It’s going to be a brief one since I’m traveling. No posts next week for the same reason.
While digging for stuff on Walter Schloss a few weeks ago, I found a short research piece he and Ben Graham helped on. The piece was published in January of 1951. It studied the performance of the “cheap” versus “dear” stocks in the Dow from 1914 to 1948.
It turns out the “dear” stocks outperformed “cheap” and the Dow in the first half of the period (1914 – 1931) in the run-up to the 1929 peak. But the “cheap” stocks extreme outperformance in the second half (1932 – 1948), drove it to outperform “dear” over the entire period.
The strategy implied is not something to use today but the explanation might sound familiar: Continue Reading…