October 29, 2020

Over the last couple of weeks, we have talked a lot about stock screeners. This is great because I have walked you through when you should use it, why you should use it and how you should use it I have given the criteria to find profitable stocks using a stock screener and I have also given the criteria to find discounted stocks. In this video, I will cover something more counter-intuitive. I want to share 3 reasons with you on why I don’t like using a stock screener. If you have been following my investing approach for a while, you will learn that I don’t use a stock screener personally. So that’s what this video is about.

90% correct transcript

So welcome back to my channel. And in this video, we're going to talk about the three reasons why I don't like to use a stock screener. So if you have been following my channel, then you'll realize that I have made a six video series on how to use a stock screener. And this is the very last one. So if you didn't watch the previous one, make sure you go back and watch them because I cover, how do you use it? When should you use you use it? Why should you use it so on and so forth? And for the final video, I just want to say and educate you on a three reasons why I don't like to use a stock screener. And if you meet these criteria, then you shouldn't use a stock screener too, because it means you are in a good place already and you don't need one.

Okay. So let's dive in. So before we start, I just want to celebrate another successful case study within investing accelerator, where Serena made 32% from Boeing within one month. So that is fantastic. Serena, I'm very happy for you. Congratulations, and looking forward to your next successful investments. So for this YouTube channel, we are doing a giveaway and if we reach a hundred likes for this video, then I'll be giving out the third book of harmonic trading. So if you have been following my six video series on stock screener, you'll realize that I have given out every single book of harmonic trading. So this is another chance for you to get this book. And it really contains a lot of different price patterns for you to analyze the markets. And I feel like if you just read one out of the three books that will put you miles ahead in terms of other investors and this was actually very beneficial to me many years ago when I was studying and testing different strategies.

So if you're still struggling with technical analysis, then make sure you click the like button, leave a comment below. And once we reach a hundred likes, then I will select a winner. So I really look forward to that and sending out this free book to you. Okay. So now, after going through five videos on how to use stock screener, you will probably notice, or you have picked up a couple of hints on why I don't personally use a stock screener because when you are using a stock screener, the goal is to really find new stock ideas that has previously have not considered. And that is probably going to be outside of my domain. And that is the key it's outside of my domain. When I'm investing, I like to focus on stocks that I like I trust, and that I'm a customer of. And when I'm using a stock screener, I usually come across stocks that I don't like, I don't know.

And I'm not a customer of. And what does that mean? That means that I need to spend extra time doing research over the business strategy of the company. I need to do research over at the management of the company. I need to actually go try their product if I can, if I can not, that will be a bit troublesome. I need to go experience their store if possible, to see if I liked them. I need to see if there are customers, find their story, like why they're buying, why this company is even successful to start with. So then I can feel comfortable and confident to invest in these companies. So that's really, the first reason is that I come across stocks. I don't know. Don't like, and I'm not familiar with now. The second reason is that I come across stocks that are not within my industry of expertise and this actually happens quite often.

Now you will notice for the last five videos, I actually didn't use an industry criteria. And I suggest you to do that because if you are an engineer, then probably you want to filter for tech. You want to filter it for mining. You want to filter for something that is engineering related. If you're a doctor, then you probably want to filter for pharmaceutical companies, medical companies, healthcare companies that you will be more familiar with because within investing accelerator, I actually have doctors and engineers where they focus on their expertise and they actually make more money than they otherwise would have focusing on companies that are purely driven by hype or momentum. When I use a stock screener and I come across a stock that it's not within my domain of industry, then I suddenly need to do a research over the industry as well. Like what is driving industry?

Is it the copper price? Is it the gold price? Is it the silver price? Is it some sort of user adoption on mobile? Is it the number of mobile phones within the U S markets or the India markets or whatnot? So if you come across a stock that you're not familiar with the industry, then it's suddenly becomes quite difficult because you need to know the industry and you need to know what the competitors are as well. So that's really one of the key reasons, but I don't like to use a stock screener. Finally, the third reason why I don't use a stock screener is because I'm not in touch with those company. And when I'm not in touch with those companies, then it usually feels like I'm one step behind because you got to remember, the market is a fairly competitive place. And what does that really mean?

It means that there are people, people with a master's degree, people with a bachelor trickery focusing a hundred percent of their time, time on a specific industry, focusing a hundred percent of their time on a select number of stocks. So when you're looking at investment banking or whatnot, you usually come across people with that focus on the pharmaceutical industry. And all they do is to write investment research report after report, after report on the pharmaceutical industry. So they know all the players, they read all the financial statements of the pharmaceutical companies. They know exactly, exactly which drug is going to be released and when, and whether they're successful or not. And they get insider access to management to have Q and a call as well. So when you think about that, it can easily put you as a disadvantage. If you are investing in a stock that's, you're not familiar with, you're not a customer and you need to manually get updated on what's happening with the stock that is going to put you behind of these smart investors, if not many steps behind of the smart investors.

So that will put you at a disadvantage. So when you are thinking about the stock market, you can think of it like a chess board. There are areas where you can make an advancement that is safe. There are areas where it's a sure win and you can actually grab the opponent's pieces, right, and make a profits. And there are also areas where it's called a kill zone. So that's when you are at a great disadvantage, your information flow is slower than others. No, the company that well you're investing based on analyst. So you have no idea what you're doing. So then that puts your portfolio and your retirement saving at a lot of risks. So instead you should focus on what you're good at. Look at your own expertise. Are you a doctor? Are you an engineer? Are you a nurse? Are you a project manager in a construction company?

Look at that and find those companies where you will have more information than the average Joe. And that is very important. And that's actually one of the key principles I teach in investing accelerator is to focus on companies that you know, you like and you trust. And once you have that, then it's very easy to pair up with good technical analysis, great fundamental analysis. And then once you find a great opportunity to invest in, then you can use stock options to invest in the market. And that's really how investing celebrated works. And that's why we have so many successful case studies we have right now over a hundred or more successful exits within investing accelerator. And I have 11 students that made over a hundred percent from a single investment within the program. So that really is the crux of investing a celebrator, where it puts you at an advantage compared to a lot of other investors in the markets when it comes to investing.

And again, if we focus on passive investing, so it's really about spending an hour a week or so on investing. So if you are interested in learning more like always, I have put all the free resource in the description below. So the first link is the free case study, where you can learn how I get 30% per year from the markets. The second link is the free chart course where you can get the exact templates I use or a technical analysis. And I also have the giveaway for this video and is harmonic trading volume three. So make sure you like this video to join a contest and leave a comment below as well. So then once we hit a hundred likes, then we'll select a winner from there. I'm very excited for you. So that's it for this training series. I need you to think about what else to make for his YouTube channel next, or if you have any ideas, then please let me know in the comments section below, I'll see you in the next video.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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