Hot List Newsletter

Most Recent Hot List Issues

3 most recent issues require subscription. Historical issues can be viewed free of charge.

6/16/2017

Validea Hot List

The Investing Strategy of John Neff

While relatively unknown outside Wall Street circles, John Neff earned guru investor status for his enviable track record while managing Vanguard's Windsor Fund. Neff focused on a stock's price-earnings ratio and considered the metric not only as a gauge for how much investors were willing to pay for every dollar of a company's earnings, but also as an indicator of the level of growth investors are expecting from a company in the future.

6/2/2017

Validea Hot List

Quant Investing Still Requires Discipline

As big hedge funds continue to corral teams of computer engineers to develop quantitative strategies, the jury is still out as to whether it will pay off. The Validea system, while based largely on quantitative criteria, looks at fundamentals, choosing stocks that meet criteria based on a company's underlying strength and value. These fundamental strategies, while not perfect, are the ones that have the potential to work over time.

5/19/2017

Validea Hot List

Ken Fisher and the Price to Sales Ratio

As the second earnings season of the year winds down, we're reminded of how much investors and the media focus on a company's profits and a stock's price-earnings ratio, the ubiquitous share valuation measure. While P/E is indeed a key tool to use when evaluating whether a stock presents a good opportunity, investing guru and author Kenneth Fisher will tell you it definitely isn't the only measure worth considering.

5/5/2017

Validea Hot List

Expectations and Storytelling

Humans like to tell stories. But that can be a detriment to long-term performance in the stock market. As an investor, any 'feelings' you may have about a stock will help form expectations regarding the stock's performance. What's important to establish, however, is whether your feelings and expectations are based on hard data or on a narrative you've created.

4/21/2017

Validea Hot List

O'Shaughnessy's Warning Against Headline Investing

When it comes to buying stocks, it is essential for investors to value process over outcome, to understand the concrete facts about the stocks that they (or their fund manager) are choosing to purchase and the basis for their appeal. Underlying fundamentals, not headlines, lead to good investing decisions.

4/7/2017

Validea Hot List

Good Times and the Contrarian Philosophy

While the Trump honeymoon is losing some of its glow as the nation questions his ability to push through his policy agenda, economic data reflects consumer optimism. This type of landscape, however, sets the stage for a cautionary tale with respect to stock performance. Historically, markets perform best not during times of economic prosperity but rather when the economy is improving despite diminished expectations.

3/24/2017

Validea Hot List

How Warren Buffett Looks at Market Valuation

Almost all metrics commonly used by investors make the current market look expensive. But one valuation tool favored by Warren Buffett paints a very different picture and shows the market may actually be cheap relative to other investment options.

3/10/2017

Validea Hot List

When Does It Make Sense To Sell a Stock?

For many investors, deciding when to buy a stock can be much easier than deciding when to sell it. But it doesn't have to be that way. Using a disciplined, emotion free approach can make selling a much easier and more successful process.

2/24/2017

Validea Hot List

The Truth About Buffett's Technology Buys

One of Warren Buffett's long known rules is that he doesn't buy what he can't understand. And that rule applied to technology stocks for a very long time. But the positions he has taken in Apple and IBM in recent years appear to show a change in his thinking. Check out our latest newsletter to see what that might mean.

2/10/2017

Validea Hot List

Why Value Investors Need "Mental Toughness"

Buying low valuation stocks can reap rewards over long periods of time. It is important to understand, however, that buying value stocks doesn't work all the time. Value stocks, as group, can go through lengthy periods of underperformance, and the investor with the mental toughness to stick with the strategy stands the best chance of coming out a winner.

1/27/2017

Validea Hot List

Taking a Look at the Meaning of Market Milestones

The Dow hitting 20,000 this week has many investors excited. But do milestones like that actually mean anything with respect to future returns? Read our latest issue to find out.

1/13/2017

Validea Hot List

Revisiting the Market's Current Valuation

With the current bull market continuing to run, we take this opportunity to take a step back and take a look at where we stand from a valuation perspective. In this issue, we analyze the market using a variety of valuation metrics including the Shiller PE, Tobin's Q, and Warren Buffett's favorite valuation indicator, market capitalization to GDP. We also look at how President elect Trump's economic policies may impact the market.

12/30/2016

Validea Hot List

Where Do the Market and Economy Go From Here

As we close out 2016, we take a look at the what the latest economic news tells us and how it may affect the market going forward. In addition, we feature a look at market-cap, equal and fundamental index weighting excerpted from our latest Globe and Mail article.

12/16/2016

Validea Hot List

Taking a Look Back at 2016

After a lackluster 2015, the stock market bounced back strongly in 2016 . But more importantly, there was a major change in market leadership, with small-caps and value stocks overtaking the large growth companies that dominated the two years before. Check out our latest issue to see which of our guru strategies led the way during the year.

