Über die Autorin bzw. den Autor

JOHN P. REESE, MBA, is the founder and CEO of Validea.com and Validea Capital Management. He is also portfolio manager for the Omega American and International Consensus mutual funds offered in the Canadian market. He is a regular columnist for Forbes.com, RealMoney.com, and Israel's Globes newspaper. He holds two patents in the area of automated stock analysis and is a graduate of Harvard Business School and the Massachusetts Institute of Technology.

JACK M. FOREHAND, CFA, is President of Validea.com and cofounder of Validea Capital Management, LLC. Working in conjunction with John Reese, Forehand led the development of Validea's investment models as well as the quantitative testing that led to the creation of Validea Capital Management's consensus portfolios. He graduated from the honors program of the University of Connecticut with a BA in economics and is a CFA charterholder.

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The GURU INVESTOR

Over the past six decades, the U.S. stock market has averaged an annual return of about eleven percent per year. Yet, except for a few renowned Wall Street gurus, the vast majority of investors, both amateur and professional, fail to come anywhere close to those eleven percent average annual gains. Why do most investors fail and what do those very successful investment gurus have in common? The Guru Investor identifies the??stock picking methodologies developed by some of history's best and most successful stock market gurus including Peter Lynch, Warren Buffett, Benjamin Graham, Martin Zweig, John Neff, and others and shows how you can combine these proven strategies into a disciplined investing system that has been proven to outperform the market.

John Reese breaks down the very different approaches of each of the gurus encompassing value, growth, and quantitative investing and lays out their philosophy and achievements, detailing step-by-step the secret formulas they used to beat the market, while explaining why these legendary investors consider certain factors to be so important when analyzing individual stocks.

Reese not only discusses the individual gurus, their strategies, and why they are important, but he also explains how to best use these strategies in the real world, showing how to sift through all of the choices to find a strategy that works for you. The model portfolio system that the??author has developed turns each strategy into an actionable system, addressing many of the common mistakes that doom investors to failure. In addition to offering these individual guru-based models, Reese also explains how to combine and implement these approaches into a multi-guru system that will provide you with a comprehensive, practical stock investing strategy with a proven track record. He reveals when you should buy, when you should sell, how many stocks you should own, and much more.

All investors can learn from the thinking, writing, and experience of Wall Street's greatest investors. The Guru Investor, and its free companion Web site www.guruinvestorbook.com will teach you the lessons of these greats and give you all the tools needed to put those lessons to work in your investment strategy.

Aus dem Klappentext

Over the past six decades, the U.S. stock market has averaged an annual return of about eleven percent per year. Yet, except for a few renowned Wall Street gurus, the vast majority of investors, both amateur and professional, fail to come anywhere close to those eleven percent average annual gains. Why do most investors fail―and what do those very successful investment gurus have in common? The Guru Investor identifies the stock picking methodologies developed by some of history's best and most successful stock market gurus―including Peter Lynch, Warren Buffett, Benjamin Graham, Martin Zweig, John Neff, and others―and shows how you can combine these proven strategies into a disciplined investing system that has been proven to outperform the market.

John Reese breaks down the very different approaches of each of the gurus―encompassing value, growth, and quantitative investing―and lays out their philosophy and achievements, detailing step-by-step the secret formulas they used to beat the market, while explaining why these legendary investors consider certain factors to be so important when analyzing individual stocks.

Reese not only discusses the individual gurus, their strategies, and why they are important, but he also explains how to best use these strategies in the real world, showing how to sift through all of the choices to find a strategy that works for you. The model portfolio system that the author has developed turns each strategy into an actionable system, addressing many of the common mistakes that doom investors to failure. In addition to offering these individual guru-based models, Reese also explains how to combine and implement these approaches into a multi-guru system that will provide you with a comprehensive, practical stock investing strategy with a proven track record. He reveals when you should buy, when you should sell, how many stocks you should own, and much more.

All investors can learn from the thinking, writing, and experience of Wall Street's greatest investors. The Guru Investor, and its free companion Web site―www.guruinvestorbook.com―will teach you the lessons of these greats and give you all the tools needed to put those lessons to work in your investment strategy.

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The Guru Investor

John Wiley & Sons

Chapter One

From the errors of others, a wise man corrects his own. -Publilius Syrus, first-century Roman writer

Peter Lynch, Benjamin Graham, David Dreman, and others have all left roadmaps showing just how the average investor can make a bundle in the stock market. Their formulas are relatively simple and don't involve the kind of complex mathematics that only a rocket scientist could understand. And, to top it all off, between the access I'll give you to my new website-www.guruinvestorbook.com-and the ease with which you can find stock information on the Internet these days, you won't have to do too much digging and research to put these formulas into action. This is going to be a piece of cake, right?

