GM:
If you had actually read the original post on the 3 P/S portfolios, you would see it contained many provisos including that this was taken from the popular stocks discussed on this and the NPI board, was during a market bull, didn’t rebase expansion of multiples, etc. It was never meant to be a scientific study, just observational and as you may know, most studies are spawned first from observations.
Why were these specific stocks chosen vs a huge landscape of stocks?? Because these were the best and brightest selections that were chosen from the heap of all stocks as having best prospects…these selections were by design a selection bias…and should have been.
I have read James O’Shaughnessy many times over the years…he is largely a value investor and longer term holder. I know he is a quant also and we all know that 70% of stocks trade by software algorithms.
But I think you too readily dismiss this thread in an attempt to be provocative…and I am saying this from the perspective of someone who also believes that there is too high a price to pay for a stock. We had a great thread at the NPI were we challenged everyone to come up with stocks that reached a P/S of > 20 and what the returns had been in the subsequent 3 years. That exercise was very telling IMO.
But you are dismissing the momentum style investing by claiming that it doesn’t hold water to a completely different style of investing in stocks that were long term buy and holds. Tell me what the average hold time is for a stock at the NPI or Saul’s? These are actively traded stocks and far different from James O’Shaughnessy’s brain dead long term buy and hold stocks…apples and orange comparisons.
BTW, have you looked at the results of his funds in comparison? https://www.osfunds.com/
The quants are really in vogue right now…how are you using them in your investments specifically??
Darth:
The ESTC (not in the original portfolio) price was taken properly…one cannot get the IPO price pre-market…the average investor had to wait until it hit the market, it is proper to take what a routine investor could first get the stock at and not preremarket IPO price IMO.