On 12/31/1999, investors across the western world were convinced that Microsoft would be the fastest growing and most profitable company in the coming years. We know this because, at that time, Microsoft was the most expensive stock in the western world, and it was owned by nearly mutual fund, pension, endowment and retail investor in America.
Several smaller companies, however, outperformed Microsoft. Equity Risk Sciences identified these standout performers—Deckers Outdoor, Old Dominion Freight Line and CorVel—through its proprietary low-risk PRI™ (Price Risk Indicator) and FRR™ (Fiduciary Risk Rating) stock ratings. Deckers outperformed Microsoft 118-fold, while the other two stocks outperformed Microsoft by 32-fold and 5-fold, respectively.
ERS’s ratings for Microsoft at the time, by contrast, were extremely poor. Over the following decade, investors in Microsoft lost 36% after 10 years of holding the stock.
The table at the bottom of the chart provides ERS’s December 31, 1999, ratings for each stock, offering a striking comparison of how valuation metrics aligned with long-term performance. These insights demonstrate the power of disciplined, quantitative analysis in identifying investment opportunities beyond the most popular Wall Street recommendations.
Analysts as well as investors need to ask numerous questions about how they select stocks.
25 years ago, what methods did the largest Wall Street firms use to determine the future prices of stocks? Further, what methods did they use to analyze the risk of loss from investing in stocks? Are the methods analysts use today more scientifically advanced and reliable than the methods they used then?
How could the biggest Wall Street firms and mutual fund companies in the world miss these three stocks, each earning between 5 and 100 times more profits than the stock they recommended?
The results are clear. Equity Risk Sciences is ready to help investment advisors reduce, avoid and prevent losses. As the data shows, ERS’s ratings can result in very favorable profits as well.
Call me for more information about stocks that are safe, with extraordinary profit potential.