The Grail Equity Management System (GEMS) 

The Alchemy of the Grail Model


The Grail Equity Management System (GEMS) is a unique momentum and growth model, which was developed through years of research. Thereby it was realized that the conventional wisdom about risk and return was wholly incorrect, because it is based on a static model called the Normal Distribution Curve, see the second graph. However, the stock market histogram shifts continuously, and is normally assymetric, favouring either the positive or negative side of the average. Here we see that the second graph has an 85% bias in favour of positive returns. How signifiant is this lopsidenness? Very! Because the risk metrics of the normal distribution curve can lead to wrong conclusions. For example, standard deviation, a key metric of volatility, is used to quantify risk is shown as a static number, but like the market itself the metric also changes with prices, as the third graph shows. 

The stock market driven by investor sentiment


The Normal Distribution Curve misjudges risk


The Value at Risk calculates daily changes in risk


The Basis of Outstandng Stock Selection


To identify high grade stocks it is essential to analyze the drivers of their performance. The graph shows how this is achieved. The Grail Equity Rating System (GERS) applies 26 data points, which are weighted in terms of their relevance to Grail's search for high calibre Alpha Stocks. As earnings growth is the primary catalyst that drives stock prices 44% of the analysis concentrates on this variable. 

Click in graph to enlarge


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