1

Fundamental Analysis

2

Technical Analysis

3

Competence Analysis

THE NEXT GENERATION OF RESOURCE
ALLOCATION

 

Can resource allocation systems save the degrading western economy? In the context of fading growth prospects, limited natural resources, global warming, pollution, unemployment and failing banks, effective resource allocation holds great promise. One has to remember though, that the effective utilization of these technologies requires good transparency and freedom to act on findings. In many cases effective resource allocation is blocked by a lack of transparency, massive restrictions or heavy regulation. But there is a very bright light at the end of the tunnel: The recent G8 Summit certainly pushed developments in the right direction.

 

Introduction to Key Concepts

 

Competence mapping refers to defining the competences of each investor on each stock. The aim of competence mapping is to determine the most competent individuals or organizations to manage the resource in question, and link them, via a competence map, to apply their collective skills, talents and competences to the given task. A competence map can be constructed when there are many participants acting in the same system, such as in the stock market, the job market, the education system and the healthcare system.

 
 
Competence analysis refers to applying competence mapping to the stock market. The acts of the most competent investors are referenced when deciding what to do with a particular stock.  For a brief, thorough, and easy-to-understand explanation of competence analysis, browse the slideshow on how 00R works.
 
While a stock market – one of the most important resource allocations system in a society – allocates capital, competence analysis forms a layer above it, allocating both capital and competence. This new approach was implemented in a virtual resource allocation system named 00RCompetence Map Solutions was created to make the expertise of 00R available to all investors, to make better use of the competences already in the market. 

 


The third paradigm of investment analysis

1. Fundamental analysis uses the method of analysis, focuses on companies, and measures companies in dollars.  It is useful for investors who know the industry, future trends in the field, the products, the management, and have access to detailed information on a company in order to give the company a future valuation.
 
2. Technical analysis does not actually use analysis as its method, but rather synthesis. It focuses on the aggregation of stock price and volume, and measures the valuation of shares of a company rather than the company itself.  It reflects the common feeling in the market about a company's value. 
 
3. Competence analysis uses the method of analysis, focuses on performance of market actors (investors) whose competences are determined by measuring the success rate of their every transaction over a long period of time.  Combining all of these competences creates a comprehensive competence map of the market.  That map is then used to navigate the difficult terrain of the stock market, reaching your financial destination. 

Differences in the various approaches to investing

Paradigm / Approach

Method

Focus

Unit of Measurement

Fundamental Analysis

Analysis

  • surface decomposition

Companies

Technical Analysis

Synthesis

  • aggregation

Aggregation of
Stock Price / Volume

Dollar

Stock Price / Volume

Competence Analysis

Analysis

  • decomposition

  • reconstruction

Investors

Transaction

For more on competence analysis and its many applications, browse our publications.  Check back often for new articles.