Flirting with Models
A data-driven approach to picking growth stocks and thematic baskets
Jan 23, 2023
14:00
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Quick takeaways
- Focus on allocating towards the right industry groups for higher expected returns.
- Utilize growth models to screen securities based on metrics like earnings, sales, and liquidity.
Deep dives
The Influence of Industry Groups on Stock Performance
About half of a stock's movement is directly linked to its industry group. By analyzing over 200 industry groups, it becomes evident that understanding the strengths and weaknesses within different sectors can significantly impact investment decisions. Allocating towards the right industry groups rather than solely focusing on individual securities can lead to higher expected returns. This approach simplifies the stock selection process by emphasizing landing in high-performing industry groups.
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