Our research is at the heart of what we do and who we are. The goal of The Johnson Research Group LLC (JRG) is very simple – to allow our subscribers be profitable and to beat the market. We do that by providing our subscibers with an edge, an advantage over the market. And we do that through our research by developing unique tools and innovative approaches that separate us from the crowd. After all, how can you have an advantage doing what everyone else is doing?

The basis of our approach revolves around a methodology we call behavioral valuation. We know that the price of a stock boils down to the fact that people do the buying and selling. And it's their desires or sentiment that dictates their behavior that determines whether to buy or sell. Fundamental and technical analyses are merely inputs that affect someone's sentiment toward a stock. Behavior is the tangible result of how investors interpret and react to those inputs. So it's the behavior that we're ultimately after, because that is the end result of the decision going on within each investor.

That's where we gain our edge. By analyzing sentiment, we can derive a predictive model of the resulting behavior that will be displayed toward a stock. Fundamentals and technicals (the tools used by most to define their "edge") are inputs to the model, but they're not sufficient. We add sentiment, measured both qualitatively and quantitatively, to give a behavioral picture of how a stock should behave. In other words, we use this model to value a security based upon its behavioral characteristics.

And that's all we try to do. We know there's no Holy Grail or Magic Bullet in trading. We know that significant profits can be made with an advantage (or edge) of just a few percentage points over the market. And we have that advantage from our behavioral valuation approach, which assesses a stock's probability of moving up or down based on investor sentiment. The key is understanding the interplay among fundamentals, technicals, and sentiment, something we've been researching for nearly a decade.

We often discuss our behavioral evaluation approach and how we translate it into investing success in the Strategy Lab section of The Insightful Investor newsletter. From time to time, we’ll post those discussions for free on the website to demonstrate our approach and how we use it to provide the crucial edge for our subscribers.