Peter Lynch, the super-star manager of the Fidelity Magellan Fund until 1990, says the famous advice to “invest what you know” attributed to him leaves out the importance of fundamental stock research. As reported in the Wall Street Journal recently, Lynch “explains his philosophy this way: Use your specialized knowledge to hone in on stocks you can analyze, study them and then decide if they’re worth owning.” Lynch also noted changes in the market since his retirement 25 years ago, especially the rise of exchange-traded funds. “People accept that active managers can’t beat the market,” he said,” and it’s […]
How do Apple, Facebook, Berkshire Hathaway, and other market giants stack up against the strategies used by history’s greatest investors? In his latest column for Forbes.com, Validea CEO John P. Reese takes a look at how 10 market titans fare, and the results might surprise you. Reese notes that, historically, small stocks have beaten large stocks by a significant margin. Small stocks have an advantage because they can fly under the radar in a way that larger stocks cannot, and they usually come with an added risk premium because they tend to be less stable and more susceptible to bankruptcy. […]
Putnam manager Jerry Sullivan takes a three-pronged approach to picking stocks, including approaches reminiscent of Fidelity’s Peter Lynch, with whom Sullivan began his career. As a student intern 30 years ago, Sullivan caught Lynch’s eye and was offered a permanent position with Fidelity. He turned it down, but his approach to managing Putnam funds includes elements that suggest he learned a lot in those early days. Sullivan’s Putnam Multi-Cap Core fund has returned an annualized 15.8% over five years, placing it among the top 3% of its peers, although it has under-performed in the last year. As a manager, he […]
This week, we bring you the Stock Screen of the week from Validea. On Validea.com, you can screen for stocks using the site’s Guru Stock Screener, which scores stocks based on the fundamental stock selection criteria of legendary investors. The firm’s models are based on investing legends such as Warren Buffett, Peter Lynch, Benjamin Graham, Kenneth Fisher, Martin Zweig, David Dreman, Joel Greenblatt and others. The Advanced Guru Stock Screener allows users to create their own fundamental screens using a combination of the strategies of these investing greats and their own criteria. This week’s screen looks for stocks that pass […]
Every other issue of The Validea Hot List newsletter examines in detail one of John Reese’s computerized Guru Strategies. This latest issue looks at the Peter Lynch-inspired strategy, which has averaged annual returns of 11.2% since its July 2003 inception vs. 6.4% for the S&P 500. Below is an excerpt from the newsletter, along with several recent top-scoring stock ideas from the Lynch-based investment strategy.