Inflation is your ultimate enemy. Your other enemy: IMPATIENCE

Inflation is your ultimate enemy.  But impatience can be an even worse enemy when it comes to equity investing.

The important thing when you invest in equities is time.

Over the long term - 10, 20, 30 years of longer - equities offer you the best chance to generate returns that will beat inflation. 

To buy equities only to keep them for a short while is a guaranteed recipe for failure.

You therefore have to be aware of

• your time horizon and
• your risk appetite

when you decide to invest in equities.

You should be aware that huge fluctuations can occur and that the portion of your equity holdings should decrease the closer you get to retirement.

Equities carry the highest risk. Why, then, invest in equities?

You can also make a lot of money investing in equities.

During the long term, US stocks gave a historical compound annual return of 11% to its investors.  During the period January 1960 to December 2000, you could have earned a compound after tax return of 16.9% a year on your shares on the South African stock market.

Equities are one of the few asset classes that give you a real chance to fight inflation over the longer term.

The reason for this lies in the nature of equities.  Equities are investments that give you part-ownership in a company.

Companies issue shares because they need money (or capital) to expand. 

• When you buy shares, you own part of the company, including its assets. 
• That explains why, although the value of money decreases with inflation, your investment in a good company can increase as the company grows and the value of its assets increases. 

Note that we say a 'good' company. 

• Not all companies are good companies and not all share prices will increase over time, simply because not all companies will expand and grow. 
• That is why it is important to be clever when you make equity investments.

Besides your share in a company's capital (i.e. its assets less its liabilities), you can also share in its profits by way of dividend payments to the company's shareholders.  This is another reason why investment in equities provides one of the few opportunities to safeguard the REAL VALUE of your capital.  The term 'real' is very important in investment terminology.  It means that you have taken the impact of inflation into account.

The risk involved in equities

You can lose a lot of money investing in equities. 

That is why it is the asset class carrying the highest risk. 

If you had bought shares during the height of the Internet boom in March 2000, you would have lost 72% if you had sold them 18 months later!

Equities are affected by many risks, including:

• commercial risk, for example, interest rate changes and trade cycles
• political risk, for example, negative sentiment about Third World countries
• market risk, for example buying shares at the top (when they are too expensive) and selling them at the bottom (just before prices start to increase again).

Anyone who has invested in equities over the past few years knows how it feels to be on a roller-coaster ride. 

• In the end of the last century, investors witnessed huge stock market crashes (in 1987, and again in 1998), interspersed with a spectacular rise in share prices as investors started to become hyped-up about the new economy and Internet stocks. 
• Then, of course, a major downswing was experienced in September 2001 after terrorist attack in the USA. 
• Due to low interest environment for many years following 911, the US stock market crashed in 2008 due to the subprime credit crunch.

Equity investing: Every time one man buys, another sells, and both think they are astute.

Investing in equities can be compared to an exciting, if scary, roller-coaster ride.

You will need to learn about the dangers of equity investing, but also why you should nevertheless invest in equities.

One of the funny things about the stock market is that every time one man buys, another sells, and both think they are astute. (William Feather)

Reviewing the basics of getting my timing right

If your time horizon, risk tolerance profile and investment objectives remain unchanged,

• it is better not to change your investment portfolio in times of uncertainty, when it may be a temptation to consider selling investments and reinvesting when prices are lower. 
• This technique is known as market timing and is a high-risk strategy simply because nobody knows what the future holds.

Patient investors will be rewarded:  research has shown that missing out on the performance of the stock market for only a few days could have a significant effect on performance.

The techniques of dollar cost averaging and phasing in can be preferable to market timing.

Two techniques for Getting your timing right: 'dollar cost averaging' and 'phasing in' your investments

Experience has shown that investors can benefit from being patient.  Impatience is your big enemy. 

Too often investors panic and sell their shares and equity unit trusts at a low, which could result in substantial losses.

There are two techniques:

• dollar cost averaging, and
• phasing in

which can diminish the negative impact of buying and selling at the wrong times.


Dollar cost averaging

Those who continue investing at regular intervals in the expectation that the market will recover, benefit from dollar cost averaging.

Dollar cost averaging can be used to great effect with unit trusts, because as you buy more units for the same amount as prices fall (or fewere units as prices rise), you will ultimately pay a lower average price for your units.


