In Chapter 3 of Accounting for Value, Professor Penman presents an useful method for helping an investor to evaluate the risk of an equity.
Often, there is risk in stocks whose value is dependent on long-term growth. (Think Internet stocks in the late 1990s.) Professor Penman's method helps an investor to anchor on the accounting of an equity and identify how much of a stocks current price is dependent on growth.
We are tremendous fan's of Professor Penman's method because it is an excellent tool to help us to evaluate risk.
Here at Prudena, we offer an automatic stock screen based on the method outlined by Professor Penman for the S & P 100 - absolutely free.
What used to take a half an hour of hunting around is now available in seconds.
Enter you portfolio and evalute your holdings. Start to understand the possible threats and opportunities in your portfolio.