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 : TA-Quotes Plus -- Ignore unavailable to you. Want to Upgrade?

To: TechTrader42 who wrote (5000)	6/27/1998 8:43:00 PM
From: Nine_USA	Read Replies (2) \| Respond to of 11149

The article (below) on the poor performance of low PE stocks in no way refutes the potential for using fundamental stock data to obtain superior investment returns. If this value approach WERE to perform well for a quarter or three, would that validate the methodology? Certainly not. In short, it proves little other than that one or two variables (Ta of Funny) are not likely to work for any long period of time. PE and low price to book are only 2 of a very large number of variables available in QP2. To limit fundamental analysis to these 2 variables is akin to limiting TA to buying when a stock drops back to its 200 day moving average. Fundamental stock data are correlated to price. The early possession of this information by insiders may make it difficult or impossible for the rest of us to profit from this approach. And certainly, such systems would be complex and difficult to devise. But I have not seen many TA oriented investors finding they have been exceeding a simple SP500 Index fund for the last few years. Particularly when the relatively high beta stock selections I see coming out of many TA filters are compared with the beta of the SP500. I think returns exceeding a measure such as the SP500 may be had using technical analysis as well as a fundamental data approach. More likely is an approach involving both. ----- No bargains for the value investors High PE stocks fueled S&P's second-quarter gains By Don Scott, CBS MarketWatch Last Update: 10:01 AM June 26, 1998 NEW YORK (CBS.MW) -- Value investors who look for low price-earnings ratios to guide their stock-picking may be on the wrong track. In the second quarter, 22 large cap stocks with the highest PE ratios were primarily responsible for the second-quarter gains by the S&P 500. The remaining 478 stocks in the index have, as a group, been non-starters. That's according to a new study just completed by David E. Nelson, a portfolio manager at the Legg Mason Funds (www.leggmason.com), which takes a value-oriented approach to investing. Nelson was named portfolio manager for Legg's $205 million American Leading Companies Trust in March and his mission is to improve the fund's performance, which has lagged the market lately. He studies the markets to find growth stocks he can buy at a reasonable value. And he says the market hasn't been rewarding investors who look for traditional value measures like low PE ratios, low price-to-book, and the like. "The strength of the market has been concentrated in the very largest and most expensive stocks in the market," he said.