The Value Line Investment Survey analyzes 1,700 companies using an opportunity ranking to predict future stock performance. The survey includes three sections and is traded as the Composite Value Line Index, an equal-weighted index.
The Value Line Investment Survey is a published analysis of approximately 1,700 companies listed on the New York Stock Exchange (NYSE), Nasdaq, and over-the-counter. The Value Line Investment Survey uses an opportunity ranking to predict the future performance of stocks.
This ranking is the result of a proprietary calculation that attempts to predict the performance of each stock in the survey against every other stock over the next six to twelve months. According to the company’s website, www.valueline.com, a portfolio of stocks ranked number one by opportunity from 1965 and, updated at the beginning of each year, would have earned 28.913 percent through the end of the year. December 2008. The Dow Jones Industrial Average gained 1,355 percent in the same period.
The survey itself consists of three parts. The Ratings & Reports section includes a single page report on each company. The Summary and Index section includes an index of all stocks in the survey and information to help investors select stocks for their investment objectives. The Selection and opinion section includes forecasts, statistics and model portfolios. Many investors who subscribe to the Value Line Investing Survey keep each week’s survey, storing it in large green or black folders provided by Value Line.
Stocks included in the Value Line Investment Survey are also traded like an index. Known as the Composite Value Line Index, the index is traded on the futures market at the Kansas City Board of Trade. The index is calculated using an arithmetic average. This method consists of adding the percentage change of all the stocks in the index and then dividing it by the number of stocks in the index. This method results in a value that more closely resembles the change in a portfolio that contained all stocks in equal amounts, compared to the geometric average, which was used by the Value Line until 1988.
The Value Line Composite Index is an equal-weighted index, sometimes called an unweighted index. This means that each stock has the same weight in the index, instead of being weighted based on its market capitalization. In contrast, the Standard & Poor’s 500 Index, also known as the S&P 500, is a market value-weighted index, with each stock weighted according to its market value. An equally weighted index is less likely to have the value of the index dramatically affected by the performance of a single stock.
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