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Technology Stocks : Dell Technologies Inc.

DELL 133.35

+0.1%

Nov 28 9:30 AM EST

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To: arthur pritchard who wrote (130829)	6/3/1999 7:56:00 PM
From: David E. Taylor	Read Replies (2) of 176387

Arthur: Sounds like you're poking fun at something you don't understand. Michael's approach using differential equations sounds similar to one I've been playing around with for over a year, and it holds a lot of promise as a predictive tool for stock price movements. I've had considerable success in benchmarking this model to historical data for DELL, less success in predicting future stock price movement, since the the results I get from the current set of equations I'm using are very sensitive to the relative weights given to the input parameters. On the other hand, a stochastic Monte Carlo simulation layered on a standard Excel spreadsheet model of DELL's earnings has allowed me to nail DELL's earnings to +/- .01 for the last 9 quarters, and in addition gives me the sensitivity of the earnings prediction to the various input parameters, which all have different uncertainties. Admittedly this has gotten easier as Dell's revenues have gotten larger and the stock has split umpteen times, but I was able to nail the earnings back in 1997/1998 when Dell was routinely blowing away the analysts estimates. The ability to predict Dell's revenues/earnings relative to analyst's expectations has been very profitable for me over the last three years. The only earnings related mistake I've made was on this last one when I way under-estimated the analyst reactions to Dell meeting both revenues and EPS estimates. Maybe Michael and I should continue this conversation off the thread to avoid having fun poked at us? I think not, I guess I can take a dig or two! David T.

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