Two Decades of Quant: What Validea’s Guru Models Reveal About Market Cycles and Strategy Resilience

Since 2003, Validea has tracked model portfolios inspired by legendary investors like Peter Lynch, Benjamin Graham, and Warren Buffett. These portfolios offer a rare and consistent lens through which to view the ups and downs of markets over the last two decades. In this retrospective, we examine how these strategies performed across major market events and what they teach us about resilience, timing, and the long arc of investing success.

The below above summarizes the long-term performance of Validea’s guru-based models (as of May 15, 2025), covering a wide spectrum of investment philosophies. Whether rooted in value, momentum, shareholder yield, or fundamental quality, these strategies show varying levels of risk and return. It’s clear that while no model dominates in every market cycle, some have delivered exceptional results over time, particularly in alignment with macro and factor trends highlighted below.

Guru Based on	Portfolio	# of Stocks	Rebalancing	Inception	Return	S&P 500	+/- S&P 500	Beta
Dashan Huang	Twin Momentum Investor	10	Monthly	12/26/2008	19.90%	12.40%	7.50%	1.12
Partha Mohanram	P/B Growth Investor	10	Monthly	3/24/2006	15.30%	8.20%	7.10%	1.03
Meb Faber	Shareholder Yield Investor	10	Annual	7/10/2009	18.50%	12.80%	5.70%	0.97
Motley Fool	Small-Cap Growth Investor	10	Tax Efficient	7/15/2003	13.50%	8.50%	5.00%	1.11
Martin Zweig	Growth Investor	20	Tax Efficient	7/15/2003	12.70%	8.50%	4.20%	1.06
Peter Lynch	P/E Growth Investor	20	Monthly	7/15/2003	12.60%	8.50%	4.10%	1.14
Wesley Gray	Quantitative Momentum Investor	10	Monthly	12/30/2005	12.30%	8.40%	3.90%	1.21
James O’Shaughnessy	Value Composite Investor	10	Tax Efficient	12/26/2008	16.20%	12.40%	3.80%	1.23
Validea	Momentum Investor	10	Monthly	7/15/2003	11.40%	8.50%	2.90%	1.01
Patrick O’Shaughnessy	Millennial Investor	20	Monthly	12/26/2008	15.10%	12.40%	2.70%	1.04
Kenneth Fisher	Price/Sales Investor	10	Monthly	7/15/2003	11.20%	8.50%	2.70%	1.11
Benjamin Graham	Value Investor	10	Annual	7/15/2003	10.90%	8.50%	2.40%	1.09
Validea	Private Equity Investor	20	Monthly	12/26/2008	14.70%	12.40%	2.30%	1.21
John Neff	Low PE Investor	10	Tax Efficient	1/2/2004	10.20%	8.10%	2.10%	1.07
Wayne Thorp	Earnings Revision Investor	20	Monthly	12/26/2008	14.10%	12.40%	1.70%	1.16
James O’Shaughnessy	Growth/Value Investor	20	Monthly	7/15/2003	10.00%	8.50%	1.50%	0.99
Warren Buffett	Patient Investor	10	Monthly	12/5/2003	8.90%	8.30%	0.60%	1.05
Pim van Vliet	Multi-Factor Investor	20	Quarterly	1/23/2009	12.10%	12.80%	-0.70%	0.82
Tobias Carlisle	Acquirer’s Multiple Investor	10	Monthly	12/26/2008	11.00%	12.40%	-1.40%	1.21
Joseph Piotroski	Book/Market Investor	20	Annual	2/27/2004	6.50%	8.00%	-1.50%	1.02
Joel Greenblatt	Earnings Yield Investor	10	Quarterly	1/27/2006	6.20%	8.20%	-2.00%	1.05
David Dreman	Contrarian Investor	10	Monthly	7/15/2003	6.10%	8.50%	-2.40%	1.12
Validea	Validea Hot List	10	Monthly	7/15/2003	12.30%	8.50%	3.80%	1.15
Validea	Top Five Gurus	10	Monthly	7/15/2003	11.00%	8.50%	2.50%	1.08

2003–2006: Post-Tech Bubble Recovery & Value Revival (View Returns)

Backdrop: After the dot-com bust, investors turned away from speculative growth and re-embraced fundamentals. Value and international stocks surged.

