So Many Screens, So Little Time [Fribble] June 20, 2000

Fribble So Many Screens, So Little Time

By (Morgan Mcknight)
June 20, 2000

I've been intrigued by the stock screens in the Foolish Workshop for some time now. I have repeatedly read the "theory" behind the screens and followed their comparative performance. But for all my interest, I just could not decide which screen from the Foolish Workshop to use. After all, it's the mechanical nature of stock screens that makes the Workshop so much fun. You study the stocks and the theory of each Workshop methodology, then decide which one best fits your style.

So I finally decided -- why not use them all? What I had noticed over time is that certain stocks appeared near the top of the chart for several different stock screens. Now, that fact is not too surprising, since there are multiple screens in each category of value, momentum, and growth investing (these classifications are my own and not necessarily in tune with the originators of each stock screen in the Workshop).

So to avoid buying one share of 30 or 40 stocks, I decided to make my own screen based on the entire Foolish Workshop current rankings. I call it the "Workshop Convergence" theory. Basically, I grab the current rankings in spreadsheet format, sort by ticker, and invest in three or four stocks with the most "hits." In the case of a tie, I can either buy them all or pick my favorite based on more conventional analysis (throw darts).

So near the end of April, I ran the numbers and bought Oracle, Network Appliance, and SDL Inc., with the intent of holding for a month or two (whenever I got around to resorting the current rankings) then buying or selling based on the new numbers. A few days ago I finally got around to pulling up the current rankings, which gave me a new top three, led by a repeat appearance of Oracle, followed by JDS Uniphase, and Analog Devices. I therefore sold Network Appliance and SDL Inc. and bought the two new stocks.

Here are the results of these first two complete transactions: Network Appliances gained 8% after commissions, and SDL gained 26% after commissions, for an average return of 17% -- not bad for six weeks. My one "hold," Oracle, is up about 1%, so the return for the Convergence Portfolio as a whole is 11.67%, which on an annualized basis would be about 105%. Yet, as all Workshop Fools know, six weeks do not a Foolish screen make. But since it's my theory and my money (my wife would probably disagree), I am willing to be the guinea pig and give all of you the benefit of my adventures. I'll try and check in from time to time to report on the results of the Foolish Workshop Convergence Theory.