Thursday, July 7, 2011

Work in Progress: Rule #1 Big 5s for ALL Stocks!

Just wanted to update you on what I'm working on right now.  I think this will be good news for those seeking new stocks in which to invest.  One of my readers, Brad, had suggested that I somehow automate my Rule #1 spreadsheet to go through every single stock traded in US exchanges and pump out a summary for them.  I took up the challenge and decided to further automate my sheet to do this.

What I did was added another tab into the spreadsheet.  There, I have in one column the symbols of all of the stocks listed in US exchanges (courtesy of Brad) and then I wrote a script to go through each and every one of them and look at their Big 5 numbers.  Since I have 1-year, 5-year and 9-year numbers, I decided to cook up an arbitrary formula to give each company a score.  As you know, Phil Town recommends that the Big 5 numbers be > 10%.  So, if a particular Big 5 number is > 10%, the company gets a score of 3 for it.  If it's > 0% but < 10%, it gets a score of 1, and if it was < 0%, it would get a -1.  I then sum up all of the Big 5 numbers and normalize it to be out of 100.  Since I do get "invalid data" once in a while for whatever reason, I just ignore that data point.  What makes a good company?  I think a score of 60 or above is a pretty solid company.

Figure 1: Updated Rule #1 Spreadsheet

One disappointment I had was that Google limits the run time of a script to be 5 minutes.  The spreadsheet takes about 5 hours to run through the script.  So, I'm painfully refreshing the script to go through the 6000+ symbols.  Once that is done and I've thoroughly debugged the sheet, I will publish the sheet along with its results for you.

I would imagine you would want to sort the score using descending order and just see which companies interest you.  I'm quite excited to see what kind of results I get.  This is really a lot better than using an off-the-shelf stock screener since there is really no Rule #1 screener.  Here, you just hit up the stocks with a high score and start your research there.  Since you will have access to the sheet formulas, you can also create your own formula as you see fit.

Hopefully, I will have it published by the end of the week!