Hot List Newsletter

Most Recent Hot List Issues

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

12/21/2012

Validea Hot List

Five Reasons To Be Optimistic About Stocks In 2013

As 2012 winds down, the general mood surrounding the market and the economy remains one of fear. The fiscal cliff, unresolved debt problems in Europe, and the lingering scars of the financial crisis and Great Recession seem to be giving pessimism the upper hand over optimism, and keeping investors lukewarm (at best) on stocks. But as we head into 2013, there are several reasons to be optimistic about where we stand.

12/7/2012

Validea Hot List

Evaluating Value Investing

Since the financial crisis, value stocks have had some difficult stretches. But over the long term, value investing wins. This week, we take a look at the data that bears that out, and the reasons why value investing works.

11/23/2012

Validea Hot List

Market Valuation Check-Up

Investors have largely focused on macro developments recently, jumping into stocks when hopeful signs emerge and bailing when fears rise. But highly successful investors like Warren Buffett and Peter Lynch beat the market by sticking to the numbers. This week, we thus take a look at how the market stacks up against a host of cold, hard valuation metrics.

11/9/2012

Validea Hot List

The "Fiscal Cliff": Peering over the Precipice

The looming "fiscal cliff" is causing many investors to fret. Should it? This week we take a look at some data that shows how a "cliff" dive could impact stocks, courtesy of quantitative strategist James O'Shaughnessy. The findings might surprise you.

10/26/2012

Validea Hot List

When Should You Sell A Stock?

When should you sell a stock? It's a question that doesn't get nearly enough consideration. In the financial media, selling usually comes up in the context of recommendations about when to decrease your overall stock allocation (usually due to macroeconomic factors), or case-specific examples of why to sell one particular stock. But in this week's newsletter, we examine the issue of how to develop a broader, long-term approach to selling that can increase your returns.

10/12/2012

Validea Hot List

Man vs. Machine: Can Computers Beat Stock Market "Experts"?

Supposed experts get a lot of attention in the media. But this week, we look at the research of James O'Shaughnessy and Philip Tetlock, which shows that, more often than not, these "experts" are wrong. And we look at what that means for your investment strategy.

9/28/2012

Validea Hot List

Why Fund Managers Fail -- And How To Succeed

Despite all of their training and knowledge, the vast majority of mutual fund managers underperform broader market indices over the long haul. In this week's newsletter, we take a look at why they fail - and how you can avoid the mistakes they make.

9/14/2012

Validea Hot List

The Resilience of Equities

For much of the past four years, maligning equities has been the chic thing to do. To be a bull has meant having to do quite a bit of explaining -- and even then, after laying out one's case, to often be derided. But since the Lehman collapse, just how have stock investors who stuck with equities fared compared to those who cashed out and stuffed their money under their proverbial mattresses? We take a look, and the results might surprise you.

8/31/2012

Validea Hot List

Volatility Is Not Risk

Stock market volatility has been high in the aftermath of the 2008-09 financial crisis. But while the media often use "volatility" and "risk" as synonyms, great investors like Benjamin Graham, David Dreman, and Bill Nygren assess risk differently. This week's newsletter looks at a different definition of risk, and at the true current level of risk in the market.

8/17/2012

Validea Hot List

The Death of Equities?

Recently, Bill Gross of bond giant PIMCO sounded the latest salvo against stocks, declaring that the "cult of equity is dying". Is he right? We don't think so -- and in this week's newsletter we explain why.

8/3/2012

Validea Hot List

Motley Fool Model In The Lead

The Hot List recently hit the nine-year mark, and we take a look back and see what has worked -- and what hasn't -- for the portfolio and the individual strategies that drive its picks over that time. The top overall performer? The strategy based on the writings of Motley Fool creators Tom and David Gardner.

7/20/2012

Validea Hot List

Are We in a Recession?

Investors have been fretting over the "fiscal cliff" situation and about whether or not the US has entered a recession. This week's newsletter looks at what the data really says about the economy, and what all of the worrying means for investors.

7/6/2012

Validea Hot List

Forget Flashy Stocks -- Boring Is Beautiful

After more than a dozen years studying history's best investors, we've found that far more often than not, the best investors and their portfolios are far from the flashy and exciting Wall Street mavens portrayed on the big screen. And new research shows that boring is beautiful when it comes to stocks, too.

