Morningstar Style Box

CFA Level III Equities
#1

I am confused how the style box builds? Schweser note says we have to assign a style score for each stock. Once a stock has both a value score and a growth score, the difference can be taken as a net style score. If the net style score is strongly positive then stock is classified as growth. Otherwise it is classified as value. But my question is why we have to assign both value score and growth score to each stock? We can just assign value score to each stock. If the value score is high (close to 100), then the stock is value stock. If it is low (close to 0), then it is growth stock. Because one stock can not be value and growth at the same time. Why morningstar style box has to assign both value and groth score for each stock and get the net style score? We can just use one score to separate value stock and growth stock, right?

#2

Anyone?

#3

Right.

So what?

#4

But Morningstar style box assigns both value score and growth score to each stock. And use the growth score to subtract value score. If the difference is high, then it is growth stock. Otherwise it is value stock.

#5

Right.

So what?

#6

Just curious why Morningstar uses two scores. It is easier to only use one.

#7

Maybe using two is more accurate than using only one.

Maybe it isn’t easier to use only one, because it’s more difficult to compute the one than to compute the two.

Maybe they like even numbers.

Maybe you should e-mail Morningstar and ask them.

#8

LOL…enjoyed reading this post!!

#9

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