About this site

This site offers methodology and tools for successful investing. It is a new project that well be built in stages. At the first stage the primary objective of the site is to help users to make money in the stock market by offering them sophisticated stock valuation tools with the emphasis on relative valuation.

The problem with any stock valuation methodology is that it is always “backward looking”, as it relies on historical financial performance of the company and is often backtested on historical stock prices. Therefore, any absolute stock valuation is primarily dependent on the valuator’s prediction of the future, which is always highly subjective and, as a rule, wildly inaccurate.

However, if all stocks are valuated within the same framework of strictly-defined rules and assumptions, then relative valuation (of one stock versus the other) becomes of great importance, as it allows us to identify stocks that on average should outperform (or underperform) the market. This would also allow us to construct a hedged portfolio by buying stock that are expected to outperform and selling short stocks that are expected to underperform. Such a portfolio, if it includes a sufficiently large number of stocks, should be able to generate positive return irrespective of the market conditions (i.e. regardless of whether the market rises, falls, or moves sideways).