Below are two alternative strategies under consideration by an investment firm:

Strategy A : Invest in stocks that are components of a global equity index, have a ROE above the median ROE of all stocks in the index, and have a P/E less than the median P/E.

Strategy B : Invest in stocks that are components of a broad-based US equity index, have a ratio of price to operating cash flow in the lowest quartile of companies in the index, and have shown increases in sales for at least the past three years.

Both strategies were developed with the use of back-testing.

1. How would you characterize the two strategies?

2. What concerns might you have about using such strategies?