Never Buy Expensive Stocks. Period. by Wesley R. Gray, Ph.D., Alpha Architect Author, Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors We did a recent internal simulation study on the performance of cheap and expensive stocks based on a variety of valuation metrics. We looked at all our favorites from our JPM paper “Analyzing Valuation Measures: A Performance Horse Race over the Past 40 Years:” EBIT/TEV EBITDA/TEV B/M Gross Profits / TEV FCF / TEV This research is part of a larger academic paper, but I did want to highlight one aspect of our study that we thought more…
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- Never Buy Expensive Stocks. Period. by Wesley R. Gray, Ph.D., Alpha Architect Author, Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors
- How Does Our Simulation Work?
- What Do the Returns to Value and Growth Look Like?
- What Do the Risks to Value and Growth Look Like?
- Conclusions
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