Hulbert: Small-Cap Value Stocks May Be Ripe for Impressive Gains

Small-cap value stocks are risky but they also historically produce jaw-dropping gains at the begining of bull markets, Mark Hulbert writes in the New York Times. Referencing academic research performed by professors Eugene Fama (University of Chicago) and Kenneth French (Dartmouth), Hulbert writes that small-cap value stocks (stocks with the lowest price/book ratios) “gained 17.1 percent, on average, in the first three months following the 13 market bottoms since 1969, equivalent to an annualized rate of 88 percent.” We’ve started to see some signs of improvement in Validea’s value-based models as well, with our Piotroski, Dreman, Neff, and Graham models […]

Schwab CIO: Bounce Will Be Big — Don’t Miss It

Jeff Mortimer, chief investment officer of Charles Schwab’s mutual fund division, tells Fortune that the coming turnaround in the stock market will be a big one, and that investors should be building their positions now. Mortimer says that 47 percent of bull market gains usually come in the first 12 months, before many investors have summoned the courage to dive back into the market. Be aware that he doesn’t think we’re out of the woods yet — his estimate is that the “rough sledding” could continue for three to nine months — but his point is that the market will […]

Is Buffett Market Timing?

Warren Buffett stated in his recent New York Times Op-Ed that he had begun buying U.S. stocks for his personal portfolio, in which he previously held only Treasuries. Does that make him a market timer of sorts? Morningstar’s John Coumarianos offers some interesting thoughts on that question, focusing his answer on the difference between value investors, like Buffett, and market timers or traders. Value investors, like Mr. Buffett and others, look at investing as buying a piece of business, Coumarianos notes. These investors “think like a business owner and aim to purchase ownership units in businesses for less than those […]

Every Stock Fund In Red for 2008

A sign of how tough the market has been this year: Through November 24, every long stock fund tracked by Morningstar — that’s right, every single long stock fund — had lost ground in 2008. That includes 10,085 U.S. funds (which, on average, had lost 44.47 percent) and 2,912 international funds (which had lost an average of 51.01 percent). The best U.S. performer: Embarcadero Alternative Strategies, which was down 1.55 percent. That was far better than the best international performer, Prasad Growth, which was down “only” 11.21 percent. (Click here for full list of fund returns.) There were, of course, […]

Stocks “Reasonably Cheap” for First Time Since 1980s, Says Grantham

Jeremy Grantham, one of the few who saw the current credit crisis coming, provides some thoughtful comments on the crisis, asset bubbles, the stock market’s current valuation and how individual investors might consider looking at the equity markets right now. Speaking with Consuelo Mack on WealthTrack, Grantham (co-founder and chairman of GMO LLC), who has been bearish on the stock market for some time, says that for the first time in over two decades stocks look “reasonably cheap”. He also believes that going forward investors will favor large, blue chip companies over riskier types of stocks. But, while Grantham thinks […]