Phasing in your investments

In times of uncertainty new unit trust investors are faced with a tough choice: 

• should they invest a lump sum, or
• should they phase in their investment over a period? 

They have two possibilities:

A lump-sum investment can be made in

• unit trusts with a large cash element,
• a share component that does not correlate with the general direction of the stock market, and
• a portfolio manager who does not hesitate to take action.

Phasing in:  Prudent or less experienced investors can consider

• phasing in their investments over some months,
• potentially benefiting from lower prices because of downward reactions.

Time, and not timing, is the key to successful investment.

So who has the best chance of success?

Another approach is to disregard the risks of market timing and to ask how great the benefits would have been if an investor's timing had been right.

Let us take a hypothetical situation of 3 people who invested a fixed amount every year for 20 years.

• Person A is extremely lucky and annually invests at a market low, as determined by a particular Stock Market Share Index (JSE All Share Index). 
• Person B is unlucky and annually invests at a market high.
• Person C invests on a 'random' date every year, in this case 31st January.

The compound return earned by

• person A over the period is 14.0% a year,
• while in the case of person B it amounts to 11.3%. 
• person C achieved a return of 12.9% a year. 

(Dividend income was not taken into account in the research.)

It is

• not surprising that an investment at a market low achieved a better return than an investment at a market high, but
• the difference in return between the high and the low/'random' date is less than expected.

Although there are times when you should be more heavily invested,

• the risk of underperformance increases considerably if you are continually with-drawing from and returning to the market. 

Investors who buy and hold have the best chance of being successful.

How does market timing impact on investments?

An analysis of the daily returns of a particular Share Market Index for the period 1991 to 2000 (dividend income excluded) showed that missing out on performance of the equity market for only a few days could have a significant effect.

DIFFERENT RETURNS IF YOU MISS OUT ON A FEW DAYS

Strategy========================Return per annum
Always fully invested===============11.8%
Miss out on 10 best days============7.1%
Miss out on 20 best days============3.9%
Miss out on 30 best days============1.3%
Miss out on 40 best days============(-1.0%)

(Source:  Plexus Asset Management)

The table shows that:

• by missing only 10 days (equal to only 1 day a year), the annual return was reduced by nearly 40%.
• by missing 40 days (only 4 days a year), the return became a loss.

Instead of reducing investment risk, market timing can, in fact, be a high-risk strategy.

Market timing sounds good in theory. It seldom works consistently in practice.

Market timing is an investment strategy that relies on:

• your being able to predict the future so that you can protect your capital by not getting caught in any market downswing. 
• You must also know when the market is going to turn around, so that you can effectively exploit any new upswings.

A market timer must always make two correct decisions:

• when to withdraw and
• when to re-enter the market.

A major issue regarding stock market or unit trust investment is the question of whether or not market timing works.  Buying low and selling high is easier said than done.

A fund that applies market timing - buys or sells depending on the direction in which the market is moving -

• can prevent you from losing money in bear markets, but
• can also result in your missing out on bull markets.

Research has shown that although market timing sounds good in theory, it seldom works consistently in practice.

How do I get my timing right?

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.

Sir John Templeton

How does investor psychology affect timing?

Investors are inclined to become over-enthusiastic during a bullish phase on the stock market and to become despondent when the market declines.

In order to be a successful investor, it is important to distance yourself from the herd mentality and to take objective decisions based on fundamental reasons.

The typical behaviour of investors is linked to the so-called psychological cycle of investors (Source:  Adapted from Geld-Rapport, 18 March 2001).

Contempt: According to the cycle, a bull market typically starts when a market is at a low and investors scorn stocks.

Doubt and suspicion: They try to decide whether what they have left should be invested in a safe haven, such as a money market fund. They've burnt their fingers on stocks, and vow never to invest again.

Caution: The market then gradually starts showing signs of recovery. Most remain cautious, but prudent investors are already drooling at the possibility of profit.  Now is the best time to buy shares.

Confidence: As stock prices rise, investors’ feeling of mistrust changes to confidence and ultimately to enthusiasm. Most investors start buying stocks at this stage.

Enthusiasm: During the enthusiasm stage, prudent investors are already starting to take profits and get out of the stock market, because they realize that the bull market is coming to an end.

Greed and conviction: Investors’ enthusiasm is followed by greed - often accompanied by numerous new listings or IPOs on the stock market.

