BEV: Business, Economic And Valuation Analysis
Buy, hold and sell decisions are based on a formula that scores the stock valuation in relationship to the company 's business fundamentals and economics.
The system employs, generally, a passive buy-and-hold strategy with minimal re-balancing activity. A stock may be replaced once every 1 to 5 years. Although the research in the attached document, shows the performance of 1, 3, 5, and 10 years holding periods of a single portfolio, the average holding period is 3 to 5 years.
The system invests in small, mid and large cap stocks and is not limited by the size of the company.
BEV is not a rigid system and it is …show more content…
However markets change rapidly, a strategy that works this year, many not work next year. For example, growth investors who invested in Apple during the past several years, would have done very well. While most value investors would have ignored it because they focus on other companies with lower P/E or P/B valuations. In 2015 Apple turned into a value stock rather than a growth stock. Those who invested in Apple in using growth investment valuations lost money. On the flip side, one famed value investors invested in IBM in 2013 only to see the company go on 13 quarters of losing sales and earnings. The only reason that it has not crashed, is the financial engineering of taking on more debt to buy back shares to shore up the EPS numbers, add to that the company is benefiting from the reputation of the same investor and continuous accumulation of shares. The decision error is demonstrated by putting too much weight on valuation and less weight on the economics of industry and the product life cycle