Have you used an investment screener? Stock, exchange traded fund, options, covered call, and mutual fund screeners are designed to allow you to determine the unique criteria that match your investment standards and interests. They then search for investment opportunities that fit your personal strategy and leave everything else out. Most online brokers and financial data sites and have screeners to help you filter out the investments that don’t meet your pre-defined criteria or they will only show certain investments that DO meet certain criteria. They’re extremely useful … if you know what you’re looking for. And as I’ll mention later, they can be useful even if you DON’T know exactly what you’re looking for.

What can be filtered through an investment screener?

As a Scottrade customer, I can easily use:

1. The stock screener
2. The exchange traded fund (ETF) screener
3. The mutual fund screener

The Stock Screen

Stock screens can filter investment opportunities by:

• Market Segment – you can easily search stocks by their sector, which index they’re a member of, various exchange components, international investing opportunities, or market capitalization.
• Sales and Profitability – set your own minimums (or even maximums) for sales and profitability.
• Fundamentals – you can also search according to price/earnings ratio, return on sales, inventory, investment, or equity, free cash flow, return on debt, or liquidity ratios.
• Analyst Estimates – find out what the experts believe and predict for a company’s growth rate.
• Price Performance – check out the 52-week high and low or a price-to-S&P 500 comparison.
• Earnings and Dividends – find only those stocks that have the dividend yield you want.
• Technical Analysis – for those who love the charts.

Ssearch for stocks, options, covered calls, spreads, mutual funds and ETFs based on the factors that you choose with optionsXpress by Charles Schwab.

For ETFs, you can screen according to:

• ETF Basics – examine by asset type (equity or fixed-income), classification or fund family, even commission free funds.
• Performance – check out the fund’s past performance over the last month through the last ten years.
• Fundamentals- easily apply fundamental indicators to your screen and use that analysis to measure different funds.
• Morningstar Rating – search funds for rating, risk or return score, or category rank over various time periods.
• Technicals- use technical indicators to measure a fund’s performance.

For mutual funds, you can screen:

• Mutual Fund Basics – screen by load type, availability, fees, asset type, classification or fund family.
• Performance – filter funds based on performance over the last month through the last ten years.
• Fundamentals- measure funds by the fundamentals. Choose from price to earnings (P/E) ratio, price to book (P/B) ratio, distribution yield, 30-day SEC yield, alpha, beta, Sharpe Ratio, R-Squared and standard deviation.
• Morningstar Rating – just like ETFs, you can screen funds for rating, risk or return score, or category rank throughout various time periods.

The difficulty with using investment screeners

Here is a snapshot of the Pre-Defined Stock Screen I found tonight on the Scottrade website. As you can see, there are thousands of investments that match the criteria listed.

Far too often, I’ve utilized a screen with too many filters and didn’t find anything. You CAN be too picky! There probably isn’t any investment you can find through a screen that will give you every single thing you want – high returns, outstanding growth, glowing estimates, high cash flow, incredible returns and ratios … and a price that’s about 20% below where it should be. It just doesn’t exist.

What does exist … and is extremely helpful … are pre-defined screens. Scottrade and all the other online brokerages (as well as most financial services sites) have screens pre-loaded and these are easily accessed and used to help you and me make our investment decisions.

My personal favorite is the Strong Growth and Value Stocks (with 109 matches today). Once you select this screen, you can then view the summary page with basic information on these 109 companies, their relative price performance, their earnings and dividends as well as their fundamentals including:

• PEG ratio (Price/earnings to growth)
• Profit margin
• Trailing 12 months P/E ratio
• Price to sales ratio
• Price to book ratio
• Price to cash ratio
• Return on equity
• Return on assets
• Debt to capital

This predefined screen is one of the most helpful in my opinion. It features some companies I’ve heard of (and even own) as well as some that I never knew existed.

Start your Scottrade portfolio today and begin using a stock screener!

So I’d encourage you to check into investment screens. Play around with them and get comfortable using them. See what criteria or yardsticks you can use to get different results. I’ve known some people who used screens to find stocks that were at the top of their 52 week high … and then shorted them! The sky is the limit once you learn to use a screener to filter investments to meet your standards.

