Screening Methodology

The below graphic summarises the process flow we have defined from the various research projects and back-tests in this blog to the last JSE crash, with respect to the various stock screens and how the combination of them narrows the field and enhances share growth probability (click on image for larger view.)



The above process, when conducted on the JSE on 28 April 2003 (bottom of last crash) resulted in 6 stocks being eventually highlighted from a total of 271, with these 6 stocks growing up to a staggering 1042% in the subsequent bull market (based on a portfolio constructed in proportion to these shares' market cap) or 593% (based on a portfolio constructed in equal 1/6th proportions per share).

The NAV and Piotroski screens on their own and combined were found to create less growth with portfolios constructed according to market-cap proportion, however PE, PriceFinder-a and especially ValueFinder showed much stronger growth using market cap based portfolio construction.

Note how ALL the 6 PowerStocks screens narrowed down the portfolio size and substantially outperformed the 350% growth of the ALSI Index, for BOTH portfolio construction methods. As the screens were used in combination, they significantly enhanced the performance achieved

Click here for a recap of the PE screen
Click here for a recap of the Price-to-Book screen
Click here for a recap of the PriceFinder-a screen
Click here for a recap of the Piotroski and PriceFinder-b screen
Click here for a recap of the ValueFinder screen

NEXT UP : Using our unique PowerStocks scoring system to increase above portfolio performance by 20% whist reducing portfolio sizes by 75%