Are ValuEngine stock forecasts only useful to value investors?
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No.
Investors with varying styles and different levels of risk tolerance can
all profit from ValuEngine's forecasting tools.
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What variables are predictors of future returns
for a given stock?
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Predictive
variables fall into three classifications: (1) Those related to the stock's
past performance such as its EPS history, past volatility, and historic
risk/return levels, (2) The company's financial fundamentals, e.g. its
balance sheets, cash flow history and operating income statements, and
(3) indicators of the behavior of the overall markets. ValuEngine's forecasting
models employ proprietary formulas that balance these three classifications
of data and also take into consideration macroeconomic factors such as
the interest rate climate in which the equity markets operate.. The formulas
have been derived from the latest academic research.
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Are ValuEngine stock forecasts dependent on the
ValuEngine Valuation Model?
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Not
really. Because the model price derived by the valuation model is a current
value for a stock, the and the resultant mispricing percentage play a
relatively minor role in forecasting future returns. Forecasting relies
more on variable criteria like EPS projections, momentum ranking, and
Sharpe ratios as well as on a set of econometric models.
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Are there different forecasting models for different
industries or for different time horizons?
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Yes.
Each industry has its own forecasting models based on the econometrics
peculiar to that industry and which reflect its fundamental characteristics.
These models also establish a company's market position across other businesses
within its sector. Forecasting models also change as forecasting horizons
move out into the future. For shorter time periods, such as 1-12 months,
technical variables dominate, while for longer projections out to three
years, emphasis shifts to the company's financial fundamentals.
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How are the probabilities for a stock's future
prospects calculated?
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First,
all available current and historic data is assembled and plugged into
our computer program. Then much as a chess-playing computer considers
all possible moves before selecting the best one, our program runs thousands
of calculations to create a broad landscape of possibilities. It then
narrows its selections to determine the probability of various outcomes,
such as a stock returning 20% or more or perhaps doubling in price within
a certain time frame and so on, while also calculating the risk of loss
during that time.
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Are ValuEngine.com forecasts accurate?
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Yes,
to the extent that accurate forecasts are possible. Thus far, precise
prediction of future events has eluded us. At ValuEngine, however, we
have broken new ground in our ongoing effort to isolate, identify, and
quantify variables that we have found to influence the rise and fall of
stock prices in U.S. and Asian markets. We have tested the interrelationship
of these variables and their impact on the value of individual stocks
as well as that of whole markets over a fifteen year period. Our research
is continuous and aimed at broadening and deepening the scope of our own
formulas which strive to reduce the unknowns of stock market behavior.
Yet, unforeseen events will always be part of the financial landscape
and so risk will always be part of our lives in any marketplace. At ValuEngine.com,
we work to reduce it to manageable and acceptable levels and to make our
forecasts as accurate as possible.
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