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A good investment advisor will help his or her client determine their personal tolerance for risk and then allocate their investments accordingly. What is “risk tolerance?” It’s the measure of volatility and uncertainty an investor can handle when faced with a negative change in the value of his or her portfolio (no one complains about positive changes).

Each investor’s personal risk tolerance is different and as such, the way they allocate their assets will differ. A good investment advisor will ask a lot of questions to determine your tolerance for the daily, weekly, monthly, or annual volatility you can stomach.

Risk tolerance varies by age, income needs, financial goals, . A 75 year old retired widow usually has a lower risk tolerance than a single 30 year old junior executive, mainly because the 30 year old has a longer time frame to make up for any portfolio losses incurred due to volatility and risk.

Use Wiser Advisor to find a local Certified Financial Planner near you.
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How to Assess Your Risk Tolerance

To determine the asset allocation that suits you best, you first need to assess your risk tolerance — the amount of risk that you personally feel comfortable taking on with your investment portfolio. It is generally accepted that there are three groupings of risk tolerance:

• High risk tolerance? Also called aggressive investors, these types of investors can tolerate the short-term volatility of riskier investments because of the superior long-term returns that those investments typically provide.
• Medium risk tolerance? These are known as moderate investors. Their portfolios usually have an even mix of investments that will likely grow in value, such as stocks, and investments that provide steady income with lower risk, such as bonds.
• Low risk tolerance? Also known as conservative investors, these investors  usually put their money in lower risk investments, such as bonds, that provide a steady stream of income without the prospect of high returns over time, or in cash.

Even within each of these groupings, investors can have wide variations. These are just rules of thumb, not set in stone. Certain aspects of your investing may have different risk tolerances: Money you invest for retirement, money you invest for junior’s college education, and money you invest to build your home in a few years will all have different risk tolerances.

To determine your ideal risk tolerance (regardless of why you’re investing), consider when you’ll need the money from your investments, your financial situation, and your personal response to risk.

Already know your risk tolerance?
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When will you need the money?

When you’ll need the proceeds from your investments has a large impact on your personal risk tolerance. Sometimes investment advisors refer to this as your “time horizon.” Your time horizon is the amount of time you have before you’ll need the money you invest. For example, a  30 year old who doesn’t plan to sell his or her investments until age 65 has a  35 year time horizon.

Remember that your time horizon isn’t just a function of your age or when you expect to retire. As mentioned above, a young investor hoping to grow his or her investment portfolio for the purpose of buying a home in three years has a short time horizon but that same investor putting money aside for retirement will have a long time horizon for those specific investments.

How Time Horizon Impacts Risk Tolerance

Time horizon has a direct relationship to risk tolerance:

• The longer your time horizon, the greater your risk tolerance
• The shorter your time horizon, the lower your risk tolerance

Your Personal Financial Situation

Another major factor in your risk tolerance is whether you will depend on the income that your investments provide. A retiree who has no other source of income other than what’s generated by his or her investments is dependent on investment income. A person who has a secure job that pays the bills and provides extra money for savings is not dependent on investment income.

Investors who depend on investment income have a low risk tolerance, since they can’t afford any interruption to that income. Investors not dependent on investment income have a higher risk tolerance, since they can accept the short term volatility in exchange for higher long-term returns.

E*Trade customers have access to over 1,000 NO FEE, NO LOAD mutual funds.
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Your Personal Response to Risk

In addition to the risk that you can accept financially, risk tolerance also includes how you feel, personally, about taking risks and losing money. Always consider adjusting your risk tolerance based on your personal response to risk when determining your ideal asset allocation.

• If you avoid risk in everyday life or if you’re a worrier: It’s likely best for you to avoid high-risk investments, such as small-cap stocks or leveraged ETFs. In exchange for potentially lower returns, you’ll have less stress and lower volatility.
• If you enjoy risk and don’t worry easily: You’d probably feel comfortable buying risky investments—assuming that your time horizon and life situation support that high-risk approach.

Risk is unavoidable

No matter how you slice it, risk is unavoidable. Even the highly conservative investors who invest solely in cash risk NOT getting the returns they need to fulfill their investment requirements.

