Investoid

If you invest in individual stocks, you need something to be able to cut down the universe of possible investments. There are simply too many possible stocks out there to analyze even a tiny fraction of them effectively, especially when you’re a time constrained do-it-yourself person.

While some people follow the major trends in the marketplace (whether by sector or by specific companies that are in the news), I think it’s important to have a systematic way to look for companies. Stock screening tools allow you to use quantifiable criteria to identify companies with traits you deem attractive.

There are quite a few free online stock screening tools available, among the most notable:

• GlobeInvestor’s stock filter
• MSN’s moneycentral filter
• Zacks stock screening software

All of these tools offer basic screening capabilities. However, none of them are that comprehensive. The main drawbacks for me are:

• Limited fundamental criteria: Most of the basics (EPS, revenue growth, etc.) are there, but there are so many more factors that I believe are important that all the basic tools are useless for me.
• Relative rankings: I want to be able to rank companies in order based on some criteria (for instance, highest return on equity) rather than inputting in less than/greater than values which removes them from the result set. I don’t necessarily want to eliminate stocks from the universe based on one poor value from my selection criteria.
• Cannot weight variables: I would like to be able to weight certain variables more than others to create aggregate relative weightings. This is what a lot of value-based investment shops do to get a look at undervalued companies.
• Limited output abilities: usually the online screens will list the companies that match the screen criteria but not their values on which you screened, so it’s difficult to overcome any of the above drawbacks by manually ranking companies after the fact.

When I was in school and part of a real-money investment management program, we used CPMS, which was pretty good. Its only major drawback was that backtesting required us to send the company our model, which they would then run on for us and send back the results. But at $2,000+/month, it’s not a tool I can get for myself. Thus I am in the market for a good stock screening tool.

I’ve taken a look at ChartSmart, and it seems to have some of the features I want (but not all). I’m going to run its 30 day demo and see if it’s worth the money.

If anyone else knows about good screening software that’s affordable, please let me know. Depending on the features, I’d be willing to spend up to $700-800 a year on such software.