STREET DOGS: Simplicity above all
No single factor or fundamental piece of data is the answer or solution on how to pick stocks that outperform
From Jim O’Shaughnessy, chairman and CEO of O’Shaughnessy Asset Management: In the first few editions of my book, I proclaimed price-to-sales to be the "king of value factors". At the time, I only looked at individual factors and price-to-sales proved itself to be head and shoulders above all the others. This was a rookie mistake. I should have remembered you can make anything look good if you varied the amount of time in your analysis. I thought, with decades of data, surely things won’t change that much going forward? But they do. Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. As we continued to update the book, price-to-sales was no longer the "best" single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis and realised that everything, including factors, moves in and out of favour, depending on the market env...
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