The problem with single-factor valuation ratios is that they move “in and out of favor” and can significantly underperform the overall market over any given 10-year period despite their long-term outperformance. The solution ? A valuation factor that uses a few valuation measures overcomes this problem by giving you a list of companies that are undervalued based on a few valuation measures and thus more consistent returns. The use of a “value composite” to measure undervaluation rather using the single valuation ratio of for example price-to-sales or book to market. O’Shaughnessy found that stocks selected based on the value composite…
'Vc1' Based on Five Common Valuation Metrics
Guest Post
If you are interested in contributing to ValueWalk on a regular or one time basis read this post http://www.valuewalk.com/guest-posts-hedge-fund-letters/ We do not accept any outside posts or even ads on penny stocks, ICOs, cryptos, forex, binary options and related products.