Make sure you determine your personal tolerance for investment risk in your portfolio and if you’re working with a personal financial advisor, insure that he or she knows and understands your investment goals and objectives in light of your risk tolerance.

Tomorrow, I’ll show some sample portfolios for each of the three styles of investment risk tolerance so you can make your own investment decisions.

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One important aspect of personal finance is answering the question: “What happens to my financial assets when I die?” Making those arrangements is simply a part of being a mature adult. Just like you draw up a will to pass on your superhero Pez collection or your fully restored 1967 candy-apple-red convertible Corvette, you can designate a beneficiary for your Scottrade account to ensure your assets are handled as you wish when you pass away. They make it incredibly easy for your heirs and it gives me a small level of comfort knowing my wife and children won’t have much to go through to access those assets if and when the time comes.

If you have a certain type of account with Scottrade such as:

• Individual
• Tenants in common
• Joint tenants with rights of survivorship

You can complete a Transfer on Death Beneficiary Plan Agreement to designate your Scottrade account beneficiary or beneficiaries. Alternatively, if you hold an individual retirement account such as an IRA, you can simply update your IRA Beneficiary Form. Designating a beneficiary is a protection mechanism, insuring that your assets go to those you wish.

To protect your assets by designating a beneficiary:

1. Complete the Transfer on Death Beneficiary Plan Agreement, found in the Forms Center online. It’s generally a good idea to designate a secondary (contingent) beneficiary in addition to your primary beneficiary.
2. Mail it to your local branch office.
3. Talk to your beneficiaries. It’s important that your heirs know they are your beneficiaries and know what to do when you pass away.

How does Scottrade succession planning work?

When a Scottrade customer passes away, it is the responsibility of the customer’s survivors to contact Scottrade and provide a copy of the customer’s death certificate. When the certificate is received, Scottrade will cancel any open orders on the account. If the customer’s beneficiaries have their own Scottrade accounts, they can move the assets directly into their own accounts using the Transfer on Death Distribution Form (found online). If the beneficiaries aren’t current Scottrade customers, they will need to open a new account before any assets can be transferred.

Stop talking about it and start your Scottrade portfolio today!

If you have any questions about succession planning, you can always contact your local branch office – one of the best aspects of having a Scottrade account! Your local branch office can help you with any aspect of your account and it really is a differentiator. No other online brokerage offers the numbers of local branch offices as Scottrade.

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With the media endlessly trumpeting the decline in American manufacturing, you’d think there was absolutely nothing made in the United States anymore. Nothing could be further from the truth. Though the number has shrunk due to technology advancements and cheap labor overseas, there are still plenty of things manufactured in the US from appliances to yard tools.

What IS “American Made?”

One reason we don’t buy American more often is that we don’t know what is and isn’t manufactured in the USA. When 70 percent of a GM, or Ford vehicle is made from parts manufactured overseas, is it any wonder that we question what is and isn’t American? Honda (Japan), Mercedes (Germany), and Hyundai (Korea) all have manufacturing plants in Alabama, Michelin (France) has one in South Carolina. Are their products American made? Their US employees certainly think so. If 80 percent of your car is manufactured in other countries, is it really American? It’s hard to say with certainty. Sure, legislators assign a certain percentage of parts that must be American made to claim the Made In The USA label, but what is so miraculous about going from 59 percent to 60 percent?

Some would say that a product is “American” if it’s headquarters is in the US and the money stays in the USA. What about Chrysler? Formerly owned by Daimler Benz (Germany), but now owned by Fiat (Italy), do you really know which country receives their money? Regardless of any country’s public partnerships, do we really know whether those dollars are converted to Euros, or Yen, or Yuan as a hedge against the declining Dollar?

We’re disconnected from manufacturing

Not too many decades ago, you knew who manufactured your tires. You knew who wove your carpet yarn. You knew who operated the sewing machines, the presses, the giant machines of manufacturing. They were your friends, your cousins, your neighbors. Today, we’ve lost touch with people who make things.