12/2/2016

Validea Hot List

Thinking Like a Contrarian - A Look at the Strategy of David Dreman

David Dreman made a name for himself by doing the exact opposite of what most investors were doing. That type of approach can be difficult to follow and require a lot of patience, but it also pays big dividends in the long-term. Read our latest issue to find out more.

11/18/2016

Validea Hot List

The Problem With the Predictions of Experts

We are subject to expert advice all the time in our everyday lives. And the stock market offers potentially the greatest concentration of so called experts of any area. But are these experts right more than they are wrong? And can you make money following their predictions? Check out our latest issue to find out.

11/4/2016

Validea Hot List

Examining the Value Strategy of the Great Benjamin Graham

The late Benjamin Graham may be the oldest of the gurus we follow, but his impact on the investing world has lasted for decades after his death in 1976. Despite being developed over 50 years ago, his investment strategy has continued to produce impressive results. Find out more about how Graham picked stocks in this week's issue.

10/21/2016

Validea Hot List

Lessons From the Gurus

History shows that beating the market over time is incredibly difficult, with more than 80% of fund managers failing to accomplish that goal. But a select group of investors have done exactly that, and they form the foundation of our stock selection system. The latest Hot List issue takes an in depth look at who they are and why we follow them.

10/7/2016

Validea Hot List

A Look at the Investment Strategy of Martin Zweig

Martin Zweig passed away in 2013, but his stock selection principles continue to endure. Our portfolio based on his book Winning on Wall Street has almost doubled the market's return since its inception in 2003. Zweig was a growth investor, and his methodology was dominated by earnings-based criteria. He looked at a stock's earnings from a myriad of angles, wanting to ensure that he was getting stocks that had been producing strong growth over the long haul and even better growth recently -- and he wanted their growth to be coming from the right sources.

9/23/2016

Validea Hot List

Value and Momentum: Perfect Together

Value investing works - and so does momentum investing. Thus, combining the two factors makes for a viable strategy. Such a combination may prevent a value-only investor or a momentum-only investor from suffering through extended periods of underperformance. In this issue of the Hot List Newsletter, we examine the combination of value and momentum investing. We also rebalance the portfolio, adding four new stocks to the Hot List.

9/9/2016

Validea Hot List

The Magic Formula: A Look at Joel Greenblatt's Simplistic Approach

Hedge fund manager Greenblatt's 2005 bestseller The Little Book That Beats The Market, lays out a way to beat the market using two -- and only two -- fundamental variables. The "Magic Formula," as he called it, produced back-tested returns of 30.8 percent per year from 1988 through 2004, more than doubling the S&P 500's 12.4 percent return during that time. Greenblatt also produced exceptional returns as managing partner at Gotham Capital, a New York City-based hedge fund he founded. The firm averaged a remarkable 40 percent annualized return over more than two decades.

8/26/2016

Validea Hot List

The Rate Debate

The debate about what another interest rate hike, the second in the current rate increase cycle which began in December 2015, would mean for the equity market continues to rage on. Will the 6+ year-long bull market begin to show signs of struggle, or will the market continue its upward path? In this issue we examine the impact of rising interest rates on the equity market. And, most importantly, address the bottom line: what should an investor do, if anything, in anticipation of additional interest rate increases in the months ahead?

8/12/2016

Validea Hot List

Investing and the Mindset of an Athlete

With the Olympics underway, a comparison of the mindset of an athlete with that of a successful investor appears to be a timely topic for this week's Hot List Newsletter. And, what better investor to profile with that theme in mind is Benjamin Graham. Graham's earlier years shaped his investment style, which was based on dedication to his craft and humility. Graham's strategy centers on conservative, low-risk purchases, identified by diligent research. His hard work paid off, earning him a gold medal in the circle of successful investors.

7/29/2016

Validea Hot List

The Facts about Corrections

Although the S&P 500 continues to hover near its recently established new record highs, investors appear to be becoming increasingly concerned regarding the potential for another correction, as indicated by recent exchange traded fund flows. However, is adopting a more conservative strategy a wise move? In this week's newsletter, we discuss this topic, citing market wisdom from Peter Lynch and Warren Buffet gurus, as well as top fund manager, Bill Nygren. We also rebalance the portfolio, adding five new stocks to the Hot List, including a direct-selling and e-commerce company as well as a manufacturer of steel wire reinforcing products.

7/15/2016

Validea Hot List

What Brexit Sell-Off

The market has recovered strongly since last month's Brexit vote, with the S&P 500 marching to new record highs. And, the Validea Hot List Portfolio has not been left behind. In fact, the portfolio has outperformed the broad market since the last publication of the Hot List Newsletter. In addition to an update on performance of the Hot List Portfolio, in this week's newsletter, we profile James O'Shaughnessy, a true quant whose disciplined approach to the market has served him very well over the years.