Ask Colin

Which would you favour for fundamental stock selection between StockDoctor and Conscious Investor?

I have seen several presentations of StockDoctor. I also know some people who like it very much. However, I don't know how much they make out of it, which is a different thing to liking it.

I have also seen John Price present his Conscious Investor. I have had less feedback on his software from users.

I have not used either of them, so I am reluctant to give an opinion - I try to avoid pontificating on things I don't have first hand experience of.

The StockDoctor method is based on the highly regarded work of Merv Lincoln. However, his work was aimed at detecting credit risks. There is probably not much risk of a company going to the wall on you with his system. However, making money is somewhat different to knowing the credit risk.

I have seen StockDoctor presentations that highlight some great stocks. It is rather harder to know exactly when they started highlighting them. Certainly they had done very well when I saw them, but the runs were already on the board, so to speak.

Conscious investor is trying to take advantage of the incredible cachet of the methods of Warren Buffett. I think Buffett is a unique person - only a few great investors come along each generation and they are a rare breed. However, Price claims to have identified his methods. I wonder. I think Buffett is a truly unique and original thinker.

This does not mean Conscious Investor does not have value. I just have not had enough exposure to it to know.

However, I suspect that both StockDoctor and Conscious Investor are largely irrelevant in the sense that they focus on stock selection. That is not where the money is made. It is made in money management and exit timing. StockDoctor may help a bit more in exit timing than Conscious Investor.

The key to investing for me is to take positions in uptrending stocks. If they keep trending up, you build your position. If they don't, you get out quickly. Then you sell when they stop trending up.

All I need to know is whether the valuation is reasonable - that there is a margin of safety - based on the work of Benjamin Graham (teacher of Buffett). If it satisfies these fundamental measures and is trending up, I will buy some.

I do my own fundamental work (it is pretty easy really - see my writing on the margin of safety) and use Aspect Financial for the data.