🔎 Intro
This post will conduct the final section of the weighted score calculation for an individual stock, which is the Final Score. The actual final score in this case does not matter since all the data is searched and represented by ChatGPT, of which the accuracy is not guaranteed. I will provide the considerations and next steps instead to further guide the investment decision-making process.
💭 Considerations for Weight Assignment
In the past blogs, ChatGPT has assigned and got final scores for each section. However, the weights for each section are not provided. Here I asked ChatGPT to provide the weights for each section. The assgining process is as below:
1. Relevance to Investment Decision:
Sections that have a higher impact on investment returns or risks should carry more weight.
2. Historical Performance:
Sections that have historically shown to be strong predictors of future performance should be weighted higher.
3. Industry Standards:
Consider industry standards and typical weightings used by professional analysts.
4. Expert Opinion:
Consult financial analysts and industry experts to determine appropriate weightings.
🧮 Suggested Weights:
1. Financial Performance Analysis (Weight: 25%)
Financial performance is a primary indicator of a company’s health and ability to generate profits.
2. Business Model and Diversification (Weight: 20%)
The business model and diversification affect stability and potential for future growth.
3. Valuation (Weight: 15%)
Valuation metrics help in assessing whether the stock is overvalued or undervalued relative to its intrinsic value.
4. Competitive Position (Weight: 15%)
A strong competitive position can lead to sustainable competitive advantages.
5. Industry Trends (Weight: 10%)
Industry trends can significantly impact a company’s growth prospects and market dynamics.
6. Management and Governance (Weight: 10%)
Strong management and governance practices are crucial for long-term success and risk mitigation.
7. Risks (Weight: 5%)
While risks are essential, they are often factored into other sections. A lower weight ensures they are considered but not overly dominant.
📈 Next Steps
1. Comparison:
Compare Microsoft’s total score with industry peers to assess its relative attractiveness.
2. Investment Decision:
Use this score to inform investment decisions, considering it alongside other qualitative and quantitative analyses.
3. Monitoring:
Regularly update scores based on new data to ensure ongoing relevance and accuracy.
⚠️ Data Resource:
The data used in this series of analysis is sourced from ChatGPT. The accuracy of the data is not guaranteed, and it is recommended to conduct further due diligence before making investment decisions.
On another note, I’ve found a data resrouce which is EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system. It is an online public database from the U.S. Securities and Exchange Commission (SEC) that contains financial statements, reports, and other information of publicly traded companies. It could be a valuable resource for future analysis. Link to EDGAR