These screenshots will start embarrassingly simple, and get more elaborate. So stay tuned…First, lets find large companies! Now, within that set of companies we want to find companies with decent valuation: That’s nice, but we have some companies with really tiny PE values: Let’s filter them out (using add term on the <, and dragging and dropping the terms): This is nice, but where did I get those 3 and 12 from. Lets do something more molded to the stocks in question. Enter the rank-across operator: We quickly learn that among large caps, that pe range is too strict: the 5th
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In a previous article, we compared the S&P 500 index to an EquitiesLab macro, issandplike. Our goal was to analyze the S&P’s value, by comparing the official index’s performance with a collection of similar stocks. But what does “similar” mean in this case? According to Standard & Poor’s website, an S&P stock must meet the following requirements.…
Show me the money People look at net income, otherwise known as just earnings, as well as Free Cash Flow to decide whether they like a company. Why? Net income is the “real” income the firm makes, but it has one weakness: it doesn’t actually track money coming into (or out of) the firm.…
Introduction The S&P 500 has performed spectacularly over the last seven years. So spectacularly, in fact, that some find its performance hard to believe. Are the stocks that make up the S&P being cherry-picked to only show the most successful performers? If the contents of this benchmark are not selected organically, its usefulness is suspect.…
O’Shaughnessy’s screen focuses on low-cost tickers with small market caps. His reasoning goes that, as small as these companies are, most analysts ignore them. This lack of attention suggests that there quite a few diamonds in the rough within microcap stocks. Is he right?
A common theory is that a company making money will outperform a company that doesn’t. Is that really true? I am here today to test how companies that make negative money or no money do compared against the S&P 500. The graph to the right shows a screener with companies not making money in green and the S&P 500 in brown.…
Tyler has worked with us for about 4 years: doing anything that needed doing. From testing (tedious but critical) to creating new strategies that manage risk and optimize returns, to writing articles (137 of them!), handling customer issues and more. He has also created much of the course work that students use to learn investing, including the Equities Lab 101 course on every account.…
After four years it is now time for me to move onto the next chapter. My time here at Equities Lab has been fantastic, and I’ll still be around posting articles here and there. But before then I’d like to summarize my experiences here in this article. Since I was first introduced to finance when I was 13, it is something that has always interested me.…
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 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.…
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.…
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.…
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.…
With all the hype surrounding Bitcoin in recent years due to price fluctuations, it’s been hard to ignore. You hear about it on business news, you read about it on your Twitter feed, and then you hear the word “blockchain”. Blockchain is essentially the technological architecture that supports Bitcoin, but it holds far more potential than just that.…
OK, what is a death cross, and what do I mean by “it doesn’t work”? A death cross is a (very) vivid name for a short term moving average slipping below a longer term moving average. Technical analysts love to sell when they see death crosses, and buy when they see golden crosses.…
Quantpedia Strategies As I was recently looking around at other quantitative firms, I happened across Quantpedia. In the past we’ve spoken to Quantpedia and are actually featured on their website. However, this time around I was taking a look in their screener section and came across the “F-score and Equity short-term reversals”.…
Portfolio123 has increased their prices, is it time to change? With the recent price increase in the services provided by Portfolio123, it has come to light that many users of their service may be looking for alternatives. We’ve been getting a number of calls these past couple of days from disgruntled users, and we have decided to write out the comparisons between Portfolio123 and Equities Lab here.…
What is Active and Passive Investing? To figure out which of these methods fit our investing needs, we first need to understand exactly what they are. Passive investing is assuming that the general market is efficient and that picking your own companies is pointless. Investments typically come in the form of index funds. …
This how-to shows how to create a strategy in Equities Lab, and how to do some basic analysis of it. For humor value, we take the point of view of a children’s book character, named Amelia Bedelia, who has no common sense. We have all felt this way sometimes. Create A Screener A quantitative mutual fund is a screener. …
Henry Crutcher How to analyze a factor without ranking in Equities Lab Create a screen Everything starts with creating a screen. So, onward! Name your screen Screeners with names can be found later. If you want to put your screens into categories, simply put MyCoolCategory: at the front. Limit your stocks You can type “Market Cap > 500m” here. …