Indifference: Investors look beyond unsustainably high price-earnings ratios.

Dismissal: As the market declines, investors show a lack or interest that quickly turns to dismissal.

Denial: They then reach the denial stage, where they regularly affirm their belief that the market definitely cannot fall any further.

Fear, panic and contempt: Concern starts to take hold; fear, panic and despair soon follow. Investors again start scorning the market. Once again, they vow never to invest in stocks again.

http://www.minyanville.com/articles/markets-cycles-psychology-bull-bear-panic/index/a/18736

Also Read:

Sentiment curves
http://myinvestingnotes.blogspot.com/2009/05/sentiment-curves.html

Dealers say one of the biggest casualties of the margin calls is Resorts World at Sentosa operator Genting Singapore PLC.

Mid-Week Comment Jan 27: Margin calls, S-chip woes drag down STI

Tags: China Milk Products Group | China Printg & Dyeing Hldg | Delong Holdings | Ferrochina | Genting Singapore Plc | Ks Energy Services | New Lakeside Holdings | Sunshine Holdings
Written by Goola Warden
Thursday, 28 January 2010 09:16

ON WEDNESDAY, ‘forced selling’ by local traders on margin calls hit the market and drove the benchmark Straits Times Index down a further 34 points to close at 2,706.26. In all, the STI has fallen 187 points since last Wednesday, and 227 points from its Jan 11 high of 2,933.

Dealers say one of the biggest casualties of the margin calls is Resorts World at Sentosa operator Genting Singapore PLC. Its share price is down almost 20% since the start of the year. According to a report by DBS Group Research, there could be a potential share overhang from the “mandatory conversion of remaining $321 million Convertible Bonds 2 at 95 cents (338 million shares) on Feb 9”.

Separately, KS Energy Services, the offshore oil & gas and marine services and support company run by Indonesian millionaire Kris Wiluan, announced it plans to issue $50 million in principal amount of 3% convertible bonds due 2015 at an issue price of 89.34% of the principal. The $44.67 million raised will be used to refinance existing debts. The initial conversion price is $1.60 per share, representing a 30% premium to its last traded price of $1.23. KS Energy may also undertake a further issue of convertible bonds worth up to $57 million if required.

According to OCBC Investment Research, the funds are likely to be used because bondholders of the previous tranche of convertible bonds issued in 2007 might opt for early redemption. The bonds issued to Stark funds were at a conversion price of $4.05. “Early redemption would require a yield to maturity of 5.5% for Stark, and we therefore estimate KS Energy would need about $113 million ready,” OCBC says. The report believes that KS Energy could come to the market with new shares “at any time, given the capital-intensive nature of its business” and has a “hold” recommendation.

Convertible bonds have been a poisoned chalice of sorts for some stocks, particularly S-chips. On Monday, the South China Morning Post said six of 11 S-chips which sold convertible bonds between 2005 and 2008 have insufficient funds to repay their convertible bondholders. The S-chips named were China Milk Products Group, steel coil maker Delong Holdings, property developer Sunshine Holdings, China Printing & Dyeing Holding, waste treatment services provider Sino-Environment Technology Group and steel group FerroChina.

Meanwhile, a local broker report says S-chip New Lakeside Holdings, the producer of apple concentrate, could be insolvent, following the company’s decision to make an RMB22.75 million ($4.7 million) provision for its liability to Bank of China. This may also force the other two principal bankers China Construction Bank and ICBC to demand immediate repayment of RMB14.5 million and RMB10 million. As a result of these claims, the company’s liabilities will exceed its assets.

To be sure, Singapore stocks weren’t the only ones being sold down. Markets everywhere in Asia reeled, largely because of China’s credit-tightening measures. According to a Citigroup Research report dated Jan 25, Asian fund inflows were down 94% week-on-week to US$29 million ($40.7 million) last week. Month-to-date, net inflows to Asian funds barely rose above US$670 million, the report says. This is much smaller than average inflows of US$2.1 billion in the month of January between 2004 and 2007. Asian fund inflows were dampened by China tightening and the strong dollar, the report says.

