Frequently Asked
Questions |
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| 1. | Once registered,
what is the fastest way to get to the Stock Picks List? |
| | After you have registered, you have unlimited access to the
Stock Picks List free for the initial six-month trial period and then
again for three months after each paid subscription. Each time you want
the Stock Picks List, you must use the Request Form on the Website.
The Website does not allow you to update a bookmark to it.
To get the Request Form, click the "Request
Form" navigation button at the top of any page, or bookmark the Request
Form page and go directly to it without entering the Website via the Home
page.
If your computer accepts cookies, your personal information will automatically load
into the Request Form. If your computer does not accept cookies or your
downloaded cookie has expired, you will have to
re-input your personal information.
Once you enter or update/verify the personal information, click the Submit button on the
Request Form to get the Stock Picks List.
Tip: Check the "What's New?" table at the top the Stock
Picks List response page to see if there have been any changes since your last visit.
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| 2. | What about
Enron? How can a Model using bad numbers make good stock recommendations?
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| | The Stock Picks List recommended Enron once, at $40.81 per share in
the end of Second Quarter 1997. Enron was deleted from the List at the end of
the Third Quarter 1997 and sold at $38.50 per share, a rather minimal loss in light
of what followed four years later. Lucky? Not really. The Value Investing
Model and the Stock Picks List recommend stocks whose numbers are growing with
steady ratios and whose price movements are within historical patterns.
Management does not wake up one morning and decide, "Well, today we're going to
do a massive fraud on the investing public." Bad accounting follows
bad management and is a slippery slope, usually pursued to sustain an unrealistic stock
price. In the case of Enron, the Model detected the "numbers noise"
of business results and/or stock prices when they first went out of pattern,
before fraud became a necessity to sustain it.
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| 3. | How long have
the Value Investing Model and Stock Picks List been around? |
| | The Model's algorithm (or set of mathematical formulas)
was developed and tested on historical stock market data for the years 1981-94.
Since 1994, the Model has been successfully picking stocks based on a
single and unchanged algorithm. In July 2000 in the midst of a major market
downturn, the Author began using the Stock Picks List to make his
own investments; the successful results are published on the "Author's Own
Results" page of the Website. The Stock Picks List was first published
on the Internet in October 2000. It was available initially to friends and
family, until early 2001 when numerous Web portals and search engines found
it.
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| 4. | Why is the
Stock Picks List so successful? What makes it tick? |
| | The success of the Stock Picks List is based on buying
stocks before other investors have recognized the company's value and
selling them when their underlying value is recognized. The Value
Investing Model anticipates the behavior of
the stock market, which eventually validates the "hidden value" of stocks
recognized by the Model. The
efficiency of the Model and the success of the Stock Picks List is due to
three things:
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Good data. The term "earnings" has
a variety of recognized
definitions for accounting and financial reporting purposes. The Value
Investing Model starts with its own proprietary database of carefully selected
earnings data. The Model does not rely on company "pro forma"
income or the adjusted earnings data used by stock market analysts
and on-line financial databases. |
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Artificial intelligence. The Model's powerful algorithm (or set
of mathematical formulas) successfully imitates human intelligence and
common sense when presented with historical data, new market
information and the changing relationships between them, before
the stock market absorbs and reacts to the data. Like stock
market behavior, the Model is dynamic and "learns" from
experience, by detecting when historical relationships have changed
and by continuously redefining data relationships based on market and
company performance. |
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Opportunism. The efficiency of the stock market is
impacted by lots of inefficient behavior by other investors: momentum
buying and selling, crises of confidence affecting individual companies and
whole sectors, herd buying of "hot" stocks or sectors, limited or slow
analyst coverage of many companies, and bull and bear markets
generally. Each of these events creates opportunities for
value-based investing. The success of the Stock Picks List is
built in part on the mistakes of others.
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| 5. | Why is the
Stock Picks List limited to only NYSE companies? Why are there only US
companies on the List? |
| | The Model's database is limited to companies listed on the
New York Stock Exchange ("NYSE"), whose minimum capitalization and
other listing requirements are more rigorous than NASDAQ and other stock
exchanges. The Model purposely excludes stocks listed on non-US exchanges
and companies that do not report their earnings in US Dollars, in order to limit the
Model's exposure to currency-exchange fluctuations. Individual NYSE-listed companies
are, of course, exposed to some foreign-exchange risk to the extent that their revenues
and earnings come from non-US Dollar economies. The Model's database consciously
excludes non-NYSE companies and non-US companies in order to assure continued robust
performance results of the Stock Picks List. In the opinion of the Author,
the current pool of NYSE-listed companies is large enough to find a diversified group
of undervalued stocks. Adding companies that meet less stringent listing
requirements and whose earnings are subject to greater foreign-exchange risk, might
adversely impact the performance results of the Stock Picks List.
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