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ValuEngine.com employs many proprietary models, which were adapted from innovative
concepts in finance theory, generated both in academia and from Wall Street practice.
Each of the following ValuEngine models represents the state-of-the-art in
fair market valuation and price forecasting technologies:
If you want to learn more about the track record of the ValuEngine models,
take a look at our Research Findings. Live-tracked performance is also
available on the VE
Benchmark Portfolios page.
The ValuEngine Stock Valuation Model
The ValuEngine Stock Valuation Model was derived from the recent research and findings of
ValuEngine's academic research team.
The model is
more sophisticated than traditional valuation models and outperforms its peers by employing
a three-factor approach to stock valuation. Fundamental variables such as a company's
trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's
future 12-month EPS, and the 30-year Treasury yield are all used to create a more accurate
reflection of a company's fair value. A total of eleven additional firm specific variables
are also used. Armed with these framework features, the ValuEngine Stock Valuation Model
then paints a detailed picture of a company's fair value, which is represented by
ValuEngine's "model price" or "mispricing".
The ValuEngine Stock Forecast Model
The predictive variables used in ValuEngine.com forecasting models include both proprietary
and well-established forecasting variables derived from credible financial research studies
and publications. ValuEngine.com uses a distinct forecasting model for six forecast time
horizons and every industry. Our forecasting models capture, among other things, several
important tendencies that stock prices consistently exhibit: Short-term price reversals,
Intermediate-term momentum continuation, and Long-term price reversals. ValuEngine.com
applies the most advanced statistical/econometric techniques to ensure that our stock return
forecasts are as reliable as possible. In addition, we have a realistic econometric model
for assessing a stock's and a portfolio's future return prospects. This econometric model
involves running thousands of simulations to estimate the probability of a double in stock
price as well as the probability of meeting and exceeding any given investment target by a
stock or a portfolio of stocks.
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The ValuEngine Portfolio Forecast
Model
The ValuEngine Portfolio Forecast tool arrives at projections by utilizing our forecasting
models to estimate future returns for the individual stocks in your portfolio. After computing
the future return forecasts for each stock, ValuEngine.com then runs thousands of concurrent
simulations for all of the stocks in a given portfolio (subject to various econometric
requirements). The thousands of simulated price paths created by this process form the basis for
our Portfolio Forecast projections. Finally, the ValuEngine Portfolio Forecast tool calculates
the most likely return forecast from the thousands of simulated outcomes.
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The ValuEngine Portfolio Advisor Model
The ValuEngine Portfolio Advisor enables you to specify the following portfolio objectives:
Maximize the chance of meeting or exceeding an investment target, minimize the chance of loss,
and both of the above. Choosing the first option will prompt Portfolio Advisor to create an
aggressive yet risky portfolio. Choosing the second option will prompt Portfolio Advisor to
search for a conservative mix of stocks that will seek to preserve capital. Choosing the third
option will prompt Portfolio Advisor to create a balanced portfolio that will seek to both
maximize potential gains and minimize potential losses. Once you have specified an investment
objective, Portfolio Advisor will utilize our forecasting models to estimate future returns for
the individual stocks in your portfolio. Portfolio Advisor will then examine tens of thousands
of possible capital allocation plans distributed across the stocks of your choice. From the
results of these simulations, Portfolio Advisor will identify and display the most favorable
stock allocation for your portfolio. Additionally, Portfolio Advisor will inform you of the
exact number of shares to buy or sell of each stock so that the resulting portfolio will
maximize gains, minimize losses, or both.
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Please
e-mail us at support@valuengine.com
with any of your suggestions and comments. For more contact information,
click here.
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