Style Diversification Using the James O'Shaughnessy Approach

    by Wayne A. Thorp

    For decades, stock investors have been debating the merits of growth versus value investing. While growth investors risk being burned by the latest hot stock, value investors may end up buying undervalued stocks that only get cheaper.

    James O’Shaughnessy set out to answer this argument “once and for all” by testing a series of growth and value screens on a sufficiently large stock database that covered a meaningful period of time. His goal was to determine which screens within each style group produced the best returns.

    The results of O’Shaughnessy’s analysis were first published in the 1996 book “What Works on Wall Street: A Guide to the Best-Performing Investment Strategies of All Time” (McGraw-Hill).

    ...To continue reading this article you must be registered with AAII.

    Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
    JOIN TODAY for just $29.
    Register for FREE
    to read this article and receive access to future AAII.com articles.

    Log in
    Already registered with AAII? Login to read the rest of this article.
      
    → Wayne A. Thorp