| BUSINESSWEEK ONLINE : MAY 24, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| COVER STORY
Rocket Science Made Simple Quantitative investors are the rocket scientists of Wall Street, crunching massive banks of numbers to reveal undervalued companies, indexes, and markets. Now, thanks to the Internet, you, too, can be a quant. You don't need a PhD in math. All you need is a computer to take you to one of the many Web sites featuring quantitative stock screens (table). One site that's almost purely quant is MarketPlayer. Started three years ago by Edward Murphy, a former quantitative analyst for Morgan Stanley Dean Witter, it allows you to sift through some 4,000 U.S. equities and more than 100 industry groups. You can screen more than 100 variables, such as company earnings estimates and historical price statistics. One neat feature lets you pretend you're Warren Buffett, the ultimate value investor. The Warren Buffett Stable Growth Screen finds stocks with strong, stable earnings growth and price-earnings ratios relative to the S&P 500-stock index that are less than a company's historical norms. International Dairy Queen showed up six months before Buffett scooped it up in October, 1997, Murphy says. One pick: Office Depot ODP. The Industry Value screen at StockSelector.com can help you find out if a stock is priced fairly relative to others in its industry. Another way to look at equities is StockSelector.com's Present Value screen, which gives the fair value of a stock based on book value, earnings estimates, and inflation adjustments. It shows that though Nautica Enterprises NAUT is trading around $14 a share, it really may be a $20 stock. Yahoo! Finance also lets you run quant screens. Say you want to find large-cap regional bank stocks with p-e ratios of 10 to 30 that are rated ''buy'' or ''strong buy'' by many analysts, sell for $10 to $50, and have estimated one-year earnings growth of 25%. Yahoo!'s picks: Bank of New York BK and First Tennessee National Corp. FTEN. To get a handle on the broad market's valuation, Dismal Scientist and MarketTrak have answers. Say you think corporate profits will grow 7.5% over the next 12 months and the 10-year Treasury bond yield will average 6%. In that case, says Dismal's Stock Market Valuation Calculator, the S&P 500 is overvalued by 31.3%. At MarketTrak, the Market Safety Index (MSI) tells you if stocks are reaching perilous highs by looking at the difference between the earnings yield of the S&P 500 and the 90-day Treasury bill yield. Right now, the MSI is at -1.5 on a scale from +3 (most undervalued) to -3 (most overvalued). The 1987 crash registered a -2.3. You got a C in calculus? Tap into the Net's quant models and crunch numbers to your heart's desire. BY MARCIA VICKERS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
 Your Guide to Online Investing COVER IMAGE: Our Guide to Online Investing CHART: The Biggest Online Brokers TABLE: Broker Scoreboards TABLE: Online Brokers That Meet Your Needs Gotta Do the Legwork ``A Diversity of Thought'' Testing the Waters Commentary: Why Old-Line Firms Need New Online Tricks TABLE: Full-Service Dream The Right Tools for the Right Trades Street.Cop TABLE: Smart Investing on the Web TABLE: Web Resources for Online Investors Rocket Science Made Simple TABLE: Quant for a Day How to Seal a Great Bond Deal TABLE: Where to Buy...And Get Info What to Read: The Good, the Bad, and the Terrible TABLE: Wired-Up Investing Books Investor Beware of Web Talk TABLE: Separating Fact from Fiction TABLE: Cross Checkers Smells Fishy? Tell the SEC This EDGAR Is a Real Know-It-All TABLE: Searching the SEC Commentary: Analyst Calls: Let Investors Listen TABLE: Calling All Netizens The Barker Portfolio: A Battle Plan for Accidental Investors Inside Wall Street: Wells Fargo Online CHART: The Rise Trails Other Banks Inside Wall Street: Bidding for 3COM? CHART: Prior Takeovers Fizzled Out Inside Wall Street: A TV-To-Net Linkup CHART: ACTV's Rise Is Due to E-Commerce INTERACT E-Mail to Business Week Online | |||
