This analysis is calculated from our open ratings archives. It covers tickers over days ( through ).
Here we divide rated stocks into 5 buckets based on each stock's rating at the close of the previous day. We evaluate the average performance of the stocks in each of these quintiles. For example, how did the top 20% of rated securities do? And the bottom 20%?
This analysis ignores transaction costs, but includes turnover analysis. Turnover analysis (see the Portfolio Details tab) includes adding and removing tickers but not daily rebalancing.
To calculate excess return, we define the "Market Average" each day as the average return of all the stocks we cover.
Humans suffer from normal, natural biases. It's part of what makes us human. Many biases affect how we think about value, risk, the future, the past, and even the historical performance of our own decisions. Often we are not even aware of our biases and will perform mental gymnastics to justify past behavior.
Avoiding biases and conflicts of interest is a core part of who we are.
We serve investors. We do not serve (nor do we charge) the securities we rate. Asking issuers to pay for ratings creates a conflict of interest.
Each rating summarizes a lot of information into one number so that you can actually use it.
With a quick glance, you can see how a company is priced relative to its financials, and adjusted for risk.