James P. O'Shaughnessy - Growth/Value Investor

James P. O'Shaughnessy Strategy Explanation Video

Research guru and money manager James O'Shaughnessy forced many professional and amateur investors alike to rethink their investment beliefs when he published his 1996 bestseller, What Works on Wall Street. O'Shaughnessy back-tested 44 years of stock market data from the comprehensive Standard & Poor's Compustat database to find out which quantitative strategies have worked over the years and which haven't. To the surprise of many, he concluded that price/earnings ratios aren't the best indicator of a stock's value, and that small-company stocks, contrary to popular wisdom, don't as a group have an edge on large-company stocks. Today O'Shaughnessy is the Chief Investment Officer of O'Shaughnessy Asset Management.
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Since 2003, this portfolio has returned 251.9%, outperforming the market by 26.3% using its optimal monthly rebalancing period and 20 stock portfolio size.

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Growth/Value
S&P 500
* Returns are model returns and do not reflect actual trading. Full performance disclaimer

James P. O'Shaughnessy - Growth/Value Investor

Validea used the investment strategy outlined in the book What Works on Wall Street written by James P. O'Shaughnessy to create our Growth/Value Investor portfolio.

Based on his research, O'Shaughnessy developed two key investment strategies: "Cornerstone Growth" and "Cornerstone Value." Cornerstone Growth favors companies with a market capitalization of at least $150 million and a price/sales ratio below 1.5. It also looks for companies with persistent earnings growth over a five-year period, and shares that have been among the market's best performers over the prior 12 months. This strategy makes sense for value-oriented growth investors who have the patience and personality to stick with a purely quantitative investment approach. Cornerstone Value looks for large companies with strong sales and cash flows, and solid dividend yields. It is appropriate for income-oriented investors.

James P. O'Shaughnessy Strategy Description Video

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Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach.

Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.

Both the model portfolio and benchmark returns presented for all equity portfolios on Validea.com are not inclusive of dividends. Returns for our ETF portfolios and trend following system, and the benchmarks they are compared to, are inclusive of dividends. The S&P 500 is presented as a benchmark because it is the most widely followed benchmark of the overall US market and is most often used by investors for return comparison purposes. As with any investment strategy, there is potential for profit as well as the possibility of loss and investors may incur a loss despite a past history of gains. Past performance does not guarantee future results. Results will vary with economic and market conditions.