What Works on Wall Street (O'Shaugnessy) Message Board

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Strategies & Market Trends : What Works on Wall Street (O'Shaugnessy)

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To: John Langston who wrote (24)	3/18/1997 8:03:00 PM
From: sea_biscuit	of 109

Hi John : I was finally able to get a copy of Fisher's "Super Stocks" from the library. Unlike O'Shaughnessy, Fisher does discuss the industry specificity issue, albeit in a rather indirect manner. What he says is that sometimes, a low PSR might be misleading, or, on the other hand, a high PSR might dissuade the investor from buying a stock. So, in addition to PSR, he introduces the concept of PRR (Price to Research Ratio). He says it is particularly useful when dealing with technology stocks. The PRR is similar to PSR except that here, we take the ratio of the stock price to the research expenses per share. According to Fisher, PRR values of 5 to 10 are reasonable (the lower the better) while values of 15 or more are not attractive. Fisher makes it clear that this is a very approximate number and readers should allow for a 20% slack in the calculations. i.e. we should not try to differentiate between two companies on the basis of PRRs alone if the values are close enough, like 10.4 and 11.2, for instance. Dipy.

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