旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴커 � TURBO SOFTWARE Stock Evaluation Manual � 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴켸 NOTE: TO USE THIS SOFTWARE YOU MUST HAVE: 1) AN IBM OR TRUE IBM COMPATIBLE COMPUTER. 2) A CGA, EGA, OR VGA GRAPHICS CARD. 3) An IBM compatible printer. That means the printer can do a graphics screen dump when you hit the ALT/PrtSc keys. The chart below uses straight lines for a boarder. In SideKick, you would hit CTRL/Q and then G to see the IBM extended graphics characters. Otherwise, the outside boarder is made up of the letter "D" going across, and the letter "3" going down the sides. 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� �*************************************************************� �*旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴�*� �*� Hit ALT PRT/SC and see if you can print this! �*� �*읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴�*� �*************************************************************� 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� 4) Your DOS file, GRAPHICS.COM, must be loaded into memory first. 5) The print-out will include the date you prepared a report. It gets the date form your computer's system clock. Be sure the system clock is set before you print a hard copy. WHAT IS IT: This program will mimic the N.A.I.C.'s Stock Evaluation and and Stock Comparison Forms. When you request a printout, all the information will be printed as a three page report to your printer. The first page is a semi-log plot of you company's data. The second page prints Part 2 through 5 of the Stock Evaluation Form. The third page is a printout of the Stock Comparison Form. Since it only contains data for the current company you are studying, you will overlay the printouts later to form one large spreadsheet for easy comparison. The program is not copy protected. The ShareWare Version is a complete package with one omission, It can not save data to disk. To save your data to disk, you need a registered version of the program. Registered Versions cost $35.00 Post Paid. The can be ordered from: Paul Bergsman Turbo Software 521 E. Wynnewood Rd. Merion, Penna, 19066-1345 (215) 667-2449 If you purchase the registered version , you agreed to abide by all copyright laws by your action of breaking the seal and opening the software package. FAST START-UP: 1) This program will print both graphics and text to your IBM compatible printer. In order to print the graphics, you must first load a small COM file, GRAPHICS.COM, which is part of your DOS disk. After booting you system, switch to the drive with you DOS disk. Enter "GRAPHICS.COM" at the prompt. 2) If you have a CGA card and another graphics card installed in your computer, turn both monitors ON. This will permit you to see all graphics on one monitor and all text on the other, at the same time. Relax, It's all automatic, you do not have to touch any dip switches. 3) Insert this disk in DRIVE A. 4) At the DOS prompt, type A:NAIC. Registered programs must now enter their name and a password. 4a) You will be asked to enter your name. Enter your name in upper or lower case letters. PRESS 'ENTER' 4b) You must now enter your password, unless you are using the shareware version. To get a password, call me at (215) 667 2449. If it's a toll call, call collect. I will tell the operator that Mr. Bergsman can not come to the phone and to give me a number to return the call. Leave your phone number and I will call you right back and give you a password. I pay for the return call. 5) To see how things work, at TURBO EVALUATION 's main menu, select A. This will permit you to select a data file, ABT.DAT, from disk. 6) You can now look at the many parts of my software. Play with the data all you want. None of the changes you make will become final until YOU CHOOSE to save the data, with selection E, on the main menu. HARD DRIVE OPERATION TURBO EVALUATION in not copy protected. You may make as many back-up copies as you want, for your own use. YOU ARE NOT permitted to make a copy for your friends, unless it is the ShareWare version. You can copy the program onto your hard disk drive if your hard disk drive is C, by placing the original disc in drive A and typing the following; COPY A:*.* C:*.* If you made the C drive a RamDisk and D is your hard drive, type the following: COPY A:*.* D:*.* RAM DISK OPERATION You can save wear on your hard drive and floppies by coping the program onto a RAM disk before running In addition to less hard- drive wear, the program will run a lot faster form a RAM disk. The main reason for using a ram disk is Program Overlays speed. The program is too big to fit in a 64k segment of memory. As each section of the program is used, that section of code is loaded into memory from your disk drive. We could have compiled an EXE file, but the main goal was to create a program that would run on as many different computer configurations as possible. EXE files take up more memory than COM files. You must remember not to save newly collected data to your ramdisk. Save all data to a floppy or Hard Disk. If you do forget, all your ram disk data will be erased when the computer is turned off. WHAT YOU GET: You will find it helpful to use the NAIC manual. $10.00 from the N.A.I.C. All the technical terms used in the program are fully explained in the manual. If you have never used the NAIC forms, have no fear. TURBO EVALUATION follows the NAIC forms almost to the letter. You can read the manual for a full description of what is going on. The main advantage to using the program is in saving time. The computer can do the number crunching a lot quicker than you can on paper. You can analyze a dozen stocks in the time it would take you to do one analysis by hand. You can play "what if" over and over again without tiring. The program will make the needed calculations over and over without mistakes. However, YOU still make all the judgment calls. FUNDAMENTAL ANALYSIS The N.A.I.C. uses fundamental analysis, to analyze growth stocks. Fundamental Analysis suggests that the people who best understand a company are the company's management. If we look at the company's performance for the past ten years, we can get a pretty good feel for the quality of management's decisions. This process only works for Growth Companies not banks stocks, bonds, mutual funds, ect. To analyze you need other criteria. The investment clubs I am involved with only invest in growth stocks which meet fundamental analysis standards. The goal of this program is to save investors time when analyzing stocks following the principals of fundamental analysis. HOW TO FILL IN DATA The box near the bottom of the spreadsheet screen keeps you informed as to which keys are active. You enter data just like you would with a pocket calculator. If you make a mistake, just hit the delete key and start over. When a company lost money in one year, just enter that data as a negative number. The program knows that you can not plot negative data on a semi-log chart. It will make all necessary adjustments before trying to do a plot. You get to play "what if" in this section. After running through the program, you may think "what if the data was different for this year". You can go back