Equity analysis has for too long been the bastion of analysts at banks and hedge funds. Touting complicated models and jargon, the financial industry has unfortunately obscured the essence of financial analysis, leaving everyday investors to fend for themselves. Some great websites have sprung up to help individual investors, but unfortunately, these sites are equally hard to understand. More importantly, they do not give investors a way to work together. Every company is presented with its own unique models and analysis, and investors lack a common framework that would allow them to communicate and collaborate. But technology and crowdsourcing are quickly changing the playing field. New tools can provide modeling capabilities that were far beyond the reach of the everyday investor just a couple years ago. For every challenge currently faced by individual investor, technology has a solution-- and Prudena puts these solutions together in one easy-to-access, easy-to-learn, and easy-to-use package.
Solution: We are not here to say the financial analysis or investing is easy. It is as complex as it is rewarding. But we believe that it is within the reach of the everyday investor. Our platform requires zero prior experience, and allows you to minimize the time required to build a powerful model. And by joining our community of investors, you gain an edge in knowledge that no individual investor can have on his own.
Solution: Every seasoned equity analyst has their own proprietary models for each individual equity. While in some cases this is useful, the lack of a standard model prevents people from working together easily. The result of this is that more time is spent looking at the model itself rather than evaluating the assumptions and inputs. Prudena presents several standardized models that are easy to understand for any investor, at any level of experience. These models are then applied uniformly to equities so that the discussion can focus on the inputs and assumptions-- and not on the model itself. A common model makes it easy for us all to speak the same language.
Solution: Conventional financial modeling is very poor at handling the ambiguity of investing. Far too often, analysts are providing exact answers to questions filled with uncertainty--the convention on Wall Street is to give exact price targets to the penny. This is at best inappropriate and at worst misleading. Prudena strongly believes that it is essential to respect the ambiguity inherent in predicting the future. Our innovative Monte Carlo simulation-based modeling tool allows investors to harness the power of "fuzzy logic"-- instead of chasing a single number, we input a range of reasonable values, and then play out a simulation thousands of times to mimic the uncertainty of the markets.
Solution: At Prudena, we are in the school of Value Investors. We believe that every investment strategy should be grounded in the economic fundamentals of the business, and that these fundamentals should form the core of any modeling approach. We recognize that every business is different, but we believe that there is a common set of tools and models that can be used to perform analysis of a business.
Whether it be Wikipedia or Estimize, crowdsourcing has again and again shown itself to be superior to relying on expert opinion alone. At Prudena, we believe that equity analysis is no different. By working together and sharing a common framework, we can dramatically reduce the effort required to perform equity analysis while simultaneously improving quality. To achieve these goals Prudena:
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