Exploring the nuances of financial science
W. P. Carey finance expert discusses factors that impact investment success, including strategies to balance risk and profitability.
In this episode aired Oct. 10, 2024, on the Rational Reminder Podcast:
Labels are particularly important when people think about value… they think about high book-to-price stocks and book-to-market stocks. I think that distracts from the real purpose of investing, which is about expected returns. How does a value stock become a value stock? It typically becomes a value stock because prices have fallen, and expected returns have risen. If you think of value in that sense, then value stocks are comprised of stocks that have high expected returns and very low expected returns as well, because prices fall for a reason. They don't just fall randomly… you screen for profitability.
– Sunil Wahal, Jack D. Furst Professor of Finance and director of the Center for Responsible Investing
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