The Price/Book has probably been the most important valuation ratio of the past century. If you look at the academic research that supports value investing, you won’t find any other ratio that is referenced more often. When Fama and French built their famous 3 factor model, value was measured using the Book/Market, which is the inverse of the Price/Book, and much of the academic research since then has followed suit. Since many quantitative value funds and ETFs take their lead from the academic research, they have also relied more heavily on the Price/Book than any other valuation ratio.
In this episode, we are going to try something a little different. Our goal at Validea is to capture quantitative strategies that work over the long-term. To do that, we go through books and academic papers to find factor-based models with results to back them up. We are going to periodically do some episodes for the podcast where we do a deep dive into these strategies and look at the factors behind them. In the first episode, we will take a detailed look at our strategy based on Warren Buffett, which was extracted from the book Buffettology. But before we look at the strategy's criteria in detail, we start with a more basic question: Can Warren Buffett be quantified?
We all have a tendency to believe that the way we invest is the best way. As quantitative investors, we can sometimes feel that there is no reason anyone should ever use a discretionary strategy. But like most issues in investing, there are two sides to this argument. In this episode, we talk about quantitative and discretionary investing and the benefits of each.
Validea is an incredible valuable tool to have. I depend on it for much of my research to help weed out stocks for my portfolio designs. The filters used for stock selection are easy to use and comes with a detailed analysis
as to the why each particular stock either passes or fails the test. The articles & blogs are a great wealth of knowledge too.
As a retail investor, I particularly value Validea’s top-notch research capability. With the deluge of investment commentary available via innumerable blogs, articles, FinTwits, white papers, podcasts, etc., the Validea team is one of my go-to sources to maintain some perspective
on what's really happening.
I am always checking my investment/trading ideas with Validea. I feel better knowing that any of the guru models they are following might also be on my side!
Find Your Edge With Validea's Quantitative Investing Tools
Analysis of 6000+ stocks using the proven strategies of investment legends like Warren Buffett, Benjamin Graham and Peter Lynch. See the details behind "why" some stocks look good and others don't through the guru methodologies.
Screen for stocks that pass the strategies of investment legends such as Joel Greenblatt, John Neff and Martin Zweig. Combine multiple strategies together or add in fundamental filters to refine your result set.
Our trend following system covers over 45+ asset & investment classes and seeks to help limit losses during major market declines while maintaining a disciplined re-entry method when prices revert. Get alerted when the signals change between Buy and Sell.
Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach.
Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the
optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.
Both the model portfolio and benchmark returns presented for all equity portfolios on Validea.com are not inclusive of dividends. Returns for our ETF portfolios and trend following system, and the benchmarks they are compared to, are inclusive of dividends. The S&P 500 is presented as a benchmark because it is the most widely followed benchmark of the overall US market and is most often used by investors for return comparison purposes. As with any investment strategy, there is potential for profit as well as the possibility of loss and investors may incur a loss despite a past history of gains. Past performance does not guarantee future results. Results will vary with economic and market conditions.