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Practical Lessons from Cliff Asness – Validea's Guru Investor Blog
In this episode, Jack Forehand and Matt Zeigler discuss their fascinating interview with AQR founder Cliff Asness. They explore several key topics from their conversation, including: Cliff’s humorous take on morning routines and why correlation doesn’t equal causation when it comes to success habits The “Less Efficient Market Hypothesis” and why Cliff believes markets may be becoming less efficient over time, particularly evident in the dot-com bubble and 2019-2020 market events A thoughtful discussion on… Read More
Ten Top Joel Greenblatt Magic Formula Stocks – Validea's Guru Investor Blog
The Magic Formula, introduced in “The Little Book That Beats the Market,” simplifies the complexity of stock selection into a straightforward two-part analysis. At its core, the method examines Return on Capital, which measures how well a company converts its resources into profits, and Earnings Yield, which indicates whether a stock’s price is low compared to its earnings potential. This approach stands out by combining these metrics into a ranking system that automatically identifies two… Read More
Ten GARP Stocks Peter Lynch Might Like – Validea's Guru Investor Blog
Peter Lynch made his name at the helm of Fidelity’s Magellan Fund, and investment research firm Validea has distilled his investment philosophy into a methodical framework. The approach centers on finding companies that demonstrate growth characteristics while remaining reasonably priced – a strategy known as GARP (Growth At a Reasonable Price). The methodology hinges on the PEG ratio, which measures a stock’s P/E ratio against its earnings growth rate. A PEG ratio under 1.0 may… Read More
Ten Top Benjamin Graham Stocks – Validea's Guru Investor Blog
The Graham-Inspired Value Strategy systematically identifies undervalued stocks by focusing on established companies with proven track records rather than speculative opportunities. This approach, developed by Validea based on Benjamin Graham’s investment principles, uses specific criteria: A company must first meet basic operational requirements: annual revenue exceeding $340 million and five consecutive profitable years. The strategy deliberately excludes technology companies, preferring traditional industry sectors. Strong balance sheets are essential. Companies need a current ratio greater than… Read More
Five Stocks Both Warren Buffett and Peter Lynch Might Like – Validea's Guru Investor Blog
Finding stocks that satisfy both Warren Buffett’s quality-focused investment approach and Peter Lynch’s growth-at-a-reasonable-price strategy can help identify exceptionally strong companies. Based on Validea’s analysis, several companies currently pass both legendary investors’ stringent criteria with high scores. The Buffett Strategy: Focus on Quality and Predictability Warren Buffett looks for companies with: The Lynch Strategy: Growth Without Overpaying Peter Lynch seeks: Discover how Validea’s models can help you identify high-quality, long-term investments, even in changing market… Read More
Ten Top Technology Dividend Aristocrats – Validea's Guru Investor Blog
Technology dividend aristocrats are companies in the technology sector that have consistently increased their dividend payments for at least 7 consecutive years, a lower threshold than the 25 years required for traditional S&P 500 dividend aristocrats. This shorter timeframe reflects the relative youth of the technology sector as dividend payers, since many tech companies historically preferred to reinvest profits into growth rather than pay dividends. Companies that qualify for this category have demonstrated a commitment… Read More
Ten Top Twin Momentum Stocks - January 2025 – Validea's Guru Investor Blog
The Twin Momentum strategy looks at combining traditional price momentum with improving fundamentals to generate market outperformance. The strategy uses seven fundamental variables (earnings, return on equity, return on assets, accrual operating profitability to equity, cash operating profitability to assets, gross profit to assets and net payout ratio) that are combined into a single fundamental momentum measure. The strategy is based on the research paper “Twin Momentum” by Dashan Huang and looks for stocks that… Read More
Building Intelligent Alpha Portfolios with ChatGPT | Doug Clinton – Validea's Guru Investor Blog
In this episode of Excess Returns, we sit down with Doug Clinton of Intelligent Alpha to explore the fascinating intersection of AI and investment strategy. We discussed how Doug is using large language models (LLMs) like ChatGPT, Claude, and Gemini to build portfolios that aim to beat the market over time. Doug shares insights from his experience launching managing AI-powered investment strategies. We dive deep into how these models actually work behind the scenes, exploring… Read More
