Yahoo Finance Weekend Reading 5th December
While high StockRank stocks have continued to outperform low StockRank stocks it's been quite a sideways year for the market as a whole. Surely one would presume that it's been a good year for stock pickers?
Sadly the FT shows that 90% of active fund managers have underperformed the indices. We regularly agree with those who question whether market beating funds actually add any alpha at all - perhaps alpha may just be undiscovered beta?
Robeco are fast becoming one of our favourite investment managers - mainly because they publish lots of great material and essentially favour a QVM (quality+value+momentum) rule based approach to stock selection. The best of their 2014 year has been published in this e-book - well worth a browse - they say that equities will be the top performing asset class for the next 5 years.
We've continued our column at Interactive Investor on Screening the Market for winners - this week we covered Piotroski's classic F-Score. It's been a poor year for Piotroski, but given that his strategy has beaten the market in 4 out of 5 years it wouldn't be wise to bet against it outperforming next year. Subscribers can see all our Piotroski screens at the 'guru' page here.
The efficient market hypothesis keeps getting undermined as more and more anomalies appear. Neil Macneale and David Ikenberry believe that you can beat the market by investing in companies that undergo stock splits, as this Wall Street Journal article explains.
Bottom Up
Paul's been back with us this week (although still slightly jetlagged). This week came the revelation that with lower oil prices pulling down the prices of resource stocks, he could be tempted to take a closer look. Frackin' hell, Paul!
Richard Beddard just pointed out thatDewhurst is “startlingly undervalued". After a poor year for its share price it still holds up with a StockRank of 98 that's partly driven by improving broker sentiment. His write-up is highly recommended.
Ed Shing took a look at high ranking resource stockCaledonia Mining as a potential play on a stabilising gold price. He points out that, for a gold mining company (hated sector and a loathed commodity) Caledonia ranks remarkably well for both value and quality. You can read his thoughts here.
Uber just raised $1.2bn from outside investors - and on a $40bn valuation it's about to break into the valuation bracket of the top 100 S&P 500 companies. If you want to have a go at valuing Uber, you could do worse than have a read of Aswath Damodaran's forensic (and deliberately inconclusive) assessment.
Warren Buffett held his hands up to making a bad choice when he invested in Tesco. But what about the Sage of Omaha's big bet on IBM? Following the hefty pull-back in the tech group's share price in October, Terry Smith of Fundsmith asks some awkward questions about whether that was such a great call too. He rounds off with the blistering line:
“I suspect that the sound which can be heard from Omaha is not the cheering that some commentators have suggested but something reminiscent of an Edvard Munch painting."
James O'Shaughnessy's son, Patrick, suggests that 'Depression babies' should prepare for their retirement by investing in the stock market. Check out this Guardian article to hear O'Shaughnessy the Younger's views on investing in overseas stocks, the psychology of investing and the advantages of picking 'higher-quality cheap stocks that the market is just beginning to notice.'
It's not just about the money
What a shocker! Here's a great article on a newly discovered wonder of the natural world… electric eels have a built in 'taser' that lets them stun their prey from a distance. The biologist who made the discovery, observed: “Fish are amazing escape artists. If the electric eel didn't have this capability, it would have a really hard time catching something to eat."
Finally, with the countdown to Christmas now on, came the sorry news that Santa has been banged up. Well, that's what it looked like to crowds of kids in South Wales who watched as a police van pulled up to take the big man away. Turns out he was just after a lift. Presumably the sleigh must have broken down… or something like that.
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