Investment Strategies: What They Are

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Searching for Patterns

Like quantitative hedge funds - large investment firms that usually manage the money of very rich individuals - Portfolio Strategies find stocks by searching for patterns in the financial performance of companies.

For example, imagine that you looked at historical data and found that, on average, stocks that pay high dividends as a percentage of their current price tend to outperform those that pay low dividends as a percentage of price (this actually is true based on data from the past 30 years). You could write a computer program that looks at the ratio of Dividend Per Share divided by Price and gives you the top companies based on that ratio.

How YCharts Strategies Uncover Patterns

We spend lots of time researching what worked in the past1 and can look at much more complex relationships than simple ratios. Once we find a good strategy, we program it into our system. Every day, our system checks the world of stocks for ones that meet the strategy's requirements, and we create a list of the top companies for every strategy.

The result is that you always have lists of stocks that fit strategies that worked in the past.

There are currently five Portfolio Strategies:

  • Large Cap Value
  • Dividend Power
  • Peter Lynch Universe
  • Ben Graham Formula
  • Growth at a Reasonable Price

(1) Note that what worked in the past is never guaranteed to work in the future. We have done our best to only share strategies that outperform over long periods of time, but you should never expect results identical to those that occurred historically.

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