The Meb Faber Show – John Reese: There Is No Strategy That Outperformed the Stock Market Every Single Year

We are usually not ones to practice nepotism, but this discussion with Meb Faber and our founder John Reese is a very good one. The podcast focuses on John’s quest to computerize the strategies of legendary investors using factor-based models. They also take in an in depth look at the model John created based on Warren Buffett and the challenges of breaking down Buffett’s extensive stock selection criteria into a computer program. And those are… Read More

Mauboussin Offers Insights on Active Management

A recent Forbes article offers comments and insights gathered in a recent interview with Michael Mauboussin, Director of Research at BlueMountain Capital Management (formerly Head of Global Financial Strategies at Credit Suisse): Mauboussin underscores two risks inherent in value investing: (1) buying a cheap stock that “deserves to be even cheaper”—a value trap; or (2) “shunning a statistically expensive stock that represents a good value.” While indexing is a reasonable path for most investors, it… Read More

Ken Fisher on Bull Market Dips Versus True Bear Markets

In a recent USA Today article, famed investor Ken Fisher offered advice on how to discern between a bear market and a bull market “blip”: Referring to the market dip that occurred earlier this month, Fisher advises, “If you’re fully invested, sit on your hands. Hard! For cash holders this action prescribes buying. Always stay cool. Fight any urge to sell. It’s all signaling more new highs ahead.” Bull markets, says Fisher, “don’t end this… Read More

The 30-Year Downtrend in Interest Rates Could Be Over

A recent article in MarketWatch outlines comments by industry experts regarding the 10-year Treasury’s recent inching up above the 30-year downtrend line: Mark Arbeter, CMT, of Arbeter Investments LLC says that, from a “very long-term perspective, yields appear to be tracing out a massive bottom,” adding that while the yield rise could lead to more volatility and is most likely a warning of a bear market down the road, “I do not think that we… Read More

Stocks Are Cheaper, But Not Much

While the sell-off earlier this month led to lower share prices, according to a recent article in The Wall Street Journal, “they are still far from cheap.” The article points out several factors that led to the S&P 500’s dip, including “worries over how much the Federal Reserve will have to raise interest rates,” and “the wipeout in products that bet against volatility.” It argues, however, that the market’s valuation was at the center of… Read More

Most Read Posts on Validea’s Guru Investor

Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] The Misconceptions About Bubbles [2] Buying the Dip Works, Study Shows [3] Ray Dalio: Recent Market Dips Are Minor Corrections [4] You Might Need Fewer Funds Than You Think ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Buying the Dip Works, Study Shows

Analysis conducted by Schroders Plc shows that, after big single-day drops, 12-month S&P 500 returns have been mostly positive, according to a recent article in Bloomberg. The study reflects that, after the largest one-day stock market declines over the past 30 years, the U.S. market returned an average of 25 percent in the 12 months after the decline. In the five years following the same declines, average returns were about 14 percent, the study shows.… Read More

Are Risk-Parity Funds Responsible for Recent Market Selloff?

Risk-parity funds, intended to balance portfolios based on asset volatility, were partially blamed for the market’s recent price swings. This according to a recent article in The Wall Street Journal. By “limiting bets on more volatile assets like stocks and commodities and using leverage to load up on safer assets like government bonds,” risk-parity funds attempt to minimize risk of collapse of any one market, the article explains. The strategy, it says, pioneered by hedge… Read More

Resist Hysteria During Market Stumbles

Bulls should be “as confident as ever,” writes columnist Nir Kaissar in a recent Bloomberg article. Emphasizing that “panicking is never a good plan when it comes to investing,” Kaissar writes, “but it’s particularly silly now, because nothing truly eventful has happened yet.” The economy continues to grow, he writes, and the market’s full valuations are supported by corporate earnings expectations as well as low interest rates. The recent sell-off, he adds, will “undoubtedly make the… Read More

You Might Need Fewer Funds Than You Think

Diversification in a portfolio is a good thing, but only up to a point. This according to a recent article in The Wall Street Journal. With the number of options for mutual funds and ETFs “exploding,” the article says, ‘investors might be tempted to purchase more funds.” It argues, however, that they can assemble a diversified portfolio with fewer than five and, “for plenty of people, just one will do, some financial advisers and analysts say,”… Read More