Value Line Index

Let's start with the name "Value Line." It refers to a brand name, as well as a conceptual framework. Value Line (the company) is a financial research firm, first founded in 1931 by Arnold Bernhard. Its highest profile product is a newsletter called The Value Line Investment Survey.

Now onto "value line" as an idea. Bernhard conceived the idea of superimposing a line over price charts to normalize the value of different companies. The line was derived from a multiple of cash flow. It was meant to help better compare the value of various stocks.

The Value Line Composite Index provides a way to chart the stocks highlighted in the company's Value Line Investment Survey. The index takes those stocks (minus closed-end funds) and combines them into an index. The performance of the index can then be compared to overall market performance. It's basically a way to prove that the investment survey (and the whole "value line" concept) has merit.