Reference-Value Investment Evaluation for Stable Performance Comparison
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Solution Overview
Problem
Individual investors face challenges in making informed investment decisions due to psychological, behavioral, and environmental factors, leading to suboptimal performance, especially in a technologically advanced investment environment, and there is a need for a method to objectively evaluate investment performance regardless of market conditions.
Innovation Solution
A method of investment evaluation using an estimated value based on a reference value, which involves determining a reference value from historical or future asset values, converting investment asset valuations based on a variability ratio, and displaying the results in graphical form to facilitate comparison and reduce the impact of underlying asset value fluctuations.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If investors rely on traditional evaluation methods based on absolute asset values, then they can obtain straightforward valuation data, but they are heavily influenced by market fluctuations and psychological factors leading to suboptimal decisions
Solution Approach 1:
The patent introduces a reference value as an intermediary element to mediate between the underlying asset value and the investment performance evaluation. Instead of directly comparing asset values subject to market fluctuations, the system uses the reference value (which remains constant or changes slowly) as a stable benchmark. This intermediary allows investors to assess performance relative to a fixed standard, eliminating the harmful influence of market volatility and psychological anchoring effects while maintaining evaluation accuracy.
Solution Approach 2:
The patent transforms the evaluation parameter from absolute asset value to relative performance metric (difference between asset value and reference value). By changing the parameter being measured from the volatile asset price to the stable performance differential, the system achieves accurate performance evaluation that is immune to market fluctuations. This parameter transformation converts a harmful dependency on market conditions into a beneficial independence from them.
2Stability of the object's composition
If investors use converted valuation based on reference value to reduce market influence, then investment decision stability improves, but calculation complexity increases
Solution Approach 1:
The patent segments the evaluation process into distinct components: determining the reference value, calculating the difference between asset value and reference value, and presenting the results. By breaking down the complex evaluation into simple, sequential steps, the system achieves decision stability without overwhelming complexity. Each segment is straightforward to compute, making the overall process manageable despite the conceptual innovation.
Data Source
AI summary
Proposed is a method of investment evaluation using an estimated value based on a reference value. The method includes, via computer execution, determining a reference value from either historical values or future reference values of an underlying asset value—the underlying asset value being the price of an underlying asset chosen as a representative investment asset or a related benchmark index from an investment asset set-in accordance with a predetermined rule, and converting the investment asset set's valuation into an estimated value based on a reference value by applying a variability ratio, calculated under the assumption that the underlying asset value at the evaluation time is adjusted to match the determined reference value.