Below is the performance of the top 5 stocks by fundamental ratios that we posted from our watch list dated January 4, 2019 to December 27, 2019:
When looking at the data, we prefer to compare the performance of companies on a spectrum of relative values. For this reason, we have compared the High P/E stocks against the Low P/E stocks, High P/B to Low P/B etc.
Long held views on fundamental value investing suggest that investors choose the stocks in the “low” categories over the “high” categories, except in the case of yield. Our attention to the spectrum of data that is available to us points to the fact, so far, that the “high” categories require significant attention as they offer significant potential reward.
The category to beat from our January 4, 2019 watch list was the High P/E group as opposed to the Low P/E group where the gain was +47.06% as compared to +24.02%, respectively.
The second best category in 2019 was the High P/B group with a 2019 gain of +40.35% as contrasted with the Low P/B group which gained +23.88%.
The third group, in terms of performance, was the Low Yield stocks with a gain of +16.25% (failing to beat the index), which stood at nearly 3 times the gains of the High Yield (similar to the Dogs of Dow) stocks with gains of +6.53%.
Last but not least, the High Payout (dividend payout relative to earnings) stocks gained +27.17% as compared to the Low Payout stocks gain of +10.42%.
In the last year, the Dow Jones Industrial Average gained approximately +22.34%.
