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Stock Screen Dream Team

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Stock screeners are priceless time-saving devices, able to identify diamonds in the rough; however, they are far from infallible and should really be used as only one aspect in a stock picker's arsenal.

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10. Equity Clock

Ending with something slightly different, this free site is not a pure stock screener per se. It nonetheless offers investors the interesting option of searching securities for seasonal patterns, the aim being to decipher an optimal trading time based on historical charts. October is an especially opportune time to reflect on the quirks of the financial calendar, for the year's tenth month has long had the reputation for being cursed, largely due to calamities in 1929 and 1987. Ironically, however, it more often than not finishes in positive territory, and indeed last October proved to be the market's single best month for 24 years. Equity Clock is an easily accessible product for anyone who believes past is prologue.

Caveats

Stock screeners are priceless time-saving devices, able to identify diamonds in the rough relatively quickly and easily. They are, however, far from infallible and should really be used as only one aspect in a stock picker's arsenal. Price/earnings ratios and gross margins are easy enough to input into a computer, but the world's most sophisticated screening technology is utterly powerless to predict an unexpected "Black Swan"-type event. Take two examples from last week alone.

Citigroup (NYSE:C) would certainly have featured prominently on many scanners on Monday at 4:00 p.m. Eastern after jumping 5.50% to top the entire S&P 500 Index. Who knew that at 8:09 a.m. the very next morning its CEO would suddenly resign? Or that Google (NASDAQ:GOOG), by almost all accounts a screaming buy when markets opened at 9:30 a.m. on Thursday, would watch horrified while its earnings subsequently leaked out early at 12:31 p.m., causing the stock to slump 8.01%?

Screeners are also only as good as the data being used, so it is critical that they stay current. Moreover, make sure each one is comparing like with like. Discrepancies can occur depending on whether one is analyzing ADRs versus local stocks, voting or non-voting shares, diluted as opposed to undiluted earnings, forward vs. trailing P/E, and so on. This doesn't just occur with obscure foreign entities, either. For instance, although Yahoo Finance and Google Finance both currently list the market capitalization of Facebook (NASDAQ:FB) as $41.39 billion, during its first chaotic trading week in May, Yahoo's figure was as much as $20 billion higher.

That said, the best screening tools provide a stellar service. The space continues to evolve, with many of the more popular all-purpose offerings having fled the scene. MSN Money disbanded a well regarded custom stock service in November 2009 and Reuters also pulled the plug on its Investor PowerScreener. In their place have emerged some excellent alternatives, increasingly tailored toward specific investing niches.

Some of the free offerings will suffice but, as the case elsewhere on Wall Street, you ultimately get what pay for.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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