Ten Guru-Approved Stocks With Improving Fundamental Momentum – Validea's Guru Investor Blog
Fundamental momentum represents a company’s improvement in operational performance and financial health over time, as measured through changes in key metrics like return on equity (ROE), operating margins, and other fundamental indicators. Unlike price momentum, which looks at historical stock price movements, fundamental momentum focuses on the underlying business performance trends. According to Huang’s research in the Twin Momentum paper, companies showing positive fundamental momentum – specifically those with improving ROE over the previous four… Read More
Ten Top High Free Cash Flow Yield Stocks – Validea's Guru Investor Blog
High free cash flow yield stocks represent companies that generate substantial cash relative to their market value, creating several compelling advantages for investors. These companies typically demonstrate strong operational efficiency and have proven their ability to convert revenue into actual cash flow after accounting for capital expenditures and working capital needs. This financial strength often provides companies with greater flexibility to fund growth initiatives, pay down debt, or return value to shareholders through dividends and… Read More
Ten Fundamentally Sound AI Stocks – Validea's Guru Investor Blog
The transformative power of Artificial Intelligence extends far beyond technology – it’s reshaping industries, consumer behavior, and the very fabric of modern business. As AI continues to dominate market sentiment, companies at the forefront of this revolution have not only fueled impressive stock market gains but are positioned to be key drivers of economic expansion in the decades ahead. To identify the most fundamentally sound AI-focused stocks, we’ve applied our comprehensive consensus ranking system, which… Read More
Validea's Top NASDAQ 100 Stocks - January 2025 – Validea's Guru Investor Blog
With the strong performance of the NASDAQ 100 in recent years, valuation has become an issue for the index. But that doesn’t mean there isn’t value in some of the names within it. Using Validea’s factor screening system, which incorporates 22 different investment strategies modeled after legendary investors like Warren Buffett and Peter Lynch, as well as proven academic research – Validea has identified several NASDAQ 100 companies that still demonstrate strong fundamental value. Here… Read More
Practical Lessons from Warren Buffett | Timeless Wisdom from the Oracle of Omaha – Validea's Guru Investor Blog
In this episode of “Two Quants and a Financial Planner,” we break down some of Warren Buffett’s most important investing lessons and life wisdom through a series of interview clips and annual meeting footage. We start by discussing whether Buffett truly deserves the “GOAT” (Greatest of All Time) title in investing, drawing some interesting parallels to NFL running backs like Barry Sanders and comparing different investing legends’ careers. We analyze Buffett’s key principles including: Throughout… Read More
Validea's Top Ten Technology Stocks - January 2025 – Validea's Guru Investor Blog
Technology stocks have had a great run. But that doesn’t mean there aren’t stocks within the universe that are still fundamentally sound and represent attractive values. Using Validea’s scoring system, which ranks stocks using 22 fundamental strategies based on legendary investors like Warren Buffett, Peter Lynch and Martin Zweig, we have identified a group of technology stocks that offer fundamental value. Here are the top 10 technology stocks for January 2025 ranked using Validea’s guru… Read More
Validea's Top 10 S&P 500 Stocks - January 2025 – Validea's Guru Investor Blog
The S&P 500 has had a big run in recent years, led by the biggest tech stocks. But investors often forget that there are many other companies in the index besides the biggest name. And many of those names offer significant value based on their fundamentals. Using a screening system that incorporates 22 different investment strategies – modeled after legendary investors like Warren Buffett and Peter Lynch, as well as proven academic research – Validea… Read More
Beyond the Magnificent Seven | Liz Ann Sonders on Markets, Cycles & Investing – Validea's Guru Investor Blog
In this episode of Excess Returns, we sit down with Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, for a wide-ranging discussion about markets, the economy, and investing. We explore her unique perspective on the current market environment, including her views on the end of the “Great Moderation” era and the transition to what she calls the “Temperamental Era” – a period likely to bring more volatility in both inflation and economic growth. Liz… Read More
Validea's Top 10 High Insider Ownership Stocks | January 2025 – Validea's Guru Investor Blog
