Mechanical investing

From Wikipedia, the free encyclopedia

Mechanical investing is the selection of stocks for investment using predetermined, numerical criteria. The technique is "mechanical" in that it typically uses a computer to a screen a database of numerical stock data for stocks that currently satisfy the desired criteria, purportedly eliminating subjective criteria and value judgments from the investment decision. Stocks may be subsequently sold, for example, when they no longer satisfy the specified criteria, or after the lapse of a predetermined time period.

Three prominent mechanical investing strategies are the Dogs of the Dow; the "magic formula" described in The Little Book That Beats The Market by Joel Greenblatt; and James O'Shaughnessy's Cornerstone Growth and Cornerstone Value strategies.

Books on mechanical investing:

  • The Unemotional Investor : Simple Systems for Beating the Market by Robert Sheard.

Discussions of mechanical investing:


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