Fund Managers

Many fund managers use the traditional P/E as one element of their stock selection filters. Those who are prepared to 'think outside the box' can significantly improve their portfolio returns and risk/reward ratio by replacing the traditional P/E with the long-term P/E or decomposed P/E.

Expressions of interest are invited from fund managers who are interested in incorporating any of these P/E ideas into their stock selection filters. I would be happy to come to present my ideas on improving the P/E, and to discuss how my ideas could be refined for your individual company's use. I have recently calculated a list of the top 30 UK shares by decomposed P/E, and will make this available on request.

Momentum has recently been shown to be a powerful short-term predictor of returns. All my calculations so far have used simple annual portfolio rebalancing, without regard to momentum. If a share being considered for purchase is still falling heavily, it would be wise to put off the purchase until the fall has abated. Similarly, a holding that is rising strongly should not be sold until the rise seems to have spent itself. I believe that returns could be significantly enhanced if the P/E filter were combined with momentum triggers for buy or sell signals. I would welcome the chance to take this research further with a knowledgeable momentum investor.

Copyright Dr. Keith Anderson 2010