screen the results of stocks and decipher mountains of data literally in seconds. Aren’t you glad the “good ole days” have passed you by and that someone invented technical analysis tools?
In reality, it was nearly impossible to perform stock screening of more than a few companies without a flock of analysts. Comparing the results of two or three companies was a daunting task. Today, it is possible to compare many companies and to screen their stocks quite accurately. Today, any investor can access powerful stock market trading tools that, before the Internet, were unavailable, and many of them are free. Of course, there are some very sophisticated tools that come with hefty price tags; however, for most investors all the research they will need is free or available for a modest subscription. Welcome to the modern world of stock screening.
The most basic stock analysis tool is the stock screener. The stock screening that this handy program does in nanoseconds would take you hours and hours of research by hand to do. The best part is there are many stock screeners on the Internet that are free for you to use. Although some of the better ones come as part of subscription packages to good online stock market trading sites, you can get a feel for how they work free of charge. The idea behind this is simple; you want to identify stocks that meet certain criteria rather than haphazardly investing in a stock because it looks good at the moment. Sounds like a good stock trading plan, doesn’t it? Enhance portfolio diversification based on comparative analysis and implement processes to track the performance of your stocks thereafter.
Stock screeners and screening programs allow you to enter different variables such as stock sectors, market cap, sales, dividends, and so forth. The more complex the screen, the more qualifiers you will include. After you enter the qualifiers, the stock screener reviews all the companies listed on the major stock market exchanges and extracts those that meet your criteria. Now you have a list of targets. If the list is too large, run the stock screener again with stricter qualifications to reduce the number of hits. The more sophisticated stock screeners allow you to run additional queries on the compiled data, while the free stock screeners tend to leave you with just the list. Either way, you have just saved yourself hours and hours of work by narrowing down the possible investment options.
Ever wonder why the dinosaurs are extinct? Their inability to adapt to their changing surroundings left them vulnerable. Thanks to the Internet and stock screeners, even a beginner investing in the stock market can avoid financial extinction.
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