Ben Waters - What Is Quantitative Value Investing?

Quantitative value investing is a form of value investing that assesses fundamental data such as economic data, unstructured data and financial statement line items in a systematic, rigorous manner. Quantitative value investors often employ applications like mathematical finance, natural language processing, behavioural finance and machine learning.

1. WHAT IS QUANTITATIVE
VALUE INVESTING?

2. Ben Waters - 2 Ben Waters - 3
“
Quantitative value in-
vesting is a form of
value investing that
assesses fundamental
data such as economic
data, unstructured data
and financial statement
line items in a system-
atic, rigorous manner.
“ “
Magic formula
investing, a
concept created
by Joel Greenblatt,
is an illustration of
quantitative value
investing.
“
What Is Quantitative
Value Investing?
Quantitative value investing
is a form of value investing
that assesses fundamental
data such as economic data,
unstructured data and finan-
cial statement line items in a
systematic, rigorous manner.
Quantitative value investors
often employ applications
like mathematical finance,
natural language processing,
behavioural finance and ma-
chine learning. Origins
The book Security Analysis by
Benjamin Graham and David
Dodd is widely considered
to be the origin of quantita-
tive value investing. Within its
pages, the authors provide
a detailed analysis regarding
the objective financial metrics
of certain stocks. This type of
investing is designed to re-
place ad-hoc financial analysis
with a systematic framework
programmed by a human but
mainly executed by a comput-
er to avoid the sort of cog-
nitive biases that can lead to
poor investment decisions.
Magic Formula
Investing
Magic formula investing,
a concept created by Joel
Greenblatt, is an illustration
of quantitative value invest-
ing. This strategy is a meth-
od used to determine which
stocks to buy for the best
chance of a high return on
invested capital. Greenblatt
describes magic formula in-
vesting in detail in his book
The Little Book That Beats the
Market, with the strategy also
featuring in John P. Reese’s
book The Guru Investor.

3. For more information about
value investing, visit the blog
of Ben Waters, trader.