VectorVest is a purposeful platform constructed round a proprietary algorithm that calculates and condenses data into three elements (Worth, Security, and Timing) that allow you to decide when to purchase, promote, and maintain completely different shares and ETFs.

On this VectorVest overview, we’ll be diving into the platform’s options, instruments, and historic efficiency that will help you decide if it’s the precise service for you.

Let’s get began!

What’s VectorVest?

VectorVest is a downloadable investing platform full of instruments for researching, analyzing, and buying and selling over 18,000 completely different shares and ETFs. The platform itself could be very purposeful with or with out the optionally available add-ons they provide on the location, however the true draw is the underlying mathematical fashions and algorithms that drive VectorVest’s proprietary indicators and evaluation.

All of it begins with the corporate’s founder, Dr. Bart DiLiddo. Dr. DiLiddo is The Man behind VectorVest. He’s a mathematician with a PhD from Case Western Reserve College, a graduate from the Sloan College of Administration in MIT, and he “has a Fortune 500 enterprise background,” in line with the VectorVest website.

Dr. DiLiddo has spent over 30 years growing mathematically supported formulation and fashions to investigate the efficiency of particular person shares, measure their danger, and establish market tops and bottoms to assist traders enhance their returns, make fewer investing errors, and construct stronger portfolios.

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, one in every of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial often prices $9.95, however you’ll be able to join right here to attempt it out for under $0.99!

How does it work?

The mathematical foundation for the fashions, formulation, and algorithms that VectorVest makes use of to generate its indicators and purchase/promote/maintain indicators isn’t obtainable to the general public – which is sensible.

What we do know is Dr. DiLiddo’s investing philosophy:  

• “VectorVest believes each investor ought to know
  • What a inventory is actually value
  • How protected it’s
  • When to purchase, promote, or maintain”

And:

• “Vectorvest believes in shopping for protected, undervalued shares rising in value in rising markets. We additionally imagine in promoting falling shares in falling markets.”

It’s fairly groundbreaking stuff. Purchase low whereas the markets rise; promote excessive earlier than the markets fall.

Sure, it’s fairly elementary stuff, however that’s type of the purpose. The extra I have a look at VectorVest and what it’s making an attempt to do, the extra I notice that it’s making an attempt to make use of superior mathematical fashions and statistical evaluation to show the rules of excellent old style fundamentals-based investing into sensible, correct investing recommendation. Form of like constructing a nuclear reactor to energy a bass boat.

All that complexity from the markets and the innumerable information factors it creates are distilled down into simply three predominant pillars: Worth, Security, and Timing (plus just a few metrics derived from the identical).

While you pull up a safety on VectorVest, you’ll see most of what you’d see on different platforms: value, P/E, Earnings Per Share, Quantity, and so forth. However you’ll additionally see just a few unfamiliar ones (those on the precise): Worth, RV, RS, RT, VST, CI, and REC. These are the VectorVest indicators I used to be speaking about.

The indications are pretty easy, however informative:

• Worth: VectorVest’s estimate of the inventory’s precise worth based mostly on forecasts of earnings per share, earnings progress, profitability, rates of interest, and inflation.
• Relative Worth (RV): Measures a inventory’s long-term progress potential in comparison with another funding in AAA company bonds. It’s measured on a scale of 0.00 to 2.00, the place something above 1.00 is taken into account favorable. It’s calculated with projections of value appreciation three years out, AAA company bond charges, and danger.
• Relative Security (RS): A measure of the statistical chance of whether or not a inventory will meet one’s value efficiency expectations, AKA how dangerous the inventory is. It’s calculated based mostly on an evaluation of the consistency and predictability of an organization’s monetary efficiency, debt-to-equity ratio, gross sales quantity, enterprise longevity, value volatility, and different elements.
• Relative Timing (RT): Analyzes a inventory’s value development based mostly on an evaluation of the path, magnitude, and dynamics of a inventory’s value actions.
• Worth-Security-Timing (VST): The so-called “grasp indicator” for rating shares within the VectorVest database. It’s equal to the sq. root of a weighted sum of the squares of RV, RS, and RT. Shares with increased VST scores have the perfect combos of Worth, Security, and Timing.
• Consolation Index (CI): Displays a inventory’s skill to withstand extreme and/or prolonged value declines. Based mostly on a inventory’s long-term value historical past.
• Suggestion (REC): A suggestion to purchase, promote, or maintain a inventory based mostly on the cumulative impact of all of the VectorVest indicators rolled collectively.

