Automated strategies for investment management

• US 6,317,726 B1
• Filed: 07/27/1999
• Issued: 11/13/2001
• Est. Priority Date: 12/30/1996
• Status: Expired due to Term

• Current Assignee: Netfolio, Inc.
• Original Assignee: Netfolio, Inc.
• Inventors: OʼShaughnessy, James P.
• Primary Examiner(s): Millin, Vincent
• Assistant Examiner(s): PWU, JEFFREY C
• Application Number:
  US09/361,654
• Time in Patent Office: 840 Days
• Field of Search: 705/36, 705/37, 705/35, 705/38, 705/39
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The invention is in the field of using a computer to select corporate stocks for investment. Fifty stocks are selected from a database on the basis of certain criteria. The stocks are acquired in equal proportions, and the portfolio is rebalanced at the end of an annual term. Strategy I: market capitalization greater than $172 million (inflation adjusted figure for $150 million in 1994 dollars.); price-to-sales ratio less than 1.5; earnings higher than in previous year; market capitalization greater than market capitalization three months ago; market capitalization greater than market capitalization six months ago; buy stocks with highest one-year stock price appreciation. Strategy II: market capitalization greater than database mean; common shares outstanding greater than database mean; cashflow greater than the database mean. (creating SET A); price-to-sales ratio less than average for SET A; sales greater than 1.5 times the average for the database; no utility companies; buy the 25 or 50 stocks with the best one year stock price appreciation.

Claims

1. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include selecting stocks of companies with database records indicating;

(i) market capitalization in excess of $172,000,000;

(ii) price-to-sales ratios lower than 1.5;

(iii) annual earnings that are higher than the previous year'"'"'s annual earnings;

(iv) market capitalization higher than the market capitalization three months ago; and

(v) market capitalization higher than the market capitalization six months ago;

(c) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

15. A computer programmed to carry out the steps of claim 1.

16. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 1.

2. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET A; and

where price-to-sales ratios are less than average for SET A; and

(iv) sales that are 1.5 times the database mean;

(c) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

3. A method for carrying out computerized selection of stocks for an investment portfolio of claim 2, further comprising the steps of:

(e) selecting a second set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include eliminating utilities and selecting stocks of companies with database records indicating;

(i) market capitalization in excess of $172,000,000;

(ii) more common shares outstanding than database average;

(iii) cashflow per share higher than database mean;

(iv) sales that are greater than 1.5 times the database mean;

(f) sorting records identifying the stocks in said second set which meet said criteria in descending order of dividend yield into a sorted list; and

(g) making available from the top of said sorted list a listing of a number of stocks;

(h) making available a listing of said sets of stocks.

4. The method of claim 3, further comprising the steps of:

(i) investing half of funds into a laddered T-bill portfolio;

(j) investing half of funds into stocks selected in accordance with claim 3.

7. A method for carrying out computerized selection of stocks for an investment portfolio of claim 2, further comprising the steps of:

(e) selecting a second set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include eliminating utilities and selecting stocks of companies with database records indicating;

(i) market capitalization in excess of $172,000,000;

(ii) more common shares outstanding than database average;

(iii) cashflow per share higher than database mean;

(iv) sales that are greater than 1.5 times the database mean;

(f) sorting records identifying the stocks in said second set which meet said criteria in descending order of dividend yield into a sorted list;

(g) making available from the top of said sorted list a listing of a number of stocks;

(h) selecting a third set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET D; and

where price-to-sales ratios are less than average for SET D; and

(iv) sales that are greater than 1.5 times the database mean;

(i) sorting records identifying the stocks which meet said criteria in ascending order of price-to-sales ratio into a sorted list; and

(j) making available from the top of said sorted list a listing of a number of stocks; and

(k) making available a listing of said sets of stocks.

14. The method of claim 7, further comprising the steps of:

(l) investing half of funds into a laddered T-bill portfolio; and

(m) investing half of funds into stocks selected in accordance with claim 7.

17. A computer programmed to carry out the steps of claim 2.

18. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 2.

5. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET B; and

where price-to-sales ratios are less than average for SET B; and

(iv) sales that are greater than 1.5 times the database mean;

(c) sorting records identifying the stocks which meet said criteria in ascending order of price-to-sales ratio into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

6. A method for carrying out computerized selection of stocks for an investment portfolio of claim 5, further comprising the steps of:

(e) selecting a second set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET C; and

where price-to-sales ratios are less than average for SET C; and

(iv) sales that are greater than 1.5 times the database mean;

(f) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation of stock price in to a sorted list; and

(g) making available from the top of said sorted list a listing of a number of stocks; and

(h) making available a listing of said sets of stocks.

