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Wednesday screencast: drift and value

There is a great deal of talk (and consternation) about the state of equity market correlations.  Specifically how closely individual stocks are trading with each other.  There are any number of explanations including the role high-frequency trading is playing, the rise of ETFs and a focus on global macro types of strategies.  Some fund managers, even those who are index huggers, are now complaining about the state of the world.

That means that investors in search of an edge need to focus on a different time horizon.  With the shortest time horizons dominated by machines the only choice is to focus on the longer term.  Over long horizons differences in quality (and earnings) are eventually magnified.  Those measures are eventually reflected in stocks prices.  This relative outperformance may emerge through drift (or dribs and drabs) but they do eventually see the light of day.  In today’s screencast we look at how value wins out in the end.

Posts mentioned in the above screencast:

Stockpickers are frustrated by the current environment.  (Bloomberg, Fund My Mutual Fund)

Quality wins out.  It just takes some time.  (Crossing Wall Street)

Screencast on patience and the value of dividends.  (Abnormal Returns)

The forthcoming golden age of stockpicking.  (Abnormal Returns)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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