{"id":879,"date":"2015-02-17T13:49:35","date_gmt":"2015-02-17T13:49:35","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=879"},"modified":"2015-02-17T13:51:03","modified_gmt":"2015-02-17T13:51:03","slug":"outperformers-likely-continue-outperforming","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/business\/outperformers-likely-continue-outperforming","title":{"rendered":"Outperformers likely to continue outperforming"},"content":{"rendered":"<p><a href=\"http:\/\/www.thebizsense.com\/views\/files\/2015\/02\/price-share.jpg\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-880\" title=\"price share\" src=\"http:\/\/www.thebizsense.com\/views\/files\/2015\/02\/price-share.jpg\" alt=\"price share\" width=\"580\" height=\"314\" srcset=\"https:\/\/www.thebizsense.com\/views\/files\/2015\/02\/price-share.jpg 740w, https:\/\/www.thebizsense.com\/views\/files\/2015\/02\/price-share-300x162.jpg 300w\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" \/><\/a><\/p>\n<p>Continuing to ourperform &#8211; outperformers. <em>This article follows on from, <a title=\"Book value to market price\" href=\"http:\/\/www.thebizsense.com\/views\/book-value-market-price\" target=\"_blank\">Book value to market price<\/a>, wherein what successful investors use heuristics to shape their strategic decisions, was mentioned<\/em><\/p>\n<ul>\n<li>The FT\u2019s James Mackintosh reported recently: \u201cMomentum has been the most rewarding bet of the past 40 years. It beat the market and outperformed other popular investment strategies including buying small companies, value investing and picking stocks that are cheap on measures such as price-to-book or price-to-earnings\u2026<\/li>\n<\/ul>\n<p>\u201cIt even beat the market after adjusting for the extra volatility caused by buying into bubbles and losing big when the bubbles burst.\u201d<\/p>\n<p>Bernstein reports that between January 1927 and March 2013 a portfolio of high-momentum stocks \u2013 those with high short-term returns \u2013 beat a comparable portfolio of low-momentum counters by an average of nearly 7 per cent a year.<\/p>\n<ul>\n<ul>\n<li>Growth companies in general \u201care lousy stocks.\u201d That\u2019s because everyone already knows they are great companies, so they bid up the price of their stocks. \u201cThere is good evidence that investors in general pay way too much for this earnings growth.\u201d<\/li>\n<\/ul>\n<\/ul>\n<p>A classic 1993 study by Russell Fuller and colleagues showed that high PE growth stocks did not increase their earnings in subsequent years nearly enough to compensate for their high prices. \u201cGrowth stock investing is a losing proposition.\u201d<\/p>\n<ul>\n<ul>\n<li>If dividends are important to you, you are less at risk in a market catastrophe. Over the 1929-32 period American stocks lost on average 90 per cent of their value, but their dividend payments only fell by 50 per cent.<\/li>\n<\/ul>\n<\/ul>\n<p>High-dividend stocks are also outperformers. A 2011 study by London Business School researchers of 19 nations over 113 years showed a consistently positive relationship, with those in the high-dividend category returning an average of 13.4 per cent a year, the lowest-yielders only 5.5 per cent.<\/p>\n<ul>\n<ul>\n<li>Winning strategies may not be repeatable, or disappoint, because too much copycat money flows into them. The famous John Templeton \u201cmade out\u2026 like a bandit\u201d because he was the first to see the potential in neglected \u201cpenny\u201d stocks.<\/li>\n<li>Because REITs \u2013 real estate investment trusts \u2013 have to distribute 90 per cent of their earnings as dividends, and can therefore only invest a small portion of their earnings in their operations, their dividends grow more slowly than those of other listed companies \u2013 \u201cmore slowly than inflation, in fact, by about 1 per cent per year.\u201d<\/li>\n<li>Political favouritism depresses long-term returns of some asset categories because it makes them more expensive to buy. Conservatives favour precious metals \u201cin opposition to the spectre of paper fiat currencies that can easily be debased by evil governments,\u201d while liberals \u201ctend to favour alternative energy stocks and avoid the manufacturers of tobacco, alcohol and firearms.\u201d<\/li>\n<li>\u201cExcept in extraordinary circumstances, I don\u2019t like corporate bonds.\u201d Besides their equity-like behaviour in a market panic, there is an inherent conflict of interest between bondholders, whose only concern is the safety of their interest and capital at maturity date, and shareholders, always tempted to raise debt to boost equity returns.<\/li>\n<\/ul>\n<\/ul>\n<p>The problem with most bonds, especially the higher-risk \u201cjunk\u201d variety, is that they lose so much value at exactly the point when you need the most cash out of them to buy equities and other assets that have become cheap.<\/p>\n<ul>\n<li>Avoid hedge funds. The market is overcrowded and they are \u201csavaged by high fees.