No. of Recommendations: 5
Screens can give you potential companies to look at but I wouldn’t use them blindly.

I agree with you completely on this. I wrote a post 15 months ago on Saul's board, where I explained that I used Schwab's screener as a starting point to find SaaS companies, and many of them matched his picks. I certainly didn't blindly buy all of them, and I put much more faith these days in following quarterly earnings reports. Here's that post:

https://boards.fool.com/screening-for-growth-stocks-34095993...

My objectives in the post at the top of this thread are to:
1. Show a screen that has succeeded spectacularly over the past 3 years compared to the vast majority of SI Pro (gold?) screens that have failed miserably, and caused a lot of consternation on this board
2. Try to counteract the mood of pessimism and capitulation that I've seen here
3. Show that "value" stocks, small caps and BRK.B have not only under-performed for 3 years, they have provided zero defense against this bear market. In a complete reversal of the post-1999 bubble, it's this particular growth software sub-sector that is holding up well. Yes, the drawdowns in this sector have been painful as well, there is no magic bullet, but investors are still willing to pay a premium for companies with recurring 9-figure (and 10-figure) revenue streams, with little debt, that are indispensable to businesses, whether we are socially distancing or not.

And 15 months ago, I posted a message on this board titled "What Worked in 2018" where I said "The FAANG and Cloud Software companies that have smoked the market the past 2 years are simply not the types of stocks that would show up in the screens here that have good backtests." Here's that post:

https://boards.fool.com/screening-for-growth-stocks-34095993...

But why not show what would have happened if you had followed this starting in 1997

Because, as explained at the top of this thread, SaaS companies simply didn't exist as a sector you could invest in prior to 2012. So it makes no sense to extend the backtest to 1997. If the SI Pro Industry Group had a sub-sector called SaaS, I would have used that, but it doesn't. All it has is the overall software sector. If you do use this SI Pro screen, use it as a starting point, follow Saul's board, and make sure your emotions can handle the downside volatility. Like Peter Lynch said, it helps if you work in the industry, and know the products (which I do). Never use a screen blindly.

-Ron
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