Have you ever bought a stock because you read something great about the company in a news report but then the stock lost you a lot of money? It happens all the time. But do not blame the media for it, news reporters are doing what they should do – report a news story.
The problem with investing in stocks based on news stories or reports is that not every aspect of investing is covered by media. Usually you can read something like this in media:
– Apple higher on growing earnings
– Tesla jumps 5% on better than expected report
– Deutsche Bank’s stock tumbles on DoJ settlement worries
Then you read the story and conclude that stock must be a buy (or a sell) since the story was positive (negative). Well, that is almost always a source of potential problems. Just because a company reports better than expected earnings or growing revenue, it doesn’t mean that the stock will be a good investment.
When choosing a good or great investments you must take a look at many different factors that influence on the stock price movement. Company performance in one quarter in not such an important factor that you can base your whole decision making on it.
There are many factors that you should look at before deciding if the stock is good enough to be your next investment. Here are some of them:
– Growing operating margins
– Growing ROA
– Large operating cash-flows
– Positive income, but even larger OCF
– Low valuation measured by EV ratios
– Competitive advantage
– High quality management
There are many more things you should check before investing your hard earned money into the stock market. But all of this checking and searching can be exhausting if you do not have the necessary tools to do it. You could get yourself a Bloomberg Terminal which is an amazing platform with enormous amount of data, but is a little bit expensive. It can cost you 2000 US dollars and up. Not something every one of us can afford.
You could also do the whole stock analysis with free information available online from different sources (company’s website and annual/quarterly reports; stock reports from brokers; etc.) but that is really time consuming. Try finding the best company in such a way. It would take years before you could finish analysing 60.000+ companies around the world (10.000+ in the US).
That is why we developed Quantitative Alpha. I had the same problem that you have – how to find the best companies to invest into without spending months reading and analysing every single quarterly report out there. I was fortunate enough to have access to Bloomberg Terminal but the time to find and analyse the best companies was still quite long.
I started developing Excel spreadsheets that would do the analysis for me. I would choose the most important factors (that are well researched by finance professors, academicians and practitioners alike) and implement them in my investment process. That would mean that I used the mathematical models implemented in Excel to check if the company that I am analysing is good enough or not for me to invest into.
As I was talking to investors in the fund I manage, all of them understood the investment process I used since it was backed by years of research and was totally logical. I got more and more questions if I could give them access to my models and data.
Since I always try to help fellow investors (I really don’t understand why people are hiding their investment process/methods…) I described in detail how I find the great investment opportunities but I could not share the Excel models since they are connected to my Bloomberg Terminal. These models (Excel spreadsheets) would only work if they also had Bloomberg Terminal, which none of them had.
I then recommended some online tools that are free or way cheaper than the Terminal (like OldSchoolValue or Screener.co, which are both great and I still recommend them) but most of investors didn’t like the complexity of these tools and wanted just the results of the analysis I do before investing.
That is why I partnered with a few of my friends who are great programmers and data scientist to bring you Quantitative Alpha.
With Quantitative Alpha Platform you can do a lot of things – since I was basically building it for myself, so that I can reach my conclusions (should I buy the stock or not) faster, more efficiently and with more precise analysis.
The Quantitative Alpha Platform is built from different modules or Investment Tools, as we call them. Here they are:
– Backtesting Tool
– Screening Tool
– Stock Analysis Tool
– Portfolio Tool
– Factor Analysis Tool
– Scenario Analysis Tool
– Fund Analysis Tool
Names are probably self-explanatory. The whole point of Quantitative Alpha Platform is to bring you a high quality research (based on methods developed by finance professors and successful investors) in an user-friendly manner. You do not need a finance or accounting degree to be able to find your next great investment.
Quantitative Alpha Platform therefore is here to help you avoid mistakes when investing in stocks and give you all the tools that successful investors use to achieve high returns without large interim losses.
Since we are still developing the Platform the Tools are not available to public. We will be documenting the whole development process by writing about investment strategies that we are implementing into the Platform. I believe you will achieve higher returns (and avoid foolish investments) just by reading the results of our research about different strategies, methods, models, factors that we will build into the Quantitative Alpha Platform.
Join us on our journey to finding great investment opportunities by subscribing below and sharing this website with your friends.
Quant & Fund Manager
Founder and CEO