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Strategies & Market Trends : Value Investing

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To: petal who wrote (77906)	8/19/2025 7:15:59 AM
From: Elroy	Read Replies (2) of 78516

Buy a basket of the 20-30 co.'s with has the highest ROIC and lowest EV/EBIT. This sounds interesting, but one thing I've never understood about this type of investing is the following: Say you examine 500 companies, and you choose the 10 with the highest ROIC and lowest EV/EBIT. Then the last one to enter your "group of 10" has a share price increase. It is now 11th out of the 500 companies, and a stock which you don't own used to be 11th but is now 10th. What do you do? You no longer own the 10 companies that best fit your metrics, you own 1-9 and #11. Do you sell the stock which appreciated in value to make it #11 and buy the new #10? If so, what if the share price appreciation (the next day) of this now #11 ranked stock goes right back down to where the stock is #10 again, but you sold it because it moved out of the top ten to 11. Do you buy it back? In other words, I see how you can put on the portfolio, but as the stock prices in your "best metrics" portfolio changes, when exactly do you buy / sell to adjust for the portfolio changes?

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