Sunday, 25 December 2011

What do you need to beat the market? Higher mathematical expectancy


What do you need to beat the market?  


You need to pick stocks of companies that have a higher mathematical expectancy than that of the market, example, the S&P 500. 

Of course, this could come in many forms, for example:
- a higher earnings yield (low PE), 
better growth prospects (high EPS growth rate), 
higher certainty in the company’s future prospects (good quality business and management), or 
- a cheaper stock price in relation to the business’s underlying assets (undervalued stock).  

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