and change any of the data you entered again and again until the three page report is just the way you want it. HOWEVER, I strongly suggest you save the raw data first. Play all you want with the numbers AFTER the original data is safely stored on disc. PART 1, Semi-Log Chart The computer will plot a semi-log chart based on the data you have entered. If you have two displays, the program will automatically switch to the Color Graphics Card to display the plot. After completing the plot, the program will return to the Monochrome Display Monitor and display the rest of the report while keeping the semi-log on the Graphics display. The process is automatic. HOW TO READ A SEMI-LOG CHART A semi-log chart plots compounded growth as a straight line. By LOOKING at the chart, you can see the following relationships: 1) E/S growth should not be greater than sales year after year. Earnings come from Sales. If earnings are growing faster than Sales then the company has some other income besides selling it's products. You should look further for possible problems. Sales should be the top most plot. The program plots values based on growth rates, placing the smallest growth rate at the bottom and the largest growth rate on the top. Stock prices are always plotted between E/S and Sales for easy comparison. 2) E/S and Sales plots should be parallel to each other. In other words, their compounded growth rates should be about the same. Since the two values are related to each other, if they are not sharing parallel growth, look further to determine why not. 3) High / Low process should parallel the other two plots. Stock represents a partial ownership in a company. If stock prices do not parallel E/S and Sales compounded growth, then you may have an over valued or undervalued stock. If the stock's price is climbing faster than the other two, the stock's price is overvalued, if the stock's price is climbing slower that the other two, the stock may be undervalued. 4) The general slope of the lines should be straight or curving slightly upward. If the lines tend to level off in the most receint years, this might indicate a growth company that has run out of steam. 5) Growth should be steady. If the plots are irregular, then the company does not have a stable 10 year track record. The next year may be very good, or very bad. You have no way of knowing from their past performance. They may be a good company to invest in, but not according to fundamental analysis guidelines. 6) Actual numbers on a semi-log plot are meaningless. The Chart shows the growth relationship between the three plots, Sales, E/S, and Hi-Lo stock prices. You examine the semi-log plots to see the visual relationship between E/S, Sales, and Hi-Lo Stock Prices. You are not concerned with actual numerical values. It is the RELATIONSHIP between the values that is important. Printing numbers on an axis only clutters up the chart. You should note that the program changes the actual values before plotting, so they fit neatly on the chart. The numbers within a group are multiplied by a constant so they can be placed at a particular spot on the graph. That is the same procedure the N.A.I.C. suggests you do on their semi-log grid paper. The program stores the original values you entered form the Standard & Poors data sheet. The values are scaled only for the purposes of a clear semi-log plot. Scaling does not alter the relationships in any way. The program looks at the growth rate for E/S and Sales, finds the smallest growth rate, plots this data starting in the lower left hand corner of the chart, and then plots the other values starting at a set distance above the first. Using this method the plots are clear and should not run into each other. The High/Low stock prices are then plotted half way between the E/S and Sales for ease of interpolation. PART 2, EVALUATING MANAGEMENT The computer makes a value judgment here. First it gets an average for the most recent five years. If the most recent three years are very close to the average, then THE TREND IS NOT DOWN. There can even be a dip in year eight or nine and still have A TREND THAT IS NOT DOWN. Make sure you add your judgment to the computer's when YOU determine if the trend is truely not down! PART 3, Price - Earnings History Part Two is automatic. Information you entered on the spreadsheet is now put through some number crunching and placed in a chart for easy use. Information in this chart will be used in other parts of the evaluation, and on the Stock Comparison Form. PART 4, Evaluating Risk and Reward. You get to play "what if" in this section. Each time you select D, ANALYZE DATA, from the main menu, you can choose a different low price for the next five years. Your choice will effect the whole tone of the three page report. You also get to play "what if" when you select C, UPDATE DATA, from the main menu. Every time you change the raw data, you will change the nature of the three page report. Once you see the kind of three page report you want on the screen, run D, ANALYZE DATA, one more time. This time, get a hard copy of the report. PART 5, Five Year Potential Part Five uses the data from previous sections to compute the percent returned on purchase price, and average yield over the next five years. USING THE STOCK COMPARISON CHART Rather than having different programs do different things, this one program is a complete package. After you have entered the needed data, the program generates a complete report. Both the Evaluation Form and the Stock Comparison Chart are generated at the same time. Since the program prints data for only one company at a time, you may wonder how the information on the Stock Comparison Chart can be used. Simply overlay one Comparison Chart on top of the next forming one very large Stock Comparison Chart. After lining the sheets up, tape them together. If you feel the final sheet is to large, there are several ways to make it more manageable. First, if you printer allows, you can set it to print everything in compressed mode. The graph will not be reduced, but all text will be compressed. Second, I use a different method for the two investment groups I am involved with. Take all the overlayed sheets to a good copy center. Reduce the whole thing to 8 1/2 by 11 inches. Make enough copies of the reduction to give out to all members at your meetings. Third, I take the reduction and make an overhead transparency with it. The building where our clubs meet provide an overhead projector and a screen. Then all the members can follow along on their sheet what I are pointing to on the screen. PLAYING "WHAT IF" Ten years ago, a company may have had one really bad year. The E/S are a negative number ( the company lost money ). The program will compute a very large, and distorted, growth rate. Your research has shown that the company had a good reason for not making money that year. You can go back to the grid and change the value to something in line with all the other data. Now your plotted graph, and computed growth rates will look more realistic. All nagative values are kept, unaltered, in the program's data file. However, the computer might alter the data while plotting to force a fit on the graph. Log-plots do not like negative numbers.