Articles

Articles Written by Validea Founder John Reese

4/16/2018

John Reese Globe and Mail Articles
The Globe and Mail

Five Debt-Laden Stocks That Could Be Attractive Buys

Debt isn't always the dirty word stock investors think it is. Some of the most successful investors over time have used debt to buy cheap companies, nurse them to health and reap the gains. Private-equity firms try to capitalize on debt to reap profit. They snap up struggling publicly traded companies, with the help of some debt financing, spend a few years turning them around by restructuring or shedding businesses and then they sell them back to public stockholders, ideally at a gain.

4/3/2018

John Reese Globe and Mail Articles
The Globe and Mail

These Three Stocks Score Highly in a Model Inspired by Warren Buffett's Bridge Philosophy

During a bridge game in 1968, investing legend Warren Buffett told mathematician Edward Thorp, "Investing in a market where people believe in efficiency is like playing bridge with someone who has been told it doesn't do any good to look at the cards." He was preaching to the choir. A few years earlier, the MIT professor figured out how to beat casinos in blackjack by identifying the sequencing of cards (he went on to invent a wearable computer to help him win at roulette). Mr. Buffett was an early admirer (casino operators were not).

3/28/2018

John Reese Forbes Articles
Forbes

Make Your Own Luck In Investing With These Four Stocks

Four leaf clovers and pennies-on-the-sidewalk aside, it's pretty tough to count on getting lucky. As an investor, this is a good thing to keep in mind. Although we'd like to find causality between actions and outcomes, the sobering truth is that sometimes there's none to be had. The universe is rife with randomness, and the world of investing is no exception. In his book Thinking, Fast and Slow, Nobel Laureate Daniel Kahneman uses the example of basketball to describes what he argues are "misperceptions of randomness".

3/21/2018

John Reese NASDAQ Articles
NASDAQ.com

Investing Lessons From The Duchess Of Poker, Annie Duke, Plus Five Names To Hold

Is investing in the stock market the same as gambling? Are we betting the odds when we purchase a piece of a company, playing a version of capitalist casino, rolling the proverbial dice? It really all depends on your mindset about investing and your approach to making decisions. In his famous book The Intelligent Investor, the late Benjamin Graham wrote, "An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."

3/14/2018

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks That Pass the Momentum Model Test

The trick to value investing is finding cheap stocks of well-run companies that are about to rise but haven't yet caught the attention of investors. It is in some ways the opposite of investing based on price movements, or momentum, a strategy that involves picking stocks that are already on an upswing with the expectation they have further to run. Value investors are supposed to focus on a company's numbers and not be swayed by technical analysis, however. Momentum investing is, after all, partly a self-fulfilling prophecy.

3/12/2018

John Reese Forbes Articles
Forbes

Apple And 4 Other Stocks That Fit Buffett's Investing Style

The much-anticipated release of Warren Buffett's annual letter to Berkshire Hathaway (BRK.A) shareholders at the end of February ignited the internet with a flurry of market and investment commentary. Some focused on the Berkshire's hefty cash balances against the dearth of acquisition opportunities, while others expanded on the famous ten-year, million-dollar bet Buffett waged-and won-that the S&P 500 would outperform a bundle of hedge funds (selected by investor Ted Seides). Still others, like the Wall Street Journal's Jason Zweig, zeroed in on what Buffett chose not to mention in the letter-that over the same ten-year period, Berkshire Hathaway also failed to outperform the S&P 500 (returning only 7.7% annually versus the index's 8.5% return).

3/5/2018

John Reese Forbes Articles
Forbes

12 Stocks That Fit The Investment Strategies Of Buffett, Lynch, Dreman And O'Shaughnessy

In this year's letter to Berkshire Hathaway shareholders, legendary CEO Warren Buffett lists the characteristics he looks for when considering a company for purchase, which include durable competitive strengths, strong management, and "a sensible purchase price." For this stock market guru, "sensible" is gauged by evaluating the following quantitative criteria (as outlined in the book Buffettology)

2/27/2018

John Reese NASDAQ Articles
NASDAQ.com

Screening For Super Stocks

The market blip that occurred earlier this month, sending shock waves through the much of the investment community, didn't faze legendary investor Ken Fisher. In a recent USA Today article, the market guru 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." Fisher, who leads the money management firm Fisher Investments (approximately $70 billion in managed assets), goes on to say, "During corrections, media and market mavens invariably search for justifying causes. What made it happen? Why? By the time they agree, it's all over."

