Re: [CANSLIM] VectorVest fundies

From: "Patrick Wahl" <pjwahl@attbi.com>
Subject: Re: [CANSLIM] VectorVest fundies
Date: Sat, 9 Mar 2002 20:26:11 -0700

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What does it cost - initially and per month?

On 9 Mar 2002 at 19:01, Katherine Malm wrote:

> Hi Warren,
> 
> It's difficult to do justice to the VV tool in a few paragraphs, but I will try and address your question in a way that shows how VV is different from tools such as QP2 (and tools built on its engine and/or MarketGuide fundamental data elements) and/or other tools that incorporate varying 
degrees of technical analysis.
> 
> It is true the VV does not have the raw historical fundamental data and it is for this and a couple of other reasons that I supplement it with DGO. Instead of providing the raw numbers, VV devotes its engine to looking for relationships between variables. The foundational parameters are built 
on long-standing stock-valuation techniques in which the value of a stock is determined by the present value of a future earnings stream given a particular growth rate in future earnings and a given interest and inflation rate. This valuation is then combined with the past profitability 
characteristics of the company--essentially the return on total capital employed. The final valuation is then compared to present price action and the expected return on the stock over time is compared to the return on a AAA bond. While the specifics are proprietary (just as are the specifics of 
DGO's A/D, GRS, SMR, etc.), the formulations are discussed in the manual. In short, this allows you to compare any stock in the database against another to determine the relative value (RV) of the stock. In addition to the RV, there is also a relative safety (RS) factor which takes not only the 
traditional measure of volatility (beta--a price based measure) but also the past fundamental volatility/safety of the stock. For example, D/E ratio, longevity of the business, persistence of profitability and growth in earnings, etc. etc. All of these factors are once again combined so that any 
one stock can be compared against another. Essentially, VV pares down all the raw past fundamental data and the future expected fundamentals into a couple of numbers for you. When I look at a stream of raw fundamentals, this is what I'm doing mentally...assessing growth patterns, repeatability, 
etc. So, no, you could not do a search on QoQ growth rates of x in the same way you can in QP2. From a technical perspective, there is once again a summary technical price indicator called relative timing (RT) which is difficult to describe without a white paper. But, it essentially takes the 
price movement over the last 13 weeks and the velocity of the price movement in more recent periods and then normalizes it for values between 0 and 2. Once again, this allows comparison of any one stock against another. (There are many more parameters, but these are the most important). From a 
CANSLIM perspective, the parameter most important is the projected forward growth rate of the company. Without a doubt, this one factor (based on forward EPS estimates, also given) is the fastest way to zoom in on CANSLIM quality companies and as far as I've been able to determine, no other 
software package has anything close.
> 


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