Articles

Articles Written by Validea Founder John Reese

7/25/2017

John Reese Forbes Articles
Forbes

10 Ben Graham-Inspired Stocks For Value's Eventual Turn

"You either believe in it or you don't," Peter Lynch PBS. Those words, from investing great Peter Lynch, are never more true then when the markets are in a free fall. But they should also ring true when the indexes are hitting record high after record high. Value investors must be feeling pretty lonely this year when all the attention has been on growth stocks, and four in particular: Facebook, Amazon.com, Netflix and Google parent Alphabet.

7/25/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks the Great Value Investors Would Likely Adore

So far in 2017, there is a huge divergence between the performance of growth and value stocks. The growth stock camp has been largely led by a handful of megacap technology names - Facebook, Apple, Amazon and Google parent Alphabet. According to a recent Wall Street Journal story, the S&P 500 has added $1.7-trillion (U.S.) to its overall market capitalization in 2017, and those four technology behemoths have contributed $500-billion, or 30 per cent of the total gain based on their stocks' price appreciation. If you weren't invested in those names, you were probably left in the dust.

7/20/2017

John Reese NASDAQ Articles
NASDAQ.com

Buffett's Friendly Skies and Picks that Could Lift Off

Amazon's much anticipated 30-hour long "Prime Day" kicked off on July 10th, with the company offering countless bargains for Prime customers-those that pay $100 a year to receive free or reduced-rate shipping on certain items. The shopping extravaganza-the third for Amazon-is considered a mid-year Black Friday of sorts. Last year, analysts estimated that Amazon pulled in $500 million to $600 million on the blow-out sales day, (although some claimed the figure was closer to $1.8 billion worldwide) and predictions for this year hover around $2.2 billion.

7/18/2017

John Reese Forbes Articles
Forbes

Four Buffett-Inspired Picks That Could Outrun The Bulls

The annual "Running of the Bulls" is part of a nine-day festival held in Pamplona, Spain in which thousands of people attempt to outrun a small herd of bulls that are allowed to gallop frenetically through a series of small streets leading to a bullring, where the event ends. Some say the event originated in northeastern Spain during the early 14th century, when men would try to speed up the process of transporting cattle to market by spooking them into running.

7/10/2017

John Reese Forbes Articles
Forbes

Buffett's Bank Of America Windfall And Five Attractive Financials To Consider

Before the July 4 weekend began, Warren Buffett made some fireworks of his own. Last week, the CEO of Berkshire Hathaway decided to exercise the company's warrants to buy 700 million shares of Bank of America (BAC) common stock, a transaction that will result in an $11 billion windfall for Berkshire and represent Buffett's most profitable investment in this sector since the financial crisis. The deal with also make Berkshire Hathaway Bank of America's biggest shareholder (7%), surpassing Vanguard, which currently holds a 6% stake.

7/10/2017

John Reese TheStreet.com Articles
TheStreet.com

5 Small-Caps That Could Be Big Performers

The universe of publicly traded companies in the U.S. stock market is about half what it was 20 years ago -- despite the fact that gross domestic product (GDP) is triple what it was then -- and much of the shrinkage is attributable to the smallest companies, according to data from Credit Suisse. In May, a Bloomberg article reported that investors had pulled back from small-caps in a big way, more than they had in the 10 years prior and in stark contrast to their post-election surge.

7/5/2017

John Reese NASDAQ Articles
NASDAQ.com

A Review Of The Piotroski Book/Market Model

Quantitative investment strategies have drawn a lot of headlines and attention in the finance world, and represent an arm of passive investing which continues to rule the market roost. Since 2009, the flow of funds into the "quant" sector has more than doubled, and a number of high-profile money managers are bulking up their quant teams and relying more heavily on computer algorithms for stock-picking. The concept, however, isn't new.

7/5/2017

John Reese Forbes Articles
Forbes

Be A Patient Investor Like Buffett With These Stocks

It's not often that you hear "Warren Buffett" and "lottery winner" in the same sentence, but bear with me. If you were to do an Internet search on the phrase "sad lottery winner stories," the slew of horror tales populating the screen would surely make you think twice before ever anteing up. The outcomes have often been dismal, with coveted windfalls of dough leading many a winner to destitution and isolation if not criminal status (and serious jail time). For the winners, the tantalizing sensation of cash burning a hole in their pockets has often led to the proverbial house going up in flames.