Fairly easy, proper? As promised, VectorVest has crunched the numbers so that you can deliver you easy-to-understand metrics and indicators that may allow you to make huge choices based mostly off just a few little numbers. No want for guide evaluation or analysis or just about something. All you’ll want to do is take note of what VectorVest is telling you and bam! Cash. If it really works, that’s.

That’s the massive query right here: VectorVest provides you a ton of solutions at a look, however are they the precise solutions?

Can VectorVest Assist You Make Extra Cash?

VectorVest has just a few distinctive methods that will help you make higher investing choices and make more cash utilizing its proprietary metrics and indicators. Listed here are only a few examples:

The first is fairly apparent: Use the VST indicators to seek out shares which can be undervalued. Purchase them, wait, then promote them at a better value.

Second: Discover shares with the very best VST scores. Purchase them, wait, then promote them when VectorVest’s ranking modifications to Promote.

Third: Discover shares rated as Purchase. Maintain them whereas they’re rated as “Maintain,” then promote them when their ranking modifications to “Promote.” Easy.

You get the image. VectorVest lays out one potential path on its web site:

1. Test for shares rated a promote.
2. Test the market timing sign to see if you should purchase shares or tighten stops on present positions.
3. If the market timing is favorable, decide shares with the very best VST ranking.
4. Set beneficial cease costs, calculated uniquely for every inventory based mostly on its historic value motion.

In different phrases, VectorVest’s proprietary metrics mixed with its suite of analysis and stock-picking options are very potent instruments for nearly any investor. It sounds nice in idea. The query is, does it work in follow? 

VectorVest Efficiency

It’s laborious to say if VectorVest’s indicators are helpful or if its purchase/promote/maintain indicators are correct. You’d want to make use of the platform and comply with all of its suggestions precisely after they make them for at the least a 12 months, then examine your outcomes towards the key indices to even get a partial reply.

The excellent news is that VectorVest says it’s been evaluating its efficiency towards the S&P 500 for over 20 years. They even say they make their numbers obtainable so you’ll be able to simply fact-check them.

And that’s good for us, as a result of we at Wall Road Survivor love to fact-check.

It’s tough to judge the efficiency of VectorVest as a complete, since there are many completely different combos of instruments and buying and selling methods you should use, in addition to various kinds of suggestions that VectorVest gives. However what we can do is have a look at a mannequin portfolio to see how an investor following a sure algorithm whereas following VectorVest’s recommendation would have carried out over a given time interval. Right here is the efficiency of a mannequin portfolio that falls into their “Prudent” class and follows the “RT Kicker Combo” market timing technique:

Listed here are the said guidelines of this mannequin portfolio:

“Trades shares whose Worth Low has been trending decrease for 4 days however immediately established a brand new three-day excessive. Inventory ought to be above its 55 Day SMA. Sorted RS Desc. Lengthy positions are held via down markets. In down markets, open positions are hedged with brief positions which can be most overextended from their Cease Worth and have unfavorable earnings. Shut all brief positions on market sign reversal.”

As you’ll be able to see, an investor following these guidelines would have gained 2,139% from February of 2000 to Might of 2022. Now, let’s examine the mannequin portfolio’s efficiency to that of the S&P 500:

That is SPY, an ETF that tracks the efficiency of the S&P 500. (And a helpful ticker image to remember when performing market analysis!) Its closing value on February 24, 2000 was $133.81, and the closing value on Might 27, 2022 was $415.26. This makes for a achieve of 210%.

So, after evaluating the efficiency of the VectorVest mannequin portfolio and the S&P 500, we are able to say sure, VectorVest has overwhelmed the S&P 500. However, there’s a catch: Not each buying and selling technique is equal. It’s potential that a few of VectorVest’s different suggestions and techniques didn’t carry out fairly as effectively, so maintain that in thoughts. Be clever about your buying and selling guidelines and keep in mind that returns are by no means assured.

To match VectorVest’s efficiency towards that of one other profitable service, learn our Motley Idiot overview.

Why Use VectorVest?

