A Proven Strategy for Disciplined Growth Stock Investing

This article was originally published on March 5, 2018, but the performance and stock list has been updated.  By Justin J. Carbonneau (@jjcarbonneau) —  There is no shortage of evidence showing value investing works over time. From the actual track records of great investors like Warren Buffett, Mario Gabelli, Bill Ruane and Tom Knapp, who were inspired by value investing techniques developed by Ben Graham and David Dodd, to numerous tests and academic studies that have… Read More

When Warren Buffett Thanks You for “Client Alpha”

By Justin Carbonneau (@jjcarbonneau) Imagine for a moment you were one of the very first investors in Berkshire Hathaway in 1965 and you’ve stayed committed to Buffett all these years (54 years and counting be exact). You’re meeting him today to profusely thank him for producing the results he has. You say, “Warren, I want to thank you for producing the long-term outperformance over the market you have delivered on my investment. You’ve more than… Read More

A “Protective” Alternative to the 60/40 Portfolio

By Justin Carbonneau (@JJCARBONNEAU) As this Forbes article points out, the 60/40 portfolio is “one of the most dominant investment approaches of our time”. This asset allocation is incredibly simple and it’s worked, but with U.S. stocks up nearly 350% off the 2009 lows and interest rates at historical lows, some investors are wondering if the 60/40 stock/bond portfolio has the same risk reduction and return benefits as it has in the past. This article… Read More

Lessons from March For The Fallen

On September 28th, 2019, I had the privilege of participating in March for the Fallen (#MFTF), an event that honors military soldiers who lost their lives defending our country and our freedom. Participants in the event—which takes place at the Pennsylvania Army National Guard base in Fort Indiantown Gap—can choose a 5K run or a 14-or 28-mile march. Everyone is free to set their own pace and take as much time as they need to… Read More

Why Use One Value Factor When You Can Use Many

By Justin Carbonneau (@jjcarbonneau)—-Interested in chatting with Justin – let him know.—- Suppose you wanted to find the value stocks in today’s market using common value ratios. Which would you use and why? Would you lean more heavily on the price-to-book ratio, which is largely used in academic testing and originates out of the world of Graham & Dodd? Or would you rather use something like the price-to-earnings ratio, which is more common and uses… Read More

A New Method for Rebalancing Helps Systematic Models Get Better

By Justin Carbonneau (@jjcarbonneau)—-Talk about the Markets and/or Invest with Justin —-A centerpiece for most systematic investing models is a “refreshing” of the portfolio positions, which is also often referred to as rebalancing. Simply put, on each rebalancing date certain positions are removed from the portfolio and replaced with better scoring stocks based on the strategy being followed. When you run investment models and the underlying company fundamentals and valuations change, it’s important to let… Read More

Momentum Investing – the What, the Why, the How and the Risks

By Justin Carbonneau (@jjcarbonneau) At the most basic level, momentum investing in the context of security selection can be defined as buying securities that have done the best over the past 12 months and selling those that have done the worst. While there are multiple methods and timeframes used to measure momentum, which we’ll get into below, the idea of buying based on price strength and selling based on price weakness is at the core… Read More

What Quant Value Models Can and Can’t Do for You

By Justin Carbonneau (@jjcarbonneau) – Two weeks ago I wrote an article, Differences in Value, where I outlined the various criteria (i.e. price-to-sales, price-to-book, and enterprise value-to-EBIT) used in the value models on Validea. As the piece got passed around Twitter, there was a very good comment by Tren Griffin, an investor and thoughtful writer. Griffin tweeted the following (see below – included in the tweet was a screenshot of a page from Berkshire’s Hathaway’s… Read More

Differences in Value

By Justin J. Carbonneau (@jjcarbonneau) —  A few weeks ago my partner, Jack Forehand (@practicalquant) wrote a piece titled “The Mechanics of Value Investing“. In it, he highlighted the various ways in which value investing can be defined. This topic was recently brought to light again in a recent tweet (see below) by Tom Psarofagis, ETF Analyst at Bloomberg. As Mr. Psarofagis points out, the underlying holdings in “value” ETFS can often be very different.… Read More

Long Term Compounding Using Low Volatility & Other Fundamental Factors

By Justin J. Carbonneau (@jjcarbonneau) —  There is an age-old concept in investing that the more risk you take the higher the return you should get. This makes a lot of sense; investors don’t invest in a risky companies to get low returns. Most hope to be compensated for that extra risk. But the tradeoff of risk and return is flipped upside down when talking about the most and least volatile stocks in the equity… Read More