Insider ownership, particularly among executives and directors, is a crucial indicator for investors as it creates a direct alignment between management and shareholder interests. When company leaders have significant skin in the game through substantial stock ownership, they’re more likely to make decisions that benefit long-term shareholder value rather than focusing solely on short-term metrics or personal benefits. This alignment means insiders will feel the same financial impact of their decisions as other shareholders, whether… Read More
Fundamentally Sound Growth Companies - Validea's Top 10 G Score Stocks for January 2025 – Validea's Guru Investor Blog
The G-Score, developed by Professor Parth Mohanram in 2005, is a fundamental analysis tool designed specifically for growth stocks, serving as a counterpart to Joseph Piotroski’s F-Score which was created for value stocks. The scoring system evaluates eight binary signals based on firm fundamentals, particularly focusing on aspects that are especially relevant for growth companies. These signals include stability and consistency of growth in R&D, capital expenditure, and advertising expenses, as well as measures of… Read More
Validea's Top Ten Shareholder Yield Stocks - January 2025 – Validea's Guru Investor Blog
Shareholder yield is a comprehensive measure that shows how much value a company returns to its investors relative to its market value. Think of it as a three-part equation: First, there’s the traditional dividend yield – the cash payments shareholders receive directly from company profits. Second comes the buyback yield, which creates value when companies repurchase their own shares, effectively making each remaining share more valuable. The third component is debt reduction yield, which reflects… Read More
Practical Lessons from Larry Swedroe | Why Evidence Beats Market Narratives – Validea's Guru Investor Blog
In this episode of “Two Quants and a Financial Planner,” we explore key insights from our previous conversations with Larry Swedroe, one of investing’s most evidence-based thinkers. Whether you’re a DIY investor or work with an advisor, this episode offers valuable lessons on building resilient portfolios based on academic evidence rather than market narratives. 🖥️ Watch on YouTube 🎧 Listen on Apple Podcasts 👂 Listen on Spotify
Validea's Top Ten Dividend Aristocrats | January 2025 – Validea's Guru Investor Blog
The Dividend Aristocrats represent an elite subset of S&P 500 companies that have demonstrated exceptional reliability in rewarding their shareholders. The criteria for joining this prestigious group are stringent: companies must increase their dividend payments annually for a minimum of 25 consecutive years. This exclusive club currently has fewer than 70 members, representing diverse sectors from healthcare to manufacturing. These companies’ ability to consistently raise dividends speaks volumes about their financial resilience. By maintaining and… Read More
Validea's Top Ten Warren Buffett Stocks - January 2025 – Validea's Guru Investor Blog
Validea’s Warren Buffett strategy, also known as our “Patient Investor” strategy, is inspired by the investment principles of Warren Buffett, as interpreted from the book Buffettology by Mary Buffett. This strategy aims to emulate Buffett’s long-term, value-based approach to investing. Buffett looks for companies with strong, stable earnings growth, conservative financing, high returns on equity, and shareholder-friendly management. Here are the details behind the key criteria in Validea’s Buffett model: If a company meets these strict fundamental… Read More
The One Factor That Explains the Struggles of Value, International and Small-Cap Stocks | Kai Wu – Validea's Guru Investor Blog
In this episode of Excess Returns, we sit down with Kai Wu, founder of Sparkline Capital, for a fascinating discussion about intangible value investing and its global applications. Kai shares his expertise on using machine learning and natural language processing to identify companies rich in intellectual property, brand equity, human capital, and network effects. We explore why U.S. firms have historically outperformed many international counterparts, with Kai explaining how the gap in intangible asset investment… Read More
The Unforecast Episode: Making Our 2025 Market Calls to Show Why Forecasting is a Waste of Time – Validea's Guru Investor Blog
We’re back with our annual predictions episode, where we look back at our (surprisingly not terrible) 2024 market calls and make fresh predictions for 2025 (which will likely be very wrong). In this episode, we’re embracing the humbling experience of market forecasting to prove to everyone (and ourselves) why market forecasting is a waste of time. You’ll hear us: We keep it real about our hits and misses, share some laughs about our forecasting methods… Read More
Value Investing in a High Intangible Intensity World | Jacob Pozharny – Validea's Guru Investor Blog
