Articles

Articles Written by Validea Founder John Reese

9/26/2016

John Reese Globe and Mail Articles
The Globe and Mail

Buffett's Key to Investing: Four Stocks That Show a Durable Competitive Advantage

Some investors seem to have a formula for finding bargains regardless of the current market and economic climate. The billionaire Warren Buffett, known as the Oracle of Omaha, looks for companies that have a durable competitive advantage to others in their industry, another way of saying he looks for a cash cow, or a company that performs year in and year out regardless of the state of the economy or what's going on in the world.

9/26/2016

John Reese Forbes Articles
Forbes

4 Stocks Shining In Apple's Ecosystem

In June of last year, Supply and Demand Chain Executive magazine recalled how, a month prior, Apple had to delay its shipment of the Apple Watch due to a defective taptic engine-a term the company created for the tiny motor that produces the unique sensation of being tapped on the wrist. The delay occurred because Apple's reliability testing of the engines (produced by a China-based supplier) showed that they lacked durability. Unfortunately, this was uncovered just as the supplier was ramping up production in anticipation of Apple's product launch.

9/20/2016

John Reese TheStreet.com Articles
TheStreet.com

4 Value Stocks Legendary Investor Joseph Piotroski Would Love

Stock market moguls embody a wide spectrum of personalities and philosophies. There are those that are fixtures in the media or the basis for fictional characters in books and movies, even some that have passed on but left an indelible mark in the investment world psyche. And then there are the roll-up-your-sleeves, no-frills, in-the-trenches experts that combine academics, theory and investment strategy. A good example would be Joseph Piotroski, the inspiration behind my Book/Market Investor stock screening model.

9/18/2016

John Reese Globe and Mail Articles
The Globe and Mail

Canadian Stocks Take Stage as Deepest Value Names

Canadian stocks have lagged U.S. equities considerably since the start of the current bull market in March, 2009. However, this year the tide is turning, and if valuations and history are any guide, the superior relative performance out of Canadian stocks could be sustainable. So far this year, the S&P 500 is up 4.4 per cent while the TSX is up 12.2 per cent, and despite the runup, Canadian stocks are still better bargains than their U.S. counterparts.

9/12/2016

John Reese Forbes Articles
Forbes

If Rates Rise, Small Caps Like These 6 Stocks Could Still Lead

Given how long we've been hovering in a low interest rate environment, it's hard to imagine things changing. The zero interest rate policy (ZIRP) implemented in 2008 by then Fed Chairman Ben Bernanke (to bolster spending, borrowing and investment) lasted seven years until December 2015 when the Federal Open Market Committee (FOMC) increased its target rate to between 0.25% and 0.50%. And while the general expectation is that the Fed will raise rates in the coming months, the size and spacing of such increases are the subject of much speculation. This period of anticipation raises questions concerning how a rate hike will affect the small cap class of assets, particularly given its historically strong long-term performance versus its more recent weak performance.

9/7/2016

John Reese TheStreet.com Articles
TheStreet.com

Warren Buffett's Defense Anchors This Must-See, All-Star Stock Portfolio

The National Football League will kick off its 2016 season on Sept. 8. As in many sports, a winning football team has to show strength on both offense and defense. The same argument can be made in terms of a winning investment portfolio. Building a resilient, well-performing team requires both offensive and defensive holdings to ensure the best probability of success. Offensive picks include stocks to take advantage of market upside, including value stocks, as well as growth stocks. Value stocks sell cheaply relative to the underlying values of their businesses. Growth stocks have strong earnings potential. On the other hand, defensive stocks might include non-cyclical, household name businesses that have size and a strong competitive advantage.

9/6/2016

John Reese Globe and Mail Articles
The Globe and Mail

Six U.S. Stocks With Little Or No Long-Term Debt

In the wake of the Fed summit meeting at Jackson Hole, Wyo., where all antennae were up for any inkling of a rate hike, there's a natural tendency to ponder the effects that an uptick in rates might have on the market. It's important, however, to go a step further and consider the potential long term fallout for those businesses that may have loaded up on ultra-low cost debt.

9/1/2016

John Reese NASDAQ Articles
NASDAQ.com

An Inside Look at Buffett's Stock Selection Method

You won't find too many folks who put Warren Buffett and men's suit linings in the same sentence. But that's exactly how Berkshire Hathaway, one of the largest companies in the world, got its start. In the 1960s, when the Massachusetts textile firm was struggling in the face of foreign competition, Berkshire CEO Buffett saw an investment opportunity-then used it as a springboard to buy other businesses. And we know how that turned out.

