Value Line Composite Index

The first market index to trade in the futures market

What is the Value Line Composite Index?

The Value Line Composite Index was launched in 1982. It was the first market index to trade in the futures market. The index comprises 1,681 companies drawn from the New York Stock Exchange, NASDAQ, Toronto Stock Exchange, American Stock Exchange, and over-the-counter markets.

 

Value Line Composite Index

 

There are two main forms of the value line composite index – the Geometric Composite Index and the Arithmetic Composite Index.

 

Summary

  • The Value Line Composite Index tracks approximately 1,681 companies that are traded in four exchanges.
  • The monitored companies are drawn from the NYSE, Toronto Stock Exchange, NASDAQ, and American Stock Exchange.
  • It comprises two main forms of indices – the Value Line Geometric Composite Index and the Value Line Arithmetic Composite Index.

 

Companies in the Value Line Composite Index

The Value Line Composite Index comprises 1,681 companies. The number fluctuates from time to time. Companies included in the Value Line Composite Index are publicly listed companies in four main exchanges – the NYSE, American Stock Exchange, NASDAQ, and Toronto Stock Exchange.

The companies included in the index may change in number. This fluctuation can be caused by various factors such as bankruptcies, mergers, acquisitions, addition or delisting of companies on the exchanges, and coverage decisions made by Value Line Inc.

Value Line Inc. makes decisions on the companies to include in index with the goal of creating a broad representation of the North American Equity Market.

Also, the number of companies listed on any of the specified exchanges may fluctuate at any given time as companies are added, delisted, or shift from one exchange to another.

However, the Value Line Composite Index methodology is not affected by the movement of companies, additions, or delisting of companies on the individual exchanges.

 

Value Line Geometric Composite Index

The Value Line Geometric Composite Index was established in June 1961. It is the original index to be released in the stock market and an equally weighted index based on a geometric average.

The daily change of a Geometric Index is closest to the median change in stock price since it is based on a geometric index.

The Value Line Geometric Composite index is calculated as follows:

Current Index = [P (t) * Reciprocal of the Cumulative Number of Stocks] / P (t-1)

 

Where:

  • P (t): Closing price of the Geometric Composite Index
  • P (t-1): Previous closing price of the Geometric Composite Index

 

Value Line Arithmetic Composite Index

The Value Line Arithmetic Composite Index was established in February 1988. It uses the arithmetic mean in its calculation and designed to mimic the change in the index, based on the assumption that the stockholder held a portfolio of stocks in equal amounts.

 

Value Line, Inc.

Value Line, Inc. is a US financial publishing and investment research company that was established by Arnold Bernhard in 1982. It was incorporated in the same year and was the successor to all the operations of the Arnold Bernhard & Co, Inc.

The company is headquartered in New York, United States. It is popular for publishing the Value Line Investment Survey, one of the widely used independent investment research resources. The survey comprises professional research of approximately 1,700 stocks trading across over 99 industries.

The term “Value Line” was used by the founder of Value Line Inc., Arnold Bernhard, to refer to a line representing a multiple of cash flows that he would superimpose over a price chart.

Apart from the Value Line Investment Survey, the company publishes the Value Line Investment Survey (Small and Mid-cap Edition), Value Line Fund Advisor, Value Line Select, Value Line 600, and Value Line Daily Options Survey.

 

Value Line Investment Survey

The Value Line Investment Survey can be purchased in print format or electronic format. The electronic format comes in the form of an online subscription, and subscribers are able to access three different model portfolios that they can track if they do not intend to create a personalized portfolio.

The following are the main sections of the Value Line Investment Survey:

 

1. Ratings and Reports

The survey publishes a selection of 130 full-page stock reports in specific sectors. The selection is made on a rotating basis, such that all the stocks tracked by Value Line, Inc. are covered every 13 weeks.

The information in the stock report includes a comparison of current and past financial data, price, and earnings projection for three to five years, charts, and rankings, among others.

 

2. Summary and Index

The summary and index section gives an in-depth view of the stock market with preset screens. Users can also create custom screens using Value Line’s online service.

 

3. Selection and Opinion

The selection and opinion segment provides an overview of the current economic statistics as well as the stock market forecast on the projected trends in the market.

 

Additional Resources

CFI is the official provider of the global Certified Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

  • New York Stock Exchange (NYSE)
  • Market Index
  • American Stock Exchange (AMEX)
  • Stock Option

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