Why is ProThinker able to add value to Stockbroking Companies?
ProThinker provides quantitative stock analysis reports that are objective, accurate and verifiable.
Objective – Since our reports are quantitative-based without any human input, we are able to provide you with reports that are objective.
Actionable – It is possible to value stocks based on different methods. For example, stocks could be valued based on their earnings, sales, cash flows, book values or dividends. However, valuing a stock by different methods will give you different values. Take for example Apple Inc. These are the different values of the stock based on different methods.
Depending on which method you choose, Apple’s stock could be grossly undervalued or overvalued. The range of values is too wide to be useful for investors.
ProThinker also uses multiple methods to value a stock. However, instead of giving you many values, we test all the different combination of indicators and give you the one combination that best explains the stock price. Usually, no single indicator can explain a stock price sufficiently. For example, some investors may look at a particular stock’s Price to Earnings while some may look at Dividend Yield. Therefore, a stock’s price is often affected by different indicators at the same time. Rather than guessing which indicators explain the stock price, we let the data find the combination of indicators that mathematically explains the stock price best. This combination approach almost always explains the stock price better than any single indicator.
Verifiable – When valuation indicators are used by itself rather than in combination, different values arise, and investors are forced to choose which indicator to use, often without back-testing to make sure that the indicator they choose has explained the stock price well. We plot our chosen composite indicator together with the past stock prices so that you can verify the accuracy for yourself.
To illustrate, the Composite Valuation Indicator for Amazon’s stock is plotted below. We can see how effective the Composite Valuation Indicator has been in explaining past stock prices and therefore can have the confidence to rely on it to predict future prices.
How is ProThinker able to add value to Stockbroking Companies?
Generating revenue from larger stock coverage
There are so many companies listed in the stock market. Yet stockbroking companies tend to focus only on the a small percentage of these stocks due to the high cost of hiring analysts. With our quantitative stock reports, stockbroking companies can provide coverage of many more stocks, thereby increasing stockbroking income.
Giving a unique value proposition to your clients
With stockbroking firms covering the same few stocks, it is also difficult to demonstrate a unique value proposition and convince clients to trade through you. Our quantitative coverage of not so well-researched stocks allow you to stand out from the rest of the competition.
Providing your clients with previously untapped investment opportunities
If your research coverage consists of stocks similar to those covered by other stockbroking companies, there is less opportunities for your clients to make profit. This is because when there are many analysts covering the same stocks, the market for these stocks are efficient and there are few mispricing opportunities. By providing your clients with reports of not so well-covered companies, you are increasing the chances of them profiting from their investments.
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