Equity Strategies Flashcards
What is the buy and hold strategy?
The idea is to buy stocks below their intrinsic value and that have a competitive advantage to the point that they will continue to generate high profits later (Buffet Strategy).
What is the contrarian value strategy?
The idea is also to buy stocks below their intrinsic value and sell them later when the price is coming back to its intrinsic value or when it appears to be over-valued.
What is the rebound value strategy?
The idea is similar to the contrarian value strategy but this type of investor may be afraid that selecting low price stocks doesn’t mean that the stock will go back up.
What is the cash earnings value strategy?
The idea is to use cash earnings instead of accounting earnings.
What is the ROE value strategy?
The firm of the stock you select have to have superior ROE; they are above the historical average for all companies.
What is the investable universe strategy?
The idea is to select highly liquid undervalued stocks.
What is the PEG strategy?
- Use PEG ratio=P/E/EPSgrowth
- When this ratio is lower than 1 it is an opportunity to buy the stock but when the ratio is higher than 1 the stock is too expensive.
What is the earnings surprises growth strategy?
The idea is to buy stocks of firms that have higher than expected earnings and selling stocks of firms that have lower than expected earnings.
What is the management growth strategy?
The idea is to look at the recommendations made by analyst and select stocks that offer some characteristics.
What is the momentum growth strategy?
The idea is that earning growth keeps price stock increasing for a while, so you want to take advantage of the momentum.
What is the mixture value and growth strategy?
The idea is to select stocks in a value strategy but having good future earnings growth.
What is the analyst upgrade strategy?
The strategy would be to buy stocks that analysts have upgraded and sell the ones that have been downgraded.
What is the dogs of the Dow strategy?
- The idea is to select some of the stocks in the Dow Jones which provide the highest dividend.
- Select the 10 stocks into the Dow Jones that have the highest dividend yield. You buy them at the beginning of the year. You weight them equally.
