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How To Design A Fundamentals-Based Strategy That Really Works, Part One: Factor Design

Dec. 04, 2021 2:32 AM ET3 Comments


  • Good factor design is essential to designing quantitative investing strategies. This article explains how it's done.
  • I provide tips for value, growth, quality, sentiment, technical, stability, and size factors.
  • I also explain how to test factors to see if they work.
  • I do much more than just articles at The Stock Evaluator: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Rising graph that Includes many rise factor

Hiroshi Watanabe/DigitalVision via Getty Images

I have been using a strictly quantitative process to buy and sell stocks for the last six years, with excellent results: I have a CAGR of 46% over that period, and have made over $3 million. In this series of

My marketplace service, The Stock Evaluator, comprehensively ranks over 6,000 stocks weekly based on a sophisticated multi-factor system with deep roots in accounting and valuation methods. It has a strong out-of-sample record: since the service began over three years ago, high-ranked stocks have consistently outperformed the market while low-ranked stocks have consistently underperformed it.

This article was written by

Yuval Taylor profile picture

Yuval Taylor is an author and analyst with 8 years of experience using multifactor ranking systems to buy and sell stocks. He focuses on microcaps and emphasizes evaluating every stock from as many angles as possible via algorithm. He is the leader of the investing group The Stock Evaluator.

Features of the service include: disclosure of Yuval’s personal positions, 2 unique portfolios, a spreadsheet of nearly 10,000 stocks rated from 0 to 100 weekly, and live chat for questions. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

RedRock Asset Management GmbH profile picture
can´t wait a real case application of your method on a stock
l0gr1thm1k profile picture
This is so great. Thanks Yuval!
Sextus profile picture
Thank you ! Excellent!
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