James Oberweis: Thinking Octagonally

Last Updated: December 27, 2010Posted in Individual Gurus

Guru Accuracy Rating


This is above average.

Current guru average is 47%

We evaluate here the market commentary of James Oberweis via Zacks.com since July 2002. James Oberweis is one of Zacks’ “pros” and a principal at Oberweis Securities Inc., “a boutique investment firm…with a particular focus on aggressive investors.” The firm’s investment strategy, which they call the “‘Oberweis Octagon,’ uses eight criteria to combine the best features of both growth and value investing.” Mr. Oberweis’ commentary for Zacks is discontinued as of November 2007. The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:

  • Although he often makes observations about market direction, his philosophy is to remain fully invested at all times.
  • James Oberweis depends mostly on the aggregate price/earnings ratio of his universe of stocks to assess market valuation and thereby predict market direction.
  • James Oberweis’ forecast sample is very small, so confidence in the measurement of his accuracy is very low.
  • As noted above, James Oberweis’ commentary for Zacks has been discontinued. We retain this record for historical reference as part of an overall analysis of guru accuracy.

Here are additional notes to augment the tabular summary:

From Peter Brimelow in MarketWatch (12/27/10): “The Top 10 [for 2010]: …6. The Oberweis Report — 35.6%…”

From Peter Brimelow in MarketWatch (3/27/06): “…the Oberweis Report [is] up 38.8% annualized since October 2002, according to the Hulbert Financial Digest, vs. 18% annualized for the dividend-reinvested Dow Jones Wilshire 5000 . …since HFD began tracking it in 1988, Oberweis has outperformed the market decisively, up 17.9% annualized vs. the DJ Wilshire 5000 dividend-reinvested 12% annualized.”

See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.