2/20/2018

John Reese Globe and Mail Articles
The Globe and Mail

When It Comes to Investing, There's Safety in Simplicity

It's easy to make investing overly complicated. Every day, nearly 10,000 U.S. mutual funds and exchange-traded funds compete for investor dollars with thousands of listed stocks, not to mention a dizzying array of options, futures and derivatives and trillions of dollars of bonds. Every day, fund managers are trying to lure investors with new strategies to make money.

2/5/2018

John Reese NASDAQ Articles
NASDAQ.com

Capitalize on Global Growth with These Five High Scoring Industrials

Global economic growth is surging, and many analysts contend that global equity markets are in for a strong 2018. For investors wanting to participate in the continuing bull market, overseas stocks are generally offering a better value than their U.S. counterparts, and might represent a good alternative if economic growth continues. Factories across the globe are running near full capacity-Chinese industrial utilization rates reached 78% in the fourth quarter of 2017, the highest level since 2011.

1/31/2018

John Reese Globe and Mail Articles
The Globe and Mail

Eight Deep-Value Stocks That Look Particularly Attractive as Interest Rates Rise

It's certainly been one long decade for value investors. This year had promised to see a reversal of years of underperformance, but at least so far, that hasn't happened. Is there still hope that conditions may finally be turning? Yes, this has been said before only to be proved wrong. Many expected the turn to come in 2015 and again in 2016, and for a while, it appeared it might have finally done so. But the market roared last year on the expectation of lower regulation and tax cuts, negating any momentum value might have gained.

1/30/2018

John Reese Forbes Articles
Forbes

Winning In The Market With The Patience Of The Wright Brothers And Warren Buffett

Patience is a firm requirement if you want to succeed at just about anything, and investing is no exception. But suppose you are working toward an investment goal that you're certain will lead to significant, possibly even game-changing gains over the long term, yet there is no immediate gratification or validation in sight? Would you have the patience to stick to your guns? This might be an interesting question to pose to the Wright brothers, who ushered in the age of aviation in 1903 after years of building printing presses and bicycles. Their first glider, which they tested in 1900, was a bust, but they kept their noses to the grindstone by constructing a wind tunnel to test nearly 200 wings and airframes of different shapes and designs.

1/16/2018

John Reese NASDAQ Articles
NASDAQ.com

A Momentum Model with Fundamentals Behind It

The stock market's sustained bull run is a reminder that momentum as an investing strategy can work well. While it may resemble performance chasing, buying stocks that have been performing well based on the assumption that they will continue to do so is more akin to banking on the emotional and irrational reactions of performance chasers by systematically identifying and buying shares that are on the rise. Momentum investors, while gravitating toward well-performing stocks, are doing so in; (1) a rule-based manner with entry and exit plans in place, and (2) with a view toward the short- and intermediate- term, rather than the long-term view of value investors.

1/11/2018

John Reese Forbes Articles
Forbes

Investment Ideas For Rebalancing Value And Growth Portfolios

There are hundreds of articles, blogs and videos sprawled across the Internet full of advice for the new year and checklists regarding what you should do with respect to your investments. So, let's part with tradition and focus on something that you should not do: Make investment decisions based on emotion. Investors can become swayed by media hype about a stock and coaxed into buying or, conversely, become panicked by bad press and sell a stock prematurely.

1/3/2018

John Reese NASDAQ Articles
NASDAQ.com

Home Improvement Picks that Could Perk Up a Portfolio

Whether or not you believe the new tax legislation is going to put more money in your pocket, economic indicators are pointing to continued growth in 2018. Most asset classes performed well in 2017, with many delivering double-digit returns, and the retail sector was no exception. Within this sector, the home improvement industry may be poised for a good year ahead, and investors might want to take a look at some opportunities there. In November, U.S. retail sales growth of 0.8 outpaced expectations (the consensus was for 0.3 percent growth). Home improvement is anticipating an uptick in growth over the coming year, according to the North American Retail Hardware Association's 2017 Market Measure report: "After all, this year has seen strong performance in the housing sector, lower unemployment, an energized stock market, a relaxation of lending restrictions and a consumer base with no shortage of home improvement ideas."

1/1/2018

John Reese Globe and Mail Articles
The Globe and Mail

Why Patience Can Often Lead to the Best Returns From Investment Managers

When it comes to picking an investment manager, it's hard to say what attribute is more important, luck or skill. A manager's track record often is not long enough to make the call on skill, and even if the work history does span decades, research has shown managers for the most part have a tough time beating the indexes consistently over a long period of time. Even the best managers underperform for a period of time, something I've written about in previous columns. Investors are flawed when it comes to choosing individual stocks or fund managers. We tend to overestimate our own decision-making abilities and defend our choices even if they turn out to be the wrong ones.

