Wayne Thorp - Earnings Revision Investor
Last Updated: 9/27/2022
Wayne Thorp is a Vice President and financial analyst with the American Association of Individual Investors. He is an expert on quantitative investing and has played a significant role in the development of the AAII stock screening and model portfolio products. He has also earned the Chartered Financial Analyst designation from the CFA Insitute and is a graduate of DePaul University.
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Since 2009, this portfolio has returned 572.7%, outperforming the market by 233.3% using its optimal quarterly rebalancing period and 20 stock portfolio size.
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Wayne Thorp - Earnings Revision Investor
Validea used the investment strategy outlined in the paper How to Profit From Revisions in Analysts' Earnings Estimates written by Wayne Thorp to create our Earnings Revision Investor portfolio.
Studies have shown that investors tend to underestimate the magnitude of good news when companies are performing well. As a result, the initial reaction to positive news tends to persist for a period of time as more and more investors recognize it. This strategy seeks to take advantage of that phenomenon by selecting companies that have seen upward revisions in their earnings estimates. It looks for companies with positive revisions for both the current year and the next fiscal year and eliminates any companies with negative revisions. It also looks for sufficient analyst coverage to ensure the revisions have statistical significance to them.
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.
The model portfolios offered on Validea are concentrated and as a result they will exhibit high levels of volatility and their performance can be substantially impacted by the performance of individual positions.
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.