Chapter 9

Winning Value Strategies

Next on deck is Value. Some may think value investing is boring. Or that you have to sacrifice returns for safety. Neither could be further from the truth. In fact, value investing has proven to be one of the most successful forms of investing over time. Value investing became famous from legendary investor Benjamin Graham and more recently Warren Buffett. Let’s take a look at some winning Value style screens that work for both traders and investors.

There are five different value screens in this chapter, and a detailed performance study on the best valuation metrics and their results. Regardless of your trading style, there are some great tips to pick up in this section. And you’ll probably look at value in a whole new way.

Value and Spark

As you’ve seen from several of the screens I have already highlighted, I’m a big fan of employing valuation metrics in virtually all of my styled approaches. And why not? The inclusion of these measures will typically reduce my risk and actually add to my returns. Plus, as I’ve said before, if I can buy a stock that I believe is at a quantifiable value, all the better. That, of course, will not prevent a “cheap” stock from ever going against me. But if a stock is going to be taken down, there’s potentially more room for it to fall if there are excesses built into it than if it’s intrinsically undervalued.

Let’s dig deeper into these valuation metrics with our first value screen. But as I mentioned before, ...

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