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Building an Investment Checklist

By John P. Reese —  In this year’s letter to Berkshire Hathaway shareholders, Warren Buffett refers to the conglomerate’s “gradual shift from a company obtaining most of its gains from investment activities to one that grows in value by owning businesses.” An article in the Wall Street Journal last month titled, “Warren Buffett’s Berkshire Moves Away from Stock Picking,” underscores the shift in the context of the conglomerate’s offer to purchase power-transmission firm Energy Future Holdings for $9 billion in cash. But the two activities are really horns on the same goat, and together represent what Buffett later calls a “two-pronged approach” […]

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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 […]

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Investing Like Buffett Means More is Not Always Better

By John P. Reese —  When Warren Buffett was a kid, he liked to read. More than most kids. And we’re not talking comic books and bubble gum wrappers, either. He once recalled receiving the World Almanac as a gift when he was a young boy. “It was like heaven to me,” he says. Is it a coincidence that this voracious reader became one of the most successful investors of all time? Maybe not. When asked about the key to his success, Buffett puts reading at the top of the list. “That’s how knowledge works,” he said, “It builds up, […]

Market Indicators Only Part of the Story, Plus Five Fundamentally Strong Stocks

By John P. Reese Among the myriad guidelines that the wise investor follows, diversification sits front and center: Don’t put all your eggs in one basket, either with respect to equities or asset classes. But the notion of diversification extends beyond the process of deciding what to buy. It also applies to the assessment of the market as a whole and the factors affecting it at any given time. The universe of indicators available to investors is vast to say the very least, and there is no shortage of opinion or controversy around them and their relevance at any given […]

Underperforming Canadian Stocks with Solid Potential

As major benchmarks continue their “seemingly unstoppable march upward,” writes Validea CEO John Reese in a recent article for The Globe and Mail, “it’s hard for investors to avoid being skeptical”—especially those that got hit hard by the 2000 dot-com bubble and/or the 2008 financial crisis. While he argues that “pessimism is an investing survival instinct,” Reese juxtaposes Warren Buffett’s investing philosophy that “over the long term, a careful investor will see gains.” He explains, “A hot stock attracts a lot of attention, even though taking a moment to think about it might lead to the conclusion that it has […]