It is quite obvious you weren't touting a random walk system with your correlation study. If you were, you wouldn't have anything to sell! I mean the whole point is to show that you discovered a correlation better that common valuation methods. Duh! (Peter Lynch touts P/E as a major tool for valuation.)
And I did do a brief review of your site (10 minutes or so), just didn't review the details. If I saw one section correctly, the best correlation for valuation to price movement was about 55%. Is that right? If so, that is weak.
I would argue that quantitative analysis is only the start. Without qualitative analysis or investment discipline, it is lacking For instance, on the qualitative side, what type of business (and especially revenue) model do they have (is it being threatened by a major law suit?), how diversified is it's customer base, is it a brand or commodity business, is the market saturated, etc. I would also argue that trading discipline is paramount. With a 55% correlation its not if you are right or wrong that counts, but how much you make when you are right, and how much you lose when you are wrong that counts!
I also think your test is designed to make small investors think they need your advice. Most of the answers come from your study - that's like giving a test on the first day of class, then saying "hey, you need my help." |
