Jim O’Shaughnessy, O’Shaughnessy Asset Management, says a long-term investor should be buying now, and compares “low-conviction buybacks” (defined as 5% or less) and “high-conviction buybacks” (over 5%) in identifying attractive stocks. From 1987 to 2014, he says, the return on low-conviction buybacks was 12.1% annually (about 1% over return on all large stocks), but the return on high-conviction buybacks was 15.9% annually. Further, he says that the buyers of these high-conviction buyback stocks “were buying their stocks when they were dirt cheap.” Of all buybacks, 70% are low-conviction, according to O’Shaughnessy.

Going forward, O’Shaughnessy says investors should be taking a value investing approach. “Over long periods of time, value trumps growth, and significantly trumps growth.” He described expensive stocks as “lottery stocks,” noting that some do very well but the average return is negative. To evaluate the value of stocks, he uses a composite of various factors (such as price to earnings) that he found “beats any given factor 82% of all rolling 10-year periods.”

O’Shaughnessy does not think a bear market is on the horizon. Sounding a note of caution, he notes, “human psychology plays such a part in investment psychology,” explaining “fear, greed, and hope have wiped out more investment value than any bear market ever can.”