Forum Archive Index - June 2002

["Rockbottom" <rockbottom@ihug.co.nz>]

I have always been interested in what makes the sharemarket tick and have
tried a number of times to come up with systems to compare one company with
another with the view to putting them in order of preference to assist
buy/sell decisions.

About 4 years ago I spent Christmas holidays at home and spent a hundred or
so hours analysing old financial accounts and putting the results in a
spreadsheet. Some of  the easier to explain factors were share price,
earnings per share, dividends per share, Imputation rates, Net assets per
share. These and others were also projected into the future for 4 years.
There are over 30 bits of  information held for  each company and about 40
NZ and Oz companies analysed to a greater or  lesser extent.

Then I carried out a statistical analysis to get the weighting for each
variable.

So much for the theory, how did it work?

Some of the shares in  the top 10 made significant gains and also some
significant losses. Some of the shares at the bottom  were bolters.
However by investing in the companies in the top half you would do
significantly better than by investing in the bottom half.

The system provides relativity between the shares in the table. As the share
prices change, the order of the shares change on the list. It almost has a
life of its own!

Looking forward to hearing details of other systems.

Regards

Rockbottom




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