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Value investing -- simple ratios still provide valuable insight

I wanted to alert readers to an excellent post at the Aleph Blog titled "Portfolio Rule Two".

Those of you who have looked at the Trade-Radar Stock Inspector software know that I have included an extensive collection of valuation measures on the Fundamental Analysis tab of the Dashboard (see a screenshot). You know that the software automatically evaluates each one and flashes a red, yellow or green light indicating how well each measure fits the valuation criteria built into the program. These indicators provide a quick estimation of whether a company is a value stock, is over-priced or is somewhere in between.

David Merkel's post at the Aleph Blog touches on pretty much all of the valuation indicators in the Stock Inspector software and provides a deeper explanation of why some of them are more important for certain industries, which ones are least susceptible to "faking" and, most importantly, provides confirmation that these seemingly simple ratios do provide a wealth of information for the careful investor.

For those who want to dig deeper, the post also suggests some ways of looking beyond the ratios.

If you are interested in value investing, I encourage you to read the post (and others in the series).

Links:
Read Mr, Merkel's post
Download the Stock Inspector software

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