What Worked:

Benjamin Graham’s Value Investor model posted strong, steady gains.
Peter Lynch’s P/E Growth and O’Shaughnessy’s Growth/Value strategies significantly outperformed.
Validea’s Hot List and Top Five Gurus delivered standout returns.

Takeaway: Value investing roared back to life, especially among models focused on fundamentals and financial quality.

2008: The Great Financial Crisis (View Returns)

Backdrop: A systemic collapse driven by the housing bubble, credit default swaps, and bank failures sent global markets into a tailspin.

What Worked:

No strategy escaped unscathed, but value-focused models (e.g., Graham) typically declined less.
High-beta and momentum-driven models experienced sharp losses.

Takeaway: Extreme macro shocks test all strategies. Defensive, value-anchored approaches preserved more capital.

2009: New Bull Market Begins (View Returns)

Backdrop: Central banks intervened with unprecedented stimulus. Stocks rebounded off deep lows.

What Worked:

Deep value and high-quality models outperformed spectacularly.
Piotroski’s Book/Market and Carlisle’s Acquirer’s Multiple delivered triple-digit returns in 2009.
Validea’s Private Equity and Value Composite models surged.

Takeaway: Recovery phases reward disciplined reversion-to-mean and quality-focused strategies.

2011: Volatility & Flash Crashes (View Returns)

Backdrop: Eurozone debt crisis and flash crashes rattled investors despite modest economic progress.

What Worked:

Momentum strategies surprisingly thrived amid the chop.
Lynch and O’Shaughnessy’s models also posted gains.

Takeaway: Tactical and faster-moving models adapted best in this volatile year.

2015: Flat Markets and Global Growth Jitters (View Returns)

Backdrop: Oil prices collapsed, China devalued the yuan, and growth concerns mounted.

What Worked:

Twin Momentum and Mohanram’s P/B Growth strategies stood out.
Most traditional value and broad guru models underperformed.

Takeaway: When markets stall, differentiated strategies with growth or price persistence filters can shine.

2016–2018: The Value Winter (View Returns)

Backdrop: FAANG stocks took off. Interest rates remained low, compressing value premiums.

What Worked:

Growth, momentum, and composite models (e.g., Twin Momentum) continued strong runs.
Graham and other value-based models significantly lagged.

Takeaway: Style cycles can persist for years. Patience is key for contrarian value strategies.

2020: COVID Crash & V-Shaped Recovery (View Returns)

Backdrop: The fastest bear market in history was followed by an even faster recovery, driven by stimulus and tech resilience.

What Worked:

Small-cap and high-growth models like Motley Fool and Quantitative Momentum exploded upward.
Classic value strategies rebounded but trailed.

Takeaway: Markets rewarded innovation, agility, and risk-on positioning during recovery.

2022: Fed Hikes and Inflation Surge (View Returns)

Backdrop: Inflation returned with a vengeance, and the Fed began its fastest tightening cycle in decades.

What Worked:

Contrarian, shareholder yield, and quality value models preserved capital.
High-duration growth and speculative names suffered.

Takeaway: Rising rates reshaped market leadership. Defensive and value styles came back into favor.

2023: Narrow Leadership & the AI Trade (View Returns)

Backdrop: Markets were led by a handful of mega-cap tech firms amid a resurgence in AI enthusiasm.

What Worked:

Price/Sales and P/B Growth models performed exceptionally.
Despite the narrow rally, Hot List and Top Five Gurus held their own.

Takeaway: Targeted growth strategies captured the narrow leadership, while blended models offered broad exposure.

2024–2025 YTD: Divergent Signals (View Returns)

Backdrop: Uncertainty around rate cuts, inflation, and geopolitical events keeps markets volatile.

What’s Working:

Momentum and quant models like Quantitative Momentum and Twin Momentum lead the pack.
Value remains mixed, but some contrarian strategies are gaining ground.

Takeaway: Flexibility and factor rotation awareness are increasingly valuable.

A Few Final Thoughts

The 20-year journey through market booms, busts, and everything in between reinforces a simple truth: there is no silver bullet in investing. But there is strength in discipline. While no model works in every market, there is usually a model for every market. Rather than chasing the top performer each year, investors can benefit most from blending a few robust, time-tested strategies. At Validea, we believe in the power of combining great ideas from great investors — and letting them work over time.