How to Choose Stocks

The Google Finance Stock Screener is a very powerful and useful addition to the Google finance system. It makes picking stock based on financial criteria so simple and intuitive that you would be excused for thinking investing on the stock market is easy.

The stock screener can be accessed directly, or through the Google finance system. The page is simple and uncluttered. Links to other pages on Google finance are on the left, an input field for a quote on a specific stock is at the top, and criteria for choosing stock runs down the middle. This includes the particular equities exchange you want (default is all, though you can choose from AMEX, NASDAQ and NYSE) and the particular sector you want (default is all).

I do find the position of the quote input box at the top of the page a bit odd: latest quotes requested are listed on the left below the Google finance page links, so this would seem an obvious spot for the input field as well.

The strength of this page lies in the ease of use of the selection criteria. By default four criteria are listed: – Market capitalisation, P/E ratio, Dividend yield (%) and 52 week price change (%).  However there are a total of 60 criteria which can be used, grouped under headings such as  ‘Popular’, ‘Price’, ‘Operating metrics’, ‘Stock metrics’, etc. Why the specific four were chosen as default is unknown – they are not ‘Popular’, and in fact fall under different headings. Definitions of the metrics are provided on ‘mouse overs’.

To add a particular criterion Google has provided the internet standard ‘+’ button (accompanied by text), which lists the headings. Clicking on any heading provides a list of criteria, and by selecting the one you want it is added to the selection list. To remove one Google has provided a ‘X’ by each criterion. Clicking it removes the criterion from the selection list.

Each criterion shows a histogram of the values of all stocks listed, as well as the highest and lowest value. You can change the upper and lower selection limit either by dragging the two bars at the extremities of the chart, or by changing the upper and lower value. At each stage of selection a list of all stocks meeting your criteria is provided, to a maximum of 20 per page. The list can be sorted by any of the criteria chosen (only one at a time) either smallest to largest or largest to smallest (indicated by an up or down icon by the relevant criterion). If you wish for more information on any of the stocks listed, clicking on it will bring up relevant company information and a graph of the share price.

You do not need to have a Google account to use this facility, unless you wish to create a portfolio of stocks to monitor. It is unfortunate that Google does not save your criteria or stock quotes if you are an account holder, as each time you use the system it returns to the default four.

Google has provided a disclaimer to the system warning the data is provided ‘as is’, may be delayed and should not be used without financial advice. This should be in big red letters as the system is so easy anyone would think stock picking is simple. You need to be warned that even the best numbers are only an indication of the worth of the company – the story behind the numbers is what is important.