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Show Us Your Portfolio: Jared Dillian – Validea's Guru Investor Blog
In this episode of Show Us Your Portfolio, Jared Dillian, author of the investment newsletter The Daily Dirt Nap and the book “No Worries: How to Live a Stress-Free Financial Life,” discusses his personal investing philosophy and portfolio. Dillian advocates for a diversified approach that includes stocks, bonds, cash, gold, and real estate, which he calls the “Awesome Portfolio.” He emphasizes the importance of avoiding catastrophic losses and focusing on big financial decisions like buying… Read More
Separating Winners from Losers in Growth Investing: The Mohanram Approach – Validea's Guru Investor Blog
In his 2005 research paper titled “Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis,” accounting professor Partha Mohanram laid out a strategy for finding promising growth stocks trading at attractive valuations. Mohanram’s approach aimed to identify the true growth winners among stocks with low book-to-market ratios. Mohanram’s Research Mohanram found that while low book-to-market stocks (aka growth stocks) as a group don’t generate abnormal returns, a subset of winners within the… Read More
The Double-Edged Sword of Trend Following – Validea's Guru Investor Blog
In this episode of Two Quants and a Financial Planner, we dive deep into the world of trend following investment strategies. We explain what trend following is, discuss the potential benefits such as downside protection during bear markets, and explore some of the challenges involved, including false signals, whipsaw risk, and the difficulty of sticking with the strategy during underperforming periods. We also talk about how trend following can be incorporated as one component of… Read More
PNL for a Purpose: Livestreaming to Help Fight Cancer – Validea's Guru Investor Blog
On April 30th, Validea’s Jack Forehand and Justin Carbonneau will co-host an all day livestream on YouTube along with Matt Zeigler and SpotGamma’s Brent Kochuba to raise money to help fight cancer. The livestream will run from 8AM to 8PM ET and will feature 24 half hour interviews with some amazing guests covering topics ranging from value investing to factor investing to macro and options. All proceeds will go to Susan G. Komen. To attend… Read More
The Consummate Contrarian: David Dreman's Value Investing Strategy – Validea's Guru Investor Blog
David Dreman is known as the “consummate contrarian” in the world of investing. As the chairman and chief investment officer of Dreman Value Management, he has made a highly successful career out of buying beaten-down, unloved stocks that the market has overreacted to and that are trading at bargain prices. Dreman’s Contrarian Philosophy Dreman detailed his contrarian philosophy in his 1998 book Contrarian Investment Strategies: The Next Generation. His approach centers on the belief that… Read More
Evaluating the Magnificent Seven Using Validea’s Guru Strategies – Validea's Guru Investor Blog
The “Magnificent 7” refers to a group of seven elite large-cap technology companies that have delivered outstanding long-term returns and growth. These companies have come to dominate the U.S. stock market, making up over 25% of the S&P 500 by market capitalization. These tech and consumer behemoths have achieved massive scale and profitability, driving the bulk of the market’s gains in recent years. As the top companies in the world’s largest economy, they are seen… Read More
The Ins and Outs of Trend Following – Validea's Guru Investor Blog
Trend following is a popular investment strategy that has gained significant attention in recent years, particularly in the realm of equity investing. This article will delve into the concept of trend following, its effectiveness, the metrics and lookback periods commonly employed, and the behavioral challenges it presents to investors. What is Trend Following? Trend following is an investment approach that involves taking positions in positively trending assets. The basic premise is to buy assets that… Read More
Finding Great Companies in a Challenging Environment with Jeff Muhlenkamp – Validea's Guru Investor Blog
In this episode of Excess Returns, we speak with Jeff Muhlenkamp, portfolio manager at Muhlenkamp and Company. We discuss Jeff’s views on inflation, the likelihood of a recession, and the possibility of another financial crisis. We also take a in depth look at his investment process, which focuses on finding good companies with strong growth, profitability, and financial strength. He also discusses the importance of understanding management incentives and how he incorporates macroeconomic factors into… Read More
Finding Wide Moat Stocks – Validea's Guru Investor Blog
Finding companies with sustainable competitive advantages, or “wide moats” can be key for compounding returns over time. Just like the moats that surrounded medieval castles to protect them from invaders, an economic moat protects a company’s profits and market share from competitors. Legendary investor Warren Buffett has built his immense fortune by focusing on wide moat companies. There are several major sources of moats including: Characteristics of Wide Moat Companies Some of the telltale signs… Read More
Joseph Piotroski: Separating Winners from Losers in Value Investing – Validea's Guru Investor Blog
Joseph Piotroski, a professor of accounting at the University of Chicago, published a groundbreaking research paper in 2000 titled “Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers”. In the study, Piotroski laid out a compelling case for using financial statement analysis to separate winners from losers among the cheapest stocks. His findings form the basis of the Validea Book/Market Investor model. Piotroski’s Research: Finding Bargain Stocks Ready to Rebound… Read More
Five High Free Cash Flow Yield Stocks – Validea's Guru Investor Blog
