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Meany people asked if the Real Stock Value algorithm work or not and how did I validate it.

In response I created price and value plots based on historical data.

Based on these plots the tool is able to detect good buying opportunities however it works best for slow growing companies, and gives better results for some industries than for others.

In the future if we will have the financial resources we will add different parameters for different industries.

What is money?

Money is a tool that helps transactions, so people do not need to rely on barter. This type of commerce is much more efficient than barter, because in the case of barter, two people need to meet, who need each other merchandise, which is difficult. If we have money in that case any person with money if finds a good or service that he wants, the transaction takes place.

That is why even in times where there was no actual money, some kind of asset emerged, accepted by almost everybody, for example cigarettes, chocolate or watches during the world wars.

Price to Sales ratio is another number to look at. A company’s earnings, profits, or even book value easily can be manipulated, however it is really hard to manipulate sales numbers, and that is why Marc Faber prefers this metric when evaluating markets.

For every industry there is a profit margin that you can expect from a well-run company. Based on the sales, possible profits can be estimated. If the profit margin is very high, probably it will not stay there for long, because competition will appear, and push down prices.

As I mentioned earlier probably the most used metric to determine a value of a company is Earnings. This is why the most heavily used tool to determine if a stock or an index is overpriced is the Price to Earnings ratio, or some kind of modified version of this. The reason behind this is quite obvious. The Price to Earnings (PE) is the inverse of returns, so the higher the PE the lower the returns, that we can expect. A PE of 10 means 1/10 in returns or 10%, a PE of 20 means an 1/20 in returns or 5%.

The Real Stock Value contrary to other price forecasting software is based on value investing and not on technical investing.

Legendary investors like Warren Buffett, Jim Rogers, Mark Faber, Benjamin Graham, Robert J. Shiller, and Philip A. Fisher are using this approach.

Jim Rogers famously said: "I haven't met a rich technician."