My Best AI Stock Analyst Prompt So Far

October 28, 2025

HERE THAR BE DISCLAIMERS: Ayyyyye am not a financial planner or consultant or professional. Ayyyye simply enjoy trading and talking about it. Do not ye be takin’ nigh advices from this piece of parchment or anything like that. First talk to ye captain, spouse, and financial professional before we take a walk on the stock plank.

Here we’re going to talk about (in Idiocracy-speak):

WHAT DO IT DO?

WHY IT SO- POW’FUL??

WHAT IT… NO CAN DO?!

HOW USE IT, USE IT,

WHERE GO NEXT (I TELL YOU WHERE TO GO!!!)

What This Framework Does

This comprehensive screening prompt identifies 5-10 elite stocks from global markets that combine:

High fundamental quality (revenue, EPS, and free cash flow growth above sector benchmarks)

Operational excellence (rising margins, strong ROE/ROIC, sustainable cash generation)

Price stability and momentum (consistent monthly gains, low volatility, risk-adjusted outperformance)

Recent execution (earnings beats, upward guidance, institutional backing)

Unlike rigid “one-size-fits-all” stock screeners that apply the same growth threshold to utilities and tech stocks alike, this framework uses sector-relative benchmarks. It compares each candidate against its sector ETF (XLK for tech, XLV for healthcare, etc.) to identify top quartile performers within their industry context.

The prompt ensures you’re not just finding “good companies”—you’re finding good companies with current price momentum that confirms the market is recognizing their quality.

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Why This Approach Is Powerful

1. Adaptive, Not Arbitrary

Traditional screeners fail because they demand the same metrics from a utility (mature, 5% growth) and a tech disruptor (20%+ growth). This framework adjusts thresholds using “sector median + 50%” or “sector 75th percentile” benchmarks, ensuring you capture excellence relative to realistic peer performance.

2. Fundamentals MUST Match Price Action

Many “quality” stocks have stellar fundamentals but dead stock prices (we saw this with ServiceNow: great business, -8.6% YTD return). This prompt requires:

9 of 12 months with positive returns

12-month outperformance vs. sector ETF and S&P 500

Sharpe ratio ≥ 1.0 or Sortino ratio ≥ 1.5 (risk-adjusted returns matter)

Trading within 10% of 52-week high (no broken charts or turnaround gambles)

If the stock can’t deliver stable gains alongside strong fundamentals, it doesn’t qualify.

3. Quality of Earnings, Not Just Reported Earnings

The framework digs deeper than headline EPS:

Cash conversion ratio ≥ 1.0 (operating cash flow exceeds net income)

FCF as % of net income ≥ sector median (real cash generation, not accounting games)

Growth driven by operations, not one-off asset sales or tax benefits

Margins trending higher for 3+ years (operating leverage, not cost-cutting)

This filters out companies manipulating earnings or riding temporary tailwinds.

4. Built-In Verification Rigor

The prompt always determines today’s date first and requires:

Cross-verification using two+ high-quality sources (FactSet, Bloomberg, SEC filings, company IR)

Explicit dating of all metrics (”as of October 29, 2025”)

Devil’s advocate analysis of each candidate

Immediate disqualification if any critical threshold fails

No hand-waving. No benefit of the doubt. Either the data confirms qualification, or the stock is eliminated.

1. It Won’t Find Value Traps or Turnarounds

By design, this screen excludes recovery plays, broken charts, and deeply discounted “value” stocks. If a company is trading -40% from highs, has declining margins, or missed earnings, it won’t pass—even if it looks “cheap” on P/E.

What you lose: Potential home-run recoveries (think PayPal at $50 if it eventually rebounds to $100).What you gain: Avoiding 90% of value traps that never recover (Fiserv’s -30% earnings implosion, Block’s revenue decline).

2. It Requires Data You May Not Have Access To

The framework demands:

Sector ETF benchmark data for relative comparisons

Trailing Sharpe/Sortino ratios (not always available in free screeners)

Multi-year FCF growth rates (FactSet/Bloomberg level detail)

Monthly return consistency tracking (requires historical price data)

Earnings quality metrics (cash conversion, FCF/net income ratios)

TradingView covers 60-70% of these criteria directly. For the rest, you’ll need to either:

Subscribe to professional data platforms (FactSet, Bloomberg Terminal, Koyfin)

Run post-screen manual checks using Yahoo Finance, GuruFocus, and company filings

Use AI research assistants (like this workflow) to compile and verify data

3. It’s Sector-Selective, Not Diversified by Default

Because thresholds are rigorous, entire sectors may produce zero qualifiers:

Fintech: All major names eliminated (Visa/MA too slow, PayPal/Block broken, Fiserv imploded)

Consumer Discretionary: Only 1 conditional qualifier (Booking Holdings)

Defensive Sectors: Utilities, consumer staples, REITs rarely pass growth thresholds

What you lose: Forced diversification across all 11 sectors.What you gain: Concentration in sectors with actual compounding (Tech, Industrials, Healthcare had multiple qualifiers).

