Posted by VenFx > 2018-08-12 18:34 | Report Abuse

At least the above selected has their own edges as a small penny.
Should try with different cap eg. < $300m ; > 1000m ; and 5000m .

Posted by Jeffbkt > 2018-08-12 19:28 | Report Abuse

AM is not the only indicator. It has to come with some other indicator like roic, quick ratio, dy, free cash flow. And don’t forget the target price. If you can’t even give a target price then how you know what kind of upside potential you are getting into.

How to calculate target price is based on your ability to use dcf, absolute pe etc and you have to find one that suit you based on your years of experience. Put your self like a biz men, if you want to buy something and sell it later what you need to do?

Besides if the stock continue to give good dividend and the biz is still relevant then you should buy more when the price came down else you should have cut lost earlier. To do so, you have to really study the qualitative part not only quantitative from annual report, quarterly report and any report relevant to the company to know the future of the company biz.

Last but not least if it is so simple just based on one indicator to invest, think everyone become very rich now. So always ask yourself is it too good to be true.

Posted by qqq3 > 2018-08-12 19:29 | Report Abuse

eat and wear how much is fated.

same method same strategy at different times yield different results.

Posted by qqq3 > 2018-08-12 19:31 | Report Abuse

one more thing.....tests are not falsifiable unless the start and end dates are clearly defined.

Posted by qqq3 > 2018-08-12 19:32 | Report Abuse

stock market got phases...at each phase , best strategy is different.

Posted by feimah > 2018-08-12 19:47 | Report Abuse

Jeff is right..
You need to select a sector with high potential growth before you apply your AM or other key ratio in stock selection.
IMO DFC only works if the counter command large scale of market share or holding monopoly rights.
Always cutloss if qtr report sales or sector in declining trend.

Posted by lizi > 2018-08-12 20:46 | Report Abuse

Forget about ev/ebitda or other fancy ratio. Keep it simply...u want earning play stick to simply earning play which uncle koon already mention many time, eps !!.

Posted by InvertInvestment > 2018-08-12 23:35 | Report Abuse

>VenFx
I would like to know how that would turn out to be. Unfortunately I don't tool to do that kind of backtesting

>Jeffbkt
I agree there are numerous ratios we could and should use to make an investment decision, and we should always set a target price before putting in money (otherwise how would we know it's underpriced right?).

But for the sake of this quantitative approach, it's buying 10% of all the stocks (in S&P 500 or Rusell 2000 or whatever you name it) with the lowest AM, hold them for one year, and then sell them, and redo the same thing (find stocks with the lowest AM again) for the next year.
Cheers

Posted by InvertInvestment > 2018-08-12 23:37 | Report Abuse

>qqq3
The experiment is done with one year period, hence start date and end date are defined right at the beginning. And regarding your comment "stock market got phases...at each phase , best strategy is different.", I sense something cyclical? :)

Posted by VenFx > 2018-08-12 23:41 | Report Abuse

Posted by InvertInvestment > Aug 12, 2018 11:35 PM | Report Abuse 

>VenFx 
I would like to know how that would turn out to be. Unfortunately I don't tool to do that kind of backtesting 

ME : I just share my view, as myself also find troublesome to do such back testing. But, i always start from sector screening and trying very best to dig the future explode - able out ...

Posted by qqq3 > 2018-08-12 23:49 | Report Abuse

I tell u what.....with Trump wars and Malaysia is belt tightening mode.....I will not be value investor if I am you....

I shall become trader, hit and run and curi curi makan.

Posted by Ricky Yeo > 2018-08-13 07:35 | Report Abuse

1. As you mentioned, your portfolio is too small. Probably need at least 30-40 stocks. Deep value relies on a small amount of stocks in the portfolio to cover the losses for most of the stocks. It rely on magnitude of gain over frequency of losses.

2. The reason why it works is because it doesn't work all the time. Similar to Joel Greenblatt's strategy.

Posted by cheahsk > 2018-08-13 08:19 | Report Abuse

Maybe you took action too soon.

Posted by InvertInvestment > 2018-08-13 20:52 | Report Abuse

>Ricky Yeo
"Deep value relies on a small amount of stocks in the portfolio to cover the losses for most of the stocks"
Thanks for comment, would like to know more about this, e.g. where can I get more information about this?

"The reason why it works is because it doesn't work all the time."
Food for thought, erm...

Posted by Fabien Extraordinaire > 2018-08-14 14:08 | Report Abuse

i dont see anything wrong with your strategy of selecting stocks based on low EV/EBIDTA

perhaps you should give yourself more time, say 3-4 years instead of 1 year span for you to conclude the investment outcome. 1 year is too short.

Posted by Fabien Extraordinaire > 2018-08-14 14:10 | Report Abuse

i have both flbhd and favco. both stocks are cheap enough with limited downside risk.