There is little disagreement among market observers that passive investing is growing. There is also little dispute that the trend is likely to continue as a result of the rise of ETFs, investors’ focus on fees, the inconsistency of active manager outperformance, and numerous other factors. That is where the agreement ends, though. There are substantial disagreements as to if there has been an impact on the pricing of securities within the market, and if so, what that impact is.
This concept of the relationship between expectations and reality is in my opinion one of the most important ones for every investor to understand. Every stock has a series of expectations embedded in its price. For growth stocks, those expectations are high ones. For value stocks, they are much lower. But either way, investors profit when they are able to identify a mismatch between expectations and reality.
The volume of financial content that is produced these days can be completely overwhelming. Filtering through it to find the best articles is a task that most investors just don't have the time to complete.
Thankfully, they don't have to.
Tadas Viskanta helped solve this problem when he launched Abnormal Returns over 15 years ago. Every day, Tadas identifies the best financial content and distills it down to a condensed series of links. And he does it for free. Tadas is also the Director of Investor Education at Ritholtz Wealth Management.
Growth investing has seemed easy in the past decade. Growth stocks have easily outpaced both value stocks and the market, which has led to great performance for many growth strategies. But it likely won't always be this easy. Over the long-term, growth stocks as a whole have trailed the market, and successful growth investors have had to identify a small group of stocks that perform well in a universe that typically does not.
In this episode, we look at some of the realities of growth investing.
Validea is an incredible valuable tool to have. I depend on it for much of my research to help weed out stocks for my portfolio designs. The filters used for stock selection are easy to use and comes with a detailed analysis
as to the why each particular stock either passes or fails the test. The articles & blogs are a great wealth of knowledge too.
As a retail investor, I particularly value Validea’s top-notch research capability. With the deluge of investment commentary available via innumerable blogs, articles, FinTwits, white papers, podcasts, etc., the Validea team is one of my go-to sources to maintain some perspective
on what's really happening.
I am always checking my investment/trading ideas with Validea. I feel better knowing that any of the guru models they are following might also be on my side!
Find Your Edge With Validea's Quantitative Investing Tools
Analysis of 6000+ stocks using the proven strategies of investment legends like Warren Buffett, Benjamin Graham and Peter Lynch. See the details behind "why" some stocks look good and others don't through the guru methodologies.
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Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach.
Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the
optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.
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