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A Big Thumbs up for Stocks from One of Our Top Indicators - Views on News from Equitymaster

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The Equitymaster Research Digest

A Big Thumbs up for Stocks from One of Our Top Indicators
Jan 19, 2017

  • Giants of small industries
  • Unlikely places to find multibagger small caps
  • Two new books we're looking forward to

Long-time subscribers know we rarely miss the woods for the trees. We prefer to take a worm's-eye view of the markets. That is, we pay attention to details (which can lead to, shall we say, unconventional views). But then these details, put together, help us see the big picture. These details are inputs for Equitymaster's core indicators.

It's vital that we revisit our indicators regularly. They give us a sense of direction that no index or expert ever could.

Since we use these indicators for the universe of stocks under Equitymaster's coverage, we know that we are not dealing with junk data. And more importantly, we know that we will be able to test the indicators' predictions sooner rather than later.

One indicator in particular has been drawing our attention for the past couple of months. The last time we wrote about this in the Research Digest, the Sensex was trading at three times (3.0x) the net worth of the index's underlying businesses. It's currently trading at 2.7x. This means negative expectations are being factored into stock valuations.

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