March 20, 2017

Are Solid Companies Really that Solid?

Firing on all four Cylinders

The world is run by computers. Almost every field has been automated to a degree that the workplace wouldn’t be able to really function without technology, and finance is no exception. With HFT firms and algorithms dictating how we trade, let’s take a step back and assess the fundamentals. How integral is strong corporate performance, through the relationships between profit margin, income growth, revenue growth, and profit margin growth, to being a successfully traded company on the market.

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For this, we will be exploring the recently designed “Firing on all four cylinders” screen which can be found under the informative section of the Equities Lab software.…

June 7, 2016

Making Steady Returns with Oil

Oil has been an incredibly volatile investment over the past twenty years, resulting in around 13% annual growth as an industry with a standard deviation of well over 7%. As a value investor the idea of investing in companies that can be seen as necessities to our current way of life is incredibly attractive, however, I need to figure out how to negate a certain amount of risk that can be see with this industry.

Here is the oil industry(Drilling and midstream) plotted against the S&P 500 over the past twenty years.

I’ve recently spent some time reading up on Kristian Siem(put link here), and I’ve decided that for this strategy I will be focusing on only drilling and midstream oil companies.…

January 1, 2016

Value Investing with Equities Lab

Overview

A very simple stocker is presented that very effectively produces value-based stock returns. The screener, with realistic assumptions, produces 25% annualized returns with a standard deviation of 26% from 1995 to 2015, as backtested in Equities Lab.

Background

Value investing is a framework of investing that selects stocks that have low prices compared to their intrinsic value [1]. The hope is that the stock price comes to reflect the intrinsic value after the investment is made . A number of metrics are available to the general public and through Equities Lab that help identify potential value stocks.  These are ratios such as:

  • price / earnings
  • price / book value
  • price / sales
  • price / free cash flow
  • price / cash flow
  • enterprise value / EBITDA

The debate is open about how to best identify value, but this blog post does not attempt to resolve this.

November 18, 2015

Value Investing With Equities Lab

Overview

A very simple stocker is presented that very effectively produces value-based stock returns. The screener, with realistic assumptions, produces 25% annualized returns with a standard deviation of 26% from 1995 to 2015, as backtested in Equities Lab.

Background

Value investing is a framework of investing that selects stocks that have low prices compared to their intrinsic value [1]. The hope is that the stock price comes to reflect the intrinsic value after the investment is made . A number of metrics are available to the general public and through Equities Lab that help identify potential value stocks. These are ratios such as:

  • price / earnings
  • price / book value
  • price / sales
  • price / free cash flow
  • price / cash flow
  • enterprise value / EBITDA

The debate is open about how to best identify value, but this blog post does not attempt to resolve this.…