19. A computer programmed to carry out the steps of claim 5.

20. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 5.

8. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include selecting stocks of companies with database records indicating;

(i) a market capitalization in excess of the database mean;

(ii) price-to-sales ratios lower than 1.5;

(iii) annual earnings that are higher than the previous year'"'"'s annual earnings;

(iv) market capitalization higher than the market capitalization three months ago; and

(v) market capitalization higher than the market capitalization six months ago;

(e) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

21. A computer programmed to carry out the steps of claim 8.

22. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 8.

9. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include selecting stocks of companies with database records indicating;

(i) a market capitalization in excess of the $25,000,000;

(ii) a market capitalization not greater than $250,000,000;

(ii) price-to-sales ratios lower than 1;

(c) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

23. A computer programmed to carry out the steps of claim 9.

24. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 9.

10. A method for carrying out computerized selection of stocks for an investment portfolio comprising the steps of:

(a) accessing a database of stock information with a computer;

(b) selecting stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include selecting stocks of companies with database records indicating;

(i) a market capitalization in excess of $150,000,000;

(ii) good trading liquidity; and

(iii) annual earnings that are higher than the previous year'"'"'s annual earnings;

(iv) market capitalization higher than the market capitalization three months ago; and

(v) market capitalization higher than the market capitalization six months ago;

(c) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(d) making available from the top of said sorted list a listing of a number of stocks.

11. A method for carrying out computerized selection of stocks for an investment portfolio of claim 10, further comprising the steps of:

(e) selecting a second set of stocks for an investment portfolio based on information in said database meeting certain second criteria;

wherein said second criteria include selecting stocks of companies with database records indicating;

(i) a market capitalization in excess of the $150,000,000;

(ii) earnings gains for five consecutive years; and

(iii) price-to-sales ratio less than 1.5;

(f) sorting records identifying the stocks in said second list which meet said criteria in descending order of one year appreciation in stock price into a sorted list; and

(g) making available from the top of said sorted list a listing of a number of stocks.

12. A method of carrying out computerized selection of stocks for an investment portfolio of claim 10, further comprising the steps of:

(e) selecting a second set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET E; and

where price-to-sales ratios are less than average for SET E; and

(iv) sales that are greater than 1.5 times the database mean;

(f) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list;

(g) making available from the top of said sorted list a listing of a number of stocks;

(h) selecting a third set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET F; and

where price-to-sales ratios are less than average for SET F; and

(iv) sales that are greater than 1.5 times the database mean;

(i) sorting records identifying the stocks which meet said criteria in ascending order of price-to-sales ratio into a sorted list; and

(j) making available from the top of said sorted list a listing of a number of stocks; and

(k) making available a listing of said sets of stocks.

13. A method for carrying out computerized selection of stocks for an investment portfolio of claim 10, further comprising the steps of:

(e) selecting s second set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET G; and

where price-to-sales ratios are less than average for SET G; and

(iv) sales that are greater than 1.5 times the database mean;

(f) sorting records identifying the stocks which meet said criteria in descending order of one year appreciation in stock price into a sorted list;

(g) making available from the top of said sorted list a listing of a number of stocks;

(h) selecting a third set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria includes market leaders with the highest dividend yields;

wherein market leaders are stocks of companies that are not utilities and that have (i) a market capitalization in excess of the database mean (ii) more common shares outstanding than the average stock in the database (iii) cashflows per share exceeding the database mean;

wherein said stocks create SET H; and

where price-to-sales ratios are less than average for SET H; and

(iv) sales that are greater than 1.5 times the database mean;

(i) sorting records identifying the stocks which meet said criteria in ascending order of price-to-sales ratio into a sorted list;

(j) making available from the top of said sorted list a listing of a number of stocks;

(k) selecting a fourth set of stocks for an investment portfolio based on information in said database meeting certain criteria;

wherein said criteria include eliminating utilities and selecting stocks of companies with database records indicating;

(i) market capitalization in excess of $150,000,000;

(ii) more common shares outstanding than database average;

(iii) cashflow per share higher than database mean;

(iv) sales that are greater than 1.5 times the database mean;

(l) sorting records identifying the stocks in said fourth set which meet said criteria in descending order of dividend yield into a sorted list;

(m) making available from the top of said sorted list a listing of a number of stocks; and

(n) making available a listing of said sets of stocks.

25. A computer programmed to carry out the steps of claim 10.

26. A computer-readable medium having imprinted therein a computer program containing instruction steps such that upon installation of said computer program in a general purpose computer, the computer is capable of performing the method of claim 10.