2 ms·

If you are measuring value with price/book, you have no hope. The conceit of the "value factor" is wrong-headed: trying to measure value quantitatively is like

If you are measuring value with price/book, you have no hope. The conceit of the "value factor" is wrong-headed: trying to measure value quantitatively is like trying to measure the aesthetic appeal of art quantitatively. It just makes no sense. Quant screens turn up the most uninvestable garbage. The only people who invest that way, haven't ever looked properly at the companies they are investing in (I use value quant screens for shorts now, the flow of money into quant means they are usually comically overpriced). More to the point though: value is only determined in hindsight. A company trading on 30x earnings can be cheap. The only "value factor" that is closely correlated to returns is 5yr forward earnings. If you think a computer can predict earnings five years forward...great, but they can't. Also, if you aren't managing $10bn+ you shouldn't be looking at Ford. Don't make it difficult.

Hypx 7y ago
> Quant screens turn up the most uninvestable garbage. The markets right now are filled with uninvestable garbage. It's not a value-only thing. Any viable investment strategy is either a broad based passive investment, or one where you'll have to pick your stocks carefully.
jdsully 7y ago
Value investing as Graham and Dodd described it is a very specific strategy. Future earnings are hard to predict or calculate - but factories, land, and cash exist and have real value that is computable. Right now the market is saying one of two things with a 1.0 price/book: 1) Ford's ongoing business is currently worth $0 OR 2) Ford's capital assets are currently worth $0 It's much easier to make a judgement call on those predicates which are based in the present rather than predict the future.