    S&P 500 Index  
Date Comments from: James Oberweis via zacks.com 21-Day Return 63-Day Return 126-Day Return 254-Day Return  
11/23/07 …we have nothing good to say. We’re struggling to grasp how – in the face of what appears to be an increasingly inevitable recession in 2008 – the stock market continues higher. …Winds of caution are certainly blowing as we approach the New Year. 3.9% -4.8% -4.5% -40.5% +
7/19/07 The growth train is leaving the station, and if you wait until the cycle change is completely obvious, you’ll miss the boat. -6.9% -0.9% -11.6% -17.8%
4/26/07 …it’s time to swim against the current and consider investing in technology stocks again. Our guess is that the reward will be handsome over the next few years. 1.4% 1.6% 1.7% -7.3%
1/26/07 …valuations look attractive for equity markets and the return prospects for 2007 are above-average. -1.6% 5.1% 4.3% -4.7%
10/18/06 …years like 2006 tend to be great buying opportunities… 1.2% 2.5% 8.7% 11.2% +
7/17/06 …fear of the unknown creates a buying opportunity for those who can look beyond this period of courtship between Mr. Bernanke and Wall Street. Stocks are cheap and investors are frightened, a combination that usually spells relief for long-term market returns. 4.1% 10.4% 16.0% 24.3% +
6/14/06 …the U.S. market is beginning to look like a bargain…stocks have not appeared this cheap in a long time. 0.5% 6.8% 14.9% 24.7% +
4/20/06 You will see an increasing emphasis on international investments from Oberweis… The U.S. is not a ship heading for an iceberg, but it may have a leak that needs tending. -3.4% -3.9% 4.0% 14.0% +
2/14/06 In the short run, times look pretty good for small-cap growth investors. 2.3% 1.5% -0.6% 14.4% +
11/16/05 …if there is a reasonable way to “time” the market, it is the opposite of what most folks actually do. …Stay the course. Look for opportunities after declines. Use data as your guide, not emotion. 2.9% 4.7% 2.5% 13.8% +
9/14/05 …sustained high energy prices will slow the economy…the market is underestimating the adverse impact on the broader economy… -4.1% 2.7% 6.2% 7.7% +
5/17/05 …we are approaching a significant buying opportunity. Stocks are cheap and investors are scared… 3.2% 5.1% 5.2% 7.9% +
4/15/05 …that light you see at the end of the tunnel? Be careful. It may be a train. 2.0% 7.3% 3.1% 14.6%
3/14/05 …investors deploying cash today will be rewarded with above average returns over the months to come. -2.7% -0.7% 2.9% 8.2%
2/14/05 The risk of investment…is significantly lower than at year’s end. -1.5% -4.3% 2.0% 6.9%
1/17/05 …the high valuations currently afforded to small-cap equities present above-average risks and may lead to a correction in early 2005… Valuations are simply getting ahead of themselves. …expect solid economic growth in 2005, which will lead to a modest increase in stock prices for the year overall. 1.2% -4.2% 2.1% 5.5% +
11/17/04 …valuations are very reasonable…as the election subsides, the good times are a coming… 1.0% 2.4% 0.3% 5.6% +
10/18/04 Investor expectations are reasonable, company fundamentals are sound, valuations are cheap, and stock prices seem to be moving back upwards again. That’s usually been a favorable combination. 5.5% 6.3% 2.9% 7.3% +
9/14/04 …resolution to the upcoming election, irrespective of who wins, will lead the S&P 500 to appreciate by at least 10% over the next year… -1.3% 5.3% 7.0% 8.8%
8/20/04 Time to put…cash to work. 2.8% 7.6% 9.3% 10.9% +
7/13/04 …earnings have caught up to valuations and risk is lower than it was at the beginning of the year. P/Es are cheaper than at the beginning of 2004, but are certainly not the super-bargains we saw at the beginning of 2003. -3.5% 0.6% 6.4% 10.0%
1/16/04 …we expect modestly higher security prices at the end of 2004…a 10-14% increase for the S&P 500… Our favorite sector for 2004 is healthcare. 1.1% -0.5% -3.4% 3.1%
10/10/03 …best years were frequently followed by continued gains in the year to follow, but of course not at the same magnitude. 0.9% 8.1% 10.3% 6.3% +
8/11/03 …[consider] utilizing [an] option strategy as a way to mitigate risk and increase income from some of your recent winners. 3.1% 7.9% 16.2% 8.6%
7/15/03 …a market pause would not be unreasonable. -1.6% 3.8% 12.7% 10.0% +
6/16/03 …the current prices of small-cap growth equities continue to offer attractive opportunities, but…equities are [no longer] exceptionally undervalued. -1.6% 0.8% 6.0% 12.3%
5/12/03 …this is the beginning of a longer-term favorable period for investors in smaller, high growth stocks. Plenty of upside remains… 5.5% 3.4% 11.9% 16.0% +
4/16/03 With lower energy prices, the potential for resolution to increase confidence, and the reasonably low valuations currently afforded to small-cap growth equities, now may not be the time for pessimism. 7.3% 13.0% 19.3% 27.1% +
3/5/03 …the current environment and valuation level will lead to a return to a less robust and eventually less volatile market for the rest of the decade…8-10% average nominal S&P 500 appreciation… 5.6% 17.1% 23.2% 38.2%
1/3/03 U.S. markets will be higher thirty days after the assault begins… 2003 will begin a new period of economic expansion and the period will be led by small company growth stocks… Oberweis predicts double-digit returns for the S&P 500 in 2003. He believes that those concentrated in small-company stocks will do even better. -6.6% -3.5% 8.5% 24.0% +
12/13/02 …small stocks are both reasonably attractive in the absolute sense and very attractive in the relative sense, when compared to large company stocks…it [is] an excellent time to be adding to one’s small stock portfolio. 3.2% -3.0% 13.6% 21.0% +
10/31/02 …stock valuations relative to growth rates, within our universe of small-growth stocks, appear to be more attractive than at nearly any other time of the past decade. 5.5% -3.4% 5.0% 18.9% +
10/11/02 …the S&P 500 is now below or approaching fair valuation while small-cap stocks may be significantly undervalued…we are quite close in both time and distance to a significant market bottom. 4.9% 11.0% 3.9% 25.3% +
8/7/02 We have seen enough panic for a bottom, but perhaps we need another period of no progress for the remaining bulls to throw in the towel. Several months of a churning, up and down market going nowhere, or a very boring, dull market would probably do the trick. But…the excesses of the 1990’s bubble market have been squeezed out. Stocks are now reasonably valued. 2.0% 3.6% -3.8% 11.8% +
7/10/02 …we are likely to see a strong rally fairly soon. But, unfortunately, I believe more time must pass…before we can experience a new long-term bull market… That process may take another five years or more. -1.6% -14.7% 0.3% 9.1%
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