In the last part (part 9) of Brendan Byrnes' interview with Wesley Gray, author of Quantitative Value, Gray shares his most surprising finding: that price trumps everything as a predictor of future stock performance. In his research, he found that weighting price and quality equally results in overpaying. Therefore, he recommends choosing the best of the cheap stocks for your portfolio. He supports this claim by stating that, historically, a high-quality, high P/E stock will outperform a low-quality, high P/E stock, but a junky stock with a lower P/E will do even better. Benjamin Graham was right -- and Warren Buffett, with his success investing in marquee names such as Coca-Cola, is just an anomaly. Cigar butts are the way to go.
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When Buying Stocks, Price Is Everything
In this interview, Wesley Gray discusses his new book, "Quantitative Value."
Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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