Dec

21

"The Momentum Effect in stocks was discovered by Jegadeesh and Titman" - A finance pundit

How about some credit to Value Line which was using price momentum in its Ranking System all the way back in 1965, long before academia provided recognition? See Fischer Black's "Yes, Virginia, There is Hope - Tests of the Value Line Ranking System", which dates back to the early 1970s. I'm proud that I was there in the early days.

Sam Marx replies:

Mr. Eisenstadt,

I'm a Value Line Subscriber to its Stock Service and its Option/Convertible Service. They deserve credit for being early in using momentum and earning changes for stock prediction. Mark Hulbert still rates it highly. I understand W.E. Buffett recommends it for a data source.
However, I feel they have become somewhat stodgy lately and other services/newsletters have become very competitive offering data Value Line doesn't. MorningStar and Zacks for example.

I believe Value Line Stock services should expand its services to include earnings data, earnings surprises and stock's intrinsic value.
Their Option Service is loaded with information that I've found very useful. The man in charge, Dr. Larry Cavanagh, took over a simplistic service and made it truly professional. If you know how to use the data, it is the best buy in an option service. He also has done a fine job with the convertible service. I also commend you on your service and contributions in making the Value Line Stock Service the success it became.

Trivia question for you; Way back before Value Line started their convertible service/newsletter, when we both were young men, there was a trailblazer convertible bond newsletter. It was the only one I knew of or could find back then and I found it useful. Value Line went into competition with it and eventually put them out of business. I believe it was published in Long Island and as a hint the first letter of its name was "R".


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3 Comments so far

  1. Jerry Arrigale on December 22, 2011 12:53 am

    Mr. Victor nierderhofer himself has touted value line in his
    Must read book practical speculation, he notes that he extensively
    Backtested several portfolio’s that the value line service constructs each year.
    It appears that portfolio 1 outperforms all the other value line portfolios as well
    as all market indices going back decades.

  2. Joe Wick on December 24, 2011 7:15 am

    For Mr. Marx — I think the service you refer to was “RHM Associates.” They pitched the virtues of investing in warrants, and secondarily options and convertible securities (essentially a bond with a warrant attached). I was so young that I used them more for learning than money-making. Loved the service!

    I always liked Value Line, not for their recommendations, but for the wonderful one page company summaries. At one point I was an M&A director for a large conglomerate and always had a few VL pages in my briefcase. Now, with retirement and the computer, I haven’t seen VL in quite a while, a pity.

  3. Andrew Goodwin on January 1, 2012 2:09 am

    Has Value Line made/kept its policy in releasing the new rankings so that all subscribers get the updated rankings at the exact same time? How would one do trying to exploit an anomaly based upon simultaneous reception of “anomalous future performance” rankings observed in stocks from a publication observed by thousands of players? A player with a real time news feed and AI interpretation might fare better than other subsribers in getting to the punch first. Perhaps a Value Line ranking gamer could figure out which of the previous #2 rankers might move up to #1 Timeliness ranking if the upgraded stocks had earnings surprises prior to the reformation of the new #1 issues list. I pointed this out in 1997. How have any adherents reading and adhering to these ranks performed who have rebalanced upon receipt of the publication to #1 Timeliness issues versus the Value Line Arithmetic Index. Apparently, the Geometric Value Line Index was not one to hold due to a simple arb available against the Value Line Arithmetic index.

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