6/26/2017

John Reese Forbes Articles
Forbes

Be Like Buffett And Other Investor Greats And Shun Pessimism

In Daniel Kahneman's 2011 book Thinking, Fast and Slow, he writes, "The brains of humans and other animals contain a mechanism that is designed to give priority to bad news. By shaving a few hundredths of a second from the time needed to detect a predator, this circuit improves the animal's odds of living long enough to reproduce." Sounds a little off the beaten track of investing--but not so much. Kahneman won the 2002 Nobel Prize in Economics for his work on decision-making, and his theory of the brain's established penchant for the negative is echoed in a recent article by Morgan Housel (formerly of The Motley Fool and now with Collaborative Fund) titled, "The Seduction of Pessimism."

6/26/2017

John Reese TheStreet.com Articles
TheStreet.com

Momentum Investing Is Still Alive: 5 Stock Picks That Could Benefit

On the face of it, the idea of momentum investing runs counter to the first commandment of investing: buy low, sell high. By definition, a momentum strategy requires riding the wave of a well-performing stock -- holding on to "winners" and selling "losers" -- a notion that the wise investor might interpret as a knee-jerk, emotional, "hot potato" reaction to market information. Couple that with the fact that momentum investing has shown disappointing returns over the past decade, and you might sour on the idea altogether. But don't jump the momentum ship just yet.

6/20/2017

John Reese Forbes Articles
Forbes

7 Keys To Success From Investing Greats Like Bogle, Buffett, Marks And Others

At the annual SkyBridge Capital industry conference (SALT) held last month in Las Vegas, billionaire Bill Ackman told a room full of hedge fund managers that after two years of double-digit portfolio losses (for his firm Pershing Square Capital Management) he is "ready for a comeback," according to a recent Reuters article. In a sideways reference to his firm's doomed bet on Valeant Pharmaceuticals, Ackman proclaimed, "The next investment you will hear from us isn't going to be some successful company trading near its highs." Ackman asserted that, instead, the firm would focus on high quality investments, adding, "When you put your hand in the fire and you get burned, you go back to a real focus on your core."

6/20/2017

John Reese NASDAQ Articles
NASDAQ.com

Finding the Next Super Stock Like Amazon is Much Harder Than You Think

Amazon's deal to buy Whole Foods Market, which gives the e-commerce giant the potential to disrupt yet another corner of the retail sales market, demonstrates for investors how hard it is to find that diamond-in-the-rough stock early on. When Amazon started out in the 1990s as an online bookseller, few people recognized its potential to remake the retail landscape. Debuting as a publicly traded stock in the spring of 1997 at a humble $18 a share, Amazon struggled in its first few years to win converts to its business model.

6/13/2017

John Reese NASDAQ Articles
NASDAQ.com

John Neff's Low P/E Strategy and Five Picks That Fit the Bill

The price-earnings (P/E) ratio is one of the most widely used variables in stock analysis, and an indicator of how much investors are willing to pay for every dollar in earnings that a company is generating. For legendary investor John Neff, who managed Vanguard's Windsor Fund from 1964 to 1995, the P/E ratio (a stock's per-share price divided by per-share earnings) is also a measure of what level of growth investors are expecting from a company in the future.

6/12/2017

John Reese Forbes Articles
Forbes

Five Sensible Stock Picks Intelligent Investors Should Make

Like most things in life, investing in the stock market is not a black and white proposition. A continuum of approaches and strategies is available to investors, including varying degrees of active and passive investing, all of which can be used in a wide range of combinations. A recent article in the New York Times titled, Hot Stocks Can Make You Rich. But They Probably Won't, says that while it is possible for investors to "pick a sizzling stock at just the right time," the odds are not in their favor. Over time, the article argues, "while the stock market has prospered, most individual stocks have not."

6/7/2017

John Reese Forbes Articles
Forbes

How To Use Jack Bogle's Rules For Investment Success

In his 2012 book The Clash of the Cultures: Investment vs. Speculation (John Wiley & Sons), Vanguard founder John "Jack" Bogle outlined his rules for investment success, which included the following:

6/1/2017

John Reese Forbes Articles
Forbes

Bridge With Buffett And Thorp, And Five Stocks That Could Follow Suit

In the 1988 film Rain Man, Ray Babbitt (played by Dustin Hoffman) shocked his brother Charlie (Tom Cruise) when he accurately counted-within seconds-246 toothpicks that had spilled onto the floor. Seizing on the opportunity, Charlie took his savant brother to Las Vegas and exploited his counting chops at the blackjack table. If Ray Babbitt had graduated to Wall Street, he could have become Ed Thorp.

