Stock prices do not always move towards stock intrinsic values. Though over a long period of time and for a large sample group they definitely do - the performance of stocks in our different rating categories attest to that (see the table in the top left corner of this page).
While analyzing this phenomenon, we noticed that instances of the divergence could be used to predict price movements of the stock market: market prices of stocks and their intrinsic values will converge.
We used this premise to built an absolutely unprecedented stock market indicator - we call it Validation index. If it moves in the same direction as the stock market, then the market price movement is validated. If the two move in the opposite directions, then the price movement of the stock market is not confirmed and, therefore, a movement in the opposite direction could be expected.
[2015-06-18] Today we've added three companies to our model 'buy' portfolio of U.S. stocks. Their past performance has affected the overall reading on the whole portfolio by weighing it down. That's how the system is set up - what matters is how these stocks will fare in the future. The calculation algorithm also assumes that the portfolio is equally weighted (i.e. the same amount of money is invested in each stock) at the beginning of each monitored period. It is an oversimplification, of course, but helps in comparative analysis of each stock performance.
[2015-06-16] We've just added X-FIN model portfolio of 'buy' and 'sell' stocks to the list of indices in the performance monitoring table in the top right corner of the home page. The 'buy' portfolio is up 36% and the 'sell' one is down more than 8% since March 1. A 'buy-sell' hedge strategy would have resulted in almost 45% gain over the past three and a half months. The portfolio composition is not available through our premium access subscription, though, as it falls into a different product category - portfolio management. We have not decided yet on pricing for this product. If you are interested, please contact us.
[2015-06-08] We've reintroduced a fee-only access (available through Premium Access Subscription) to intrinsic value calculation results. This is the only way to keep providing quality content on the site. A monetary gain from a good investment decision is not even comparable with the modest amount of subscription fee we charge ($250 per year).
[2015-05-29] We've just introduced an entirely new metric for identification of market overbought and oversold conditions - the stock market validation index. It is a unique measure of the market, as it is based on intrinsic value of stocks and has nothing to do with technical analysis. Even though we are confident of the capacity of the validation index to predict stock market movements also over the short-term horizon, we do not have yet enough statistical data to prove it. So, we would recommend to use its indications with caution.
[2015-05-10] We've introduced a stock valuation range - it is shown at the stock analysis page just below the intrinsic value. As you can see, for most of the stocks the range is very wide, as even small changes in some key input parameters have very large effect on the valuation result. The intrinsic value number is the valuation result at our best estimate what input parameters should be. The valuation range is the result of plausible variations in the input parameters. A word of caution regarding application of the valuation range. Do not use it for stock screening purposes. By doing so you invariably diminish your chances of outperforming the market. The stock intrinsic value number is the best estimate of its fundamental value as it is calculated based on the most probable input variable numbers. You can greatly improve your performance by analysing and adjusting the input variables.
[2015-05-07] Earlier today we introduced a portfolio monitoring service. It is offered free of charge to all registered visitors. Later on, we plan to add to it email notification whenever there is a change in intrinsic value estimation for any stock in the visitor's portfolio. That service will be available to premium access subscribers.
[2015-05-06] We've introduced a premium access subscription for a flat fee of US$250 per year. We are still committed, circumstances permitting, to keeping the basic service we offer free of charge, but we need to have some revenue to compensate for the cost of maintaining the site. New (both free and premium) services will be introduced shortly.
[2015-05-05] We've extended our coverage of Canadian stocks by adding some companies listed on the TSX Venture Exchange: S&P/TSX Venture Composite Index. We did not include all of them, as these are "junior equities' often without sufficient historical financial data for straightforward application of the valuation model.
[2015-04-26] We've introduced a remarkable tool that gives site visitors direct access to information about performance of stocks in different rating categories. It is located on the home page in the upper left corner. You can choose the period and stock index (or all stocks) you are interested in and see how stocks in each category performed. This is raw, unaltered data. We use it to fine-tune the stock valuation model. There is still plenty that needs to be done. For example, we've noticed that stocks rated as 'hold' tend to behave similar to those rated as 'sell'. But one thing is certain however: our model is a tool allowing you to outperform the market by a good margin and with confidence.
[2015-04-12] We've changed the file structure of the site. Now all stock pages are found within their respective stock exchange folders. This makes unnecessary addition of any suffixes to stock symbols for identification of stocks listed in different countries (the case in point are stocks listed on the Toronto Stock Exchange).