These Tools for Picking Stocks Sometimes Even Work
Using quantifiable measures called factors to identify promising investments has exploded. But it’s not for amateurs.
Think of them as filters.
Photographer: Carl Court/Getty Images EuropeLike stocks that have low price-to-earnings ratios? How about ones that have outpaced the market? Or shares of small companies? Those are known as factors: quantifiable characteristics that some money managers use to identify stocks associated with above-market returns. But factor investing is tricky. Sometimes it pays; other times it doesn’t. Bloomberg Opinion columnists Nir Kaissar and Noah Smith recently met online to debate whether factor investing is worth the effort. They previously discussed corporate debt.
Nir Kaissar: It’s widely acknowledged that some factors have historically outpaced the broad market.