This blog should be read in conjunction with the Facebook application Model Price ™. Facebook is great for small comments, Q&A, and links however very challenging when writing over a few hundred words.
Be prepared to read about new concepts in finance. Stuff you never heard of before, nor find in any textbook. Did we invent these concepts? Yes and no. As we have said on Facebook, we have stood on the shoulders of others for the big concepts however we enhanced, refined and constructed our own tools for looking at the world of finance.
That is why this blog exists, to teach new financial concepts, to discuss them, maybe even debate things that should be debated. We have created a new world of finance, (yes, a bold statement) and for those willing to learn, we believe your investment knowledge will be better off. Maybe even make some money in your investment account.
We also want to have fun! The most fun we have is reading the financial press. We see “effects” all the time. A company reporting great earnings, a penny above, and the stock sells off. Acquisitions occur, and the acquiring company’s share price gets wacked. Why? Everything in the press or in the financial world seems to be about “effects” and NOT the “causes”. We love “causes”. Our world is about the math of “causes”. Explaining the why and the how. As you can imagine there is no shortage of material to talk about.
Our primary goal is to make transparent our in house research tool –Model Price, and editorialize about it in such a way to give a perspective that is math based, based on a theory of the economic process that relates economic activity to the economic structure of a company. Secondarily, we want to be controversial, and shake things up and have fun doing it.
We’ve had a suggestion of reprinting “About Us” from the Facebook application here in the blog, to help those who don’t want to go on Facebook, and to give context on the charts we are inserting in this blog.
|About Us (From Facebook)Model Price ™ is a valuation model application designed to aid investors in profitable security selection. Model Price ™ is about the collection of third party data, running this data through our algorithms, and producing economic book values (EBV) and model price for a database of 2000 or so securities – both US and Canadian companies. We collect quarterly balance sheet data, if available, last trade (4 o’clock close) price, and input applicable interest rates on a nightly basis. This new data, along with our algorithms, is processed nightly, starting around 4:30 pm eastern. The new output, updated charts including the day’s new information, is produced around 6:00 pm eastern. Users can tell the new data has been calculated by looking at the calendar on the right column of the application. If the calendar highlights the current day’s date, then the calculations have been completed. Sophisticated users can also tell by the current day’s close also on the company’s chart.There is famously NO opinion on our charts. Model Price™ only performs the calculations, stores data, and oversees the integrity of the process. Opinions come from our users, who can use Facebook ™ as a platform for their comments.
Errors do occur from time to time. With so many securities, and daily data inputted, it is impossible for Model Price™ to catch every conceivable error. Please draw our attention to any error by using the Facebook™ Wall for notification. Errors can usually be spotted immediately when our EBV lines jump, up or down, for no apparent reason. Also, if a company has no model price, by way of an error, a pop up window will appear.
Model Price™ works best on large capitalized equities. We use published consensus earnings forecasts for our model price calculation. We also grow the balance sheet on a daily basis, between reported quarterly financial statements, to grow our EBV lines. Obviously, the more reliable analyst estimates’ are the more confidence a user can have on model price and the EBV trading bands. A selected equity with only one analyst estimate will have restricted information value.
Model Price ™ is maintained at the offices of Acker Finley Inc. Acker Finley Inc. is a Canadian investment dealer registered with the Investment Industry Regulatory Organization of Canada (IIROC). Acker Finley Asset Management Inc. a related company is a Canadian registered portfolio manager and Investment fund manager.