Introduction: Hashtag Investing Stock Discovery Tool Powered by ShareAlpha
In the last few weeks we at Hashtag Investing partnered with ShareAlpha to bring our members a powerful new stock discovery tool. You can read our press release as well as an incredibly insightful Q&A with co-founder Patrick Kuczynski to learn more about this tool and partnership.
In this post we wanted to provide a high-level introduction to the tool in terms of what it does, why you should do it, and how to operate the tool. This will be the first of a series of post that goes through each feature, functionality, and benefits they have!
First off, what is this tool...
In the most simple way, this new tool will help you discover new stocks and strategies to trade. However, unlike other screeners, this tool actually creates actionable portfolios and strategies to deploy. All the stocks and strategies that are presented are determined by a proprietary quantitative analysis algorithm designed by one of the co-founders of ShareAlpha who has a Masters degree in financial engineering and many years of experience in quantitative analysis.
You are able to select strategies to discover stocks based on your investing style. In the table below we summarize all the different strategies and factors you can choose to discover new stocks. The below table shows us the performance of each for a monthly re-balanced portfolio for 10 stocks in the US market.
How to use the stock discovery tool
The stock discovery tool is great compliment to an investors existing strategies. It is a simply and effective way to discover and find stocks and strategies that you normally wouldn’t. Many users have different strategies and so treat the tool differently. For value investors for instance, it is a nice way to find stocks based on certain criteria like value, profitability, quality, as well as finding potential stocks that guru investors like Warren Buffet would trade.
The tool is updated at the first of each month when brand new updated data from over 10,000 stocks globally are input. The unique algorithms for each factor and strategy then analyzes this data to select up to 25 stocks that fit that strategy and factor. For instance, I lean towards long-term, value style investing. Below you can see in the image the factor strategy that I select to discover stocks that would fit that criteria along with the strategies historical return over the past 5 years.
As you can see, compared to the index, the strategy I am looking at has a much better annualized return. If I had invest $10,000 5 years ago, it would currently be sitting at about $22,000. Compared to the index, it would only be under $13,000. Following this strategy, each month it will spit out and recommend three stocks to trade that meet my strategies criteria. For the month of October, based on the first of the month, the below stocks were the ones recommended.
The stocks shown above have all actually seen positive returns on the day of this post being published. It will be interesting to see if November will recommend all new stocks or if it will keep all or some of the three above.
But wait… You can also just trade like the pro’s
Another interesting feature that recently came out is the ability to select factors and criteria that is similar to what legendary investors would likely use. Want to select stocks using Warren Buffet’s strategy, no problem. How about Joel Greenblatt, or Benjamin Graham? Done. Here for instance is an example of a Warren Buffet stock selection strategy for the US market and the corresponding results of that strategy.
No question here, the Oracle of Omaha definitely has a winning strategy. The stocks listed for this strategy were definitely interesting and were added to my dashboard to watch!
What else can you do?
Say for instance you saw a cool stock you wanted to learn more about, the financial information, historical graphs, news, what the company does. With amazing user feedback for the Hashtag Investing stock investor chat community, this specific feature was rolled out. The feature is simply a stock specific page that describes all the aforementioned features of learning about a stock. For example, if I were to click on one of the stocks I discovered it would be taken to a page like this. If you want to see more, there is an easy button to the Yahoo finance page.
In the next few posts we’ll take a deeper look into the factors and different strategies, how they were determined, and the cool stocks you can discover with them.