Saul,
Given your well documented historical performance, I am curious how your strategy has evolved over time. It seems to me that the 1YPEG is a relatively new statistic to identify fast growing companies at a reasonable valuation. Was your past performance achieved using this strategy, or has your strategy evolved with time and experience? I think it would be beneficial to many on this board to learn how your strategy has changed over time, and why.
Thanks for all you do on this board. It has made me (and I’m sure many more) a much more successful investor.
2020investor
4 Likes
Hi 2020,
I always looked for fast growing companies with relatively low PE’s. After all, most of my companies were picked before I “invented” the 1YPEG (or gave it a name anyway), and I wrote almost everything in the Knowledgebase before also. The log graphs I use are a terrific help, and probably one of my most important indicators. What’s evolved with time and experience is no Chinese or third world stocks, no penny stocks, no stocks I don’t understand (SCTY is an example), but the basics and body of what I do hasn’t changed much at all.
Saul
6 Likes
Hey Saul, Jim Slater set out PEG in ‘The Zulu Principle’ (1990), still in print or kindle for those interested.
At the time, I was quite keen on smallcaps (which I define as companies which are unlikely to dilute you too seriously; cap. under, say, $750m) and it was a darn nuisance as the ravening hordes then highlighted every growth bargain in that space.
John Neff in the US had his own ratio, I think growth rate + DY/PE. It is interesting to reflect on the fact that he liked to see the result over 2! Later he tempered this, reluctantly, owing to the market’s multiple having risen substantially since those days of value.