sashkalenka / 123RF Stock Photo

Investors Who Dare to Be Different Stand a Better Chance for Success

By John P. Reese In 2006, Oaktree Capital co-chairman Howard Marks wrote a memo titled Dare to Be Great in which he delivered a simple but provocative statement about investing: “This just in: you can’t take the same actions as everyone else and expect to outperform.” Being different, he argues, is “absolutely essential if you want a chance at being superior.” Going against the herd, however, runs counter to human nature and can be exceedingly tough for investors. Just ask famed investor James O’Shaughnessy (a market guru who inspired one of the stock screening models I created for Validea) who […]

Fundamentally Strong Picks for the Contrarian Investor

The Citigroup Economic Surprise Index, which measures how current economic data is comparing to expectations, is on the rise along with investor confidence regarding the expanding economy, writes Validea CEO John Reese in a recent article for Forbes. Historically, however, markets perform best not during times of economic expansion, but rather when the economy is improving despite lower expectations, writes Reese. When things are going relatively well, he argues, “forecasters tend to extrapolate forward using recent trends and assume the good news will continue.” Reese outlines the contrarian investment approach of guru David Dreman, who argues that investors can beat […]

A Contrarian View May Be in Order

The seven-year-old bull market that started in the aftermath of the financial crisis could be facing a shift over the next five years, says Validea CEO John Reese in last week’s Globe and Mail. Reese suggests that such a shift could include a resurgence of emerging markets and trends favoring cyclical, value and small cap stocks over defensive, growth and large cap names. “Investors appear to be betting that economic growth has the potential to come in better than expected in the near term, because cyclical companies are sensitive to economic growth trends.” “Perhaps,” he says, “investors have grown wary […]