{"id":265440,"date":"2025-05-31T14:26:41","date_gmt":"2025-05-31T14:26:41","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/factor-based-model-portolio-earnings-leverage\/"},"modified":"2025-05-31T14:26:41","modified_gmt":"2025-05-31T14:26:41","slug":"factor-based-model-portolio-earnings-leverage","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=265440","title":{"rendered":"Factor Based Model Portolio: Earnings Leverage"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p><strong>The Zen Earnings Leverage Trading Strategy<\/strong> looks for companies that have recently raised their earnings forecasts or have been upgraded by the analyst community. The idea is to bet on accelerating earnings, rather than stable earnings.<\/p>\n<p><strong>The Screening Algorithm<\/strong><\/p>\n<p>This factor trading strategy begins with a universe of 6,000 stocks of all sizes, industries, and geographical locations, the algorithm selects stocks with robust fundamental characteristics like revenue and earnings growth, debt coverage, growing market share. But it doesn\u2019t stop there.<\/p>\n<p>It then applies a second filter that only allows companies that have positive technical readings like price and volume momentum, positive on-balance volume, and high relative strength. We run the screening algorithm every four weeks, and it produces a list of 10-15 candidates for further consideration. We then look at each candidate and eliminate any that have made it through by virtue of bogus numbers, or \u00a0are the subject of rumors about accounting irregularities or contract cancellations.<\/p>\n<p>The final list of stocks that make it into the model portfolio consists of 5-7 thoroughly vetted names. These finalists tend to be smaller than average in size, and younger than average in age. But there are also names that are blue chip companies that have temporarily fallen out of favor, and might be poised for a significant rebound.<\/p>\n<p><strong>The Performance History<\/strong><\/p>\n<p>The performance of the Earnings Leverage Factor Trading Strategy has been underwhelming over the last 10 years, as the chart below shows. However, on a longer time horizon, the numbers improve markedly.\u00a0<\/p>\n<p>This illustrates an important feature of this strategy. There will always be periods when it under-performs the market. It\u2019s an inevitable fact of life, unless you were a client of Bernie Madoff, and never experienced a down year until you lost everything.<\/p>\n<p>\u00a0<\/p>\n<p><strong>Earnings Leverage Track Record<\/strong><\/p>\n<p><a href=\"https:\/\/www.zeninvestor.org\/wp-content\/uploads\/2025\/05\/Earn-Lev-track-rec.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-21294\" src=\"https:\/\/www.zeninvestor.org\/wp-content\/uploads\/2025\/05\/Earn-Lev-track-rec.png\" alt=\"\" width=\"488\" height=\"289\" srcset=\"https:\/\/www.zeninvestor.org\/wp-content\/uploads\/2025\/05\/Earn-Lev-track-rec.png 488w, https:\/\/www.zeninvestor.org\/wp-content\/uploads\/2025\/05\/Earn-Lev-track-rec-300x178.png 300w\" sizes=\"auto, (max-width: 488px) 100vw, 488px\"\/><\/a><\/p>\n<p>\u00a0<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>The Zen Earnings Leverage Trading Strategy looks for companies that have recently raised their earnings forecasts or have been upgraded by the analyst community. The idea is to bet on accelerating earnings, rather than stable earnings. The Screening Algorithm This factor trading strategy begins with a universe of 6,000 stocks of all sizes, industries, and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":265441,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[3528,12829,22932,95038,11480,1168,95039],"dealstore":[],"offerexpiration":[],"class_list":["post-265440","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-based","tag-earnings","tag-factor","tag-factor-based-investing","tag-leverage","tag-model","tag-portolio"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Factor Based Model Portolio: Earnings Leverage - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=265440\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Factor Based Model Portolio: Earnings Leverage - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"The Zen Earnings Leverage Trading Strategy looks for companies that have recently raised their earnings forecasts or have been upgraded by the analyst community. 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