Screen like Peter Lynch

Peter Lynch, the man who taught us to invest in what we know and use.

Manager of the Magellan Fund, one of the most profitable funds of all time. Turns out there are very specific things he looks for in a company. Absolutely no surprise there. Is this tweet accurate to those things? Probably not. I’ve always loved screening stocks and dissecting companies though, after I realized day trading just wasn’t my thing (the first time) I dabbled in Fundamental Analysis. Way more my style.

So here’s the tweet that got me thinking.

They go over the logic of each choice in the thread. Very solid, very good points made. So I took the points and adapted them in to a FinViz screener. For those of you who don’t know, FinViz is a tool I use when I want to “quick and dirty” get a list of stocks together that I can share easily. You can screen off fundamentals, chart patterns, technical/quant statistics, you name it.

Anyway, here’s the screener settings.

Some big, notable names. Lots of smaller, unexpected names. Lets see how they do in a strategy.

So, some pro’s and cons.

Cons

It absolutely needs to be refreshed, likely quarterly as earnings and valuation data is refreshed. Until Composer introduces dynamic baskets, this is a common downside to many strategies.

One could argue that this style of investing is best served in a “Buy and Hold” style portfolio. I wouuldn’t argue, but you can simply set it to trade less often if you’d like!

Pros

It’s hard to disprove the idea that investing in valuable companies will ever go out of style, or be a unprofitable venture.

It’s equally difficult to say that a broad list of companies selected with statistically relevant metrics, with no care given to the past in a direct way, is overfit.

Let me know what you think of it!

I’m going to be spending more time exploring this kind of strategy, broad, infrequently traded baskets are a joy to assemble for me.

In the News for next week

The Stock Market Rollercoaster: Bonds take a dive

Last week, the stock market basically died, you could reasonably describe it as absolute carnage. The first half of October has painted the market and many portfolios red, with the 10-year bond hitting 5% at one point.

Several events are lined up to direct the market's trajectory for next week. Notably, the Governor of California's visit to China, a UN Security Council debate on the Middle East, earnings reports from giants like Microsoft and Alphabet, real estate data releases, a much-anticipated speech by Jerome Powell, and the ever-looming threat of global conflict.

As the next week unfolds, keep your eyes on the PMI and PCE indexes, indicators critical for directing bond movement and future inflation numbers. As with every earnings season, companies are under pressure to surpass earnings expectations, given the potential for downside market reactions to disappointing reports pay special attention to anyone who could be negatively impacted by a weakened consumer.

On the topic of companies in danger, regional banking stocks are currently navigating rough waters, with notable hits to earnings of key players like Regional Financial on Friday. As the Regional index wavers back to levels seen at the last bank collapse (hello there SVB), I need you to stay alert for potential market opportunities. Grabbing something that isn’t dying when everyone thinks it is can be a solid way to get a solid position on some financial sector companies.

Ready for the week? Come brace yourself for the potential “Black Monday” with the rest of us over on Discord!