November 11, 2010 5:12 pm

Portfolio 101: Lesson 8 - Using stock screens

Most sensible advice on investing tends to start with one simple idea – diversify your portfolio and wherever possible use a fund to buy into risky assets such as shares. But this good advice doesn’t always hold true in every market and some investors prefer to increase their appetite for risk by buying individual shares to put in their portfolios. This can be a brilliant strategy if you know what you’re doing but it’s also very risky. The universe of UK stocks is huge and always growing – where and how do you start to pick individual stocks?

The key is to be careful and methodical about how you select the shares to include in your portfolio – which is hopefully where Smarter Stock Picking from the publishers FT Prentice Hall comes in. It’s a detailed guide to active stock selection strategies for the private investor but always built around detailed quantitative research and academic debate and theory. Read a small excerpt from the book about why and how you need to ‘screen’ the market

David Stevenson is editor of Portfolio Review www.portfolioreviewonline.com

Portfolio 101 aims to provide simple online lessons on the practical, nitty-gritty issues you’ll face when running your own portfolio. If you have any suggestions for lessons, post them in the comment box below.

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