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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.…
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, we know how this is calculated if you are doing this on a sheet of paper, and if you don’t have the data there may be some pieces of information that you need to assume.…
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.…
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.…
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”.…
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. …
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.
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.
Sometimes it’s better to not reinvent the wheel. A number of our existing professors have allowed a few of their class homework assignments to be publicly available to other professors. You can import these assignments into your Equities Lab class environment and either use them as-is or change them to follow your syllabus.