Why Stock Screeners are Important to Your Investment Portfolio

Stock screeners are important to you if you want your portfolio to be based on science and not guesswork or recommendations. Recommendations can be self-serving, and also based upon the current buzz - hot today and stone cold tomorrow. Stock screening makes selecting investments easier and more secure than traditional methods by ensuring that your choices meet your predetermined performance qualifiers.

Stock screeners are a phenomenon of the internet age, and while not all internet phenomena are recommended, or even useful, a stock screener can save you a great deal of time in enabling you to decide on the best stock investments to make at any one time.

Manual company searches can take an absolute age to carry out, and by the time you have trawled through the masses of documents needed to adequately build a list of potential companies for investment, the information is out of date. How would you feel if you could enter a few lines of screening qualifiers, and then instantly receive a list of companies on the stock exchange that meet these criteria?

The answer to that question is so obvious that you needn't even reply.  That is what stock screeners do:  one of the simplest yet most useful tools for researching stocks that the internet has brought us.  Not only that, but you use them free of charge.  Sure, there are expensive versions that are available on subscription, but for basic fundamental screening the free downloads are more than adequate.

If, however, you want to target specific areas of investment, or focus in on specific companies in your list, then you might want to try one of the more sophisticated versions.  It can take a while to find your way around the more powerful stock screening software, so it is worth downloading one of the free deluxe packages available online and carry out your learning free of charge.

However, that's not answering the initial question:  why stock screeners are important to your investment portfolio. When setting up a portfolio many people will go for the stocks that are popular at the time, or appear to be performing well:  the latest hot tips. However, these would be chosen as a snapshot, and will not be taking performance trends into consideration. Hot tips have a habit of become very expensive, and eventually ending in disaster.

For lasting success you must use stock screeners to get the information you need to make the right decisions. For example, you could look for trending stocks, or those whose prices have crossed resistance lines. You simply enter the criteria into the stock screener and you will receive a list of companies that meet these criteria. In addition to those previously mentioned, you could look for stocks that are rising on unusual volume, or whose price has touched a support line and are therefore likely to climb again.

Once you have your list, you can narrow it down using additional criteria, and even link to a report on the company's financial situation so that you can really focus down on specific stocks and possible investments. Your investment decision is then based on genuine criteria and not just the 'hot pick' for today that every man and his dog will be looking at.

Although the free stock screeners are very useful for basic information and lists, you will likely have to pay a subscription fee to use a real time screener that can offer technical as well as fundamental information.  Portfolio decisions must be based on both fundamental and technical criteria if they are to be sound.

Stock screeners are important to your investment portfolio because they can help you to avoid choosing stocks that are good today but bad tomorrow, and you can choose your stocks based on your interests and not on those that are trying to sell to you. Tips are very often given by those who tend to gain from them, and not given freely to help others. A stock screener can help you to avoid self-interested recommendations.

Building a portfolio on today's information and also on an analysis of the financial condition of a business and its projected future, is a significantly more stable situation than if you acted purely on hearsay or on the recommendations of others. Stock screeners remove the human element and offer good solid information on which to base your decisions.

A good portfolio will be compiled for the future, based on projected trends and the anticipated performance of companies calculated from the criteria that you, yourself, have chosen, and not on the opinions of others. Naturally, you have to know the right screening qualifications to apply, but that can be learned by practicing on the free screeners available online for download, and you can play around with it as long as you like without it costing you a penny.

Then, once you know your way around them, you will be in a position to pay a nominal sum to use one or other of the more sophisticated and powerful stock screeners that will enable you to focus in on the type of investments that you are seeking:  those offering longer term success, and also possible short-term gains.

Your code to embed this article on your website* :

*You are allowed to change only styles on the code of this iframe.


Add your Comment