I have seen many IBD top 100 stocks take a hit this week. HITT, FORM, LIFC, SCSS, and a few others have been ounished for earnings and/or revenue disappointments.
Those "investors" need to put their money to work in a real winner: EZPW!
Be careful with doing historical analysis b/c companies often change up their business lines which makes comparing such ratio's over time.
This is one of the reason's why EVA and related methodologies are popular. By focusing only on capital and return on capital you abstract yourself away from the companies physical existance.
Where in europe are you?
"the change of one metric over time. like this it would be easy to see how gross margins developped over the last 10 years quarter by quarter. this and much more could be displayed graphically for one company or several companies side by side."
You've never used a bloomberg terminal, have you? This is what they pay the 1600/mo for.
it won*t be possible for me to argue with you about what you stated above, but i just guess that we have several retail / hobby investors here who smoked most fund managers. i ownly buy funds for regions where i can't access stocks or reliable information as retail investor, like eastern europe or india / china.
otherwise i like to do investing myself and i've not been doing worse then most actively managed stock funds. i'll let everyone know about what i found - and let everyone comment on it.
i've been on the subject for the last hour, and here are my findings: the sec will open its database so that every interested person can query it to their liking. several companies have started to write front end software, some of it will be published for free at the sec web-site. the article i found is from a german speaking computer magazine but my idea is the folloing: while i've so far seen much talk about comparing companies side by side in one sector or several sectors with just a click of a button, i*m more interested in another dimension of the data: the change of one metric over time. like this it would be easy to see how gross margins developped over the last 10 years quarter by quarter. this and much more could be displayed graphically for one company or several companies side by side.
i'll be looking into it the next days, quite an interesting top�c. this should take the hours of analysing data from retail investors.
thx for your input about data quality, history proved that quality of numbers filed will always be an issue, but fast access to more information and its flexible aggregation should help the retailinvestors if the sec makes the tools freely available.
i'll post links of my findings the next days, this i owe to this board and the many quality contributions.
i know that automated analysing of financial information has been done since the 70s at least, but now it's moving online and getting available for free - if we are lucky.
It will take years before XBRL takes on. It also has the problem that alot of companies have complex financial statements, and you need context to analyse them.
The thoughtful investor will always smoke some idiot screener. This has been big problem in academic research because market participants do integrate information that is not contained in the raw data.
Active bond managers are very slippery for exactly this reason. They use public information to move up and down the yield curve and do relative value arbitrage.
"everyone else, like divi are also welcome to comment on this issue. the reason i*m asking is that i need a project to suggest for my MSc IT, so i could be programming some sort of automated tool to analyze this stuff. however i don't want to do duplicate work, so if there is some tool out there (and available for free or relatively small fee) pls let me know. "
People have been doing computer screening of stocks since the 1960s. To put it mildly, this is a very well researched area.
Read up on econometric methods to get some ideas for methodology. Fama/French's 1993 paper is seminal papaer in attempting to explain stock market returns.If you buy large growth stocks after reading this paper you can't be helped.
Bonus points if you read up about analysis of messy data.
The usual sources for raw data are CSRP, S&P Compustat, or Bloomberg, all very expensive (CSRP might be cheap). Valueline also maintains good datafiles.
Data quality is a big issue here, companies with weird balance sheets tend to clog up computer screens, so often people remove financial stocks and utilities stocks. Outliers tend to badly screw up models, so you ought to flag them out (hence the need for knowledge about messy data).
The main workable methods for picking outperforming stocks is to look look for cheap stocks via some sort of value metric. More recently some folks have been using economic profit based methodologies.
help is on the way, i just found this and it seems the sec is working on a piece of database that will aggregate historical data per company and possibly more. its a longer read but quite interesting if they follow through with it.
Morningstar and Value Line can give you an initial stock screen to highlight stocks with potential. Beyond that you have to do your own research. I have a full-time job outside the markets so even with EZPW (currently my largest holding though FCFS and CSH both held that title at separate times earlier this year) I cannot pore through every word of the 10K.
I have been in and out of WRLD on multiple occasions (now out).
"I think Alan Greenspan targeted the housing market when the FED began rasing interest rates 17 times."
This was to mop up after an anti-deflationary money policy (when rates were lowered in 2000-2001) and after the direct injection of bank reserves post 9/11. The Fed injected about $40 billion of bank reserves into the system for about two weeks.
"The housing market has been crushed", this is not purely the result of cheap loans. There was also a huge demand pull inflation from speculators buying "investment homes". Number of factors combined to create the housing bubble.
People would like to just blame low interest rates, but there was also a sea change in psychology which enabled it.
"and the GDP# (1.6) suggests there are other sectors slowing."
Hard to say, economic numbers are hard to measure. It seems that economic activitiy is slowing down. Unfortuneatly it is very hard to predict the economy, so the safe choice is to stay safe.
Right now, the move into defensive sectors is a classic crowded trade. Look at the chart for XLU as an example. The move to safety is unwinding though, compare the 6 month and 3 month charts of SDY/SPY
I have heard contra arguments that M2/MZM growth will sustain or increase asset prices. So the bull market may not be over.
"Don't you think the Fed will begin to ease rates early next year? If so, what sectors will benefit from the ease?"
Directly? (Purely on interest rates w/o any economic effects)
Bonds will do well at first, and then slow down in the long run (as bond portfolio's run off and are reinvested).
If you believe that REIT prices are driven by interest rates, then REITs/BDCs will do well. The new "Private Equity" ETF may lift BDC prices just like SLV did to silver.
Given that cheap money encourages M&A activity, expect to see more LBO's happen. That is good for value stocks.
Banks may or may not do well. They pay less for funds, but then they make less on loans. Banks pay lots of dividends, too. Those are more attractive in a low rate enviroment.
its me again with a different thought. how exactly do you analyze the sec filings? is there an automated way, some software tools out there? i guess most of the posters on this board have lots of stuff going on in their lives, so going through them manually does not seem to be an option.
everyone else, like divi are also welcome to comment on this issue. the reason i*m asking is that i need a project to suggest for my MSc IT, so i could be programming some sort of automated tool to analyze this stuff. however i don't want to do duplicate work, so if there is some tool out there (and available for free or relatively small fee) pls let me know.
are you willing to share your entry point in wrld? when do these stocks catch your attention? how do you decide what makes a small cap with potential from one that goes nowhere? i've been well served in following the faith junky showed in management of ezpw, but how you keep track of the quality of management in small companies? is it really all in filings?