The Diversification Debate

In addition to the question of how many stocks they should own, another similar question many investors ask is how many funds or asset classes they should own. In a recent Financial Times column, David Stevenson offers some interesting data on the topic, as well as some comments from top strategists. The “proper answer” to those questions, Stevenson says, is to follow the modern portfolio theory developed by Harry Markowitz, which “suggests that you look at risks and returns, alongside volatility, and then compute something called ‘an efficient frontier’ of different assets, allocated sensibly, in an optimised fashion.” But, he […]

Paulson on Financial Buying Binge

After profiting hugely from shorting financial stocks last year as the sector tanked, hedge fund guru John Paulson has been buying up beaten-down financials this summer. Paulson has bought a stake of about 2% in Citigroup, the New York Post reports, citing sources. “One source said that Paulson sees Citi’s shares trading closer to its book value of $5 to $7 a share, and that he has been scooping up shares in the bank over the past several weeks,” the Post stated, adding that a Paulson spokesperson declined to comment. Earlier this month, The Wall Street Journal reported that Paulson […]

Beating the Timing Temptation

As Liz Ann Sonders notes in the posting below, a lot of investors are now wondering whether it’s too late to jump into the market, or, for those who have been in the market during the rally, whether it’s time to cash out. As Sonders says, such all or nothing decisions are very dangerous — and The Stingy Investor’s Norm Rothery has laid out some excellent reasons why. In an article titled “Tempting Temptation” (originally published earlier this summer in Canadian MoneySaver but still quite relevant now), Rothery touches on a number of studies and data sets on market timing […]

Sonders Says We’re in “Coiled Spring” Recovery, Warns Against All or Nothing Bets

Charles Schwab Chief Investment Strategist Liz Ann Sonders tells Fox Business Network that she thinks we’re in the early stages of a “coiled spring” recovery, and says that too many investors are trying to make all-or-nothing calls as they ponder whether to get back into the market right now. Sonders, who correctly called the start of the recession, says there’s a risk that what we’re seeing now is a “sugar high”. But, she adds, “I think that the better case right now is that there’s going to be a little more sustainability thanks to corporate profitability than a lot of […]

Guru Strategy Rating Changes: Dish Network, Under Armour Rising

Each week, I take a look at which stocks my Validea.com Guru Strategy computer models have newfound interest in, and which they have soured on. Here’s a look at some of the stocks that my strategies have upgraded or downgraded today. Among the bigger names on the move: athletic apparel maker Under Armour and gaming company Electronic Arts.