CHART VIEW
The market is becoming increasingly “oversold” based on short-term oscillators. For the STI, the 21-day RSI is at 34% and the 14-day RSI at 24%. These are at their lowest levels since March last year. Support appears in the 2,700 area which was tested several times before the index eventually broke out. On the flip side, the STI is below its still rising 100-day moving average now at 2,748 and the 200-day moving average at 2,539. With support appearing soon, and indicators — including the five-day stochastics — at extreme lows, the market should attempt a rebound at resistance level to 2,748. A stronger upmove would only develop after a series of positive divergences, which would take four to five weeks to develop.

http://www.theedgesingapore.com/blog-heads/goola-warden/12036-mid-week-comment-jan-27-margin-calls-s-chip-woes-drag-down-sti.html

Rubber glove companies enjoy pricing power and steadily rising sales

Judging from the capacity expansion by rubber glove companies, it appears that larger glove companies like Top Glove, Supermax and Sempermed (Thailand) have more moderate expansion plans as a percentage of existing capacity, while smaller ones like Latexx and Adventa have more aggressive expansion plans and are likely to show higher earnings growth in 2010. 

An oversupply of rubber gloves is unlikely in 2010 but could be a worry in 2011 when more capacity comes onstream. Assuming that the 150 billion-a-year medical glove market grows by 8% a year, an additional capacity of 12 billion gloves will be required per year.  Rubber glove companies have been able to pass on higher costs arising from rising latex prices, with Top Glove increasing prices again in January 2010. 

Nevertheless, producers of nitrile gloves may now enjoy better margins as the cost advantage that latex gloves enjoy over nitrile gloves may have narrowed as latex prices have risen faster than nitrile prices.  Ratings of Malaysian rubber glove companies are still cheaper than those of Ansell, SSL International and the Malaysian market.

The Edge
1.2.2010
By Choong Khuat Hock


Comments:

The whole glove industry is growing.  Due to capacity expansion and their smaller sizes, the smaller glove companies are expected to show faster earnings growth than the bigger glove companies.

The industry business is still resilient.  Profit margin is either maintained or improving.  Glove companies are still able to pass the cost to the customers.  How long will this last?

This industry is highly competitive.  The business is driven by volume and price.  When capacity to supply outstrips demand, those companies with durable competitive advantage are expected to survive.  Those low cost producers will be the big winners and leaders.  Those companies that automate their production with good quality control will probably be able to lower their costs per unit through increasing productivity.  It is possible that those leveraging on low human labour costs now with no or few plans for increasing automation of the manufacturing processes, may eventually lose out to the former in the future both in terms of quality, productivity and costs.

The Only Three Questions That Count: Investing by Knowing What Others Don't

Investing is far more complex than that.

The idea is to get us to think more deeply.

The three questions are:

• What do you believe that is actually false? Test the received wisdom to see if it is really true. 
• What can you fathom that others find unfathomable? Look for unusual areas of competitive advantage that you have that are possessed by few. 
• What the heck is my brain doing to blindside me now? Your emotions will often lead you astray: Look for opportunity amid fear; look for shelter amid wild abandon.

Competitive advantage in investing is an elusive thing.

• The clever idea that you might discover is just one journal article away from an academic toiling in obscurity, but will go to a hedge fund two years from now.
• Patterns that work in one market should work in most markets. If your discovery seems to work in most places, it might work well, until it is discovered and used heavily.

Fisher uses E/P relative to bond yields to try to estimate whether markets are rich or cheap.

Now, in the intermediate-run, most things that people are scared about don’t affect the market much.

• Government deficits? Seem to be a positive for stocks in the short run.
• Trade deficit? Little effect on stocks.
• Weak dollar? Little effect.

This book debunks a number of common worries.

Ref:
The Only Three Questions That Count: Investing by Knowing What Others Don’t
(Fisher Investments Press)
 http://seekingalpha.com/article/182970-fisher-s-the-only-three-questions-that-count?source=hp_wc

Importance of Financial Education

Flip-flopping from gloom and doom back to boom... this is fun!

Watch all the media types get whiplash flip-flopping from gloom and doom back to boom - wheeeee, this is fun!

http://seekingalpha.com/article/185412-thank-gdp-it-s-friday?source=article_sb_picks

Limiting portfolio risk to extreme "black swan" events.

I am not looking for a systematic way to call market tops or bubbles, I don’t think they exist.

I am far more interested in finding ways to limit the exposure on the downside of a portfolio due to “black swan” events. The expression made famous by Nicholas Taleeb in his book The Black Swan. Such events would be defined as

• unlikely events with disastrous circumstances,
• bursting of bubbles, or
• other low probability events that could have disastrous consequences on a portfolio.

