The average investor often significantly underperforms a simple index. Blame the neurological wiring that we all share.
Chances are, your behavioral biases are hurting the performance of your portfolio. A lot of economic and financial theory is built upon the premise that humans are rational agents but, if you’ve ever been stuck in traffic, you will be aware of just how easily this assumption is disproven.
That’s why we save investors time by providing the tools they need to construct their own stock selection and portfolio construction strategies. If we take Carnival (LON:CCL), we can show how just a few of our metrics can tell you an awful lot about a company in seconds.
A look at the factors driving Carnival’s share price
Factor investing is not new - its long term success is something of an open secret. In fact, to explain Stockopedia’s StockRank means we tell the story of an investment philosophy built by some of the greatest investors to ever live...
A (very brief) timeline might go something like this:
- Benjamin Graham described a Value investing philosophy in his book, Security Analysis,
- Warren Buffett and others adapted this philosophy with a greater emphasis on Quality (profitability), and then
- Various academic studies in the past 20 years established stock price Momentum as a factor
Stockopedia ranks every stock in the market according to these factors. Taking Carnival, we can see that it has:
- A Value Rank of 77,
- A Quality Rank of 82, and
- A Momentum Rank of 71
We classify stocks with such a favourable mix of factor exposures Super Stocks. Statistically speaking they are more likely to outperform than other stocks according to research from luminaries such as Robert Haugen. Based on our analysis, Carnival is one of them.
Thinking in terms of factors is increasingly popular - some of the best investors in the world use it as a framework for thinking about the stock market. Watch this video to understand a bit more about how Stockopedia provides factor-based research on stocks. Alternatively, take a two-week free trial and have a look yourself.