OUR INVESTING PHILOSOPHY
Always Rigorous, Sometimes Contrarian
Our fiercely independent way of thinking about investments and our unwillingness to cut corners often results in stock ratings and ideas outside the mainstream, contrarian to crowded trades and opposite of many popular views. That is because we believe independence and conviction are the traits that allow investors to achieve superlative investment returns that go beyond the benchmark.
Our Investing Philosophy
MarketGrader was founded on the belief that owning stocks is the best way for you to harness the growth of the world’s economy in the form of shareholder returns. This applies to all countries and regions where equity markets follow a clear set of rules that include rigorous, transparent and enforceable accounting and reporting standards. We also believe that consistent creators of economic value, regardless of size and domicile—which we call ‘Growth Compounders’—are the best long-term creators of shareholder value.
Our Own Take on Fundamentals
In today’s high-frequency and hyperactive markets where many seek instant gratification and social media amplifies anyone’s message, fundamental analysis has become—to many investors—antiquated, out of touch, and no longer useful when analyzing investments.
In our view, precisely because of today’s focus by many on speed and short-term returns, fundamental analysis—in the time-tested, old-fashioned tradition of security analysis—is more important and relevant than ever. For over 20 years, our research has focused on truly understanding a company’s business (or its fundamentals) as reported in its financial statements. We seek to understand how successful and profitable each company is in order to help you separate the good from the bad investment prospects. We analyze businesses and the prices for which they’re selling to help you extract value and achieve superior long-term investment returns.
GARP: Straddling Growth and Value
For decades investors have been offered what we believe is a false choice between owning growth or value stocks. Entire families of benchmarks and investment products have been constructed around this binary concept.
We like to take a middle ground approach. We believe investors can own stocks with attractive growth and valuation characteristics within a carefully designed and thoughtful portfolio as long as the methodology that underlies the selection of its constituents is rigorous, agnostic to size and business model and sourced with high-quality data. This is what our research does. Our fundamental analysis is constructed using 24 individual indicators, which form the building blocks of our fundamental rating for every stock under coverage, across all markets globally. These 24 indicators are broken down into four core analytical categories: Growth, Value, Profitability and Cash Flow. The sum of all these indicators results in an overall grade between zero and 100, representing the final rating for the stock.
So, the supposed conflict between growth and value that exists within many other analytical investment frameworks does not exist in ours. On the contrary, the dynamics of combining six growth and six value indicators with 12 quality measures is what makes our research thorough and unique. The coexistence of growth and value in our analytical framework and, by extension, in our indexes, allows our clients to invest with the conviction necessary to achieve consistent, long-term returns without compromising on quality, diversification or liquidity.
Our research methodology, fundamental indicators, company ratings and indexes are designed to be fully transparent. As a client, at any time, you can view the complete list of constituents to any of our indexes. You may also see each constituent’s overall grade, rating and its corresponding 24 fundamental indicators. Our research platform allows you to drill down to the bottom of each of each company’s indicators and to the company financials from which they are constructed. All of our grades, across all companies globally, are recalculated daily and made available to all of our clients simultaneously, wherever they are. Most importantly, you may view the complete history of all our company ratings and we’ll tell you how every single stock has performed since our last upgrade or downgrade, regardless of whether we got the rating right or wrong.