The basic principles of value investing are reasonably clear: value investors look for undervalued companies to invest in. This often involves a quantitative and a qualitative analysis. However, when it comes to the actual implementation, there are many different approaches. I think it is dangerous to focus solely on one key figure, such as the price/earnings ratio or the price/book ratio, and to make the investment decision dependent solely on these quantitative factors of company valuation. In my view, it makes sense to combine valuation ratios – such as O’Shaughnessy’s Value Composite. In my opinion, such long-term studies are worth their weight in gold and are also meaningful. He analyzed various value indicators over a period of 45 years, from January 1, 1964 to December 31, 2009, to find out which value indicators can be used to select companies in order to achieve the best returns. This resulted in the so-called Value Composite, which is a combination of these value indicators. He tested this combined valuation ranking for all rolling 10-year periods over the 45-year period between 1964 and 2009 and found that in 82% of cases it outperformed companies that were undervalued based on a single valuation metric – but not if you also looked at the other valuation metrics.