by Scott Martindale
  President & CEO, Sabrient Systems LLC

With stocks holding up near their all-time highs in the face of a towering Wall of Worry, it is apparent that investors have been reluctant to sell for fear of missing out (FOMO) on continued upside.

However, at the same time, there has been something of a lid on further upside as valuations are at lofty levels, with the S&P 500 and Nasdaq 100 at forward P/Es of 22.4x and 27.0x, respectively, while the 10-year yield has been on the rise (recently eclipsing 4.30%), which tends to hold down valuation multiples. Indeed, many of the most prominent investors are wary, including the likes of Warren Buffett, Jamie Dimon, and Jeff Bezos, while corporate insider buying has slowed.

So, bulls and bears appear to be at a standoff, perhaps awaiting a catalyst from earnings season and the election outcome. And depending on how things transpire, markets are likely to experience some volatility (like today!). I have been anticipating a market pullback followed by higher prices by year end and well into 2025, buoyed by the combination of a dovish Fed and rising global liquidity—and potentially from reduced taxes and red tape in the New Year. In any case, any surprise that leads to a selloff—other than a cataclysmic “Black Swan” event—would likely be a buying opportunity, in my view.

But with the momentous election just a few days away (I can’t wait for it to be over!), I thought it might be a good time to share some timeless market wisdom, insights, and levity by compiling a list of 55 investing proverbs to live by. The first several have no particular author that I can discern, but for the rest I show a byline. Here we go:  Click HERE to continue reading

By Brent Miller, CFA
President & Director of Research, Gradient Analytics (a Sabrient Systems company)

The value of quantitative, rules-based, process-driven equity models is clear. They can be tested based on various historical timeframes and market conditions, sectors, market caps, and regions, while removing emotion from investment decisions. And with the exception of brief market periods driven by speculative fervor, investors tend to favor high-quality companies with solid fundamentals.

Sabrient Systems specializes in building fundamentals-based equity models that seek to generate alpha versus a market benchmark, including alpha factors and strategic beta indexes. In 2011, Sabrient acquired Gradient Analytics, a fundamental equity research firm with a team of forensic accounting specialists who focus on assessing earnings quality and anomalous insider activity, in part to enhance Sabrient’s quantitative model-building capabilities. Together, we leverage a unique collaboration of engineers and forensic accountants and a scientific hypothesis-testing approach to create proprietary alpha factors, multifactor models, process-driven portfolio strategies, and rules-based indexes.

In 2013, the combined team created the original version of our Earnings Quality Rank (EQRv1), a pure accounting-based risk assessment factor based on the collective experience and expertise of Gradient’s analyst team in identifying company-level earnings quality issues, aggressive accounting tactics, and misleading “financial engineering.” More recently, we enhanced the model to create EQRv2.

Furthermore, the Sabrient/Gradient team has created a variety of other valuable alpha factors, including an enhanced version of Sabrient’s flagship Growth at a Reasonable Price (GARP) model and several other factors related to value, growth, quality, and momentum. All told, we now publish the following eight “Sabrient Scores”:

1. Growth at a Reasonable Price (GARPv2)
2. Earnings Quality Rank version 2.0 (EQRv2)
3. Growth Quality Rank (GQRv2)
4. Strategic Valuation Rank (SVR)
5. Strategic Growth Rank (SGR)
6. Aggregate Price Momentum Rank (AMR)
7. Bull Score (BULL)
8. Bear Score (BEAR)

For institutional quants and systematic traders, we offer five of these alpha factors (EQR, GQR, SVR, SGR, AMR) as a factor suite (“Equity Factor Rankings”) for licensing through Nasdaq Data Link. However, fundamental analysts, financial advisors, and individual investors also find them valuable for screening, idea generation, risk monitoring, and confirmation. On a temporary basis, you can access all 8 of these Sabrient Scores free of charge through our SmartSheets products (one that provides scores for over 4,200 stocks and one for over 1,200 equity ETFs). Ultimately, they will be behind a paywall as a companion product to our powerful and comprehensive SmartLights^TM web application.

In this article, I provide further details on the purpose and basis for our Earnings Quality Rank and other alpha factors, including a summary of back-tested performance.  Read on....