Some Ideas for Investing in a Low Return Environment

There is a very strong likelihood that returns for investors over the next decade will be significantly lower than what we have seen in the past ten years. With the trailing ten-year return of the S&P 500 at around 10% and the ten-year return of a 50-50 stock and bond portfolio at a little less than 7%, investors have become accustomed to above average returns. But long-term data indicates that these ultra-strong returns are very… Read More

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

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] Some Ideas for Investing in a Low Return Environment [2] Ken Fisher on Bull Market Dips Versus True Bear Markets [3] Mauboussin Offers Insights on Active Management [4] GMO Team Member Says Stocks are “Obscenely Overvalued” ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

GMO Team Member Says Stocks are “Obscenely Overvalued”

In a paper published earlier this month, GMO’s James Montier argues that the stock market is in the grip of a “cynical bubble,” according to an article in Bloomberg. Montier doesn’t share the optimism of his colleague, Jeremy Grantham, who recently expressed his view that the market could be headed for a late bubble “melt-up” the article says. In the paper, Montier writes, “Those buying the asset in question don’t really believe they are buying… Read More

Stock Market Returns on Internet Are Wrong

A recent article in the Financial Times highlights the tendency to “use the US market as an example” of long-term profit potential in the stock market since there is so much historical data for this, the “biggest, deepest, and most celebrated market of them all.” However, the article argues, the U.S. market may be an outlier. It cites the example of the construction of pension systems, pointing out that the world may have “mistakenly treated… Read More

Millennials: Embrace the Bear

The stock market is more expensive today than it was when baby-boomers were starting their careers, writes Bloomberg columnist Nir Kaissar. “Which means,” he adds, “that millennials can’t expect the same payoff from U.S. stocks as their parents.” That said, he writes, since millennials will soon enter their peak earnings years, they should “root for recent market turmoil to turn into a long rout. And if their wish is granted, they should shovel as much… Read More

Share Valuations More Appealing After Market Dip

The stock market dip that occurred earlier this month had “something good to offer,” according to a recent article in The Wall Street Journal. The article underscores how, before the sell-off (on Friday the 9th), the market’s P/E ratio was high by historical standards, notwithstanding expectations that strong corporate earnings would continue. The correction, it says, “could alleviate some of those concerns.” Although the prospect of rising bond yields remains a concern for inflation-fearing investors,… Read More

Ray Dalio Says Recession Risks on the Rise

Billionaire Ray Dalio recently said that the Fed’s response to strong economic data and increased fiscal spending could lead to an “economic slowdown.” This according to a CNBC article. Dalio, founder of Bridgewater Associates, argues that we are in a stage of the economic cycle in which “the central banks’ getting monetary policy right is difficult,” and that “the risks of a recession in the next 18-24 months are rising.” He says that, while most… Read More

Investors Spooked by the Market Tumble Should “Buy and Hold”

Highlighting the fact that future stock market movements are “unknowable” and that trying to predict them can be “dangerous,” a recent Wall Street Journal article quotes the legendary investor Peter Lynch: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” The article says research data shows how individual investors lose over a “percentage point a year through timing errors,” and adds… 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