In this episode of Excess Returns, we take a deep dive into value investing with our good friend Tobias Carlisle. We discuss the recent outperformance of small cap and value stocks, tackle the challenges of long periods of underperformance for value strategies, and examine how Tobias constructs his portfolios. We delve into his process for selecting stocks, including his focus on companies trading at discounts using the Acquirer’s multiple and his approach to portfolio diversification.… Read More The post Value Investing, the Mag 7 and Making Sense of a Changing Market with Tobias Carlisle ap ..read more

The NASDAQ 100 index has been on a tear in 2024, building on its impressive gains from 2023. Year-to-date, the tech-heavy index is up 20%, driven by enthusiasm around artificial intelligence, cloud computing, and semiconductor advances. Mega-cap tech names like Nvidia, Microsoft, and Apple have led the charge, benefiting from their dominant market positions and exposure to key growth trends. Despite Lofty Valuations, Value Still Exists With the index trading at historically high multiples, many investors are understandably concerned about valuations. However, Validea’s guru-based stock screen ..read more

Peter Lynch was one of the most successful mutual fund managers in history, averaging a 29.2% annual return while managing Fidelity’s Magellan Fund from 1977 to 1990. Validea’s Lynch-inspired strategy aims to capture the key principles of Lynch’s investing approach. The strategy first categorizes stocks into three main groups: Fast-growers: 20%+ annual EPS growth Stalwarts: 10-19% annual EPS growth, multi-billion dollar sales Slow-growers: <10% annual EPS growth For all stocks, regardless of category, the strategy looks at: P/E/G ratio: Price-to-earnings ratio divided by EPS growth rate ..read more

In this episode, we dive deep into practical alternatives to the traditional 60/40 portfolio. We explore various approaches like the Permanent Portfolio, risk parity and return stacking and take a detailed look at how we build alternative portfolios for our clients. We also examine Nomadic Samuel’s innovative work on building diversified portfolios using new ETF products. Throughout our conversation, we emphasize the importance of having a systematic process, understanding the risks and potential behavioral challenges, and considering factors like taxes and market regimes. While acknowledging ..read more

In this episode of Excess Returns, we speak with Warren Pies of 3Fourteen Research about his unique systematic approach to analyzing markets. We explore his outlook for the second half of 2024, discussing topics like the future of the 60/40 portfolio, inflation trends, labor market indicators, earnings expectations, and the impact of AI on productivity. Warren shares insights on market breadth, his newly launched quality-driven ETF strategy, and interesting perspectives on seasonality and retail sentiment. We also touch on his approach to combining systematic and discretionary investing metho ..read more

The “Magnificent 7” stocks – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla – have been the undisputed leaders of the stock market in recent years. In 2024, these seven mega-cap tech giants have accounted for the vast majority of the S&P 500’s gains, dramatically outperforming the broader market. While their market-beating performance is clear, how do these stocks stack up on a fundamental basis? Using Validea’s guru-inspired stock analysis models, we can peek under the hood to see which of the Magnificent 7 have the strongest fundamental underpinnings to potentiall ..read more

Validea’s Warren Buffett model using published writings about Buffett to identify stocks that might meet his fundamental tests. The strategy aims to identify high-quality companies with predictable earnings that are trading at attractive prices. The strategy has two main stages: Stage 1: Identifying “Buffett-type” companies Look for companies with strong brand recognition or “consumer monopolies” Seek predictable earnings – no negative EPS in the past 10 years (with some exceptions) Conservative financing – long-term debt should be payable from 5 years of earnings or less High return on equi ..read more

Below is our trend following update for July of 2024. Our trend following system uses multiple moving averages to identify the long-term trend in a variety of equity indexes, asset classes, sectors and investment styles. With the continued bull market, most equity indexes and asset classes remain in uptrends, with the one exception being Bank Loans. All sectors are also currently in uptrends according to our system. Across the value and growth spectrum, all investment styles also remain in uptrends For more information about our trend following system or to dig into the details for any ind ..read more

When evaluating potential investments, many investors focus on dividend yield as a key metric. However, shareholder yield offers a more comprehensive picture of how companies return value to shareholders. Let’s explore this concept and examine five stocks that currently score highly according to Validea’s models. What is Shareholder Yield? Shareholder yield encompasses three ways companies can return capital to shareholders: Dividends Share buybacks Debt reduction By considering all three factors, shareholder yield provides a fuller view of a company’s commitment to creating value for its i ..read more

Dividend aristocrats are S&P 500 companies that have increased their dividend payouts for at least 25 consecutive years. These companies are known for their financial stability, consistent growth, and commitment to returning value to shareholders. As of 2024, there are 67 companies that have achieved this prestigious status. Why Dividend Aristocrats Can Be Good Investments Dividend aristocrats are often considered attractive investments for several reasons: Consistent income: Their track record of increasing dividends provides a reliable income stream for investors, especially those seek ..read more