Comments on: Easy Concept, Potentially Profitable Investing Strategy http://ChromaInvesting.com/2010/03/02/easy-concept-potentially-profitable-investing-strategy/#utm_source=feed&utm_medium=feed&utm_campaign=feed Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman Fri, 30 Mar 2012 00:33:39 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: chroma http://ChromaInvesting.com/2010/03/02/easy-concept-potentially-profitable-investing-strategy/comment-page-1/#comment-56 chroma Fri, 05 Mar 2010 20:06:27 +0000 http://ChromaInvesting.com/?p=1666#comment-56 It is a given that high ROA is a good thing, right. I am not sure that the findings are mutually exclusive since this all refers to growth. The question for me is is there any advantage to a high ROA stock with low Asset growth over a low ROA stock with low asset growth. What do you think. The GDP growth study is also very interesting. How do we captialize (pun intended) on this research? Parker, thanks for coming by and for the thoughtful contributions. It is a given that high ROA is a good thing, right. I am not sure that the findings are mutually exclusive since this all refers to growth. The question for me is is there any advantage to a high ROA stock with low Asset growth over a low ROA stock with low asset growth. What do you think. The GDP growth study is also very interesting. How do we captialize (pun intended) on this research? Parker, thanks for coming by and for the thoughtful contributions.

]]> By: Parker Bohn http://ChromaInvesting.com/2010/03/02/easy-concept-potentially-profitable-investing-strategy/comment-page-1/#comment-53 Parker Bohn Fri, 05 Mar 2010 10:37:14 +0000 http://ChromaInvesting.com/?p=1666#comment-53 Here's one that blew my mind when I first encountered it: Stock markets in countries with low GDP growth outperform markets in countries with high GDP growth. For instance, here is data to that effect: http://www.brandes.com/Institute/Documents/Case%20for%20Emerging%20Markets%20071105.pdf And a quote: "The professors' findings demonstrated that the highest returns were associated with countries in the lowest quintile of GDP growth" My takeaway here is that both high GDP growth and high ROA are positives, but that attractive assets with high growth rates are often over-priced, and thus underperform going forward. Here’s one that blew my mind when I first encountered it: Stock markets in countries with low GDP growth outperform markets in countries with high GDP growth.

For instance, here is data to that effect:
http://www.brandes.com/Institute/Documents/Case%20for%20Emerging%20Markets%20071105.pdf

And a quote: “The professors’ findings demonstrated that the highest returns were associated with countries in the lowest quintile of GDP growth”

My takeaway here is that both high GDP growth and high ROA are positives, but that attractive assets with high growth rates are often over-priced, and thus underperform going forward.

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