Stock Engineering re-assesses each week all the stocks in its universe (currently all stocks quoted in Paris, Amsterdam, London, Milan, Brussels, Zürich and the German markets of XETRA).
Stock Engineering publishes an opinion on each of these stocks. Useful opinions, called OREC
OREC stands for Overall RECommendation, i.e. a summary recommendation generated for each stock by our algorithm and which takes into account various fundamental, technical and behavioral parameters. The OREC on a stock can be « Recommended », « Can be kept » or « Inadvisable ». On Stock Engineering’s website, « Recommended » is always associated with the color green, « Can be kept » with a pale color, either beige or ivory, and « Inadvisable » is always shown in red.
can take three values: Recommended,Can be kept , Inadvisable.
These recommendations are based on :
• An analysis of the company’s stable fundamentals
• An analysis of the stock’s effective perception by the market (technical and behavioral analysis)
• Recent changes in the opinions published by analysts about the stock
These analyses will not just enable you to identify quality companies whose stock is doing well on the market. You will also be able to detect, from among those « quality stocks », those that have been « recently primed for a rise », i.e. those whose price is likely to jump up in the very next days.
Conversely, you will be able to identify stocks whose growth potential is momentarily exhausted. Such stocks should not be kept in your portfolio at that time, even if they are « blue-chip stocks » with an excellent reputation, strong earnings etc. We consider that the price of such « inadvisable » stocks has already integrated all that information, and that no known, rational and quantifiable element is likely to send the price of such stocks upward in the coming days.
For your own stock portfolio we offer you the possibility to choose between a highly dynamic style (the « short system ») and a moderately dynamic one (the « long system »).
In the short system you will only buy stocks with a « green » OREC (ideally, stocks whose OREC has just turned green). You will sell them as soon as their OREC is downgraded from green. You will thus never keep « yellow »or « red » stocks in your portfolio.
In the long system you will only buy stocks with a « green » OREC (ideally, stocks whose OREC has just turned green). You will sell them as soon as their OREC turns red . You will thus keep only green and yellow stocks in your portfolio .
A “fresh” list of stocks recommended for purchase is created each week by Stock Engineering. It is available at any time and with no restrictions to our subscribers (“ Recommended stocks ”). For the time being this list is also available to non-subscribers through our à la carte search functionality, at a price equivalent to 10 stock searches (note that the weekly list of recommended stocks includes much more than 10 stocks)
Whenever you buy a new stock , whether to replace a stock you are selling or to expand your portfolio, you should always use our market forecasting tool to make sure the market on which you intend to buy, as well as the targeted sector within that market, are « green » as well. Never buy against market trends, because « an ebbing tide brings down all boats ».
You should also make sure that you do not « put all your eggs in the same basket ». Diversify between marketplaces and sectors. Our weekly list of
recommended stocks usually provides enough choice for such a diversification.
And finally, make sure that your transaction costs do not put too put too much of a burden on your gross performance .
Define a ceiling for transaction costs, e.g. 1/4 or 1/3 of gross performance.
If this is the case, the first thing to do is to make sure that your broker is competitive. Costs should never exceed 1% of the total transaction value.
For that reason, you should not invest into too many stock lines or split your sales or purchases. From 5 or 6 lines already, your risks start coming under control (better spread of risks related to volatility as well as sector and geographical risks)
If you cannot reduce your costs further and you are using the short system, it may be advisable to reduce your portfolio turnover by keeping some stocks with a « can be kept » OREC. If you are using the long system, it may sometimes be preferable to stay out of the market and to wait for better times. A dynamic portfolio generates higher costs than a « buy and hold » approach, but at least you do not have to stay in the ring while you are being beaten into a pulp in a corner !
The stock assessment system developed and used by Stock Engineering is serious, logical, rigorous and dependable. The "Basics of the Method" section will convince you
.
Nevertheless, the fact that this system generates extremely easy to use indicators should not make you think that it is itself simple. Stock Engineering bases its analyses on the more recent and reliable financial information – we receive a continuous electronic feed of information from the REUTERS agency. This information is processed by an algorithm using powerful and efficient mathematical models that only real professionals could design.
If you are interested and if the "Basics of the Method" section cannot provide you with all the answers you want, feel free to attend one of the conferences we hold on a regular basis – there you will get the chance to ask all your questions.
METHOD 
Recommended, 
Can be kept , 
Inadvisable. 
