July 7, 2017

The question marks in stock analysis



We make mistakes, just like everyone else. That’s why it’s a good idea to question the stock ratings if they don’t meet the expectations. That's not so difficult, as Dr. Stern shows with the example of CNH Industrial.

CNHI manufactures agricultural machinery, a solid business that he values for his long-term investments. Our ranks are excellent.They are either at 100 or slightly below.

That looks suspicious.

As with all automatized procedures, our ranks may contain mistakes. For instance, Standard & Poor’s, our data provider, might have made a mistake entering the information.

For this reason, it’s a good idea to question the ranks. As CNHI is listed on the NASDAQ, we can use the Nasdaq Guru Analysis. They offer around a dozen stock ratings on scales from 0 to 100, so very similar to ours. The guru closest to us is Benjamin Graham, how could it be otherwise?

Now it turns out at that at Nasdaq, most Guru Ratings are mediocre, so unlike ours. For you as an investor that means you should be careful. For Dr. Stern, as a stock analyst, it means to pursue the differences, which he will do now. In any case, he didn’t buy any stock for now.

You can also evaluate our ranks with Reuters. The relevant financial ratios are each compared to the averages in the industry. It's another indicator of whether our ranks are right.

The important thing is: if it looks suspicious, look it up. This often reveals the discrepancies straight away.



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