Free cash flow (FCF) is the cash that a company generates from its operations after accounting for capital expenditures. It represents the money that a company has available to distribute to shareholders, pay down debt, or reinvest in the business. Free cash flow is an important metric because it shows a company’s true profitability and ability to generate cash, which is ultimately what drives shareholder value. Why is Free Cash Flow Important? Studies have shown… Read More
The Importance of Managing Drawdowns in Retirement – Validea's Guru Investor Blog
In this episode of Two Quants and a Financial Planner, we dive into the important topic of withdrawal rates and retirement planning. We discuss how Monte Carlo simulations can help us understand the potential outcomes and risks associated with different withdrawal strategies. We also explore the concept of sequence of returns risk and how it can impact a portfolio’s longevity. Additionally, we examine how utilizing different asset classes and employing factor investing can potentially enhance… Read More
Riding the Wave: Profiting from Momentum in the Stock Market – Validea's Guru Investor Blog
What is Momentum Investing? Momentum investing is a strategy that aims to capitalize on the continuance of existing trends in the market. It involves buying stocks that have performed well in the recent past and selling those that have performed poorly, based on the idea that those trends will persist in the near-term future. Momentum investors believe that stocks which have outperformed recently will continue to do so, while those that have underperformed will continue… Read More
Navigating the Islands of Macro with Andy Constan – Validea's Guru Investor Blog
In this episode we are joined by Andy Constan, founder of Damped Spring Advisors. We discuss his outlook on the current economic landscape, why he left “higher for longer” island, inflation, the Fed’s actions, the bond market, and the influence of Treasury Secretary Janet Yellen and a lot more. He also shares his views on defining alpha and beta in investing, and how he constructs portfolios to generate long-term returns. Finally, Andy expresses his biggest… Read More
The Overlooked Strategy of Dividend Growth Investing – Validea's Guru Investor Blog
Many investors who focus on dividends look for high yields. But that can be a trap since many companies with high yields have significant problems with their businesses and those high yields can be an illusion. One often overlooked strategy for dividend investors is focusing on dividend growth instead of yield. By focusing on high-quality companies with strong competitive advantages and long track records of increasing their dividends each year, dividend growth investors can find… Read More
An In Depth Look at Low Volatility Investing – Validea's Guru Investor Blog
In investing, there is supposed to be a clear tradeoff between return and risk. Strategies that reduce risk are also supposed to come with a corresponding reduction in return But one factor defies that tradeoff. In this episode, we look at the low volatility factor. We discuss how it is measured, why it works and how it can be used in portfolios. We also examine some popular low volatility ETFs and look at the key… Read More
Joel Greenblatt's Magic Formula: Combining Value and Quality – Validea's Guru Investor Blog
Many people think investing has to be complicated. They think it takes a massive amount of in depth analysis to find attractive stocks. They think you need CFAs and other advanced designations to have any chance. But Joel Greenblatt turned that idea on its head with the publication of his book “The Little Book That Beats the Market”. In the book, Greenblatt outlined a simple investment strategy that used only two criteria to find good… Read More
Five Fundamentally Sound NASDAQ 100 Stocks – Validea's Guru Investor Blog
The NASDAQ 100 has performed exceptionally well over the past decade, driven by the strong performance of technology companies that make up a significant portion of its holdings. The index is comprised of the top 100 largest non-financial stocks listed on the NASDAQ stock exchange. Looking at a 10-year chart of the NASDAQ 100’s performance against the S&P 500 is all you need to do to understand just how well it has performed. And this… Read More
The Case for Value Investing with Tobias Carlisle – Validea's Guru Investor Blog
David Einhorn recently said that he thinks fundamental investing is broken. If he is right, there would certainly be significant long-term implications for value investing. We explored Einhorn’s case in several of our episodes and so we thought it was time we explored the other side of the argument and looked at the long-term case for value. And we couldn’t think of anyone better to do that with than our good friend Tobias Carlisle. In… Read More
Benjamin Graham: Quantifying The Father of Value Investing – Validea's Guru Investor Blog
Benjamin Graham (1894-1976) is considered the father of value investing and one of the most influential figures in investment history. His teachings and writings, especially his books Security Analysis (1934) and The Intelligent Investor (1949), laid the foundation for a patient, risk-averse approach to investing that has been followed by many successful investors, most famously Warren Buffett. Pioneering a disciplined, “defensive” approach focused on financial strength and cheap valuations, Graham achieved an excellent long-term track… Read More
Beyond Dividend Yield: The Power of Shareholder Yield – Validea's Guru Investor Blog
In the world of investing, investors are always on the lookout for metrics that can help them identify undervalued companies with the potential for strong returns. One such metric that has gained popularity in recent years is shareholder yield. In this article, we’ll explore what shareholder yield is, its components, and why it is considered superior to the more commonly used dividend yield. We’ll also highlight five companies with high shareholder yields that investors may… Read More