8/30/2016

John Reese Forbes Articles
Forbes

5 Back-To-School Shopping Stocks Graham And Buffett Would Love

As the hunt for backpacks, notebooks and new shoes is underway, investors are hoping for what forecasters expect to be a robust back-to-school spending period . With lower gasoline prices and increased employment and incomes, the consensus says an "A+" may be in the offing. There's a wide range of growth expectations, ranging anywhere from 2% to 10%, but everyone seems to agree that any gains would be welcome. According to the National Retail Foundation (NRF), an improved sales season would be the first in four years.

8/29/2016

John Reese Globe and Mail Articles
The Globe and Mail

Five Stocks That Have More Than Just Momentum on Their Side

With the stock markets consistently reaching new highs since the late-June swoon, it can be difficult to find stocks that have not gotten overheated. What's more, the industries that led the way for part of that runup have shifted significantly. Through June, the leading market performers were defensive stocks such as utilities, telecommunications and health care. But since then, as the market continued to rally, financials and technology stocks have come out on top.

8/24/2016

John Reese Forbes Articles
Forbes Magazine

Escape Volatility In These Graham-And-Doddsville Stocks

In 1984 Warren Buffett delivered a speech at Columbia Business School that has become something of a manifesto for value investors. In the speech, entitled "The Superinvestors of Graham-and-Doddsville," Buffett talked about a small group of investors who worked under Benjamin Graham (the man known as the "Father of Value Investing") and David Dodd at the Graham-Newman Corp. in the mid-1950s. Three of the firm's four associates-Walter Schloss, Tom Knapp and Buffett-established easily traceable and tremendous track records after leaving the firm (they nearly doubled the S&P over periods ranging from 13 to 28 years).

8/23/2016

John Reese TheStreet.com Articles
TheStreet.com

5 Stocks the World's Greatest Investors Would Love

Numbers and sports go hand-in-hand. Millions of viewers have witnessed Jamaican gold medalist Usain Bolt sprint across the finish line 8/100ths of a second ahead of No. 2 Justin Gatlin. The movie Moneyball taught us how Oakland Athletics general manager Billy Beane used analytics to resurrect his baseball team. Watch a football game on any given Sunday and hear a steady stream of statistics spilling out of the broadcast booth. Sports are only one example of how data can be useful, however. The importance of numbers in finance may seem painfully obvious, yet it's not unusual to hear people discuss markets and investments under a shroud of hearsay and superstition.

8/22/2016

John Reese Forbes Articles
Forbes

Stop The Insanity And Stick To Fundamentals Like Buffett, Graham And Greenblatt

These are turbulent times, no doubt. We're heading into a presidential election where the two candidates have the highest disapproval ratings in history. Political and economic unrest is mounting around the world. Debates continue on such heated topics as terrorism, immigration, gun control and taxes. We're waiting for the fallout of Britain's history-making vote to leave the EU. Domestic earnings figures continue to disappoint yet the S&P 500 is at an all-time high. As an investor, it can be hard to sift through all the noise and know where to put your money. Add to the mix the buzz around crude prices, interest rates and myriad market indicators-not to mention the onslaught of media talk-and it's enough to spin any head.

8/16/2016

John Reese Forbes Articles
Forbes

Martin Zweig: Shotgun Stock Hunter

After the passing of Martin Zweig in 2013, Liz Ann Sonders recalled a comment by the market sage: "Summing it up, to succeed in the market you must have discipline, flexibility-and patience. You have to wait for the tape to give its message before you buy or sell." Sonders, chief investment strategist at Charles Schwab & Co., worked for Zweig from 1986 to 1999 and considers him a mentor. At Validea, we view growth investor Martin Zweig as one of the more colorful gurus. He began following the stock market at 13 years of age, impressing his high school teachers with his vast knowledge on the subject. He graduated with an economics degree from the Wharton School, where he took "every stock market course offered," then received an MBA from the University of Miami. A few years later, he earned a Ph.D. in finance from Michigan State University, where he conducted ground-breaking research in the field of stock analysis.

8/16/2016

John Reese NASDAQ Articles
NASDAQ.com

The Best of Both Worlds: Blending Value and Momentum

As we know, the stock market can be fickle in the short term. There is no single investment strategy that offers a fool-proof method for earning returns and/or mitigating risk. Further, jumping from one approach to another while trying to predict what will happen next can lead to losses in the long run. Since different methodologies perform well at different times, a good plan is to take a blended approach when writing your investment playbook.

8/10/2016

John Reese TheStreet.com Articles
TheStreet.com

4 Stock Picks Using This Market-Beating Manager's Low P/E Method

It is easy for investors to get tempted by the exciting stocks of companies on the cutting edge of innovation or enjoying the media limelight. As the market continues to advance, however, bargains are getting harder to find. To find upside potential, investors must ferret out opportunities that may be overlooked or seem unattractive for one reason or another. That is precisely the philosophy of investing legend John Neff who from 1964 to 1995 managed what he described as the "relatively prosaic, dull and conservative" Windsor Fund.

