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Executive Summary: Important One-Page Reading For All Stock Investors

The price of a stock can fluctuate up and down almost without limitation, but the rate of return of the same stock, as shown by the recently patented Infinite Spreadsheet Stock Valuation System (Pat. No. 6,078,901), is inevitably confined to a range usually between 10% and 30%. The Infinite Spreadsheet establishes a mathematically rigorous relationship between the price and all the factors affecting the price in a time space extending to infinity. It is a mathematical interpretation of the price in terms of all the factors affecting the price, including, in particular, the rate of return. Having taken consideration to infinity and being all-inclusive, it has captured the reality, in this case, the stock market, in its entirety. The Infinite Spreadsheet is the first and the only financial analysis method to provide full disclosure and full accountability of future investment expectations. The Infinite Spreadsheet can calculate the rate of return of a stock with the given market quote after around 10,000 iterations and in about ten seconds. The calculation is completely realistic and based on dividend, which for most growth companies might only in 15 years from now. It is also possibly one of the easiest investment analysis methods to use, for it is completely automated and usually needs just five readily obtainable inputs (from web sites, such as Yahoo Stock Finance/Quotes) for each calculation, as given below (the other 50+ inputs are generally the same and standardized):
1. What is the First Year Earning Per Share ? $__________
2. What is the Next Year Earning Per Share ? _____%
3. What is the % Growth Rate For The Next Five Years ? _____%
4. What is the Dividend Per Share ? $__________
5. What is the Stock Quote (Price) ? $__________

In practice, however, the stock market is full of imperfections. Although the Infinite Spreadsheet can capture the entire market in its infinite net mainly by constraining the rate of return within the inescapable range of from 5% to 100% (very few stocks are above 30% or below 10%), it is itself caught between the not-yet-rational investors, who determine the stock price or quote, and the somewhat irresponsible analysts, who provide the earning estimates. The Infinite Spreadsheet merely relates in a mathematically rigorous fashion the price to the earnings. Thus, only when the earning estimate is correct, the prediction of over and under-valuation by the Infinite Spreadsheet becomes infallible. The market imperfection is due mainly to the use of finite spreadsheet, such as finite cash flow analysis (appreciation of the resale price). The incorrect methods of investment analysis can cause the appreciation of a stock price or earning to feedback on the appreciation itself resulting in an appreciation instability. Taking market imperfection in to consideration, an investor should buy an undervalued, low-risk (with high market cap), stock whose price is rising, not falling. In conclusion, an infallible process of stock investment involves the following two steps:
(1) Use the Infinite Spreadsheet to track under-valued stocks, which have their rates of returns above 30% +/- 5%, depending on their risks, and have their price movements flat or downward,
(2) Buy the stocks when the price movements start to execute the appreciation instability and have turned from downward to flat and then to upward by about 10% from the lowest price, and sell the stocks when the rates of return drop below 20%+/-5% or whenever they move down by more than 5%; the undervalued stock is capture above 30% return and what goes up must come down.
When the Infinite Spreadsheet is popularly used, it will solve the problem of over-valuation by confining the rates of return of all the stocks to within a narrow range, say, between 10% to 20%. But, before then, its users can still have a last chance to accumulate some under-valued stocks.

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