Also,  such thing as a perfect hedge that protects the downside and retains the potential for upside gains… is either non-existing or very rare.

http://seekingalpha.com/article/185531-in-search-of-the-illusive-black-swan-hedge-one-idea-worth-trying

Be careful when playing momentum – the trend may appear to be your friend, but can quickly turn into a foe

Momentum – The trend is not always your friend

Posted by indianmutualfund

Have you ever thought why most stock tips you receive are about buying a stock that has done well recently, a recent winner? Are your brokers and friends great stock pickers who pick stocks that do well, or is it just momentum – picking stocks AFTER they have done well – at work? With no offense to anybody’s skills, it’s probably the latter.

Momentum is India’s favourite market strategy. Most stock picks and market recommendations, whether they come from a broker’s desk or a cocktail party, when looked at in any detail, point to momentum. What does that mean? Quite simply, it means betting on things that have done well recently – whether it is an individual stock, a particular sector or the market as a whole. A classic recent example – everyone wants to buy steel stocks because they have done well, everyone wants to sell telecom stocks because they have done badly. Buy winners, sell losers, it’s as simple as that.

Indians are not the only ones who understand or love momentum, and there is no magic behind it. Momentum is a time-tested globally known investment strategy with its roots in behavioural finance. When good news comes out, people under react because they are not sure, and the stock price doesn’t rise enough. The stock has room to go, and as more good news comes out, people overreact, driving the stock price up further. Similarly, on the downside, as bad news comes out, people over react to bad news, and in despair run for an exit, leading to a further correction. The tendency to overreact to bad news and under react to good news is timeless and inherent in human nature, and as long as it works, momentum trading will continue to work.

In fact, momentum has historically been even more powerful in India, than other global markets, and is one of the best performing strategies over the last 15 years. The most basic indicators have made for very favourable trading strategies. What makes it even more popular is that momentum is one of the easiest things to do – it takes very little to get the past prices of stocks and figure out which ones are doing well. You don’t need to know anything about the stock or the business to trade momentum – you could be following the price of bananas for all it matters.

Moreover, for a broker or an individual, momentum is a professional and socially safe strategy. You’re always following the trend, always selling what is doing well, and that’s a pretty easy sale to make. You always sound right, and who doesn’t like that? Compare this to value investing – after all the work involved in understanding a company’s inherent value and financials, you are the one rooting for an undervalued firm whose stock price has been beaten down. Even tougher, you’re running down a company that has done well because it is overvalued, even though everyone else loves it. It’s a pretty unpopular place to be in and a tough sale to make to a client.

Unfortunately, for all its ease and apparent money making abilities, momentum can revert pretty quickly, and when it does, it gets ugly. No trend sustains itself forever, definitely not in the short to medium term, and when a trend reverts, it is painful being a momentum trader. Think of 2007. For the three year bull run, markets were doing well, and every trader was bullish – momentum did well and every investor felt they had discovered a gold mine…until 2008 struck. The upward trend reverted, the market crashed and momentum crashed with it, and quickly. Momentum traders saw gains made over three years quickly erode as markets took a turn.

My favourite story about the dangers of playing momentum is Religare AGILE, a mutual fund that claimed to be a quant fund, but is actually just playing momentum. AGILE launched when the tide just turned and momentum was having its worse run. In a year when the markets were down 60%, AGILE bled much more. A period of downward momentum followed and AGILE did fine, but come May 2009, the downward trend reverted. The markets rallied nearly 90%, momentum strategies suffered, and AGILE returned less than 50%. AGILE’s poor performance, incidentally, has nothing to do with being a quant fund – many quants have done well over this period – it is simply playing momentum.

Cut to the last quarter of 2009 – another great period for momentum as the markets have had an upward trend, and to no surprise, AGILE has done superbly, as have other funds that have played the same trick. What will happen to them when the trend reverts, however, is the question?

Should you not play momentum or invest in a momentum fund? In general, yes, investing in a concentrated strategy is a bad idea – investments should be diversified across investment styles. If you do have to play momentum, do it in a conservative way with moderate risk. Most of all don’t be fooled by a manager’s great returns over a period – he may just be playing momentum. Check out his returns when the trend reverts.

