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To: Jack Hartmann who wrote (148)	11/10/2000 3:42:37 AM
From: Paul Senior	Read Replies (1) of 164

Jack Hartmann: thanks for posting the growth vs. value article. I found it interesting as well as disturbing. I'm mostly a value investor, have read most popular value studies such as David Dreman's books, O'Shaugnessy, etc. which show that low pe investing beats high pe (or those stocks with low to negative e/p -- for those high flyers which have very little earnings or even losses and hence no or infinite p/e). I don't have much faith in this guy Niederhoffer-- he was the wealthy stock speculator who was driven out of business a couple of years ago, I believe. Okay, a lot of the article is comparing low pe performance to Value Line picks which are Group 1 (most attractive). I suspect that two factors might be important: The timeframe selected for the study, and the practicality or impracticality and cost of having a rather large Value Line type portfolio that often (or quite often?) has to be rebalanced. The Niederhoffer article seems to show that Value Line does very well indeed by its methodology (pick high pe stocks, high momentum stocks). I've linked below the performance of Value Line's actual funds which might use this technique. And the results don't seem so attractive at all. (Again, this could be due to the time period.) Perhaps Value Line group 1 stocks do perform better than Value Line stocks with low p/b, low p/e. And perhaps even a random selection of stocks from the NAS100 perform even better than Value Line's Group 1. I just don't believe enough people who've actually made money over many years support Mr. Niederhoffer's view of this kind of categorical growth investing (high pe) over value. Nor do academics support Mr. Niederhoffer's conclusion , it seems to me. quicktake.morningstar.com quicktake.morningstar.com Paul Senior

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