In a previous blog post, I walked through how Microsoft Excel calculates all of the variables for its LINEST function (i.e., multiple linear regression) except for the variable coefficients and their standard error, but promised to revisit LINEST.  This blog post directly addresses how to calculate manually the variable coefficients as well as their standard error....

In my previous post I highlighted the flaws associated with Beta (β), in this post I would like to explore the proper use of Beta. Studies have shown that managed portfolios only outperform the S&P500 Index about 1/3rd of the time in both bear and bull markets - this means that for 2/3rds of the time it is better to just invest your money in an index fund, and...

Whether you are an employee, a business owner, or a shareholder, you may have wondered what an incremental dollar of investment is worth to your company. First it depends upon the cost of funding (F%) for an incremental dollar of investment ($I), and second the return (R%) that you earn on that incremental dollar of investment.  The dollar value ($V) created by the...

In my previous two posts regarding the Markowitz Portfolio Theory, I did not consider the dividend yield in the optimization to reduce the complexity of the model.  In this post I will explore the impact of adding the dividend yield to portfolio selection, plus verify the stock’s selected by checking if they are presently undervalued. You can download the...

When approaching data for modeling, some standard procedures should be used to prepare the data for modeling: First the data should be filtered, and any outliers removed from the data (watch for a future post on how to scrub your raw data removing only legitimate outliers). The data should be normalized or standardized to bring all of the variables into proportion...