This is a quality-focused, returns-oriented portfolio, not a balanced asset allocation fund.

4. It Won’t Beat the Market in All Environments

High-quality, stable-growth stocks tend to:

Underperform in melt-up bull markets (speculative junk rallies harder)

Underperform in deep value rotations (when broken stocks bounce on sentiment)

Outperform in sideways/volatile markets (stability and execution shine)

Outperform in crashes (quality holds up better, recovers faster)

This screen optimizes for risk-adjusted outperformance over 1+ year holding periods, not quick flips or momentum chasing.

How to Use It!

Step 1: Copy the Complete Adaptive Prompt

Use the full framework from our conversation (available in the complete version) which includes:

Sector-relative growth thresholds

Price performance and volatility requirements

Quality of earnings filters

Verification and sourcing protocols

Step 2: Choose Your Data Source Strategy

Option A: Manual Research (Free, Time-Intensive)

Start with TradingView or Finviz screener for basic filters

Export 20-50 candidates

Manually verify fundamentals via Yahoo Finance, company filings, and GuruFocus

Track monthly returns and calculate Sharpe ratios using Excel

Cross-check against sector ETF performance

Option B: Professional Tools (Paid, Efficient)

Subscribe to FactSet, Bloomberg Terminal, Koyfin, or Portfolio123

Build custom screens with sector-relative filters

Automate Sharpe/Sortino calculations and ETF comparisons

Set alerts for earnings beats and guidance revisions

Option C: AI-Assisted Research (Hybrid, Recommended)

Use the adaptive prompt with AI research tools (like this workflow)

Let AI compile data from multiple verified sources

AI cross-checks fundamentals, price action, and sector comparisons

You review the final 5-10 candidates and make allocation decisions

Step 3: Start Sector-by-Sector

Don’t try to screen the entire market at once. Focus on one sector per week:

Week 1: Technology (likely 3-5 qualifiers)

Week 2: Industrials (2-3 qualifiers)

Week 3: Healthcare (2-3 qualifiers)

Week 4: Financials/Consumer Discretionary (0-2 qualifiers)

After 4 weeks, you’ll have 8-12 vetted candidates. Pick your top 5-10 based on portfolio construction preferences (sector balance, risk tolerance, conviction).

Step 4: Backtest and Refine

Run the screen on historical data (1-2 years ago)

Check how those qualifiers performed over subsequent 12 months

Identify false positives (qualified but later failed) and false negatives (rejected but later succeeded)

Refine thresholds based on your findings and risk tolerance

Step 5: Establish a Review Cadence

Quality compounders don’t need daily monitoring, but quarterly check-ins are essential:

Post-Earnings (Quarterly): Did the stock beat? Maintain guidance? Any deterioration?

Price Check (Monthly): Still within 10% of 52-week high? Monthly gain or loss?

Annual Reconstitution: Re-run full screen; replace any names that no longer qualify

THEN WHAT YOU DO?

DO THIS.

Step 1: Deep Dive Due Diligence (2-4 hours per stock)

Read earnings call transcripts

Analyze competitive moat

Check technical setup

Review analyst consensus

Read 10-K/10-Q risk factors

Step 2: Portfolio Construction

Position sizing strategies (equal weight vs. conviction-based vs. volatility-adjusted)

Diversification and correlation management

Tax efficiency across account types

Step 3: Set Up Your Monitoring System

Quarterly earnings checks

Monthly price health reviews

Price alerts for key decision points

News monitoring (without obsessing)

Step 4: Rebalancing & Reconstitution

Quarterly trimming/adding

Semi-annual re-screening of current holdings

Annual full universe re-scan

Expected turnover: 20-40% annually

Step 5: Manage Behavioral & Risk Challenges

Market crash protocols (-20% drawdown scenario)

Earnings miss responses (-30% single-day drop)

Profit-taking on big winners (+200% gains)

Resisting “reach” for diversification

Handling sector hype cycles

Keep a trading journal

Backtest your decisions

Refine thresholds over time

Stay humble about outcomes

The Bottom Line

This adaptive screening framework is designed for serious investors who want quality growth with stable returns, not gamblers chasing momentum or value investors betting on recoveries.

It works best when:

You have 12+ months to let quality compound

You can tolerate 100% concentration in 1-2 sectors if that’s where quality lives

You prioritize risk-adjusted returns over absolute max gains

You’re willing to sit out sectors with zero qualifiers rather than force allocation

It doesn’t work if:

You need immediate diversification across all sectors

You’re chasing this month’s hot momentum names

You can’t access professional-grade financial data or AI research tools

You want to bottom-fish beaten-down value stocks hoping for reversals

**The results speak for themselves:**From our October 2025 analysis, only 15-20 stocks globally met all criteria across Technology, Cybersecurity, AI/Enterprise Software, Healthcare, Industrials, and Consumer Discretionary. Those 15-20 names represent the top 0.3% of publicly traded companies—the real compounders with current momentum confirming their quality.

