Stock Market Valuation using Monte Carlo Simulation

Stock markets for last hundred and fifty years has been used for wealth generation. Provided people participate as an investor and invest in stocks which show strong fundamental intrinsic values. Fundamental analysis is significant from the perspective of evaluation of stock market price for long term investment. This system provides a guidance mechanism based on Monte Carlo simulation and discounted cash flow analysis model which is used to evaluate the list of stocks under study what is their probability of becoming multibaggers, from a long term of investment perspective. The system is modeled to handle low debt companies for long term evaluation. Typically, companies having less than twenty five percent debt in their assets. The users of system are fundamental analysts i.e. chartered accountants, chartered financial planners, chartered financial analysts, credit risk analyst, financial analyst, and portfolio managers. Comparing statistically calculated intrinsic values and current market price, system will be able to add a robust statistical reasoning for investment decision. This reasoning will have no human or emotional biases as there will be no human intervention involved for arriving to the final intrinsic value of stock. Monte Carlo simulation is best suited solution for generating random scenarios that fall in line with Brownian walk motion of stock prices, as in long term any stock price follows random path.