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TranceAddict Investors Club @ Marketocracy (pg. 128)
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| Krypton |
I'm going to make a prediction about the Dow Jones Industrial Average (DJIA) based on my calculations. I predict the DJIA will be above 10,000 by 2013.
In other news, I'v completely down away with any linear functions within my macro algorithm. |
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| Krypton |
| quote: | Originally posted by jerZ07002
they aren't strictly mathematical formulae. The problem I usually face with excel is how to create an algebraic formula while at the same time searching multiple data sets for that information I want to use in the formula. In any given formula I could have multiple embedded functions searching for information based on certain defined variables, all while conducting a mathematical equation. In my field, the mathematics are much easier than sorting out the information needed in the equations.
Another significant issue in tax calculations is developing functions that look to the past while doing a current year calculation. While that may sound easy in theory, in practice, it can be quite difficult to perform in excel. A significant complication is also ordering rules in tax law that allocate losses and credits in specific ways (i.e., categories of income, etc...). It's tricky ! So, its not about forcasting through developing new formulae. It's more about manipulating excel functions to create the math equation that the IRS regulations specify. |
Qualitative analysis...ugh...I stick to the numbers as much as possible, because they just make sense. |
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| atbell |
| quote: | Originally posted by Krypton
I'm going to make a prediction about the Dow Jones Industrial Average (DJIA) based on my calculations. I predict the DJIA will be above 10,000 by 2013.
In other news, I'v completely down away with any linear functions within my macro algorithm. |
I'd take that bet if I had any money ;)
Just saw Hardtalk, a BBC interview program, with Kenneth Rogoff, a former IMF cheif economist. He was predicting a bottom to the housing problems in late 2010.
I expect another two drops before this year is out and I just don't see the 'economy' in general trending up between now and 2013.
Krypton - Seeing as you are a numbers person, check out this paper from the federal reserve http://www.federalreserve.gov/pubs/.../200858abs.html
The paper models the response of prices to monetary shocks over time. It specifically tries to explain why there has been an observed period of irationality directly following monetary shocks.
I applied this theory to the bailout of Oct. 1, 2008 and used data from the financial times to estimate inflation between then and two weeks ago (when I made the model). It forcast inflation due to the one instance peaking at about 37% per quarter on July 22, 2009.
I don't trust the magnitude of the inflation but the timing matches my predictions from other things I've read. Late summer is when I expect the second drop of this year, July 22 is earlier then what I would expect. |
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| Krypton |
Check out my new financial website...
www.finance.com
| quote: | Originally posted by atbell
Krypton - Seeing as you are a numbers person, check out this paper from the federal reserve http://www.federalreserve.gov/pubs/.../200858abs.html
The paper models the response of prices to monetary shocks over time. It specifically tries to explain why there has been an observed period of irationality directly following monetary shocks.
I applied this theory to the bailout of Oct. 1, 2008 and used data from the financial times to estimate inflation between then and two weeks ago (when I made the model). It forcast inflation due to the one instance peaking at about 37% per quarter on July 22, 2009.
I don't trust the magnitude of the inflation but the timing matches my predictions from other things I've read. Late summer is when I expect the second drop of this year, July 22 is earlier then what I would expect. |
Ahhh, macro economics. Something I'm not too fond of. But I did create this macro spreadsheet :D...
[[ LINK REMOVED ]]
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| spdandpwr |
The following post refers to the dow jones estimator on your calculator.
Just to make sure I understand your calculator; does the below formula mean that you are taking the present value of the index and multiplying it by a 6% increase every year?
y(t) = 8001(1.06^t)
My next question is where does the -0.156 in the this formula come from:
=I3+(-0.156*I3)
Likewise, where does the .161 in the this forumal come from:
=I3+(0.161*I3)
Thanks and good work! |
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| atbell |
| quote: | Originally posted by Krypton
Check out my new financial website...
www.finance.com
Ahhh, macro economics. Something I'm not too fond of. But I did create this macro spreadsheet :D...
[[ LINK REMOVED ]]
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Not a bad start.
Macro stuff is almost impossible to model though. I don't see models as any more reliable then a moderately well read opinion.
It's good stuff to brush up on since there's been another 800bn of money printed. Most of the stuff I've read seems to indicate theres still more after this too. |
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| Krypton |
| quote: | Originally posted by spdandpwr
The following post refers to the dow jones estimator on your calculator.
