In today’s tech market, where giants like NVIDIA command breathtaking valuations, investors face a critical challenge: How do you separate genuine opportunities from market hysteria? The answer might lie in nature’s own design principles.
Enter the Price-to-Earnings Network (PEN), a portfolio construction approach reminiscent of the structure of a spider’s web. Just as a spider builds its web with precision and balance, PEN maps out connections between companies based on their earnings multiples. This approach uncovers natural clusters in the market, offering a fresh perspective on valuation.
In this first installment of our deep dive, we’ll explore:
- Core Principle: Weaving a Web of Value
- Data Selection: Choosing the Right Anchor Points
- Standardizing the Data: Creating a Level Playing Field
- Refining Our Universe: Clearing the Web of Unwanted Debris
- Spinning the Web: A Network of Value Takes Shape
- The Architecture of Value: A Quantitative Web Analysis
- Untangling the Web: From Theory to P/E-rfection
Join me as we spin a novel approach to portfolio construction!