Value investing · Course 13 of 39 · The practice
Screens and factors
What a screen can and cannot find, why a rank is not a threshold, what the evidence on value and quality says, and why a backtest flatters.
For a reader who runs screens to shortlist ideas and wants to know what the list leaves out, not just what it returns.
A screen is arithmetic on stored figures, and a company missing one of them is dropped without being tested, neither passing nor failing. A published finding about cheap or profitable stocks is an average across decades and thousands of companies, not a promise about the next ten you buy, and it can trail for years before it pays off, if it ever does again. This course also places one well known score, Piotroski's F-Score, back inside the narrow slice of the market it was built and tested on, and closes by naming the ways a backtest can flatter a rule that has no real edge.
After it you can read what a screen kept and what it silently dropped, tell a rank from a fixed threshold, and weigh a backtest before trusting its record.
It assumes The value investor's mindset, Accounting quality, Quality and returns, and Valuation.
The method, not the running of it
Screens and factors is 7 lessons on running the whole method on one company. Running it is the part that only happens against real filings, on a real date, and this course has none of yours. It also cannot tell you the day one of your reasons stops being true, which is the part that matters after you have bought.
See our methodology for how the product reads a filing and what it refuses to compute.