In this episode of Excess Returns, hosts Jack Forehand and Justin Carbonneau sit down with Jacob Pozharny, partner at Bridgeway Capital Management, to explore the increasingly important role of intangible assets in modern investing. Jacob breaks down what intangible assets are – from intellectual property and proprietary algorithms to brand value and customer relationships – and explains how these harder-to-measure assets are changing traditional investment approaches. He discusses Bridgeway’s pioneering research on “intangible intensity” and… Read More
Do You Really Need International Diversification? 10 Top Investors Debate – Validea's Guru Investor Blog
In this episode of “Two Quants and a Financial Planner,” we explore one of investing’s most debated topics: international diversification. Through clips from 10 different investing experts, we examine whether U.S. investors truly need international exposure in their portfolios. Key topics include: Featuring insights from renowned investors and experts including Corey Hoffstein, Meb Faber, Dan Rasmussen, Larry Swedroe, Cullen Roche, Dan Villalon, Rick Ferri, Jason Buck, Mike Green, and Andy Constan, this episode offers a… Read More
Inside the World of Pod Shops | Bob Elliott – Validea's Guru Investor Blog
In this episode of Excess Returns, hosts Justin and Matt sit down with Bob Elliott, founder of Unlimited Funds, to explore the fascinating world of multi-strategy hedge funds, also known as “pod shops.” Bob breaks down how these complex investment vehicles work, discussing their unique structure where multiple portfolio managers operate independently while sharing infrastructure and risk management resources. The conversation covers crucial topics including: Drawing from his extensive experience in the hedge fund industry,… Read More
Validea's Top Benjamin Graham Stocks - December 2024 – Validea's Guru Investor Blog
Benjamin Graham, the father of value investing, crafted a disciplined framework for discovering stocks trading below their true worth. Building on Graham’s foundational principles, Validea developed a systematic approach that emphasizes companies with proven financial health rather than those promising speculative returns. The strategy evaluates potential investments through several key lenses: First, companies must demonstrate fundamental strength. This includes generating substantial revenue of at least $340 million annually and showing consistent profitability over five straight… Read More
Practical Lessons from Andy Constan | Bridgewater, Macro Pillars and Navigating Deleveragings – Validea's Guru Investor Blog
Join Matt Zeigler and Jack Forehand as they break down some of the most insightful frameworks from our interviews with macro thinker Andy Constan. Drawing from multiple conversations with Andy, they explore: Andy’s ability to break down complex topics into simple, actionable frameworks has made him one of the most valuable voices in macro investing. Whether you’re a professional investor or managing your personal portfolio, this episode offers important insights into how to think about… Read More
Warren Buffett and Peter Lynch's Investment Wisdom Combined: Four Stocks That Pass Their Tests – Validea's Guru Investor Blog
Warren Buffett and Peter Lynch stand as two of investing’s most legendary figures, each with distinct approaches to identifying exceptional companies. Through Validea’s guru-based models, four stocks currently demonstrate the fundamental characteristics that would attract both the Oracle of Omaha and the mutual fund maestro. Let’s examine why these companies align with both investors’ stringent criteria. The Buffett Approach: Seeking Durable Competitive Advantages Warren Buffett seeks companies with predictable earnings growth and high returns on… Read More
Dispelling Big Investing Myths | Dan Rasmussen – Validea's Guru Investor Blog
In this episode of Excess Returns, Jack Forehand and Justin Carbonneau sit down with Dan Rasmussen from Verdad Advisers to discuss his firm’s top research pieces from the past year. They explore several fascinating market insights, including: Dan also announces his upcoming book “The Humble Investor” which challenges common assumptions about predictability in markets. Throughout the conversation, he offers thought-provoking perspectives on market efficiency, the limitations of forecasting, and why humility is crucial for investment… Read More
Validea's Top Ten High Shareholder Yield Stocks - December 2024 – Validea's Guru Investor Blog
Shareholder yield represents the total value a company delivers to its investors, calculated as a percentage of its market value. This comprehensive metric encompasses three distinct components: Why Shareholder Yield Matters Shareholder yield has become an increasingly important metric for investors for several key reasons: Here are Validea’s top 10 high shareholder yield stocks for December 2024. These stocks not only have high shareholder yields,but also score highly according to our quantitative models based on… Read More
