A little less than 4 months ago we released a lesson to determine whether the stock was under or overvalued (reference
Introduction to Fundamental Stock Valuation). In this lesson we demonstrated our methods on the sneaker company Adidas and the ADR, ADDYY. We predicted that adidas was around 20% overvalued. Almost 4 months after we came to that conclusion adidas plummeted 17% from the time we released our data, while the German and US markets stayed relatively unchanged. Since 1926 till 2011 the average annual return of the stock market was 11%. A short position at the time of when we released our lesson would of beat the average annual return of the stock market by 20%, 3 times as fast. The it took a few hours to complete the research to predict that adidas was overvalued and we will soon be releasing more accurate and more in depth strategies.