Piotroski Score Revisited
  • Pio score still provides decent returns
  • Use it as another tool to filter out your own "best stocks"
  • No meme for today - planning stocks to buy for next year

When I first started out learning about fundamental investing, the Piotroski score was one of the things I looked at. For those of you unfamiliar, it is basically a 1-9 point scoring system for the fundamental strength of a company.

Piotroski score backtest (Source)
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The chart above shows us that Piotroski scores above 7 appear to be decent filters. On the other hand, some state that this score is deteriorating (Source). Even though the score itself may be producing less returns, I still think it provides a valid filter assuming you have conviction in a stock.

Applied Example - Visa
My underlying conviction for Visa is the core use case of credit card usage. Crypto still hasn't disrupted this industry yet. Of course, the company has good financials. Looking at the Piotroski scores by year (beautifully custom hand-painted annual returns at the top):

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Even with a lag, the score got us in decent spots.

In closing
I'm probably gonna make a list of like 20 stocks to choose from and figure out a way to leverage it, assuming there is a high degree of accuracy here. I am also not too pleased about the macro state in doing a long-only strategy, so I'll probably think of a way to hedge against another -20% downside move (if only VIX options didn't only go out for 6 months).

Anyways, feel free to let me know your thoughts or whatever. Always looking to learn new stuff to reduce risk and all that jazz.
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