12/26/2017

John Reese Globe and Mail Articles
The Globe and Mail

Big U.S. Money Managers Signal a Shift in Tides

It's going to be hard to beat this year's nearly 20-per-cent gain in the S&P 500, and most experts are warning investors to temper their expectations over the next few years. Sure, there's a good chance stocks continue to rise because of strong corporate profits and impending tax cuts. Global economies, including that of the United States, are expanding and corporations are sitting on mountains of cash to invest or return to shareholders. These catalysts aren't going to disappear when the ball drops at midnight on New Year's, but some big money managers are cautioning that markets simply can't continue to keep the same pace.

12/20/2017

John Reese Forbes Articles
Forbes

10 Chinese Stocks For Alpha Seekers

Whether or not you're a bull in the China market, it's hard to ignore that it has been one of the best performers this year. Besides housing one of the world's largest bitcoin "mines," China is home to approximately 350 million middle-class consumers that are experiencing growing levels of wealth and an improved quality of life. The government continues to transition from a manufacturing-based to a service-based economy, with an increased focus on digital innovation serving as a major influence on consumer trends.

12/19/2017

John Reese Forbes Articles
Forbes

18 Potential Stock Winners From Tax Reform

The tax man cometh, and he's wearing a red suit. As it continues along its path through Congress, the tax reform bill is ushering in a kinder, gentler environment for many businesses in 2018. The proposed reduction of the corporate tax rate from 35% to 20% (or perhaps 21%, depending on how continued negotiations go) will certainly offer a welcome reprieve for a variety of businesses.

12/11/2017

John Reese NASDAQ Articles
NASDAQ.com

Surprise, Surprise: No Strategy Works All The Time

Since 2003, I've been running a series of investing models inspired by great investors and successful strategies. One of the most prominent lessons I've learned over the years is that these models can surprise me, both on the upside and the downside. Since their performance in any given year also reflects investors' appetite for certain types of stocks and styles, I thought it might be both an interesting and enlightening exercise to review these models - which cover a vast set of investing approaches -and see what we might glean from their track records.

12/5/2017

John Reese NASDAQ Articles
NASDAQ.com

Looking for Top Stocks in the Strongest Performing Sectors

As discussions concerning the ever-rising stock market continue to flourish, so do opinions and observations about how the tech sector is generating most of the gains. It stands to reason, given that the tech behemoths have enjoyed such dramatic growth and are so heavily weighted in the S&P 500. But while the tech sector continues to reign supreme on the performance front, 2017 has been a good year for several sectors.

11/27/2017

John Reese Forbes Articles
Forbes

Four 'Cornerstone' Growth And Value Stock Buys

Being a successful active investor requires focusing first on process, then on results, according to famed investor James O'Shaughnessy. In a recent Bloomberg Radio interview, the message was driven home by O'Shaughnessy Asset Management's Senior Portfolio Manager, Chris Meredith. While the firm is dedicated to building sound investment processes, Meredith said, it has also come to realize the importance of educating investors on how to do the same-another priority of the firm's founder.

11/14/2017

John Reese Forbes Articles
Forbes

M&A Activity Growing, What Stocks Would Benefit Most?

The stock market may be eerily calm in terms of volatility, but merger and acquisition activity has been bubbling up over the past year, more so than in the first year of any other modern president's term. Thomson Reuters data shows that U.S. merger and acquisition transactions totaled $1.2 trillion since Trump was elected, stemming from nearly 12,700 deals-the Broadcom-Qualcomm and Disney-21st Century Fox talks being two of the more recent.

11/14/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks From Different Sectors That Could Provide Value For Investors

Some prominent professional investors have been talking about the difficulty of finding value stocks in a market that seems to go nowhere but up. Even Warren Buffett's Berkshire Hathaway is sitting on $100-billion (U.S.) of cash looking for places to invest. After losing out on a hot trade in the energy sector this summer, his biggest deal so far this fall has been to take a private stake in Pilot Flying J, the largest truck stop operator in the United States. The deal isn't going to go far to solve the billionaire's dilemma. He has so much cash to put to work he needs a big transaction or two to really move the numbers.

11/2/2017

John Reese Globe and Mail Articles
The Globe and Mail

The Contrarian View on Dividend-Paying Stocks

Investors tend to view companies that pay dividends as boring, but reliable, stewards of shareholder capital, but there are a variety of reasons why these payouts aren't necessarily the best sign of a strong company. Dividends and stock buybacks have been the staple demands of activist investors in the past few years as they push company managers to unlock more value for shareholders. These are often vulnerable managers who have been struggling to unlock growth.