Not exactly. While people such as Lynch, Graham, and Dreman have been kind enough to lay out paths to investing success for us to follow, the stock market will throw obstacles and challenges into even the most carefully crafted roads to riches. The first stop along our journey isn't going to be a pretty one. We're going examine how and why investors before us have failed so that you'll be ready when confronted with the same pitfalls.

The Fallen

As we begin our survey of the graveyard of failed market-beaters, one thing should quickly jump out: It's a pretty crowded place. To start with, there are the professionals-the mutual fund managers. Over the past couple decades, mutual funds have become a widely used stock market tool, allowing investors to buy a broad swath of stocks with less transaction costs than they'd incur if they tried to buy each holding individually. The problem is that most mutual fund managers fail to beat the returns you'd get if you had just bought an index fund that tracks the S&P 500 (The S&P 500 index is generally what people refer to when they talk about beating "the market").

In fact, in a 2004 address to the United States Senate Committee on Banking, Housing, and Urban Affairs, John Bogle-the renowned founder of the Vanguard Group, one of the world's largest investment management companies-stated that the average equity fund returned 10.5 percent annually from 1950 through 1970, while the S&P 500 averaged a 12.1 percent return. From 1983 through 2003, as mutual funds became more popular, the gap was even worse: The average equity fund returned an average of 10.3 percent annually, while the S&P grew at a 13 percent pace.

A 2.7 percent spread between the S&P and mutual fund managers' performances may not seem like all that much. But remember, the compounded returns you get in the stock market can turn that kind of difference into a lot of money very quickly. A $10,000 investment that grows at 13 percent per year compounded annually, for example, will give you a shade over $115,000 after 20 years; at 10.3 percent per year, you'd end up with about $44,000 less than that (approximately $71,000).

Bogle's not the only one whose research highlights the poor track record of fund managers. In his book What Works on Wall Street, James O'Shaughnessy, one of the gurus you'll read about later in this book, looked at what percentage of equity funds beat the S&P 500 over a series of 10-year periods, beginning with the 10-year period that ended in 1991 and ending with the 10-year period that ended in 2003. According to O'Shaughnessy, "the best 10 years, ending December 31, 1994, saw only 26 percent of the traditionally managed active mutual funds beating the [S&P] index." That means that just over a quarter of fund managers earned their clients market-beating returns in the best of those periods!

In addition, those that beat the S&P didn't exactly crush it. O'Shaughnessy said, for example, that less than half of the funds that beat the S&P 500 for the 10 years ending May 31, 2004 did so by more than 2 percent per year on a compound basis. What's more-and this is a key point-O'Shaughnessy noted that these statistics didn't include all the funds that failed to survive a particular 10-year period, meaning that his findings actually overstate the collective performance of equity funds.

Along with fund managers, another group of market under-performers mired in the stock market muck are newsletter publishers. These are investors-some professional and some amateur-who write monthly or quarterly publications (many of which are published online) that give their assessment of the economy as well as their own stock picks. They sound official and authoritative, and sometimes even have large research staffs working for them. But while they can attract thousands of readers, more often than not their advice is lacking. In fact, Mark Hulbert, whose Hulbert Financial Digest monitors investment newsletters and tracks the performance of their picks (Hulbert is considered the authority on investment newsletter performance and has been tracking newsletters for over 25 years), said in a 2004 Dallas Morning News article that about 80 percent of newsletters don't keep pace with the S&P 500 over long periods of time.

And just as their individual stock picks are often subpar, newsletter publishers also have a difficult time just picking the general direction of the market. A National Bureau for Economic Research study of 237 newsletter strategies done in the 1990s found that, between June 1980 and December 1992, there was "no evidence to suggest that investment newsletters as a group have any knowledge over and above the common level of predictability," according to the International Herald Tribune.

So, while their advertisements and promises may sound tempting, the data indicates that newsletter publishers and money managers have a weak record when it comes to beating the market. Their collective track record, however, is far better than that of individual investors, whose poor performance we examined in the Introduction.

Bogle has also addressed the issue of individual investors' returns, and his findings paint an equally glum picture. He told that congressional committee in 2004 that he estimated equity fund investors had averaged an annual gain of just 3 percent over the previous 20 years, during which time the S&P 500 grew 13 percent per year.

The Futility of Forecasting

Having established that most investors-professional and amateur-under perform the market, the obvious question is, why? After all, professional investors are, for the most part, intelligent people. Just about all of them have college degrees, some from very prestigious schools, and they are required to pass multiple licensing examinations before being allowed to invest clients' money. Similarly, there are a lot of very smart amateur investors out there. As I noted earlier, I have degrees from Harvard and MIT and successfully built up my own business, yet I struggled for a long time to beat the market. How can so many smart people fare so poorly?

Well, for the first-and perhaps greatest-reason, we don't have to look far: It is the fact that we are human. Our own humanity-the way we think, the way we perceive things and feel emotions-has become a major topic in the investing world in recent years. There are even branches of science-behavioral finance and...