2. QL+QT Pilot

Model Framework

Stock Ranking Objective

The Morgan Stanley analyst describes the ranking system objective below:

The aim of the exercise, as with our prior ranking system, is to identify the cheapest stocks with the best fundamentals that have a near-term, positive catalyst, low risk, and beneficial X-factors.

Stock Ranking Model

The Critical Issues Sub-Model below is the QL component of a stock ranking model used at Morgan Stanley, Evercore Partners and several other firms. The full model includes valuation and financials sub-models in addition to the Critical Issues sub-model. The manager has the option to use the full model. However, our standard procedure is to start with the Critical Issues Sub-Model because (1) it involves a new approach to modeling and provides clients with a competitive advantage over their peers who cannot model their QL factors in the “language of the market” and (2) our clients usually have their own QT models. We then help them synthesize their QL & QT models into one seamless model of their whole thought process.

You can see examples of the Morgan Stanley TST models and research reports at TST Equities – Morgan Stanley Section; To read last Morgan Stanley report that shows how much shorter, yet more comprehensive TST-based research reports are, click: Last Report; to read first report that also contains detailed descriptions of THINKSheet methodology and value proposition by Morgan Stanley, click: First Report

Model Framework

MorganStanleyTSTModelStructure2