I have been trying to get more active in stock investing. Unfortunately I couldn’t find a starting point to screen stocks. So I have tried different methods proposed my Joel Greenblatt, Peter Lynch etc. As an amateur, I find it hard to convince myself to screen through stocks just by using some multiplies or ratios without much understanding. So I tried to increase the number of evaluations I use to filter out my stock. Hence I ended up with the intrinsic value with discounted cash flow method. I have tried to use various stocks in this analysis and everytime no matter how good the multiples or other criteria look, the intrinsic value comes out very low making the stock almost always over valued. And not by a small amount.
I was just wondering, is there any confident way of screening stocks ? If so could any of you guide me through the process ? I prefer quantitative even if only gives one half of the story. Qualitative, finding moat etc. are something I have zero knowledge in and looks extremely daunting to study different industries and understand businesses. I want to pick some stocks that are fairly valued, gives average return over a few years. Do not want to sell regularly. I am not interested in buying only Multibaggers as my understanding is below par.
The markets are at all time high. Had the stock been under valued or fairly valued, investors would have bought long ago. Study and filter fundamentally sound stocks where the tailwinds are higher and has the potential to grow over next few years. Since, your market understanding seems below par, stick to large caps for average returns. Buy on corrections (June 4 was one such big buying opportunity).
So you want to be an investor, but want to select stocks on the basis of numbers and not on the fundamentals of the business?
How about analyzing the numbers of a business, which you are familiar with, so that the process is relatively smooth? The very industry you work in may have presence in the market, or there might be industries which are related to your profession.
Thank you for the reply. I did not mean that i never wanted to choose based on qualitative Analysis, it is just that the skill level seems daunting. I, myself, have tried to analysis a few industries and tried to understand the technical terms and important metrics associated with them. But I still lack the confidence for decision making using qualitative analysis. But with numbers i feel more confident. That is what I was trying to say.
And thank you for sharing the thread too. As mentioned I would try to understand my industry better. Should be a good starting point.