5/31/2017

John Reese NASDAQ Articles
NASDAQ.com

The Buyback Decline and Five Stocks that Stack Up

On page seven of the Berkshire Hathaway 2016 annual report, billionaire CEO Warren Buffett offers his opinion on share buybacks: "My suggestion: Before even discussing repurchases, a CEO and his or her Board should stand, join hands and in unison declare, 'What is smart at one price is stupid at another.'" While simple math shows that stock repurchases boost earnings-per-share for investors, the move only makes good big-picture sense if the shares are being repurchased at a reasonable price.

5/31/2017

John Reese Globe and Mail Articles
The Globe and Mail

Key Lessons For Becoming a Successful Value Investor

A few months ago, many people believed the stock market was overheating, yet the indexes have continued their march to record highs despite increasing uncertainty over U.S. tax reform, deregulation and infrastructure spending. Some worried this year's gains were not broad-based, driven by just a handful of big technology stocks - Amazon, Facebook, Alphabet and Netflix - which helped skew the indexes higher.

5/23/2017

John Reese TheStreet.com Articles
TheStreet.com

4 Safe Cybersecurity Stocks

Last week, a Voldemort-equivalent hacker group called the Shadow Brokers unleashed the WannaCrypt ransomware attack on the digital world, crippling tens of thousands of businesses, hospitals and agencies across 153 countries, according to Forbes. The malware encrypts data files until a $300 bitcoin "ransom" is paid by the user (bitcoin transactions are not traceable). Unfortunately, in many cases the files are never recovered, even after the ransom is paid.

5/23/2017

John Reese Forbes Articles
Forbes

Investors, There's Nothing Magical About Quant Strategies

As the debate continues around the topic of human versus machine-based investment models, fund managers continue to allocate resources to quantitative modeling in the hopes of beefing up returns, satisfying prickly clients and maybe even attracting some new ones. The flow of funds into the "quant" sector has more than doubled since 2009, and high-profile managers (BlackRock, for one) are bulking up their quant teams and relying more heavily on computer algorithms for stock-picking.

5/23/2017

John Reese Globe and Mail Articles
The Globe and Mail

A Practical Approach to Factor-Based Investing

As investors, we've been taught that success comes from sticking to a few basic ideas: Cheap stocks outperform expensive ones; earnings quality matters; prices move on momentum. Market anomalies can be exploited for profit and have helped make so-called "smart beta" exchange-traded funds a hit in recent years. But what if the widely followed investment factors underpinning these investments don't really function as expected?

5/17/2017

John Reese NASDAQ Articles
NASDAQ.com

Buffett, IBM and a Lesson in Selling Stocks in Your Portfolio

Prior to the Berkshire Hathaway annual meeting last Saturday, CEO Warren Buffett disclosed that he had sold about a third of the firm's 81 million shares of IBM, causing a nearly 4% drop in the tech company's share price that precipitated a domino-like rash of headlines. While the billionaire investor is known for taking a long view on the companies he owns, he makes it clear in this year's letter to shareholders that his commitment is not without borders.

5/16/2017

John Reese Forbes Articles
Forbes

A Fundamental-Based Investment Approach Is Timeless: Five Stock Buys

Long before Warren Buffett, Bill Gates or John D. Rockefeller, there was Jakob Fugger. Born in Augsburg, Germany in 1459 to a well-heeled merchant family, Fugger emerged as one of history's most ruthless businessmen, keenest investors and preeminent financiers for kings, explorers and popes (albeit at times for such ignoble pursuits as buying votes and waging war). In the process, Fugger became one of the wealthiest people in history, amassing a fortune of about $400 billion (in current dollars) at the time of his death, a whopping 2% of Europe's GDP at the time.

5/10/2017

John Reese NASDAQ Articles
NASDAQ.com

International Markets, Mean Reversion and 5 Picks

An article in last month's Financial Times stated, "Investors are flocking back to European equities and propelling a rally across continental stock markets," noting the stark contrast with 2016 when "investors pulled roughly $100 billion from the asset class." It's easy to see why investors may have been ready to throw in the towel on international markets. Over the past 10 years, the MSCI EAFE has shown an annualized return of a measly 1.2%. The S&P 500, on the other hand, has earned an annualized return of 7.2%. Over the last 3 years, the performance gap is even wider.

5/9/2017

John Reese Forbes Articles
Forbes

Forget P/E, Focus On Price-To-Sales To Find Super Stocks Like These

As the second earnings season of the year winds down, we're reminded of how much investors and the media focus on a company's profits and a stock's price-earnings ratio, the ubiquitous share valuation measure. Price-earnings ratio, calculated by dividing a stock's per-share price by the amount of per-share earnings it generates, is used to give investors an idea of how much bang they're getting for their buck. For decades, the P/E ratio has been the most frequently used and discussed stock analysis ratio and, in many newspapers, it's the only valuation metric included in their daily stock listings.