Most stock screeners give you 500 “buy” candidates. This framework gives you 15. That’s the difference between noise and signal.

Ready to build your focused, high-quality portfolio? Start with one sector, apply the adaptive framework, and watch how quickly mediocrity gets filtered out.

The hard part isn’t finding good companies—it’s having the discipline to demand greatness.

Step 1: Find and Log Today’s Date

• Before any screening or sourcing, always determine the current date (today’s date) and record it for transparency in all subsequent data pulls, calculations, and reporting. All data, trends, and analysis must reference only the most current values relative to this date.

Step 2: Apply These Criteria—With Live, Verified Sourcing for Each Data Point

For every fundamental, ownership, price, and technical metric, use data as of today’s date, explicitly noting “as of {today’s date}.”
Verify key numbers (price, return, growth, valuation, margin, trend, etc.) using at least two of the highest-quality, up-to-date sources available (FactSet, Bloomberg, Reuters, SEC/EDGAR, TradingView, company IR, reputable news, etc.).
For trend, return, and risk-adjusted performance, always use rolling 12-month, YTD, and most recent quarter values as of today’s date, and benchmark vs. sector ETF and index.
If any metric cannot be confirmed, is stale, or there’s material source disagreement, flag and either exclude or state that the candidate is not fully verified.
All conclusions and written reporting must cite today’s date up front, and in candidate-specific asset write-ups. Do not present any stock as “qualified” unless ALL qualifying metrics are as of today and have been cross-checked for accuracy.

Identify U.S. or global-listed companies with the following characteristics:

Fundamental Growth & Profitability (Sector-Adaptive):

3-year average annualized revenue growth ≥ sector median + 50%, with minimum 8% absolute growth
3-year average EPS growth ≥ sector median + 50%, with minimum 10% absolute growth
Return on Equity (ROE) ≥ sector 75th percentile, OR ROIC ≥ sector 75th percentile
Operating margins and/or gross margins trending higher (improving by ≥100 basis points) over the last 3 years
3-year average free cash flow growth ≥ sector median, with minimum 8% absolute growth

Execution Quality & Trend:

Most recent quarter’s earnings and revenue both beat analyst estimates, with upward forward guidance or positive analyst revisions
PEG ratio ≤ 2.0, or below sector median PEG (whichever is stricter)
Institutional ownership above 60%; evidence of insider buying or stable insider ownership in the past 6 months
Current valuation premium must be justified by fundamental growth acceleration, not sector hype
Consistent year-over-year EPS growth for the past 3-5 years, with the most recent quarter showing sequential improvement
FCF yield (FCF/market cap or FCF/EV) growing over the last three reporting periods, and positive free cash flow for each of the last three years
EPS and FCF growth driven by core operating activities, not by one-off events, asset sales, or accounting changes
Track record of sustainable margins supporting high FCF conversion—FCF as a % of net income ≥ sector median
Low earnings manipulation risk—cash conversion ratio (operating cash flow/net income) ≥ 1.0

Price Performance & Risk-Adjusted Return (Last 12 Months):

Total stock return above both its sector ETF and S&P 500 (or relevant benchmark) over the trailing 12 months
Positive price appreciation in at least 9 of the last 12 months
Higher volatility than the sector ETF permitted IF compensated by a trailing 12-month Sharpe ratio ≥ 1.0 or Sortino ratio ≥ 1.5
Maximum single-month drawdown greater than sector ETF median allowed ONLY if recovery is rapid and total returns remain superior, with no persistent multi-month downtrends
Stock must be in a sustained uptrend: trading above its 50-day and 200-day moving averages, with both MAs trending upward
Current price within 10% of its 52-week high—no broken momentum or recovery/turnaround situations

Liquidity & Exposure Filters:

Stock price ≥ $10 (to avoid extreme volatility and illiquidity)
Average daily trading volume ≥ 500K shares or ≥ $10M daily dollar volume for execution
Top quartile performer in its sector for growth and profitability metrics combined

Trend Quality Safeguard:

Most recent quarter must show acceleration or stability in revenue/EPS growth vs. prior 4-quarter average—eliminate names where recent gains are not overcoming a larger troubling trend

Portfolio Construction Logic:

Narrow to 5-10 stocks maximum from different sectors or themes
Be as selective as the criteria require—if no stocks qualify in a sector/theme, exclude that sector/theme
Focus on one sector or theme per research session
Use sector-specific ETFs (XLK, XLF, XLV, etc.) as direct benchmarks for all comparisons

Research and Narrative Approach:

Provide balanced, skeptical analysis with a devil’s advocate view of each candidate’s trends, risk, and sector headwinds/tailwinds
End with realistic—not overly optimistic—narrative about the strengths and risks of any qualified stocks
Explicitly disqualify stocks that fail critical filters and explain why

Example report opening

“All analysis below is as of {today’s date: October 29, 2025}. All data has been sourced and verified using FactSet, Bloomberg, TradingView, SEC, and company IR where possible; discrepancies are flagged, and only fully up-to-date qualifiers are included…

ENJOY!