Validea's Market Valuation Report | December 2024 – Validea's Guru Investor Blog
Here is the latest update for December from Validea’s market valuation tool. Rather than focusing on market-cap weighted indexes like the S&P 500, our tool focuses on the valuation of the average stock relative to history. We use the median of our investable universe of 2700 stocks to perform the calculation. Despite the market’s run in December, the median stock’s valuation remained fairly steady Using the current year PE Ratio, stocks look more expensive. They… Read More
Validea's Top 10 Russell 2000 Stocks - December 2024 – Validea's Guru Investor Blog
Despite lagging behind in market performance, smaller companies’ underlying business strength remains solid. This disconnect has created numerous investment opportunities among smaller companies that often get overlooked in favor of well-known large companies. At Validea, we evaluate stocks using 22 different quantitative models. These models are derived from the investment approaches of legendary investors like Warren Buffett and Peter Lynch, as well as proven academic research. By applying these rigorous criteria, we aim to identify… Read More
10 Great Investors Share Their Most Important Lesson – Validea's Guru Investor Blog
We ask one question at the end of each of our episodes: Based on your experience in markets, if you could teach one lesson to your average investor, what would it be? In this episode, we discuss our favorite answers from our guests in 2024. Featuring insights from: Learn why the fundamentals of investing often matter more than complex strategies, how to avoid common behavioral pitfalls, and why getting the basics right can put you… Read More
Validea's Top 10 NASDAQ 100 Stocks - December 2024 – Validea's Guru Investor Blog
Despite the NASDAQ 100’s remarkable performance and dominance among major market indexes, questions have emerged about potential overvaluation, particularly given its concentration in growth companies. However, thorough quantitative analysis suggests there may still be fundamentally sound stocks within this tech-heavy index. Using a sophisticated screening system that incorporates 22 different investment strategies – modeled after legendary investors like Warren Buffett and Peter Lynch, as well as proven academic research – Validea has identified several NASDAQ… Read More
Why Most Investors Won't Buy the Best Diversifier | Andrew Beer on Managed Futures – Validea's Guru Investor Blog
In this episode of Excess Returns, hosts Justin and Jack sit down with Andrew Beer of Dynamic Beta Investments to explore the fascinating world of managed futures and alternative investment strategies. Andrew, who manages over a billion dollars in assets, shares valuable insights on why managed futures remain underutilized despite their proven benefits for portfolio diversification. Andrew also discusses the evolution of the ETF landscape, the role of artificial intelligence in investment management, and why… Read More
Validea's Top Ten Warren Buffett Stocks - December 2024 – Validea's Guru Investor Blog
The Patient Investor approach takes inspiration from Warren Buffett’s investment philosophy, drawing from insights shared in Mary Buffett’s Buffettology. This methodology focuses on identifying companies with enduring value, much like Buffett’s own investment style. Key criteria include companies demonstrating: For December 2024, we’ve identified our top ten qualifying stocks. They are in the table below. Of note since last month is Lululemon and Williams Sonoma falling from 100% scores and Kinsale Capital and LPL Financial… Read More
A Rare Stock That Meets the Tests of Buffett, Greenblatt and Lynch – Validea's Guru Investor Blog
It is very rare feat, homebuilder NVR Inc. (NYSE: NVR) has achieved something unusual – simultaneously passing the strict criteria fundamental of three legendary investors: Warren Buffett, Joel Greenblatt, and Peter Lynch. This construction services company demonstrates impressive characteristics that align with multiple value investing philosophies. Warren Buffett’s Patient Investor Strategy (100% Score) The Buffett strategy, based on the principles outlined in “Buffettology,” emphasizes long-term value and durable competitive advantages. NVR excels across multiple Buffett… Read More
Practical Lessons from Ben Carlson – Validea's Guru Investor Blog
In this episode of Two Quants and a Financial Planner, we explore the timeless investing wisdom of Ben Carlson. We break down several crucial investing concepts, including why investors shouldn’t blindly follow billionaires’ market moves, the importance of finding an investment strategy you can stick with, and why the market rarely operates at extremes despite what headlines might suggest. We examine why even successful professionals can struggle with overconfidence in investing, the challenges of benchmarking… Read More