Just to make sure I understand your calculator; does the below formula mean that you are taking the present value of the index and multiplying it by a 6% increase every year?
y(t) = 8001(1.06^t) |
Yep, you got it. The 6% increase is the average return since 1929. 8001 is the index value on the first trading day of the year.
| quote: | My next question is where does the -0.156 in the this formula come from:
=I3+(-0.156*I3)
Likewise, where does the .161 in the this forumal come from:
=I3+(0.161*I3)
Thanks and good work! |
The -.156 is the average loss during a down year. The .161 is the average gain during an up year. So the model takes into account...
1. Average return each year
2. Average loss each down year
3. Average gain each up year
That's how I get the range. It helps to operate within a range instead of just one estimate number, because as we all know, it's practically impossible to estimate the index value precisely, especially, the farther we go into the future. So, likewise, the range difference between high and low increases with time, because the farther into the future the estimate, the harder to estimate the index value. |
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| Krypton |
| quote: | Originally posted by atbell
Not a bad start.
Macro stuff is almost impossible to model though. I don't see models as any more reliable then a moderately well read opinion.
It's good stuff to brush up on since there's been another 800bn of money printed. Most of the stuff I've read seems to indicate theres still more after this too. |
It helps to have a basis to analyze the macro of our economy. These models provide that. What would the index value of the Dow be if it followed its average return. What about if it followed it average loss? Or average gain? These are excellent fundamentals to rely on to guage what the Dow might be 1 year from now, 5 years from now, 10 years from now, always keeping in mind to rely more on the range instead of one set estimate. That way, I can see if the Dow is gaining higher than its average return, and make an assumption that it may be over valued, and adjust my holdings accordingly. |
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| Kinezi |
Hi PDD Fellows,
I need some help from you guys, I need to identify one good company to invest right now.. my criterea for investment are:
Current Ratio should be greater than one.
Acid Test Ratio should be grater than one.
Receivable Turnoover which is how many days does the firm takes to convert its receivable into cash, which is usually in number of days should be better than other firms in the same industry.
Inventory Turnover, which is how fast the company sells and finishes its current inventory in store, business warehouses should be better than current firms in the same industry.
Profit margin should be comparitavely higher than other firms in the same industry.
Return on assets should be high or average.
Return on Common stockholder should be good.
EPS should be low.
Price earnings ratio that is number of times the stock price is than its current earnings should be low.
Payout ratio should be high.
Solvency ratio should be high.
Debt to total assets ratio should be 2 is to 1, or higher.
Times interest earned should be 2 times minimum.
If some of the criterias are not met but other are excellent than I would go ahead with it.
It would be nice if you could recommend me one stock.. my preference is bluechip companies.
Thanks! |
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| Shakka |
| quote: | Originally posted by Kinezi
Hi PDD Fellows,
I need some help from you guys, I need to identify one good company to invest right now.. my criterea for investment are:
Current Ratio should be greater than one.
Acid Test Ratio should be grater than one.
Receivable Turnoover which is how many days does the firm takes to convert its receivable into cash, which is usually in number of days should be better than other firms in the same industry.
Inventory Turnover, which is how fast the company sells and finishes its current inventory in store, business warehouses should be better than current firms in the same industry.
Profit margin should be comparitavely higher than other firms in the same industry.
Return on assets should be high or average.
Return on Common stockholder should be good.
EPS should be low.
Price earnings ratio that is number of times the stock price is than its current earnings should be low.
Payout ratio should be high.
Solvency ratio should be high.
Debt to total assets ratio should be 2 is to 1, or higher.
Times interest earned should be 2 times minimum.
If some of the criterias are not met but other are excellent than I would go ahead with it.
It would be nice if you could recommend me one stock.. my preference is bluechip companies.
Thanks! |
I think your professor intended for you to do your own work on this one.;) |
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| Kinezi |
| quote: | Originally posted by Shakka
I think your professor intended for you to do your own work on this one.;) |
But he gave me only one day, and I have to give him something from WSJ, I am not even a subscriber at WSJ. |
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| pkcRAISTLIN |
| quote: | Originally posted by Kinezi
But he gave me only one day, and I have to give him something from WSJ, I am not even a subscriber at WSJ. |
i think we shall file that under T for "tough titties". |
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