The term "red flags" is synonymous with "bad things are going to happen," and, for investors, they are a sign that you should likely stay away from that investment. However, all this talk of red flags being able to predict that a company is going to do poorly makes you wonder, does it work?
Just how telling are red flags? The term “red flags” is synonymous with “bad things are going to happen,” and, for investors, they are a sign that you should likely stay away from that investment. However, all this talk of red flags being able to predict that a company is going to do poorly makes you wonder, does it work?…
Creating Your Own Score
Most anytime we analyze a company or build a screen; we use a number of scores that are pre-built in the Equities Lab system. These scores are tried and tested, but they lack that personal touch. I think it’s time we learned how to build our own scores within the software.…
Survivorship Bias – How does it work?
I was recently lurking around an online investment forum when the following post came up – “I recently ran an experiment where I generated random 7 to 50-stock portfolios from the 500 largest U.S. traded companies and measured their performance over the past 10 years. All of the randomly selected portfolios outperformed the S&P500 and BRK.B…
Monte Carlo Simulation – Advanced Investing
Monte Carlo Simulation As investors, we all know that each investment we make comes with a certain amount of risk. We can decrease this risk by understanding all possible outcomes. Better yet, we can visualize each outcome through the use of a Monte Carlo Simulation. In a broad stroke definition – a Monte Carlo simulation allows for people to make informed quantitative decisions based on a range of possible outcomes.…
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In my years of using Equities Lab as a quantitative investment tool, I have never lost sight of the core values of long term investing. Many of these values are in the teachings of Benjamin Graham and used by an idol of mine, Warren Buffett. Remembering this, no matter how much risk I take on in my portfolio, I always keep a subsection for value investments.…
Beneish M-Score
The Beneish M-score was designed as a way to detect possible manipulation of a company’s financial statements. The score itself can be anything between –infinity and +infinity, though most scores fall between -10 to 10. Anything below -2.22 is considered a good score and suggests that the company is likely not manipulating their balance sheet.…
   April 30, 2017    1   ,
Relative Strength Indicator (RSI)
I’m not a big technical trader. That being said, a lot of people in the information age are, and because of that we have been sure to include a number of technical indicators within the Equities Lab system. One such indicator, the relative strength index(RSI), is extremely common among technical analysts, and I think it is time to put the RSI indicator to the test.…
Stock Analysis – Utilizing Plot Panels
In the past two years of using Equities Lab, I have never stopped experimenting. However, at some point along the way, after taking up a prop trading course I found a few indicators that I trust and use more than others—essentially using those variables whenever I need to analyze a strategy.…
What is the Piotroski F-Score?
Piotroski F-Score We mention the Piotroski F-Score in a lot of our articles, videos, and even within a lot of our prebuilt screens. So, it poses the question, what exactly is the Piotroski F-Score? Created by a professor of Accounting at the University of Chicago named Joseph Piotroski, the score is used to identify possible investments.…
Funds Vs. Investing Yourself
Every investor has their own preferred investment. Two of the most popular choices are investing in funds such as ETF’s, Mutual Funds, or Hedge Funds, and self-investing using a strategy that you’ve either built yourself or adopted from a well-known investor. It’s finally time to figure out which choice has more potential.…
Explaining Quantitative Investing
What exactly is Quantitative investing? Investing is an extremely difficult endeavor regardless of your goals. It takes both intelligence and strong will in order to do it successfully. With the invention of the computer and the more widespread use of data science, people eventually realized that you could take out much of the human error when it comes to investing in favor of complex investment algorithms that trade based solely on math.…
Traditional Technical Analysis Kinda Working
Why it’s hard to Trust Technical Analysis Over this past month or so we‘ve been writing a lot of articles that are very pro-technical analysis. Personally, I was fascinated by technical analysis when I first started investing, but I have to say, my tastes have changed. Either way, our most recent featured screen is actually based off of the SCTR designed by StockCharts, and it works amazingly.…
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SCTR – Technical Analysis The SCTR no longer gets the performance pictured here, even when backtested on the dates shown.  This article is retained as a warning for why we no longer allow comparisons between split-adjusted Closing prices and constants, or ranking of split adjusted closing prices.  The stocks with higher split adjusted closes in the past turned out to have lower SCTR scores. …
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What is rebalancing? When you first start screening and backtesting for companies you are going to be presented with a number of different variables that need to be decided. One such variable is the rebalance period. Think of a rebalance as the following. – When a portfolio is rebalanced it is assumed that all positions within that portfolio are sold, and all companies that are returned by the screener are purchased at the same weight at the same time.…
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  When I’m going through a testing process to check for a new update, my go to screen is “Close > 444”. This seems all fine and well, and will return companies that have a close greater than 444, but, believe it or not, this usage of “close” is incorrect. Within the Equities Lab system, there are two types of close – Close, and RawClose.…
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How are investments like apple pie? Think back to the last slice of apple pie you have had. My last slice, eaten with my wife and two daughters, was delicious. It was out of this world. For me, it was the best apple pie. What makes it special? The recipe (passed down from my mother in law to my wife, Emily) is simple: Ingredients: 6 Granny Smith Apples 1/2 cup of sugar cinnamon nutmeg Four Pillsbury frozen pie crusts First question: why are we using four pie crusts for one pie?!?…
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Montier C Score – Who is Cooking the Books? At its base, the Montier C Score is simply a way to give you, the investor, an idea of the probability that a company is cooking their books. This score is from 0-6, and basically, the higher the C-score the higher the probability that something fishy is going on with their books.…
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The last time I did helped a friend develop an investment strategy he was under the impression that as long as he put stop losses in place that he couldn’t lose more than that amount of money under any circumstances. That sounds all fine and well since that’s what stop losses seem to be for, and in some cases that’s the truth.…
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How often are stocks delisted? People never really expect their investment to become delisted on the exchange. However, it happens a lot more often than you think. But how often is often? Here is a general idea of all of the companies that have become delisted over the past twenty years.…
   December 23, 2016    1