In the 2011 academic paper “Another look at trading costs and short-term reversal profits“, the authors (De Groot et al) speculate that a simple mean reversion strategy in US stocks is able to significantly outperform the market. The strategy seems to have promise, especially when used in a rotational setting with smart allocation.
The price-to-earnings ratio, or PE ratio, is one of the simplest but most popular financial ratios for estimating the value of a stock. Even though the PE ratio is simple, it’s an amazingly useful tool. In fact, a study by Merrill Lynch found that 33% of professional investment managers consider the PE ratio before investing in a company. […]
I never recommend trading off tips. It doesn’t matter whether it’s your next door neighbour or Warren Buffett, if someone tells you to buy a stock you should always do your homework first before you put any of your own money on the line.
Recently, I have been doing more research into portfolio trading strategies, particularly those that are based on financial ratios such as PE ratios. I seem to like these strategies because they appear to be robust, possibly more so than purely technical trading systems. They appeal more strongly to my logical side, the part of my brain […]
A new day trading strategy idea In previous articles I have blogged about the high risks involved with day trading. I have also spoken of my preference for trading strategies that combine both technical analysis AND fundamental analysis. Much like Bruce Kovner in the original Market Wizards, I find that fundamentals can add real strength […]