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Cardinal Rule #1Valuation is Crucial to Investment SuccessIn the search for superior returns, investors have tried many approaches. Most have been disappointing because they fail to deliver expected higher returns or only work for brief periods or under special circumstances. On the other hand, the value approach to investing has produced better than market results over many decades in both academic tests and professional use. What is the value approach? In the classic form it involves selecting stocks for investment from those selling at low prices versus some observable metric such as book value. Adding additional measures of value and including the concept of relative valuation creates a powerful investment decision making methodology for both purchase and sale decisions. Cardinal Capital has developed and successfully used a multi-factor valuation model incorporating absolute and relative value concepts for over a decade. The result has been portfolios with solid long-term performance and low volatility, compared to the general stock market. These portfolios are well diversified by investment style and market capitalization with excellent long-term absolute and risk adjusted returns. We invite you to learn more by reading our article entitled Value and Valuation Investing and view the returns achieved elsewhere on our web-site. Joel A. Millikan, CFA |
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