The Market Has Been Favoring High PE Stocks by Eric Bush, CFA, Gavekal Capital Blog
Over the past one and three months, the factor with the highest correlation to developed world stocks (out of 24 total factors) has been price to earnings. It has had an 93% correlation over the past month, an 85% correlation over the past three months and and a 90% correlation over the past year (good for 4th highest factor correlation). In general over thee past one-month, three-month and 12-months, the higher the P/E for a stock the better it has performed. For example, over the past month the decile of stocks with the lowest P/Es have fallen by -1.7% (in USD) while the decile of stocks with the highest P/Es have increased by 3.6%. Over the past three months, the performance spread has been even wider. The decile of stocks with the lowest P/Es have fallen by -2.3% while the decile of stocks with the highest P/Es have increased by a whopping 16.8%. Lastly, over the past year, the decile of stocks with the lowest P/Es are approaching a bear market (-18.6%) while the decile of stocks with the highest P/Es are up 5.5%.
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More