VectorVest is a reasonably strong platform with some very useful options. Its inventory screener comes with a ton of built-in searches that will help you discover shares and ETFs that match some very particular standards. Its charting instruments don’t include as lots of the fancy technical evaluation instruments as among the different platforms, nevertheless it has greater than sufficient for almost all of traders. Its proprietary metrics, indicators, targets, and stop-loss options might not be infallible, however all of them present helpful data and strategies that may level you in the precise path and allow you to really feel extra assured about your trades.

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, one in every of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial often prices $9.95, however you’ll be able to join right here to attempt it out for under $0.99!

VectorVest Worth

VectorVest provides a number of completely different account tiers, all of which include a 30-day trial for $9.95. (The trial is just $0.99 if you join right here!)

The Primary plan is $69 monthly and provides the next options:

• Knowledge updates (finish of day)
• Inventory evaluation and scores
• Day by day inventory picks
• Market timing
• Screeners and watchlists
• Buying and selling plans
• Profitable Investing Fast Begin course
• Free training programs
• TradeNow (brokerage connection)
• Worldwide market evaluation
• Cellphone assist

The Enhanced plan prices $99 a month and comes with all the things within the Primary plan, plus the next:

• Knowledge updates (15-minute delay)
• Superior Buying and selling Cease (proprietary dynamic cease order)

The Premium plan goes for $149 each month. You’ll get all the things that comes with the Enhanced plan, plus:

• Knowledge updates (real-time)
• Profitable Investing teaching group
• ProTrader (pre-built searches to seek out breakouts simply)
• AutoTimer (automated buying and selling)
• WatchDog (superior commerce alerts)

You can even purchase particular person add-on companies that vary from superior market information to choices buying and selling to automation instruments for wherever from $100 to $250 monthly.

Is VectorVest Price It?

You possibly can most likely use VectorVest to make greater than sufficient cash to cowl its Primary membership package deal. That might not be the case for its Enhanced or Premium membership packages, relying on the dimensions of your portfolio. You’ll additionally wish to attempt the add-ons earlier than you decide to spending ~$3,000 per 12 months on every one. It’s at all times higher to be protected than sorry, even when the add-ons change into value it in the long run.

VectorVest Execs and Cons

Right here’s what we like and don’t like in regards to the platform.

Execs:

• Proprietary indicators (Worth, Security, Timing, and their derivatives) condense volumes of knowledge and analytics into just a few figures.
• Purchase/promote/maintain indicators allow you to time your trades by supplying you with constant strategies of when to purchase, promote, or maintain.
• Does loads of evaluation routinely so that you don’t must.
• Helps remove feelings from buying and selling determinations.
• Pretty strong set of screeners, robust search perform, fairly respectable charts and graphs.

Cons:

• Costly, particularly with add-ons.
• Platform runs regionally and relies on your laptop’s processing energy.
• Methodology for calculating proprietary indicators and purchase/promote/maintain indicators is unclear.
• The quantity of knowledge generally is a bit overwhelming at first.
• Not a lot by way of newsfeeds, social media integration, or neighborhood options.  
• Tutorials and studying modules are virtually required to determine tips on how to use the platform.
• Charting instruments are comparatively restricted. 

Professional Tip:

VectorVest makes use of a refined mathematical mannequin that gives unbiased suggestions based mostly on market timing, inventory worth, and security. Over the course of virtually 22 years, one in every of VectorVest’s methods beat the S&P 500 by upwards of two,000%. Their 30-day trial often prices $9.95, however you’ll be able to join right here to attempt it out for under $0.99!

Remaining Ideas

VectorVest is a highly effective device with loads of options, lots of that are constructed on or round its proprietary metrics. And it’s not like following VectorVest’s recommendation goes to make you go broke in a pair weeks. They are often very helpful in the precise contexts. Simply don’t take them as gospel or a assure that you just’re going to see quadruple-digit returns should you comply with them.

It additionally makes some claims about its efficiency that will not maintain up throughout all its methods, which will be off-putting for some traders.

Use VectorVest you probably have a portfolio large enough to pay for a membership with its annual positive aspects. Use it should you have a look at its record of options and suppose that all or any of them appear to be they’d allow you to be a greater dealer. It’s a great platform. It’s value testing.