Abstract

In this paper, evidence is presented on the profitability of a fundamental trading rule as applied to the Kuwait stock market. Data on forty four stock prices and four fundamental variables (earnings per share, price-to-earnings ratio, price-to-book value ratio, and dividend yield) over fifty five weeks is used for this purpose. Two hypothetical strategies are applied, buy and sell and buy and hold. The results reveal that the buy and sell strategy is more profitable than the buy and hold strategy.

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