The Investing Times showcases research metrics throughout its reports. See below for a summary of the key data validation metrics:

Asset Allocation Research

In our publication, we provide real-time updates on some of the most reliable asset allocation metrics both in isolation and as a combination. These have each been rigorously analysed and tested to have historically provided an opportunity for enhanced risk-adjusted returns. Many of them are famous, including analysis of the Shiller P/E ratio and the Coppock Indicator, but some of them are far less well-known.

We often combine the net result into a scorecard that has a strong correlation to forward 3, 5 and 10 year returns. See below for the long-term performance record of the scorecard and the strong correlation between the aggregate score and future returns:

The Zone System (On Stocks, Sectors and Markets)

The Zone System is a 30+ year old tool that share-market investors can reliably use to make judgements on the future direction of share prices. It uses five zoning formulas that identify when the share-market is significantly undervalued, undervalued, fair value, overvalued and significantly overvalued.

The Zone System first came to prominence when it accurately picked the 1987 crash, and this was later monitored with the accurate identification of the 2001 tech wreck and the 2007 GFC peaks. Equally, it also identified the early 1990’s, 2003, 2009 and 2012 as periods of significant undervaluations (which also proved accurate).

ZONE SYSTEM EXPLAINED – WHITEPAPER (PDF opens in a new tab)

The application of the Zone System takes many forms, with some readers of the Investing Times using it as a tool to strictly set their asset allocation, whilst others use it as a guide along with other tools such as the Robert Shiller PE ratio and the Benjamin Graham Yield Gap. In every edition, the Zone System is shared on dozens of stocks, sectors and global markets to provide a broad view of equity valuations and the potential pockets of value within it. 

The performance of the Zone System has proven to be stellar and significantly higher than market averages. By way of explanation, 112 years of analysis proved that a “significantly undervalued” indicator leads to >2x the market average return and >3x the “significantly overvalued” indicator returns. It also has between 11%-29% less risk of a negative return (refer to page 3 of the whitepaper for details). Said another way, the significantly undervalued zone generates returns that average in excess of 15% whereas the significantly overvalued averages only 4% return with considerably higher risk.

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