Reese on New Guru Model, Economy

In his latest Hot List newsletter, Validea CEO John Reese unveils a new guru-based stock selection model, and tells readers that continuing economic woes don’t have to mean continued trouble for the stock market. Reese’s new Guru Strategy is based on the writings of hedge fund master Joel Greenblatt. Greenblatt created quite a stir in the investment world in 2005, when he published “The Little Book that Beats The Market”, in which he explained how investors could produce outstanding long-term returns using his simple “Magic Formula”. The purely quantitative approach had just two variables: return on capital and earnings yield. […]

Reese: Five Reasons for Optimism

In the week’s Validea Hot List newsletter, Validea CEO John Reese says that, despite the continuing troubles with the U.S. economy, he sees several clear reasons long-term investors should be high on stocks heading into 2009. “Good investors must have the ability to look past the near-term and see the forest for the trees,” Reese writes. “To me, the forest that is the stock market looks quite inviting right now.” Five reasons for his optimism: Stock valuations by just about any standard — even the ultra-conservative 10-year P/E ratio — are at levels we haven’t seen in many years The […]

Values Abound in Small-Caps

In this week’s Validea Hot List newsletter, John Reese says that his Guru Strategy computer models are finding an array of values among small-cap stocks, particularly among those that would be considered small-cap growth firms. Reese’s Hot List portfolio added eight new stocks on his regularly scheduled rebalancing, all but one of which are in the small-cap growth category — one of the market’s most beaten-down areas of late. For 2008, Reese notes, small-cap growth has been the second-worst performer among the nine size/style categories, according to Morningstar. Small-cap growth funds have lost almost 45 percent on average, with only […]

A Growing Chorus of Bulls

In this week’s Validea Hot List newsletter, Validea CEO John Reese writes that “more and more of the world’s most successful investors — including many who correctly believed that the market was overvalued before its recent crash — are saying that stocks are now good values”. Among them are Jeremy Grantham, David Dreman, Jeremy Siegel, Bruce Berkowitz, Warren Buffett, and Marty Whitman. The fact that these gurus are seeing value in the market is a great sign, Reese says, especially given that many of them foresaw the recent crash. The growing number of bullish gurus doesn’t necessarily mean we’ve hit […]

Reese: Five Hot Stocks With Staying Power

In his latest column for Forbes.com, Validea CEO John Reese takes a look at what stocks have actually been among the biggest gainers while the market has plunged in the past couple months. These stocks can be awfully tempting for investors, who are trying to latch on to any sort of positive market vibes amid this difficult climate. But, Reese cautions, buyers should beware: “Blindly following hot stocks can get you in trouble,” he says, “and in this environment, it can spell disaster for your portfolio. Simply going with stocks that have been hot during an incredibly anomalous climate is […]