Test an idea?: Little Book of Picking Top Stocks - Martin Fridson

General
1

I saw this: https://www.youtube.com/watch?v=lsu9Yxk93aY&ab_channel=WEALTHTRACK

The idea seems very simple and somewhat unusual:

Summary:

  • Critique of Traditional Analysis:

    • Fridson criticizes traditional equity analysts for lacking accounting knowledge.
    • He argues that earnings are manipulable and don't reflect economic reality.
    • GAAP unfairly penalizes R&D-heavy tech companies.

  • Fridson's Stock Screening Criteria (For Explosive Growth):
    * High stock price volatility.
    * Wide dispersion in analyst EPS forecasts.
    * Sub-investment grade credit rating.
    * History of declining market capitalization.

2

Actually reading this book now, thanks for flagging!

Will try some tests. But at first glance, the focus is quite limited:

  • Only S&P500 stocks since 2012
  • Sample size of only 10-12 stocks (and any survivorship bias?)

The author states that these real winners are rare, but still - very limited data.

But very valid points on how markets have changed (written in 2023) since COVID.

Will keep reading...