Since my book, “Choose Stocks Wisely: A Formula That Produced Amazing Returns,” was released in early October, I’ve received a number of e-mails from readers. Some of these e-mails have included questions about different issues and I’ve attempted to answer each question received. One person, Al, who wrote me recently, suggested that I share some of the questions and answers I receive. I thought it was a great suggestion and am doing just that through this post, and several posts which will follow in coming weeks.

Arthur and John observed that my Finviz screen provided in the book presently only reveals a few stocks which pass the screen and are left to evaluate using my Adjusted Floor Price Scorecard. Arthur was pondering relaxing some of my criteria in order to reveal more stock candidates. John wonders if we are in a period of excessive risk-taking in the market, thus leaving fewer and fewer low-priced stocks.

Relative to the inquiring thoughts expressed by Arthur and John, my response to the matter of my Finviz screen presently (December 2013) producing few stock purchase candidates is as follows:

On the issue of relaxing the 7 screen criteria found in my book in order to identify more potentially low-priced stock purchase candidates, my first choice is to relax the P/E at Finviz to “under 25” or to “under 30.” Next, one could consider relaxing the insider transactions to anything positive (> 0%). Finally, one could consider relaxing the current ratio to “over 1.5.” I’m personally not willing to relax my P/B, quick ratio, country, or P/S filters. Also, I prefer not to relax any of the seven…..however, to identify more stocks, relaxing the P/E to under 30, changing the insider transactions to “positive (> 0%),” and changing the current ratio to “over 1.5” can be done and my balance sheet quality tests included on the Scorecard (parts A and B) will still offer needed firewalls. Of course, it is completely up to the individual as to what criteria he/she chooses to go with.

On the issue of whether the screen may reveal excessive risk-taking by the current market, I believe my screen producing fewer low-priced stock purchase candidates indeed points to the stock market having a heavy risk appetite at present. I’m starting to be concerned that we are repeating some of the errors made at the turn of the century again, with some tech companies sporting sky-high P/Es again, not to mention balance sheet equity levels that are miles below the stock prices.  Super-growth in future earnings is being factored in for many tech stocks, in my view.

Al asks several questions and I’ll visit one of them in this post and others later (by the way Al, thanks for your suggestion to me on doing this post): “Typically, what is the number of stocks that show up in Finviz during bull markets and bear markets? Do the number of stocks showing up in the Finviz screener act as a market timing indicator?”

My response to Al is: “I usually have seen about 15 to 25 stocks pass my screen….even well over 30 at times. This market today, in early December 2013, is more anomalous than I’ve seen before. In my view, our economy is not booming but our market is really booming. Yes, bull markets can somewhat reduce the number of stocks from the screen and bear markets can somewhat raise the number. I would tend to agree with the notion that the screen reflects what’s happening in the stock market as a whole….and in that sense may act as a market timing indicator. There are times to be more in cash while remaining patient and also screening more often for value. This may prove to be one of them.”

Thanks for the great questions.