Abstract
The strategy of investing in companies with low price-to-book ratios continues to be successful in the long term. Historical evidence on reversion to the mean justifies the strategy, but it is seldom consistently pursued because environmental pressures on investment analysts make the strategy almost unbearable to maintain. To counteract the pressures and focus analysts on the low-P/B strategy, investment firms need to focus on analyzing the long-term expectations for companies, not short-term stock price forecasts, and avoid intuitive, emotional investment decisions.This presentation comes from the Improving the Investment Decision-Making Process: Behavioral Finance and Decision Theory conference held in Marina del Rey, on April 4, 1995.
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.
