Analytic Investment Management LLC

Invest Prudently

value investing

Proven Stock Investment Methods

Here we collect powerful techniques for anyone interesting in systematic and emotionless stock investment portfolios through number crunching.

Classic Papers

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  • A Conversation with Benjamin Graham, Financial Analysts Journal, 1976.
  • Investment Performance of Common Stocks in Relation to Their Price-Earnings Ratios: A Test of the Efficient Market Hypothesis, S. Basu, The Journal of Finance, 1977.
  • The Relationship Between Return and Market Value of Common Stocks, Rolf W. Banz, Journal of Financial Economics, 1981.
  • The Cross-Section of Expected Stocks Returns, Eugene F. Fama and Kenneth R. French, The Journal of Finance, 1992.
  • Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers, Joseph D. Piotroski, Journal of Accounting Research, 2000.

Books

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Value Investing Books

The global bear market from 2008 to 2009 were one of the worst in history, traditional asset allocation approach were proven to be deadly wrong for retirement accounts since simultaneously all assets went down heavily and none of the asset classes can recover quickly back to previous high when the crisis was over. The only thing continues to weather the storm well and can quickly recover from bear market draw down and make equity high is value investing approach – buy quality investments at low price and sell when they become expensive.

One of the best value investing books written for 8 year old kids to 80 year old retirees is “The Little Book That Beats The Market” by Joel Greenblatt, who uses a simple story to explain an easy yet powerful magic formula. Here are some quotes from Chapter 11 of the book: “Choosing individual stocks without any idea of what you’re looking for is like running through a dynamite factory with a burning match. You may live, but you’re still an idiot.” “Most people have no business investing in individual stocks on their own.”

Another book offering timeless quantitative value investing strategies is from James O’Shaughnessy: “What Works on Wall Street” The price-to-sales ratio strategy revealed in his 1997 book proves again to be a run-away winner in 2009 recovery.