How To Design A Fundamentals-Based Strategy That Really Works, Part Two: Applying Rules And Designing Ranking Systems

Feb. 28, 2022 7:24 AM ET1 Comment

Summary

  • When designing a fundamentals-based strategy, you can use ranking, screening, or a combination; this article gives tips on the most effective methods.
  • I explain why it's better to screen first and then rank instead of the other way around.
  • I also give tips on creating more complex ranking systems by using conditional, composite, and industry factors.
  • I do much more than just articles at The Stock Evaluator: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Hand with a white pencil writing: Rank blank list

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This is the second article in a series; here is the first.

I've been using a fundamentals- and ranking-based strategy for stock picking since 2015, and since then my compound average growth rate is 47%. So I can attest

My marketplace service, The Stock Evaluator, comprehensively ranks over 7,000 stocks weekly based on a sophisticated multi-factor system with deep roots in accounting and valuation methods. It has a strong out-of-sample record: since the service began over three years ago, high-ranked stocks have consistently outperformed the market while low-ranked stocks have consistently underperformed it.


This article was written by

3.01K Followers

Yuval Taylor is a hedge fund manager, author, and analyst who has been using multifactor ranking systems to buy and sell stocks since 2015. He focuses on microcaps and emphasizes evaluating every stock from as many angles as possible via algorithm. He is the leader of the investing group The Stock Evaluator.

Features of the service include a spreadsheet of nearly 10,000 stocks rated from 0 to 100 weekly and live chat for questions.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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