Study Reveals New Predictive Factors for Stock Performance

A recent study by finance professors at the University of Missouri and Renmin University of China set out to analyze the predictive power of more than 18,000 factors with respect to stock performance over past decades, according to a recent article in Barron’s. “That’s good news for stock-pickers,” the article reports, adding that some of the more familiar clues (such as price-book ratio, for example) rank “surprisingly high in predictive power.” Topping the list, it adds, was “ballooning leverage” (increasing total liabilities relative to assets). The study revealed certain factors as solid predictors of outperformance were counterintuitive, such as high […]

Higher Earnings are Driving Stock Gains

The biggest U.S. companies have started a new growth streak and more good  news is expected in the coming quarters, says an article in last week’s Wall Street Journal. Citing FactSet data the article states “fourth-quarter earnings are expected to log an increase of 4.6% from the same period a year ago, the article states that this would mark the second consecutive quarter of year-over-year growth. “ “As for the overall market,” says WSJ, “corporate tax reform, infrastructure spending and fiscal stimulus have helped push the Dow Jones Industrial Average up about 13% since the election.” Still, it says, rising […]

Investing Principles Part IV: Buying Stocks That Have Declined in Price

As our discussion of the Tweedy Browne publication What Has Worked In Investing continues, we’re going to look at the strategy of investing in poorly performing stocks both domestically and globally. The concept of value investing lives at the core of our stock screening strategies inspired by gurus Benjamin Graham, David Dreman, John Neff and Warren Buffett (who subscribes to the notion that “Price is what you pay; value is what you get.”). Each of these legends has earned fortunes by investing in companies whose stocks were selling on the cheap relative to the underlying values of their businesses. Such […]