What Works in Year Two of a Bull?

James O’Shaughnessy’s What Works on Wall Street details one of the most extensive studies of stock returns and stock-picking strategies ever performed. Now, as we approach the second year of what appears to be a bonafide bull market, O’Shaughnessy’s firm has new data on what works during different stages of bull markets. In a piece written for O’Shaughnessy Asset Management’s website, Patrick O’Shaughnessy says that OSAM’s research has found significant trends in the types of stocks that perform well during and after bear markets, particularly severe bears like the one we’ve just seen. “While the particulars of each bear market […]

The Two-Pronged O’Shaughnessy Attack

Every other issue of The Validea Hot List newsletter examines in detail one of John Reeseā€™s computerized Guru Strategies. This latest issue looks at the James O’Shaughnessy-inspired strategy, which has produced annualized returns of more than 6.7% since its inception more than six years ago, a period in which the S&P 500 has gained just 1.3% per year. Below is an excerpt from today’s newsletter along with several top-scoring stock ideas based on the O’Shaughnessy investment strategy.

O’Shaughnessy Sees S&P 1200 by mid-2010

In Barron’s latest Big Money Poll, about 60% of money managers say they are bullish or very bullish on the stock market through the middle of 2010, though nearly half say they think there’s a 50% or greater chance of a sharp correction in coming months. The bullish respondents, on average, expect the Dow to climb 5% or so to 10,187 by year-end, and expect it will reach 10,771 by mid-2010, Barron’s reports. They expect the S&P 500 to reach 1121 by year-end and 1190 by mid-2010. And they are most bullish on the Nasdaq Composite expecting it to rise […]

O’Shaughnessy: Rationality Making a Comeback

Last week, we highlighted James O’Shaughnessy’s take on why investors are making major asset allocation changes at just the wrong time. This week, O’Shaughnessy tells the Financial Post of Canada that he thinks “the market is returning to rationality”, and that over the next ten years equities will be one of the best-performing asset classes. “We think the new ‘bubble’ is in treasuries and other bonds,” O’Shaughnessy says. “We continue to advise that investors remain committed to a patient, long-term outlook and that the best way to do well in stocks is to use a disciplined, time-tested strategy that has […]

O’Shaughnessy: Asset Allocation Changes Coming at Terrible Time

With stocks struggling through a terrible bear market over the past two years, investors have taken huge sums of money out of stocks and poured money into bonds — a seemingly “safe” decision that will end up costing them dearly, says fund manager and author James O’Shaughnessy. In his latest market commentary on O’Shaughnessy Asset Management’s web site, O’Shaughnessy says that from Jan. 1, 2008 to Aug. 26, 2009, investors pulled $41.8 billion from open-end U.S. equity funds while adding more than $310 billion to open-end U.S. bond funds. They’re doing so at a time when stocks have been hammered […]