“We try to exert a Ted Williams kind of discipline. In his
book The Science of Hitting, Ted explains that he carved the strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his "best" cell, he knew, would allow him to bat .400; reaching for balls in his "worst" spot, the low outside corner of the strike zone, would reduce him to .230. In other words, waiting for the fat pitch would mean a trip to the Hall of Fame; swinging indiscriminately would mean a ticket to the minors.”
…and at Watchtower Associates, we agree with that statement.
Axiom 1: It is possible to discern fundamentally strong &
efficient companies from fundamentally weak & inefficient companies.
Axiom 2: Fundamentally strong & efficient companies, at times,
sell at a discount to their intrinsic value (PV of Future Cash Flows).
Axiom 3: It is possible to discern a fundamentally strong &
efficient company selling at a discount vs a fundamentally strong & efficient company selling at a premium. 1. The Value Index is a proprietary algorithm that leverages Fundamental data from SEC-filed Income Statements, Balance Sheets, and Statements of Cash Flows via 10K and 10Q submissions.
2. This provides a Fundamental-Driven, Alpha-Generating, rigorously backtested equity valuation
model for Institutional Asset Management purposes.
Buy signals activated when Value Index (Blue Columns) crosses an 80% Threshold (Black Line).