Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (13921)	2/13/2002 3:18:52 PM
From: sjemmeri	Read Replies (1) \| Respond to of 78628

I've been a fan of p/s ever since reading O'Shaughnessy's books. Of course, he favored combining low p/s with price momentum. This combination eliminates eternally low p/s businesses unless the price has been moving up. (As we've learned over time here, most value investors can't buy stocks with price momentum even while holding their nose.) I like p/s because revenues are less fudged than earnings. Also, as your comment below indicates, far fewer investors are looking at p/s. >In my opinion, in eliminating annual p/sales and book value/sh, they are saying these figures are not as important to their readers as other metrics which they substituted.

To: Paul Senior who wrote (13921)	2/13/2002 3:57:45 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78628

<<concluded psr is not significant to him in his stock selections>>Maybe Fisher's become more aware of PSR's shortcomings in not factoring in debt structure. That's why I moved away from it. If comparing companies whose debt structure differs or the same company over time where they've substantially changed the debt/equity ratio, your going to get misleading comparisons. A company with very low PSR may be using mostly debt...with just a stub of equity. So what looks like a bargain may just be treading on thin ice. The main attraction of using PSR's was that sales are tougher to fudge than net income. Two aways to get around PSR's limitations would be: 1) to combine PSR screening with Debt/equity range; 2)Use enterprise multiples like EV/Sales which factor in debt.