- Return On Enterprise Value
Most financial planners and bloggers tell investors that passive management or buy and hold strategies work in the long run. What they fail to tell you is that the long run might be a really long time. Passive management works well in bull markets and not so well in flat or bear markets.
I have written many articles on this blog about the importance of valuation and the AAAMP portfolio has demonstrated adjusting your asset allocation according to valuation can greatly improve portfolio returns. History proves that investing when valuations are low greatly increases long term investment returns.
A couple of days ago I left a comment on a post at Fat Pitch Financials praising George for presenting a sound valuation strategy to his readers. I commented that I preferred using a slightly different ratio and pointed him to an article on the AAAMP Blog.
George specializes in value investing and decided to analyze the valuation metric. He did a 10 year back test and validated the ROEV ratio as an outstanding tool for comparing and evaluating individual stocks!
This is a valuation ratio every investor should know about! But I don’t want to steal George’s fine work so I will direct you to his Backtest Article to learn more about this valuation metric.
| AAAMP Blog by Ken Faulkenberry | |
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Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record. |
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