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BargainStock.com |
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Our investment strategy applies both fundamental and technical analysis and returns monthly over 2.5% in excess of the S&P500 (excluding dividends and transaction costs). |
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We are not financial analysts, investment brokers or financial advisors. The Information on the Site is provided for information purposes only. The Information is not intended to be and does not constitute financial advice or any other advice. We are not responsible for any investment decision made by you. Investors should always check with their licensed financial advisor, to determine the suitability of any investment. BargainStock.com does not make any warranty as to the results to be obtained from use of the site or the content. BargainStock.com shall not be liable for any direct or indirect damages arising out of the use of the site. BargainStock.com does not warrant that the site will be uninterrupted or error free. Any investment decision which are based on information in this website may result in financial losses. |
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Universe constraints: · Portfolio starts with $100 initially, equally allocated; · Holdings for each portfolio are calculated once each month; · Market prices for selected stocks are greater than $5; · Market capitalization for selected stocks is over $50 mln; · All stocks in portfolio are equally weighted; · Research results do not include commissions, trading costs and dividends; · All results are compounded rather than annualized.
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The market inefficiency is evidenced by the existence of the stocks selling below their intrinsic value (bargain stocks) as well as by existence of the stocks selling above their intrinsic value (premium stocks). The mispricing of stocks by the market results in the inefficient allocation of resources in the economy. In other words the recourses (money) are not being put to their best use. Investing in overvalued stocks increases market inefficiency, results in losses to the investor and in a deadweight loss to the economy. On the other hand investing in bargain stocks decreases market inefficiency, results in excess profit to the investor and in a decrease in the deadweight loss to the economy. We use a number of models (including discounted cash flow model) to assess the intrinsic value of a stock. Different models produce slightly different results but the overall evaluation of results enables us to come up with the intrinsic value of a stock and allows us to tell whether a stock is a bargain or not.
The total market value of all the stocks that are members of the S&P500 index is a bout 10 trillion dollars. Our Top 10 Buys outperform Top 10 Sells by 1.8% over a 4-week period. The excess returns do not disappear after a 4-week period. Bargain stocks continue to outperform the S&P500 index and the Top Sells for a longer periods of up to 3 years. The market capitalization of the Top Buys and Top Sells represents about 5% of the S&P500 index and amounts to 500 billion dollars. The bargain stocks yield excess annual returns of over 20% which amounts to 100 billion dollars. That is a very conservative estimate of the value of the market inefficiency. Coincidentally, it is pretty close to the 140 billion dollars that some economists believe should be injected into US economy to save it from recession in 2008 and 2009. Had the market been efficient, the growth package would probably not have been necessary.
We run this site to make allocation of resources in the economy more efficient by identifying and exposing market inefficiencies to investors.
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