Replies to post #38 on the Pragmatic Investor

[aptus]

Hi Larry,

1) The difference you see in ratings and target prices between PI and VSS are there because they use slightly different algorithms. VSS uses a more conservative algorithm, so you will always receive lower target prices.

After reviewing both algorithms for the past year, I've decided that the one in VSS is safer and so will be adding it to PI in the next release (effectively replacing the current PI rating and target price system).

2) The Fundamental Analyzer uses a company's financial statements (Balance Sheet, Income statement and Cash Flow statement) to determine its rating. Of course mutual funds, being a collection of companies, don't have this information available. So the FA can't rate mutual funds.

However the Asset Allocation module doesn't require these statements, rather it just requires the historical prices -- which are readily available for both stocks and funds. That's why the AA can be used with funds.

So the answer to your question is, yes, results for funds allocated via the Asset Allocator are valid.

I hope that helped. Let me know if you have any other questions.