James O'Shaughnessy Interview: How he rewrote the rules on stock market investing

Tuesday, Sep 11 2018 by
James OShaughnessy Interview How he rewrote the rules on stock market investing

James O’Shaughnessy is one of very few investors who can truly lay claim to having changed the way people approach the stock market. He’s also one of the nicest and most engaging people you could hope to meet.

O’Shaughnessy has spent more than 30 years researching equity market returns. His work has brought to the fore the power of what he calls ‘fundamental quant’. His groundbreaking studies became a relentless pursuit of the factors that are most commonly associated with outperformance. And from that he built a fund management business with nearly $7 billion under management.

For most professional money managers, those achievements would probably be enough. But O’Shaughnessy is remarkably altruistic. Despite lucrative offers to keep his research private, he presented it to the world.

As the author of four books, it was the second - What Works on Wall Street - that transformed his career and very likely the fortunes of many others. In four editions published between 1997 and 2012, he set out his findings on how elements of value, quality and momentum combine to work in investing.

What set him apart was a willingness to follow the data, even if it meant tearing up previous conclusions. What he was left with was a set of strategies that he could stick with in good times and bad.

O’Shaughnessy’s benevolence - his readiness to share his knowledge - is in his genes. His grandfather built what was once one of the world’s largest privately-owned oil company before giving away 95 percent of his fortune during his lifetime. In fact it was the family debates on how the enduring foundation should be invested that first got the 17-year-old O’Shaughnessy into studying markets.

Back then, all he had was a Value Line subscription, a large paper spreadsheet and and a book on the Dow Jones Industrial Average. Some years later - after finishing college and getting married - he returned to those studies. With the help of computers and the advent of Morningstar, he started taking much deeper dives into the market.

Jim told me this story when I met him at a suitably exclusive, yet surprising relaxed and rules-free club in New York City. Having recently passed the leading role at O’Shaughnessy Asset Management to his son Patrick, I got the impression that he was very much enjoying a slightly more relaxed life…

Ben: Jim, what…

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22 Comments on this Article show/hide all

mmarkkj777 8th Aug '18 3 of 22

Hi Ben,

Really good. I'm looking forward to the other articles.

It gives a bit more insight into the person behind the strategies. Interesting that he places emphasis on the psychology side of things.

Who is coming next I wonder?

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pka 8th Aug '18 4 of 22

An excellent and fascinating article.

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Kenneth Merritt 8th Aug '18 5 of 22

Ben? Ben Hobson? Is that you? Would you sign this for me?
Loved the interview. I'm going to look at buying What Works on Wall Street, I never read it. It sounds like it's the basis of a lot of what Stockopedia does.

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Goodgrieff 8th Aug '18 6 of 22

One of the better interviews, and gives a strong, positive impression of Mr O'Shaughnessy, who seems to justify his position of someone whose opinions and actions are well worth noting. Shall be interesting to see how his son performs at the top over the next few challenging years.

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justinian 8th Aug '18 7 of 22

Great bloke.

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starleg 8th Aug '18 8 of 22

Wonderful interview! Full of really important points, his second book certainly was a game changer.

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matylda 9th Aug '18 9 of 22

Nice interview and article Ben - Thanks a lot - Hope Jim doesn't get Skype soon :)

Blog: Briefed Up
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Peter Kelo 9th Aug '18 10 of 22

Hi Ben,

I enjoyed this interview very much, particularly James' observation that most investors are slow to embrace new concepts such as shareholder yield (ie dividend yield + buybacks) being a substantially better factor than dividend yield when part of a single composite factor.

I was wondering if you could confirm that Stockopedia now uses shareholder yield when computing its Value Rank, and if not, is there a plan to update this formula to match O'Shaughnessy's latest research.


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iwright7 9th Aug '18 11 of 22

A fascinating backstory that illustrates the power of TV. I was particularly taken with the observation that James's mechanical screens had beaten the fund managers he cloned.  An example of machines being more systematic than man!

....In  "Invest Like the Best" I showed you how to clone your favourite manager. We haven't done it for a long time, but the last time we updated all the clones in that book they were killing the managers they were cloning.

Just ordered  a used copy of Invest like the Best  from Amazon for the princely sum of £5.

Great reporting Ben.    Ian

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Jenny Williamson 9th Aug '18 12 of 22

Are there any plans to have a Stockopedia fund or if that’s not possible are there any funds based on Stockopedia algorithms? I am interested but don’t really have the time to do my own research so would love to invest in a passive fund using your fundamentals

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nquaile875 9th Aug '18 13 of 22

Hi Ben,

I've just finished reading Jim Slater Beyond the Zulu Principle and he references O'Shaughnessy so this is a really well timed article for me and very informative!

Thanks for this, I now have further reading to chase up!


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Blissgull 9th Aug '18 14 of 22

Just out of interest could anyone at Stockopedia tell me if they ever thought about putting a "Trending Value" filter among the guru screens. That seems to have been the best strategy tested by O'Shaughnessy in WWOWS, but is not included among the Stockopedia screens. It would be interesting to see how such a screen would have performed in the UK over the last few years.

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HumourMe 9th Aug '18 15 of 22

In reply to post #389664

Just out of interest could anyone at Stockopedia tell me if they ever thought about putting a "Trending Value" filter among the guru screens.

Be similar to this?


Very low drawdown ...

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Fyberspates 10th Aug '18 16 of 22

What a treat to read :)

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finance director 11th Aug '18 17 of 22

Thank you Ben. A well crafted piece that was a treat to read on a quiet Saturday afternoon. A very nice style of writing. I liked the questions you selected and the way they were presented, and of course the replies - even though they were technical at times (...don't mention the Dow Jones Industrial Average).

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vilage_idoit 13th Aug '18 18 of 22

Very good article and well written.

"My proudest thing is that I have not a single documented time when I ever overrode one of our models because of emotion or volatility, and that's hard."

I read another article from James recently.. Perhaps this trade is the reason why he learned to trust the models!



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jonesj 13th Aug '18 19 of 22

In reply to post #389529

Hi Jenny. You don't have time to do your own research, but also a PASSIVE fund using Stockopedia algorithms would by definition also not do it's own research. That's the idea of passive.

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iwright7 14th Aug '18 20 of 22

In reply to post #389514

Just finished reading Invest in the Best, published in 1994. James was a strong advocate of Factor investing, so he was way ahead of his time. He recommended a portfolio combining a mix of value and growth models to smooth out variability. 

Interesting that whilst a value investor at heart, that he also held high regard for the results from the William o’neil Can Slim momentum/growth model which at the time beat every Mutaul fund in the Morningstar database. Can Slim is still doing well in Stocko Guru screens now with a 5 year return of 165%.   Always something new to learn. Ian

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sjw 14th Aug '18 21 of 22

His son's podcast is worth following, too. In fact, he interviewed his father in this one: http://investlikethebest.libsyn.com/podcast/jim-oshaughnessy-premeditated-success-invest-like-the-best-ep29

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sckot 20th Sep '18 22 of 22

Great interview! Oprah's story is hilarious :) If you liked this interview I recommend watching his talk at Google, its publicly available on youtube.

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About Ben Hobson

Ben Hobson

Stockopedia writer, editor, researcher and interviewer!


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