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

To: Ray Dopkins who wrote (2551)	11/28/1997 7:05:00 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78652

Ray Dopkins: Wow. Investing is just sooo e a s y. Buy low pe's when you have perfect vision of next year's earnings. Buy low pe's vs. high pe's. Who'da known that? No wonder them quant guys is all rich -g-... And I thought it was just from their inflated salaries -g-. Well here's a couple of things this chap missed: 1) Buying stocks with no earnings -- infinite pe. What's that look like? 2)How about checking 18 months out instead of just "next year", so's we can get capital gains break. There's a study out (which I don't have a cite for) that says low pe's don't work that far out -- the high pe's catch up. (Maybe there is a good reason people pay up for earnings -g-). And now a coupla questions for everybody: What's the first quantitative figure or ratio you guys look at when researching a company? And what's the last? I say pe should be last. Paul

To: Ray Dopkins who wrote (2551)	11/29/1997 2:12:00 AM
From: James Clarke	Respond to of 78652

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.