Abstract
Money managers are often referred to as “good stock pickers” and more rarely as “good investors.” Being “a good stock-picker” is closer to having a good nose for wine, which suggests an innate ability. The cash return on capital invested (CROCI) model supports instinct more than labor by steering the stock-picker toward what really matters for the share price; real cash return, real growth rate of economic assets, and expected level of economic profits among others. However, the result, the success or failure of the investment, is still largely in the hands of the stock-picker himself. This preamble is important because to claim that an economic profit (EP) model “works” for stock selection can only be done based on a systematic investment strategy, where human judgment is totally excluded. There is only one way to illustrate how CROCI information can be used to take investment decisions, and that is to select previously published research reports. This is necessarily a subjective exercise.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
