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Not to mention, does "outperform" mean "higher earnings over time relative to stock price" or does it mean "stock prices higher relative to earnings"? The latt
by Eliezer 17y ago
Not to mention, does "outperform" mean "higher earnings over time relative to stock price" or does it mean "stock prices higher relative to earnings"? The latter would seem to be what is predicted, and that's hardly "outperformance".
- jplewicke 17y agoIt should be some measure of market-relative total return, including dividend yield, etc. As far as I can tell from the paper, they don't even adjust for market-relative returns, so if a bunch of unpronounceable companies got launched at the peak of the Internet bubble and proceeded to perform exactly in-line with the market, this would still be counted as underperformance even though it is completely untradeable.