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Strategies & Market Trends : Value Investing

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To: Ray Dopkins who wrote (2551)	11/29/1997 2:12:00 AM
From: James Clarke	of 78683

So what you're telling me is that if I can predict next year's earnings perfectly I can outperform the market. Thanks, I never thought of that. But I have a better idea. I bet your "backtest" would show that stocks trading at a low multiple to next year's share price will outperform even more! Imagine that - all you have to do is know next year's share price and you can outperform the market. That sounds easy. (before you start running the test, this is sarcasm) The idea of a backtest is to test real time information, not information that you will only know when the price is already up. Spend your time figuring out how to predict next year's earnings, because your backtest is not worth the paper its printed on if you can't do that.

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