AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF)

Companies / Tech Stocks Jul 20, 2021 - 01:37 PM GMT

My initial attempts some years ago at feeding raw financial data such as PE ratios, EBITA, PEG into neural nets failed to deliver anything useful, clearly it was not going to be that easy! What's required is to preprocess the data to make the various inputs better gel together rather than producing noise which means input from human intelligence (me) to preprocess the data before training the neural nets, and so was born what I call the Expensive / Cheap (EC) Indicator that includes 15 stock financial indicators all fine tuned manually to resolve in better being able to discriminate between stocks in fundamental valuation terms, add price to that to become 16 inputs. that have been preprocessed as per their formulation into the EC indicator.

IMPORTANT POINTS REGARDING USE OF THE ASVF6

1. That it is trained on bull market price and EC financial data, so it is unknown how it would behave during a bear market, probably over estimate future outlook for a stock prices, but it's unknown as there is a lag between price movements and corporate financial data. I have thrown bad numbers in and it does still tend to project higher prices but to a far less extent, but it does have a bull market bias.

2. That it is unknown how accurate the valuation forecasts will turn out to be as it is not actually forecasting price i.e. trend analysis, but price in terms of valuations. How much a stock will be worth in relative terms compared to what has come to pass under it's EC values..

3. That the data is limited to the stocks that I generate an EC for until I get around to writing better routines to auto generates the data to calc the EC with error checking..

4. That the readings are volatile i.e. there is very little smoothing of the forecasts i.e. if Google fell today by $400 then the forecast would fall by about roughly $400 to track the price lower, if it rose by $400 then the forecast would go up by about $400, So it is definitely not a trading tool but rather a relative future prospects valuation tool.

5. That it is still developmental i.e. the EC indicator is constantly being refined which means that preprocessing for inputs changes which can effect the forecasts i.e. I may discover a flaw in the formulates that requires a rethink, though which was the whole point of creating the EC indicator as if the EC indicator is useful than the preprocessing should also prove useful.

6. The key here is preprocessing the data, that it is always being fine tuned as per the construct of the EC indicator.

How I Use ASVF6 - Percent Upwards Pressure (PUP)

(Note all data in the AI / buying levels calc's are based on data upto 14th July 2021)

In my opinion the most important use for this tool is in the 2nd new column on my table AI stocks portfolio table, the Percent Upwards Pressure (PUP) which is basically the ASVF divided by the current stock price for percent change.

What this shows is literally the amount of UPWARDS pressure a stock is currently experiencing as the price as it is being PULLED towards it's future forecast which to me is far more useful than an always distant 3 year price forecast.

For instance it tells me which stocks are likely to have mild or no maybe even no price corrections due to the fact they have a high degree of upwards buying price pressure which in market terms translates into a LOT of investors waiting on the sidelines for the price to drop so that they can BUY! So what happens? The price does NOT drop instead it continues trending higher frustrating waiting to buy investors.

This is one of the key problems we have when trying to buy a deviation from the high. What do we do if the stock FAILS to fall? FAILS to see sense and follow the other stocks lower. Well we now get to peak under the markets hood and have advance warning of stocks that are going to be strong in relative terms come what may.

So for instance here I am sat waiting for Nvidia to correct towards my buying levels after selling all of my holdings at $715, having ignored the AI's advice that it would be a bad idea to SELL Nvidia stock, and what did Nvidia do it continued rocketing higher to well above $800 and is parked at $820 as I write (14th July 2021), and even after updating the EC levels the AI is still telling me (+171%) that it is not a good idea to sell Nvidia.

But what is of use right now is the Upwards Pressure Indicator.

It gives an alternative opinion on whether I should be buy, sell or hold an AI stock, an independant indicator. However, definitely not an automated trading system!

What I am actually looking for is if the indicator is telling me something significantly different, so that I can take a deeper look at that stock.

Whilst Yes having a distant price target can be comforting, but 3 years is too LONG! Especially for a primitive AI! And especially as we all know that company reports can be suspect, that can show huge swings between quarters especially at market junctures, so I would not take the 3 year valuation forecasts too seriously but instead focus on PUP.

AI Stocks Buying Levels Plus ASVF & PUP

This article is an excerpt form my latest in-depth analysis that contains AI stock 3 year valuation forecasts and 3 high risk reward chinese stocks for the next 5 years. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

AI Predicts AI Tech Stock Price Valuations into 2024, Time to Buy Chinese Tech Stocks?

Contents:

AI Stocks Value Forecaster (ASVF).
How I Use ASVF6 - Percent Upwards Pressure (PUP)
AI Stocks Buying Levels Plus ASVF & PUP
AI Stocks Portfolio Buying Levels
Dow Stock Market Trend Forecasting Neural Nets
Pattern Recognition
Trend Analysis Preprocessing
Crossing the Rubicon With These Three High Risk Tech Stocks
Cheap Chinese Tech Stock 1
Cheap Chinese Tech Stock 2
Cheap Chinese Tech Stock 3
CME Black Swan

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Stock Market Summer Correction
REPO Market Brewing Financial Crisis Black Swan Danger
Margin Debt Bubble
US Bond Market Long-term Trend
Michael "Big Short" Burry CRASH and HYPERINFLATION WARNING!
Michael Burry's Track Record
Michael Burry's Portfolio
Investing During Uncertainty
AI Stocks Portfolio Buying July Levels Update
HEDGING AI Stocks Portfolio
Crypto Bear Market Accumulation State
Bitcoin Bull / Bear Indicator
Market Oracle AI Coin Thoughts
Biotech Brief

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Stock to Flow Infinity and Beyond!
Bitcoin, Crypto's and the Inflation Mega-trend
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Bitcoin Trend Forecast
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Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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