Analysis Reports

Unconventional Valuations

A battle has raged between fundamental and technical analysts for years as to which process appropriately values equities.  The truth is that both schools of thought have merit, and neither is right all the time.  The Ockham valuation methodology is basically a hybrid between the two competing theories.  We have found that this more balanced approach gives perspective in any market environment.  Here’s how it works,

1.  Create a historical data base of individual securities prices, sales, cash earnings, and dividends.

2.  Assign valuation ranges for each security based upon the average annual highs and lows for price to sales, price to cash earnings and dividends. 

3.  Utilize these valuation ranges as bands to identify a stock's conventional high and low valuations.

4.  Identify stocks whose share price has moved outside of these conventional valuations. 

Ratings Methodology

As you can see we look at fundamental data such as revenue, earnings, etc, but we also put all of these fundamentals over the price component.  So, there is the technical aspect as well which makes this methodology unique.  Understanding how the market is reacting and responding to the performance of the company gives us a better perspective from both fundamental and technical perspectives.

In the spirit of Ockham’s razor, this rubric is insightful and direct, thus eliminating confusion at times of decision making in extreme market volatility.  Our methodology combines empirical conclusions derived from two decades of analysis with a strict adherence to the abiding principles derived from those conclusions.

Ockham Video