Mindless Stock Screeners are "Mindless" and dangerous

Almost every stock site, or financial page on any browser has a stock screener by which a reader can put in some qualifications, like yield desired, PE, Price, etc, and then get the stocks that meet those qualifications. Some time ago, I did a sort on high dividend yielding stocks---this is a very popular sort these days, since many banks and investment vehicles give very low rates of interest. For example, if a bank gives 1.50 % on the savings, if you had saved a million dollars over your lifetime...it would give you $15,000 per year to live on...So now that you know that, being the self reliant person that you are...and the assets you have available for retirement...do the math...ok..you see the problem. Anyway..I digress...After my sort I got a list of stocks, and royalty trusts that sported some very attractive yields...all over 10%. And I did buy several. Some months later I was reading in an investment magazine that this particular royalty trust was going to be going out of business in 2015, or in three years....yes it had been formed a hundred years ago when the old Great Northern Railway had been around, and indeed James J Hill had been one of the founders of the trust...but what the simple stock screener could not tell me was that it was dated for demise. So---just a word to the wise...check out the financial details on the company you are investing in, and the history of that company paying dividends, what coverage they have in terms of cash flow to pay the dividend...and what the prospects are going forward...sometimes the reason that the dividend is rising is that the stock price is plunging because of adverse market conditions for that industry....

There is a Time to Buy...and a Time to Sell: A bit on "Limit Orders"

One of my daughters was a graduate student for some years, and when I used to ask her about how she could afford to furnish her apartment...she would just smile and say, "I've got it covered." I found out subsequently that on "Move out day" she would just drive down the street and look for the items she might enjoy and then just stop since the price was such an affordable zero. For the "price conscious" buyer, it is unheard of to just impulse buy...One waits till the price is right. When one is buying on Wall Street it is similar...Usually stocks have a high and a low over a period of a year, and it must be assumed that the swing from high to low is at least 20%. On hot growth stocks of course it might be different. But---in a time when the stock market has been booming, and there are signs all over the place that a sharp correction might be coming, and 90% of investors are in bonds....that is time time when it is prudent to use a "limit order" or place an order to buy some shares of stock at a price very much lower than the current selling price. You place the order GTC, which is "Good Till Cancelled". Of course you do have to have money in your account for when it is filled someday. Then during the year, your broker might call you and tell you that "your order for XYZ stock has been filled"---That telephone call tells you that there is a selling mood on Wall Street and you can check what has happened...and you also can celebrate a bit, cause you probably got a bargain basement price. I like to call this the "Limbo Rock Order" or how low can it go?