Value Line Technical Rank's inverse correlation with relative performance

In April 2013 we noted that the Value Line Technical Rank seemed to have an inverse relationship with performance

The perverse performance continues with the best ranked doing the worst and vice versa.

(c) 2014 Robert L. Colby

Performance of the Under and Overvalued screens since April & the November Screens

Performance Update

This charts updates the longer  term performance of the Under and Overvalued screens.  There is some improvement in the Undervalued and a distinct deterioration in the Overvalued after more than 2 years of relative out-performance.  The following graph is a close up of the results since last April.

This shows the flat relative performance of the UV (+0.2%) screens vs a significant decline of -10.6% for the Overvalued.

Current Screens

The stocks are ranked by the  relative strength (to the S&P) last month.  At the top of the UV screen are undervalued stocks that did better than the market in November..  

Conversely at the top of the OV list are the Overvalued stocks that did poorly.

Changes in the screens last month

In general we would expect equities leaving the UV list to outperform the market and vice versa, which is largely the case as shown here as is the opposite case for the OV.

robertlcolby@gmail.com

(c) 2014 Robert L. Colby

10 year results for Under and Overvalued Screens

September 30^th 2014 marks the end of the 10^th year of the monthly analysis of over 500 US equities.  Over all, the results have been good with the Undervalued list outperforming the S&P 500 by 4.72% per annum. The Overvalued under-performed the same index by 1.48% per annum.

Relative to Corequity’s universe, the Undervalued are 2.64% pa ahead while the Overvalued were behind by 3.56% pa for a spread of 6.20%.

In absolute terms, the Undervalued gained by 10.87 % pa while the Overvalued was up only 4.31%.  In the context of equity fund performance, this was the difference between the 99^th percentile and the 39^th for a spread of 60 percentiles in the ranking of over 300 US Equity funds tracked by the Globe & Mail for the 10 year period  ending in September. (All Corequity figures are based on price only)

robertlcolby@gmail.com

June 30th Screens

Valuation Screens for May 30th 2014

January 31st Screens for Value

 Changes to the Undervalued list during last month

and the changes to the Overvalued screen were as follows

RLC