8/9/2016

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks to Help You Mimic the All-Time Great Investing Champions

Every two years, alternating between summer and winter sports, the Olympics not only inspire millions of spectators, they give investors some key insights for successful investing. What's obvious is that Olympic athletes have natural talent. But they're not just relying on good genes to reach the podium. They spend years training, developing discipline and perfecting their skills. They put together a training plan, often with a coach, and they stick to it. Smart investors follow the same approach, setting long-term goals and putting their money to work toward achieving them. They are disciplined, maximizing their retirement fund contributions and devoting a consistent portion of income to investing.

8/8/2016

John Reese NASDAQ Articles
NASDAQ.com

Finding Opportunity in Valuation Differentials

As the buzz of conjecture continues around the expensive market and how this extended bull must be running out of road, an interesting situation has emerged in the form of expanding valuation spreads when comparing the cheapest stocks in the market to the market itself.

8/2/2016

John Reese TheStreet.com Articles
TheStreet.com

Cash in on Pokemon and Augmented Reality with these Four Stocks

When Pokemon Go was released earlier this month, millions of folks hurled themselves into the world of augmented reality (AR), a process whereby a digital world is layered over the real one. In the case of Pokemon Go, that digital world is rife with cute little animals and players are sent on hunting expeditions in public places (using their device's GPS and camera) to catch as many as possible. Not to be confused with virtual reality (VR), in which you could be standing alone in a closet and be transported to, say, court-side seats at a virtual Knicks game. By contrast, AR brings digital interactions to your actual location.

8/1/2016

John Reese Forbes Articles
Forbes

Four Financial Stocks To Consider As A Rate Hike Looms

Now that financial markets have more or less stabilized in the wake of Brexit, it seems likely that the Fed will consider a rate increase as we move into the back half of 2016. But then again, it depends on who you ask. The economic landscape over the last several months has taken us from a bleak jobs report in May to brief post-Brexit investor panic to a bounce-back in hiring and all-time highs in equity markets. There were those who thought the Fed would move this past Wednesday and there are those who think things will stay unchanged through the end of the year.

8/1/2016

John Reese Globe and Mail Articles
The Globe and Mail

An Alternative to the Fickle Fortunes of Growth Stocks

Netflix Inc. looked about as perfect as could be. In 2015 alone, the stock was up 134.3 per cent. Analysts had it on a trajectory to achieve a $100-billion (U.S.) market capitalization by the end of the decade. But recently the tech darling had a disappointing announcement: The growth of its streaming video service had slowed significantly. Its shares instantly shed 16 per cent and so far in 2016, the stock has lost almost 25 per cent of its value. Stocks of growth companies such as Netflix get a lot of attention because they have the potential to soar. But being trendy also means growth stocks are prone to attract investors with high expectations.

7/15/2016

John Reese TheStreet.com Articles
TheStreet.com

3 Stocks to Rise From the Appetite for Healthier Foods

There is a growing trend in this country toward eating healthier in general and, specifically, toward eating organic, and investors should take note. Consumer demand in this segment has grown by double digits just about every year since 1990, according to the Organic Trade Association. Between 1997 and 2015, sales of organic products increased from $3.6 billion to $43.3 billion and don't show signs of slowing down.

7/15/2016

John Reese Forbes Articles
Forbes

When It Comes To High-Dividend Stocks: Caveat Emptor

As low interest rates continue to underwhelm investors, high-dividend-yield stocks seem to be just the ticket. But before pulling the trade trigger, you might want to listen to the voice in your head whispering "there's no free lunch." While high dividend yields (yield defined as dividend divided by stock price) are appealing, they become less so if they're a function of a low stock price that reflects underlying financial weakness. So, while announcements or news items that drive a stock price down may increase yield, an investor has to determine if it's a good time to buy or if the stock should be avoided.

7/13/2016

John Reese Globe and Mail Articles
The Globe and Mail

Valuable Lessons From Brexit, And Three Stocks For The Long-Term Investor

Last Friday's U.S. jobs report sent the markets skyward, and by Monday the Standard & Poor's 500 had returned to a new record high, dulling the memory of the decline that followed the June 23 vote by Britain to exit the European Union. The lesson: Short-term shocks don't necessarily lead to permanent damage. It is a predictable pattern, but one that jittery investors too often forget. Markets tumble at the hint of bad news, but more often than not they rebound. Look at the 2008 financial crisis to illustrate this point.

7/11/2016

John Reese NASDAQ Articles
NASDAQ.com

Do Good Things Still Come in Small-Cap Packages?

Over the past several years, small-cap fund performance has come under scrutiny and the credo of the "small-cap premium" has all but evaporated. The notion, that an investor should earn a premium for investing in smaller companies due to the increased risk associated with them, was not considered a violation of market efficiency but rather a compensation to the investor for investing in companies with vulnerabilities.