\u201d Over the past decade \u201cyou would have done just as well investing mainly in [Treasury] bills, spiced with a soup\u00e7on of stocks, and at much lower cost.\u201d<\/li>\n<li>Bernstein favours the Dimensional US Large Cap Value fund, which passively invests in companies with the highest BTM ratings. Over the 15-year period to November 2013, the fund delivered average annual earnings growth of 9.31 per cent, compared to 7.69 per cent for the S&amp;P 500.<\/li>\n<\/ul>\n<p>Bernstein reckons that investors shouldn\u2019t expect to achieve anything better over the long term than average growth, or something close to it, and even that will be difficult.<\/p>\n<p><em>copyright: Martin Spring of OnTarget<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Continuing to ourperform &#8211; outperformers. This article follows on from, Book value to market price, wherein what successful investors use heuristics to shape their strategic decisions, was mentioned The FT\u2019s James Mackintosh reported recently: \u201cMomentum has been the most rewarding bet of the past 40 years. It beat the market and outperformed other popular investment strategies including buying small companies, value investing and picking stocks that are cheap on measures such as price-to-book or price-to-earnings\u2026 \u201cIt even beat the market after adjusting for the extra volatility caused by buying into bubbles and losing big when the bubbles burst.\u201d Bernstein reports <\/p>\n","protected":false},"author":1,"featured_media":880,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"amazonpipp_noncename":"","amazon-product-isactive":"","amazon-product-single-asin":"","amazon-product-content-location":"","amazon-product-content-hook-override":"2","amazon-product-excerpt-hook-override":"3","amazon-product-singular-only":"","amazon-product-amazon-desc":"","amazon-product-show-gallery":"","amazon-product-show-features":"","amazon-product-newwindow":"2","amazon-product-show-list-price":"","amazon-product-show-used-price":"","amazon-product-show-saved-amt":"","amazon-product-timestamp":"","amazon-product-new-title":"","amazon-product-use-cartURL":"","amazon_featured_post_meta_key":"","_amazon_featured_alt":"","amazon-product-template":"","footnotes":""},"categories":[1,103,3,112,9,170],"tags":[287],"class_list":["post-879","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-europe","category-investments","category-markets","category-news","category-opinion","tag-outperformers","has_thumb"],"yoast_head":"<title>Outperformers likely to continue outperforming - TheBizSense Views<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.thebizsense.com\/views\/business\/outperformers-likely-continue-outperforming\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Outperformers likely to continue outperforming - TheBizSense Views\" \/>\n<meta property=\"og:description\" content=\"Continuing to ourperform &#8211; outperformers. This article follows on from, Book value to market price, wherein what successful investors use heuristics to shape their strategic decisions, was mentioned The FT\u2019s James Mackintosh reported recently: \u201cMomentum has been the most rewarding bet of the past 40 years. It beat the market and outperformed other popular investment strategies including buying small companies, value investing and picking stocks that are cheap on measures such as price-to-book or price-to-earnings\u2026 \u201cIt even beat the market after adjusting for the extra volatility caused by buying into bubbles and losing big when the bubbles burst.\u201d Bernstein reports\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.thebizsense.com\/views\/business\/outperformers-likely-continue-outperforming\" \/>\n<meta property=\"og:site_name\" content=\"TheBizSense Views\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/www.facebook.com\/TheBizSense\" \/>\n<meta property=\"article:published_time\" content=\"2015-02-17T13:49:35+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-02-17T13:51:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.thebizsense.com\/views\/files\/2015\/02\/price-share.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"740\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"bizadmin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"bizadmin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming\"},\"author\":{\"name\":\"bizadmin\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\"},\"headline\":\"Outperformers likely to continue outperforming\",\"datePublished\":\"2015-02-17T13:49:35+00:00\",\"dateModified\":\"2015-02-17T13:51:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming\"},\"wordCount\":651,\"commentCount\":1,\"image\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2015\\\/02\\\/price-share.jpg\",\"keywords\":[\"Outperformers\"],\"articleSection\":[\"Business\",\"Europe\",\"Investments\",\"Markets\",\"News\",\"Opinion\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/business\\\/outperformers-likely-continue-outperforming\",\"name\":\"Outperformers likely to continue outperforming - 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