6/22/2012

Validea Hot List

Where Is the Value?

The hubbub surrounding Greece and the Eurozone continues to dominate most investors' minds. But as the vast majority of the highly successful gurus we follow have shown, if you want to generate strong, market-beating returns over the long haul you have to be willing to tread into areas of the market where fear reigns. In this week's newsletter, we look at areas where fear -- and opportunity -- are lurking in the current market.

6/8/2012

Validea Hot List

Keeping Perspective

Nearly four years after the 2008 market meltdown and global financial crisis, it still at times seems as though the financial world is balanced on the edge of a knife. But when you step back and consider the bigger picture, you see that what's going on -- lengthy economic turmoil -- is not unusual if you understand the historical context.

5/25/2012

Validea Hot List

Which Value Metric Is Best?

John Neff used the P/E ratio. Kenneth Fisher liked the price/sales ratio. Benjamin Graham looked at price/book values. Which value metric should you use? In this week's newsletter, we examine why there is more than one answer to that question.

5/11/2012

Validea Hot List

How Many Stocks Is Enough?

Can a 10-stock portfolio provide enough diversification? This week, we look at research on portfolio size, as well as copious data from our own different-sized guru-inspired portfolios, to see how much diversification is needed to keep risk at an acceptable level.

4/27/2012

Validea Hot List

Deconstructing Buffett

As interesting a character as Warren Buffett is, the more important piece of the Buffett puzzle for investors is this: How did he do it? This week, we take a look at our Buffett-inspired Guru Strategy, as well as the current holdings of our Buffett-inspired portfolio.

4/13/2012

Validea Hot List

Through Bearish Eyes

Some bears have been arguing that problems with the way government agencies calculate economic data are making the economic picture look rosier than it really is. Are they right? This week, we take a look at the data from a bearish perspective to see if they are on to something.

3/30/2012

Validea Hot List

Sentimental Thoughts: How Do Investors Really Feel About Stocks?

As the stock market has risen in recent years, concerns have grown about whether sentiment has gotten too bullish. But what does the data show about investor optimism levels? We consider that issue in this week's newsletter, and we look at the Guru Strategy inspired by The Little Book that Beats the Market author Joel Greenblatt.

3/16/2012

Validea Hot List

The Real Question About Inflation

Banks are continuing to hoard cash, meaning that the Federal Reserve's massive liquidity injection isn't actually leading to inflation. But many investors continue to about what will happen when inflation does pick up. We believe the real question is, "How does inflation impact assets over the long haul?" This week, we look at the implications of the answer to that question, and we take a look at how the David Dreman-based contrarian strategy works.

3/2/2012

Validea Hot List

The Bull Market Turns Three

The bull market that began in 2009 is about to turn 3 years old. What can history tell us about what to expect in Year 4? We examine the question in this week's newsletter, and take a look at our top-performing James O'Shaughnessy-based strategy.

2/17/2012

Validea Hot List

An Investing Mission Statement

Can you sum up your investing philosophy in ten words or less? Excellent Wall Street Journal columnist Jason Zweig says it's a worthwhile exercise, so this week we try to come up with short and sweet investing mantras for ourselves and the gurus we follow, including Warren Buffett.

2/3/2012

Validea Hot List

Good & Cheap: Finding Value In The Stock Market

While the broader market looks to be somewhat cheap, several individual stocks are downright bargains. See what gems the Hot List is turning up in this week's newsletter.

1/20/2012

Validea Hot List

Emotions and The Market

Some very powerful emotions have been at work in the stock market over the past decade-and-a-half, with investors swinging back and forth between exuberance and fear. In this week's newsletter, we take a look at David Dreman's new book, which examines the investor psychology that leads to those mood swings and drives the market.

1/6/2012

Validea Hot List

A Guru Year In Review

It was a difficult year for the Hot List. But several of our other guru-inspired strategies fared well, including our Momentum Investor model and our Warren Buffett- and James O'Shaughnessy-based approaches. In this week's newsletter, we break down how all of our strategies performed in 2012.