We’re too interested in accounting

I call it the “accountification” of American business. We’re more interested in the buying process than in the manufacturing process, in how we can tweak the system to eek out another penny per share than in providing the highest quality product at the best price.

We’re too influenced by marketing

Whether we’re willing to admit it or not, marketing plays a crucial role in what we purchase. We’ve allowed ourselves to be convinced that a Lexus (Japan) is better than any other car out there and that having one in the driveway with a big red bow on top is the ultimate gift.

American business has been too slow

Not all the blame can be laid at the feet of the American consumer. American business has been very slow to react to changing conditions. When the gasoline shortages of the 1970’s hit the US, smaller foreign cars were snapped up like they were going out of style because they met the needs of the public. American manufacturing was incredibly slow to adapt and change. Not only that, but American manufacturers were perceived by the public as peddling shoddy materials as other countries (mostly Japanese) were steadily increasing the quality of their products.

Innovation comes from the field but accountants and “experts” are usually too slow to react to it.

Still made in the USA — Sign up for PerkStreet’s REWARDS checking account here!

The biggest reason is we’re a much more global economy

The interconnectedness of commerce today is astounding. Two hundred years ago, a chair manufacturer would buy lumber from a local forester, shape it with hammers and chisels made one town over, then sell it locally by delivering it on his own handmade wagon. Today, a chair manufacturer (even an American manufacturer) might buy veneers from a company in Canada, use adhesives made in India to attach it to a substrate made in Brazil, stain it with stains made in China after using power tools made with parts manufactured in 12 different countries, then ship it on a truck made in Sweden and a trailer made in Texas to a distributor based in France who will sell it to retailers all over the world using a marketing company that’s a partnership between and English and Japanese conglomerates. Assembled in the USA? Yes. Made in the USA? I’m not so sure.

What’s the solution?

We won’t be getting rid of the global economy anytime soon, not unless we’re hit by an asteroid or comet and life takes a radical change for the worse. What needs to happen is for manufacturers to focus on what they do best and for governments to get out of the way.

Does it really help a country to adopt protectionist measures when the problem is a lack of innovation, too much regulation, and politicians with ZERO business experience dictating how a company should be run?

History says no.

Check out:

Toys Made In America

Made in USA.org

Still Made In The USA

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World Bank President, Robert Zoellick, warned economic policy makers recently that the stimulus packages countries are using to artificially prop up their economies create sugar highs that are not sustainable.

“Right now, the international system appears to have a sufficient amount of stimulus,” Zoellick said. “The danger is if you spend too much government money, you create a different problem.”

That problem is inflation. Expectation inflation. Price inflation. Wage inflation. Cost inflation. “Bail me out, too!” inflation.

The problem with a sugar high is that it is followed by a sugar low. the “crash” that happens when there isn’t enough glucose in the blood stream. Scientists may debate whether sugar highs and lows exist, but parents experience them quite frequently (mostly after a trip to the grandparent’s home).  Zoellick is concerned that we’re on the way to overstimulating the world’s economies just like sugar can overstimulate a child (or adult).

How Can You Avoid A Financial Sugar High and Low?

1. Eat the granola of steady, consistent savings.

2. Eat the vegetables of fully capitalizing your emergency fund.

3. Drink the unsweetened green or black tea of paying off high interest debt.

4. Eat the fresh fruit of using broad based index funds for your investing.

5. Eat the whole grains of having the proper amount and types of insurance.

6. Eat the raw almonds of staying away from temptations to spend.

7. Drink the pure, filtered water of learning how to make extra money.

8. Eat the fresh, lean meat of creating and using a budget.

9. Eat the blueberries of putting aside some money for your child’s college education.

10. Eat the spinach of giving to a cause you believe in.

There really isn’t anything wrong with sugar per se, at least not when used in moderation. The problem is that a “moderate amount” is so easily exceeded, much like credit! Then you end up with that sugar high, followed by a sugar low when the bill comes due.

But ANYTHING can be abused and overused, even super foods. Too much of any one thing, even things that are good, can throw a monkey wrench in the mixer.

The key is moderation and balance.

What’s your take? What other important personal financial issues should be included in our “diet?”

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