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Determining Market Capitalization With Extreme Consistency And Accuracy

Apr. 01, 2019 2:44 PM ETIntel Corporation (INTC), LEVI, QCOM35 Comments
Benjamin Solomon profile picture
Benjamin Solomon


  • Short Levi Strauss. Its longer-term valuation is between $9.82 and $10.11.
  • Buy and hold Intel. It has the potential to reach a revenue $118B from the current $77B.
  • Sell Qualcomm as it is the most leveraged by far in its sector.
  • This is a powerful tool for IPO, M&A, Angel, VC managers and investors to value share price before and after IPOs.

Introduction to my Background and Why You Should Read This Article

Everything in the pricing of risk can be traced back to (some version of) the Dividend Discount Model (DDM). This is an analytical model. Like all analytical models the DDM has explicit and implicit assumptions (also known as axioms) built into these models. It is the implicit assumptions that worry me. For example, one of DDM's implicit assumptions is that the market cares about the cost of funding. Nobody I know has tested this. In this article I show using numerical modeling, that many times the market does not care about the cost of funding. Shocking, isn't it. That is, cost of funding is a cash flow problem, not an economic problem.

When you read this article, have an open mind, and put aside everything you think you know about financial risk. Empty your cup, as I am proposing a rigorously tested quantifiable new approach to financial risk, based on now my more than 35 years of analytics in many different fields.

Let me give you a brief background of my research endeavors. Most of you will know me from my two Seeking Alpha articles "Is The Recession Here?" and "The Fed's Bank Stress Test is Wrong."

There are two parts to my background. First, having successfully completed my Masters in Operations Research in 1982, with Lancaster University, UK, I completed my Master's in Finance in 1995 with the University College Dublin, Ireland. This article is written using years of experience in both these technical fields.

Since I had proved that a portfolio's unsystematic risk cannot be fully diversified away, I reworked all our definitions of risk. My shortened 553-page finance thesis titled Unsystematic Risk is available on Amazon. This thesis is based on 2,000 years of daily real

This article was written by

Benjamin Solomon profile picture
Solomon has 40+ years working in many different industries and fields, banking, stress testing, credit risk analysis, manufacturing, management consulting, decision theory, strategy, and physics with companies like UMB Bank, Key Bank, Texas Instruments, PwC, Unilever and Westport (Malaysia). At Westport, then (1995) a $1 billion port infrastructure, he invented the "7-hour Strategy" that enabled Westport to become the 6th largest port (2006) in the world. Using data modeling, in February 2007 he discovered the first formula in 334 years (1687-2021), for gravitational acceleration that does not have mass in the equation, g=τc2 (see his APEC Zoom video presentations Gravity Modification and An Alternative to Quantum Theory?). Solomon invented many new solutions, Asymmetric Information Resolution (AIR) Models, Wilcoxon Regression, Collated Distributions. Default Covered-Call Model, Capital Premium Model, Economic & Funding Statements, and the Infectious Disease LifeCycle Model (probably a first in medicine and replaces the Reproduction Model), and is researching Multiple Sclerosis symptom triggering. He showed that Black Swans can only come into effect when the restricted form of the Power Law, the Levy Distribution, is in effect. He has published 7 technical books and many peer reviewed papers and articles. Solomon has a Master of Business Studies in Banking & Finance (University College Dublin, 1995, oldest graduate finance program in Europe), a Master of Arts in Operations Research (University of Lancaster, 1982, a British Ivy League), and a Bachelor of Science in Electrical & Electronics Engineering (University of Aston, 1979). He is the Founder & CEO of the FinTech startup, Business AIR Models Inc and based on the algorithms he has developed, provides company credit risk assessment in minutes.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (35)

Benjamin Solomon profile picture
For all of you who disagreed with my work, I have been vindicated. My March/April 2019 valuation of LEVI at about $10 has been vindicated. The stock that was IPO'd at $22+ and hit $25+ soon after that, has seen a consistent and steady decline. It is now trading at $12+. If you did not heed my advice you would have lost about 50% of your principal investment.
Benjamin Solomon profile picture
Read @Mark Hibben "Qualcomm: The Party's Over" seekingalpha.com/...

Qualcomm' party is over. I bet most of you nay sayers lost money. Qualcomm's bad news is not over. Apple is most likely to renegotiate it's $4-$5 billion settlement.
Robert Honeywill profile picture
I do not understand these comments. At the date of this publication QCOM was ~$58 and has gone up to $66. Intel was ~$54 and has gone down to $45. Am I missing something?
Livegood3 profile picture
You all didn't follow Benjamins instructions and sell...darn it, now how am I supposed to get QCOM in the 50s again!? LOL Long, to the moon!
Well that aged badly (Your QCOM statement)
Glad I didn't take that advice!
Benjamin Solomon profile picture
Another nail in the coffin.

The Wall Street Journal reported today, "A Surprising Connection Between the Bull Market and Stock Buybacks" (www.wsj.com/...),

"This comes as a surprise, because the conventional wisdom is that economic growth is by far the most important factor in the outperformance of certain countries’ stock markets in recent decades. The researchers found little support for this belief."
Robert Honeywill profile picture
Hi Benjamin, Thanks for an intriguing article. I might wish to quote you and include your Figure 1 in a future article, with source reference of course. Would that be okay with you?
Benjamin Solomon profile picture
@Robert Honeywill Thanks. Definitely
"Determining Market Capitalization With EXTREME Consistency And Accuracy"?
Short Levi's - it's market cap is $9.82-$10.11
Perhaps you should pick a new profession?
How did that short go on Levi's lol?
Benjamin Solomon profile picture
I read the comments – most are atrocious. What has happened to America? Newton’s 3rd Law of Motion does not apply – putting someone down is not going to raise you up. But the vindication is that with this third SA article I went from having 20+ actively investing followers to 111. Most contributors have less than 10. Wow! Good people don’t disparage, they quietly get on with their lives.

