LATEST SPREADSHEET CORNER ARTICLE:
Calculating Mohanram’s G-Score Using SI Pro and Microsoft Excel
First Quarter 2014
In the October 2013 issue of the AAII Journal, we presented a growth-stock screen constructed on the research findings of Partha Mohanram. The article, “Finding Winners and Avoiding Losers Among Glamour Stocks,” looked at stocks with high price-to-book-value ratios that possess financial qualities that should help them succeed in the future. The screen used data from AAII’s stock screening program and fundamental database, Stock Investor Pro.
Mohanram created a scoring system that related company information to industry/sector medians. While we could have captured the spirit of the screen without the industry comparisons, we determined that we could export relevant data from Stock Investor Pro into an Excel spreadsheet to perform the analysis on a sector level. In this Spreadsheet Corner, we present how we used Excel to perform our analysis. We provide the Excel export file for download from the Computerized Investing website, and any cell references in this article relate to that file.
Most academic research suggests that investing in glamour stocks is a losing proposition. On average, firms with high valuations determined by factors such as the price-to-book-value ratio underperform the market over the long term. While the market does a good job of valuing securities in the long run, in the short term it can overreact to information and push prices away from their true value.
Part Two of our series on bond calculations focuses on Excel functions for measuring value and comparing bonds.