STREET DOGS: Value-oriented strategies beat the market over longer time horizons
Many studies over the years have confirmed that value-oriented strategies beat the market over longer time horizons. Several measures of value have been shown to work. These strategies include selecting stocks based upon low ratios of price to book value, price to earnings, price to cash flow, price to dividends…. These simple value strategies do not always work. However, measured over longer periods, they do. Though these strategies have been well documented, most individual and professional investors do not have the patience to use them. The periods of underperformance makes them difficult — and, for some — impractical to implement. Another problem with these simple methods is that, though they work well, they work far better with smaller and medium capitalisation stocks than with larger stocks. Companies that are too small for professionals to buy and that are not large enough to generate sufficient commission revenue to justify analyst coverage are more likely to be ignored or m...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.