Financial Valuation: Gordon Growth Model

The Gordon Growth model is an offshoot of the standard dividend discount model. This model is used primarily to calculate the intrinsic value of a firm based on the discounted value of future dividends. The Equation At a basic level the Gordon Growth Model is calculated by: P = D1 / r-g P = The intrinsic price you should pay for the firm D1 = The dividend for the next period R = The current discount rate, for our purposes we will use the CAPM for this G = Is the dividend growth rate Applying the Gordon Growth Model So,

CAPM – Capital Asset Pricing Model

CAPM – Capital Asset Pricing Model The CAPM is a staple of most every finance course that focuses on the valuation of equity investments. And though it may be a very good way to begin the process of teaching students how to effectively analyze securities there are a lot of assumptions that make it very difficult to use in a real world setting. These assumptions are as follows – Investors hold a diversified portfolio If you have a large enough portfolio or are focused entirely on ETF’s you may be able to get rid of the majority of the unsystematic

Changing the Benchmark

Equities Lab Learn how to benchmark your strategy versus various benchmarks, ranging from indexes, to stocks and other strategies. Imagine you have a large cap screen Cutting to the chase, imagine you have a simple screen that finds reasonable large cap companies.  That screen is literally “import ohlson_o_score < -3 and mc > 10b” Click on “® B 9” ” src=”https://www.equitieslab.com/wp-content/uploads/2018/10/e59du_2.jpg” />       Click on “I Trading Rules” ” src=”https://www.equitieslab.com/wp-content/uploads/2018/10/e59du_5.jpg” />   Click on “S&P 500” ” src=”https://www.equitieslab.com/wp-content/uploads/2018/10/e59du_6.jpg” />   Add AAPL for a tough benchmark. Hard to beat Apple!  Notice we added General Electric.  It’s hard NOT

What happens to AAPL when they release a new iPhone?

Whenever I’m speaking to people about AAPL they tend to ask the same question. Apple just released a new phone, should I buy into their stock now since there will be an influx of sales? The gut reaction I, and many other people within the industry have, is that the future sales are already baked into the share price. That said, this is a very testable idea, so let’s actually put it to the test. Apple has consistently increased in price since the original release of the iPhone, and is now the most valuable company in history, but how much

Equities Lab vs. Gurufocus: Which Backtest Software

  This article pits Equities Lab and Gurufocus against each other, to determine which one deserves the individual investor’s loyalty. This is simple, once the criteria for a “good” backtesting tool is specified.   Investopedia.com states that backtesting is “the process of testing a trading strategy on relevant historical data to ensure its viability before the trader risk any actual capital. A trader can simulate the trading strategy over an appropriate period of time and analyze the results for the levels of profitability and risk.”   Breaking this down, it’s apparent that backtesting software must be able to screen a