Stock Market Probability: How to Improve the Odds of Making Better Investment Decision

In Stock Market Probability: How to Improve the Odds of Making Better Investment Decisions, author Joseph E. Murphy, Jr., provides an insightful and detailed review of statistical tools investors can use to evaluate a broad range of financial decisions. The ability to make calculated estimates of the probabilities of various investment outcomes will enable investors to make sharper and better qualified decisions and improve their investment returns. Although these methods are derived from established statistical methodologies, many of the specific concepts and calculations as applied to investment decision making are here presented in book form for the first time.

This book describes specific new techniques to estimate probabilities of future events that will affect investments. Some techniques can be applied to searching for solutions on mutual funds, others applied to determinations on individual stocks; some aid in market timing, and others aid in estimating probabilities of future profit and loss.

The premise of this book, given the fact that the precise future of any investment is unknown, is that it nevertheless is often possible to make calculated estimates of the alternative probabilities of various outcomes. The end product is a probability statement which will describe the distributions of retums on a stock or the entire market, and the distribution of future interest rates or of future earnings or dividends. By making these probability distributions, as developed in this book, it is possible to make sharper and better qualified decisions and thereby improve investment retums.

Although these techniques are based on well-established statistical methodology, many of the specific concepts and calculations as applied to investments are unique to this book. This is so because they are based on a perspective not normally taught in the business schools or practiced on Wall Street. But learning these new techniques, and applying them to your own investment problems or those of your customers, enables you to better manage your investment risk and improve your investment retums. Also, you may see the market from quite a different viewpoint than you held before.

Contents:

• The Standard Deviation, the Normal Distribution, and Natural Logarithms—Concepts Useful to Studying the Stock Market
• The Statistical Basis for Estimating Future Probable Changes in Stock Prices
• How Knowing the Probability Can Improve Your Investment Decisions
• The Dispersion of Stock Prices
• The Basic Model for the Stock Market
• Predicting the Distribution of Historical Returns on the Stock Market
• How to Reduce Common Stock Portfolio Risk
• Are There Changes m Stock Market Volatility?
• Predicting Probable Returns from a Single Stock
• Estimating Probable Returns on a Mutual Fund
• Predicting the Probability of Loss
• Predicting Probable Changes in Earnings
• Predicting Probable Changes in Profit Margins
• How to Estimate the Average Future Return from Stocks
• The Law of the Distribution of Wealth
• Diversification Across Time
• Predicting Dividend Changes
• Basis for Predicting the Probability of Loss
• How to Read the Probability Tables
• Five Laws of Finance

Stock Market Probability: How to Improve the Odds of Making Better Investment Decision By Joseph E. Murphy pdf