Applying a Systems Mindset to Stock Valuation

25 Pages Posted: 7 Jul 2008 Last revised: 28 Jul 2008

Date Written: July 16, 2008


Research on the life-cycle valuation model began in 1969 at Callard, Madden & Associates in order to improve stock selection and investment returns. Beginning in the mid-1980s, the model was extensively refined and commercialized by HOLT Value Associates. Today, many institutional money managers use the life-cycle valuation model, as well as relevant data from the global database of 20,000 companies in 60 countries provided by Credit Suisse HOLT.

This is a review of the five important choices that guided this 40-year research journey. A systems mindset that stressed intensive measurement and experimentation with variables was especially instrumental to the evolution of the life-cycle model. Systems thinking led to distinct departures from mainstream finance practices. For example, the life-cycle model uses a discount rate that is dependent upon the procedure used to forecast a firm's long-term, net cash receipt stream.

Based on this research experience, I offer suggestions about the potential evolution of a new research program to address additional important, practical needs.

Keywords: Valuation, CFROI, Life Cycle, Research Methodology, Systems Thinking

JEL Classification: B40, C9, D84, G12, G30

Suggested Citation

Madden, Bartley J., Applying a Systems Mindset to Stock Valuation (July 16, 2008). Available at SSRN: or

Bartley J. Madden (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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