Academic Finance Research and Insights

Portfolio Allocations using Enterprise Multiples (and others)

By |August 22nd, 2017|Factor Investing, Value Investing Research|

A common question asked in the factor investing field is the following -- "how much of the model's performance is driven by sector allocations, and how much is driven by security selection?" Our answer is to simply buy Value stocks or Momentum stocks, regardless of sector constraints. Why? Well a nice anecdote (but not data) is that investing in "cheap" technology stocks was not a great idea in the internet bubble crash.

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