The strategy involves buying 10 of the 30 blue-chip stocks in the venerable Dow Jones Industrial Average that have the lowest price-to-earnings ratios each year
market spawns a plethora of stock-picking strategies, but a simple one has been producing gains for 86 years.
Picking stocks with low P/Es is a classic value-investing technique. It’s one reason why I was pleased to see an update of Graham’s study several years ago from money manager James O’Shaughnessy, who wrote the excellent book,Mr. O’Shaughnessy found that a portfolio composed of the 10 stocks with the lowest P/Es in the DJIA climbed at an average annual rate of 9.2 per cent from June 30, 1937, to June 30, 2004. The DJIA itself moved up 7.0 per cent annually over the same period.
That’s not bad, but the 10-stock high-P/E portfolio fared a touch better, with average annual returns of 8.9 per cent over the same period, while the DJIA climbed by an average of 9.1 per cent annually. I hasten to add that combining the results of the studies may not be perfect because there could be methodological differences between the two. For instance, each study likely defines earnings in a slightly differently way.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
‘Insidious 5’ topples ’Indiana Jones’ at the box office ahead of ‘Mission: Impossible’ launchIndiana Jones\u0027 reign atop the box office was short\u002Dlived.
Read more »
'Insidious 5' topples 'Indiana Jones' before 'Mission: Impossible' launchesIndiana Jones' reign atop the box office was short-lived. In its second weekend in theatres, the Disney release was usurped by another franchise fifth -- 'Insidious: The Red Door.' The horror film starring and directed by Patrick Wilson scared up US$32.7 million in ticket sales from 3,188 theatres, according to studio estimates on Sunday.
Read more »
‘Insidious 5’ topples 'Indiana Jones' before ‘Mission: Impossible’ launchesIndiana Jones’ reign atop the box office was short-lived. In its second weekend in theaters, the Disney release was usurped by another franchise fifth – “ Insidious: The Red Door.”
Read more »
Splatsin calls for traffic light at Okanagan crosswalk where band member was killed - Terrace StandardHarry Jones Jr. was killed while crossing Highway 97A in a marked crosswalk on Canada Day
Read more »