Quote Originally Posted by Lizard View Post
I've taken historical ASX data from Dec 2007 and put it alongside current and deleted any that don't match (which means anything that has substantially changed it's name, gone broke or been taken over). Then I ran a straight price comparison and deleted any obvious recapitalisations. Data is not going to be perfect, but should be enough to be interesting.

Perhaps surprisingly, the most significant difference between the gainers and the market averages is in P/E - with the average much higher for the gainers at the beginning of the measured period! ...
Lizard, can you explain why your P/E statistics for December 2007 are so high? I would describe the December 2007 whole of market P/E of 30.2 as high (perhaps not surprising at the end of a bull market run), but the 'gainers' historic December 2007 P/E of over 50 is extraordinary. Is it possible that because the gainers sample was so small that you have identified some kind of statistical aberration? Just who were these gainers and can you identify any underlying theme that is driving this very high -in absolute terms- P/E result?

Also, how did you calculations deal with P/E ratios for those companies that reported negative earnings?

...ROE was much lower, as was yield.
That ties in with other research results which shows the best overall outperformance statistic is to look for companies with valuable underlying assets in relation to sharemarket price, regardless of P/E.

Pr/NTA was slightly better, but not considerably and has ended the year higher,
Interesting is the decline in market capitalisation for 'the market' of 40% in parallel with the decline in 'price to net asset value' of 44% (seems logical, assets are not worth what the market once thought they were and so the market price declines in tandem)...

...seen in comparison with the *increase* in market capitalisation for 'the gainers' of 35%, compared to a decline in 'price to net asset value' of 31% for 'the gainers'. Why is the market taking such an optimistic view of 'the gainers' (boosting market capitalisation) yet the market price payable for those gainers underlying net asset values appears to have shrunk? Am I reading your chart correctly Lizard?

while the ROE for the gainers is now consistent with the market.
Brought about by new accounting rules requiring assets values to be marked to a market valuation based on the return those assets give?

The most notable point from this is that the market cap has gone up for "gainers", while P/E has fallen.....
The gainers P/E has fallen from around '50' Lizard, which as I said before was an extraordinarily high absolute figure. Surely you could only expect the P/E to fall from those levels?

The change in both these numbers (P/E and Market Cap) can be used to calculate that the average change in earnings for the gainers was an increase of 104%! Earnings for the market as a whole must have fallen by an average of 6.4%.
You have recorded the market prices precisely but what about the Earnings? Is it possible that because your comparison covers only 11 months that some of those reported earnings have not been updated year on year?

SNOOPY