When market valuations fell sharply this summer, Neil Woodford, the highly respected fund manager, described how sliding share prices can be overwhelming and distort rational perspectives. He said that while it can be difficult to remain focused on fundamentals when markets fall dramatically, it’s a chance to look for opportunities where the falls have been heaviest.
In essence, Woodford was saying that good quality companies don’t necessarily stop being good when their share prices fall. In fact, lower prices can be a blessing to a strategy that combines two of the most influential drivers of investment returns: Quality amp; Value.
It’s a strategy that has earned Woodford a reputation as a star fund manager. And it’s one that’s been executed with devastating success by some of the investing world’s best known names, ranging from David Dreman and Joel Greenblatt to Warren Buffett. The philosophy was best summed up by Greenblatt in The Little Book that Beats the Market “buying good businesses at bargain prices is the secret to making lots of money.”
Why Quality + Value is effective
In the taxonomy of stock market winners, Quality + Value (QV) stocks are…
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