Be careful when playing momentum – following the trend may appear to be your friend, but can quickly turn into a foe you had never bargained for.

Source: http://www.moneycontrol.com/news/mf-experts/momentum-–-the-trend-is-not-always-your-friend_438780.html

Aim for durable, long-term outperformance in your stock market investing

Long term investors in the stock market will know that most go through hot and cold streaks.

 

More importantly, investors should aim for durable, long-term outperformance.

 

However, many investors either

• lose in equity investment or
• end up in a no profit-no loss situation.

 

Often, it happens that you start putting money in equities and the market moves to new highs. Then you are tempted to put in more money, since you are getting higher returns. Suddenly, the market starts to slide down.

Forget returns on investment, you are not even able to recover your capital. This is a common grouse of most investors.

 

Why? Is it because you make wrong decision or because the market is only meant for speculators and gamblers?

 

No, that’s not true. We go through this pain again and again because we do not learn from our previous experiences in the market.

 

Only the ‘smart investors’ survive the ups and downs in the market and make pots of money.

Relative quality often a matter of time

Luukko: Relative quality often a matter of time

Published On Sat Jan 30 2010

By Rudy Luukko
Mutual Funds Columnist

As any investing textbook will tell you, good stocks with superior fundamentals will eventually outperform bad stocks. What you also need to realize – as a direct holder of stocks or as a fund investor – is that stock markets don't always reward good stocks.

Paradoxically, stocks whose characteristics are exactly the opposite of what the textbooks advise you to look for are sometimes the biggest winners. At least over shorter periods.

This is what happened after the 2008-09 bear market, says fund manager James O'Shaughnessy, who is based in Stamford, Conn., and manages about $3.4 billion for RBC Asset Management Inc.

A practitioner of enhanced indexing (he calls his methodology strategy indexing), O'Shaughnessy employs quantitative screening techniques to try to beat market benchmarks. The criteria vary for the various mandates, but among his key factors are stock-price momentum, stock price to book value and dividend yield.

During the past two years of mostly bearish markets, O'Shaughnessy's screening methods flopped. All six of his RBC fund mandates with at least two years of history lagged in their peer groups. Five performed in the dreaded fourth quartile, meaning the bottom 25 per cent of fund rankings.

As O'Shaughnessy explains, no stock characteristics will consistently protect portfolios in down markets. His funds also suffered because the types of stocks he held weren't the ones that rebounded most strongly after the bear-market low of March 2009.

Instead, the market recovery was led by stocks that had been "priced for extinction," meaning they had fallen the most on fears that the issuing companies' very survival was threatened.

Historically, the shorter the holding period, the less likely it is O'Shaughnessy's funds will have outperformed their market benchmarks.

For example, RBC O'Shaughnessy Canadian Equity outperformed the S&P/TSX over all rolling 10-year periods dating back to its inception in late 1997. But it did so in just over half of all the three-year periods. And over all the one-year periods, the fund beat the index only 37 per cent of the time.

Of the three oldest funds, RBC O'Shaughnessy Canadian Equity and RBC O'Shaughnessy U.S. Value both rank in the top quartile of their peer groups over 10 years, and RBC O'Shaughnessy U.S. Growth performed in the second quartile. "We take solace from the fact that, over long periods of time, we can have the odds on our side," O'Shaughnessy told me.

More evidence that the ugliest-looking stocks will sometimes be market darlings comes from the so-called "Dangerous Portfolio," a demonstration model created by the CPMS division of Morningstar Canada. It's designed to illustrate the perils of choosing overpriced, debt-laden stocks with deteriorating earnings.

Yet in 2009, this portfolio returned 85.3 per cent, more than double the 35.1 per cent of the S&P/TSX Composite Total Return Index. Over 10 years, however, the Dangerous Portfolio has been the hypothetical wealth destroyer it was designed to be, losing an annualized 16.8 per cent, while the index gained an average 5.7 per cent.

Since you can do so badly over time with a portfolio of lousy stocks, it follows that there are merits in screening techniques that seek to identify the good ones. But as we've seen both with hypothetical portfolios and with real-life funds such as those managed by O'Shaughnessy, this is a game of probabilities. The only certainty is that no stock-picking system will work all the time.

rudy.luukko@morningstar.com
http://www.thestar.com/business/article/757949--luukko-relative-quality-often-a-matter-of-time