Post #3185 by rayvt on the Mechanical Investing board

Investment Strategies / Mechanical Investing ❤

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I think it's this one:

https://boards.fool.com/1-universe-of-large-cap-st... 1) Universe of Large Cap stocks. Suggested: ValueLine stocks with timeliness rating (about 1400). Used here: Russell 1000 (large caps) + S&P 400 (mid caps) 2) (optional) Only those stocks that have a dividend. 3) (Recommended) The 50% of the stocks closest to their 52-week high. 4) Rank by ROE, take the top 33% of them 5) Compute NetCash as "Cash & short-term investments" minus "long term debt". This is enterprise total, not per share. 6) Rank by NetCash. Take the 40 with the highest NetCash. 7) Re-evaluate every 1-2 months. Sell any stock that is not in the top 45. (40 HTD 45) The stated rationale for step 5 is that a large stock with a lot of ready cash is unlikely to blow up. Note that when discarding stocks that do not pay a dividend (step 2) there are fewer than 40 stocks Two quick comments: * That last statement sounds wrong? Are you requiring the [cash - debt] value to be positive in addition to merely sorting on it? Based on my testing from the VL universe, if I start with top 1157 by market cap to match your universe size and keep the optional "50% closest to 52 week high" step there I see on average 115 stocks eligible for the final step. That's a lot more than 40, so you might have a glitch. It should be 1/3 of 1/2 of the number of dividend payers. * the step 3 is a recently invented tweak of mine, not part of the original screen. Not sure if it was mentioned before. For those following the evolution of the screen it might seem anomalous. Jim

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