This article is an important read for 2 reasons. First, it shows that there is a lot of preparation before getting to data analysis. This can be split into 3 parts, (i) data preparation, (ii) data reporting and (iii) data analysis. Unfortunately, most people mistake data reporting for data analysis.

Mathematics is a very precise tool but beware of what the late Prof. Morris Klein said in his book “Mathematics: The Loss of Certainty” (www.amazon.com/...), that mathematics has become so sophisticated that it can be used to prove anything!

The fault in a precise mathematical model is that it sits on a wobbly (for the want of a fun term) conceptual model, and thus give inaccurate result with a great deal of precision. That was one of the points of my article that the Dividend Discount Model is wobbly. We need to search for something better. The E&F Statements I had proposed are just the first steps – using mathematics to consider what to investigate (arbitrage or fundamentals) and eliminate what not to (time waste).

Here is an exercise for you all. Try documenting your investment strategy in a rigorous manner. State what you know and what you don’t. How it affects your decisions. Is what you are doing sufficient? When do you use qualitative and when quantitative?

If you cannot do that then you are proof that luck exists.
Pure financial analysts could not always accurately predict a tech company because once its underline technical strength is gone, the whole business crumble. Financial asset is a tool for it to fight but unless it acts correctly (not merely act), it will still sink.

INTC's key underline strength is gone --- its semi manufacturing leadership has gone last year. INTC cannot put more transistors into unit area as TSM and KR:005930. Worse, TSM works for many INTC's competitors. Giving proliferation of Android and ARM plus MSFT's support Windows 10 on ARM, INTC's another powerful weapon X86 ISA (share only with AMD) is not as powerful as before.

INTC needs to spend cash, lots of them to catch up with TSM by not worrying a few quarters of red inks which would piss off Wall Street. INTC also needs to do more .... Stop here, as we talk on stock speculation, let's not wish or expect but watch price-volume chart.
Wow. Just to go through this very rambling article would be a major job. Don't know what to think, but from the comments and my own view on, for example, QCOM, it seems there are many questions as to whether the way the data is presented and concluded upon is valid or not.
A thesis based on 2000 years of daily real and simulated stock prices from 15 exchanges and indices around the world sounds impressive.

Out of genuine curiosity, through your research, what is the earliest daily stock price you were able to locate? What was the date on which this stock price occurred and on which exchange did it occur? How much of your information is simulated and how much is real?

Thank you for the article.
"The bottom line is that, Intel, which used to be about 2 years ahead of competition in process technology, for the first time, is behind TSMC by at least a year if Intel can keep its 2019 HVM commitment. GF seems to have reached parity with Intel". These notes are from the seeking Alpha article from August 2018 that you brought up:"Intel's 10nm Problems Have Implications Far Beyond What The Market Is Seeing." Intel today is also well behind in the 5G race. How do you come up with the idea that intel has a revenue POTENTIAL of $118B ( 50% more then the current revenue), as a basis for buying and holding on to intel shares for the long haul. Sorry but your analysis comes through as a sad April Fools joke!.
jst profile picture
Everything you wrote is regurgitated nonsense. And to top it off, you posted this nonsense, as it has nothing to do with what the author researched and wrote about. In time Intel will surpass $118B in revenue. C.L.O.W.N.
Qcom assets are not machines but rather the how to manual on 5g. I kept reading though since you possess obvious intelligence. statisticians can get lost in their oscillations, especially if they think they can guess future stock behavior which depends on what the shareholders and potential/or lack thereof shareholders decide to do. fear and greed
DGrainger profile picture
Too long.

Are you going on a book tour like M. O.?
ron3637 profile picture
This is all above my pay grade.
Gordon Shumway profile picture
TLDR: trust me I’m a genius but the entire scientific community is too dumb to understand my revelations. Also dogs speak to me and I do my research on 4chan.
Livegood3 profile picture
Exactly, April Fools Day guys!
Happy April Fool's Day!
"Yes, Intel may have some teething problems right now, but its chips are super fast. About 6 years ago, I was hunting for a better PC to buy. I have physics Excel models that take 8 hours to run. I stripped down one of these models and took it to Best Buy. Ran it on an Intel 4-core, and an AMD 6-core. I was shocked that the Intel's 4-core was about 50% faster than AMD's 6-core. I bought the Intel 6-core i7. My model run time dropped to 20 mins! You see, for people who need absolute speed there is no substitute for large monolithic chips, not even multiple smaller dies. Intel is a buy."

J.F.C. ... you call yourself an analyst?
Hahahha wtf is what i tought... what does a 6 year old pc chip from intel has to do with Qcoms 5g chip?!
Actually reading it now, it's an obvious April 1st troll article. Well done :)
... and following some of the links the author gives to his own literature/website... I do believe this guy seriously believes his claims (which include antigravity research, impossible physics, and LOTS of bogus credentials). Amazing self-promotion crap.
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