About Gnome

About Gnome

Introduction

GNOME Stock Analyst is a Stock technical analysis tool which provides guidance regarding the most likely near-term movement of a stock's price. The direction and probability is indicated by the C-G Index which statistically is a Z-score. Thus, a C-G Index of -1.5 signals that there is only a 10% probability that the price will go lower (more negative values represent still lower probabilities) and therefore a "buy" signal. Conversely, a C-G Index of +1.5 signals that there is only a 10% probability that the price will go higher (again, more positive values represent still lower probabilities) and therefore a "sell" signal. The individual stock trader can establish C-G Indices as action levels based on risk acceptance (less risk, fewer opportunities and more risk, greater chance of loss) and the "buy" and "sell" values need not be symmetrical. Some other C-G indices and their associated probabilities are: 1.0 equates to 16%, 1.5 to 7%, 2.0 to 2%, 2.5 to 1% and 3.0 to 0.1%. The C-G Index is computed for the most recent 40 days of trading to reflect current performance of the stock. It cannot foresee external events which may impact the stock price but can indicate whether an over-reaction to events may have produced an opportunity. Finally, although Gnome Stock Analyst has performed very well, there is risk associated with Stock Trading. The portfolio followed on the Gnome Web Site consists of Dow Jones Industrials such that a short-term setback can be waited out with historical long term performance of these Corporations.

History

In the late 1960's, one laboratory technician maintained a daily chart of the Company's stock price which stretched around the walls of the lab. One feature that stood out was the cyclic nature (not necessarily with constant periodicity) of the closing price and that being able to capture even one or two cycles each year would result in significantly higher returns than the buy-and-hold-till-retirement approach. Following a study of a number of technical analyses described in the literature, a still different approach was developed and applied specifically to the Companies stock-price behavior. During the 70's, using equations programmed into VisiCalc and later Framework and Lotus 123, trading was carried out limited to the Company stock. A further optimization of the decision rules took place in the mid-80s leading to the present tool. In 1996 a standalone executable application was written and named Gnome. A 32-bit version was written in 1997 which also serves as the basis for the Gnome Web Site.

Financial Performance

Since 1987, trading based on the Gnome analysis approach has been conducted through two different Stock Brokers (approximately 7 years with the first followed by 6 years to-date with the second). Based on capital employed (actively invested in stock as contrasted to remaining idle in the accounts), over the period of 1991-1997 the average annual return was 31%.

Beginning with February 3, 2000, a tracking portfolio was established such that performance could be tracked against the S&P500. The Chart of performance is shown below and will be updated weekly.