Please be open to feedback and constructive criticism from others, and consider their suggestions and advice when making decisions or forming opinions.
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Personal Finance Topics / Macroeconomic Trends and Risks❤
No. of Recommendations: 1
I know the roe is the 5 yr ROE.
What is the cash part?
Thanks in advance.
No. of Recommendations: 9
Is this the screen you are referencing?
Author: mungofitch
Subject: A SPY alternative screen
Date: 5/24/2020
"The screen:
Start from the Value Line 1700--this is old skool!
Of those with a reported ROE, take the top 30%--around 475 companies on average.
For each one, calculate their cash balance in excess of long term debt.
Buy equal dollar mounts of the 40 stocks with the largest net cash balances.
That`s it.
Note: this uses largest cash balances in absolute terms, not largest cash balances as fraction of market cap...that`s why it`s a large cap screen."
https://yorickm.com/Message.php?pid=34516863
No. of Recommendations: 9
I know the roe is the 5 yr ROE.No, actually.
The original screen used Value Line's "Return on Shareholders Equity" field. This field is updated only once a year, using the most recent annual report. This means that it can be quite out of date, but that's not too big a concern since (a) it seems to work fine anyway, and (b) it makes for very low turnover.
Another variant of the screen uses their "ROE latest quarter" field, but I am a little hesitant to use that since I think it's just the one-quarter return on equity, not the trailing four quarters, so it is needlessly volatile. (Also I believe it is not annualized, so 10% means they made a profit of 10% of book in the single quarter, which is an ROE of 40%)
When I'm doing international screening I like to look at both the five year average ROE and (when available) the trailing four quarters. The former is good because you don't want to jump into a firm that just had one anomalously good period. The latter should be checked as well because you don't want a firm that has been doing well for a while but it now going down hill. Both 1-year and 5-year ROE figures are available internationally as fields in the free FT.com global equity screener. Only subscribers can save screens. It covers 140,700 stock listings , about 10% of which have five year ROE over 20%. (many firms have more than one listing, some European ones more than 10, so there aren't nearly that many companies)
https://markets.ft.com/data/equities/resultsJim
No. of Recommendations: 6
I have used this cash_ROE screen (slightly tweaked for my use) for past 5 years since it was posted and have had very good and consistant return beating the SP every year.
In lizdgal post there is a message link that refers to 2 different versions of the cash_roe with the first version as the classic. I'm interested in the second version using a dividend requiremnt along with ROE as its first criteria.
As I'm getting closer to retirement age the dividend cushion is getting more appealing both as a cash flow and as a floor support, but I more like that it includes some of the smaller cap members in its intial sort. With the last 10 years being mostly large and mega cap growth period, I think it is time for a rotation toward some of the under looked smaller large and mid caps to start floating to the top.
Is this dividend version of cash_roe printed in the weekly rankings? If not is it able to be added. I have already done it manually over the last couple weeks but would like an "official" version to compare my work with.
Opihi
No. of Recommendations: 4
With the last 10 years being mostly large and mega cap growth period, I think it is time for a rotation toward some of the under looked smaller large and mid caps to start floating to the top.
How many people in the last 25 years have said "the largest cap stocks have run too far, they are headed for a fall"?
We will know when it is time to rotate from the mega stocks to the smaller stocks.
It will be when then mega-cap stocks stop going up. Momentum, baby!
No. of Recommendations: 11
I have used this cash_ROE screen (slightly tweaked for my use) for past 5 years since it was posted and have had very good and consistant return beating the SP every year.
Yes, it's been very good for five years. It put us into a list of stocks that have made everyone happy for five years, and kept us there - GOOG, AMZN, MSFT, META, NVDA, TSLA.
But I have to ask myself if it's been a fabulous screen, or has it been lucky to hitch a ride on one of the greatest bubbles in modern history.
Elan
No. of Recommendations: 7
I have used this cash_ROE screen (slightly tweaked for my use) for past 5 years since it was posted and have had very good and consistant return beating the SP every year.
...
Yes, it's been very good for five years. It put us into a list of stocks that have made everyone happy for five years, and kept us there - GOOG, AMZN, MSFT, META, NVDA, TSLA.
But I have to ask myself if it's been a fabulous screen, or has it been lucky to hitch a ride on one of the greatest bubbles in modern history.
I don't know the details of the poster's screen variant or how it's being used, but by construction, those six that you mention can be at most 15% of an equally weighted 40 stock screen. While I was running the screen it did pick NVDA, but that wasn't the most profitable ticker for the era. I think it came in about fourth.
Jim
No. of Recommendations: 5
But I have to ask myself if it's been a fabulous screen, or has it been lucky to hitch a ride on one of the greatest bubbles in modern history.
The latter.
SPY, VONG, QQQ, etc. all have approximately the same 8-10 stocks.
I recently did a deep look at my accounts and found that close to 25%-30% is in these stocks.
Good reason to watch closely for a solid confirmation of a bear market. Note: bear, not the pullbacks.
