Key takeaways
- Factors summarise past data; they do not predict.
- Each factor answers a different question.
- A combined score hides disagreement between the parts.
Factor investing groups stocks by traits that have historically mattered to returns. A factor score turns a trait into a number so you can compare companies side by side.
The four questions
- Value: is the price low compared with what the company earns or owns?
- Momentum: has the price been trending up or down recently?
- Quality: is the business profitable, stable and not overloaded with debt?
- Growth: are sales and earnings expanding?
Why the parts matter
A stock can look cheap (high value) because the business is struggling (low quality). A strong combined score with one very weak part is a different story from a score with all parts moderately strong. Look at the breakdown, not only the total.
What a score is not
- A forecast of the next price move.
- A recommendation to buy or sell.
- Sensitive to your goals, taxes or timeline.
Use scores to ask better questions, then check the answers in the company’s own filings.
For informational and research purposes only. Not financial advice. Past performance doesn't guarantee future results.