Oberweis: Look to Niche-Oriented Small-Caps

While still somewhat wary of the economy, Jim Oberweis says that you can find plays in the technology and consumer discretionary sectors — “the pillars of a growth portfolio” — if you know where to look. Oberweis writes in his latest Forbes.com column that retailers such as restaurants, auto suppliers, consumer semiconductor makers, and advertising firms have been posting big year-over-year growth numbers, but that part of that is due to easy comparisons to the previous year, when the financial crisis was at its peak. “Such easy comps will come to a close by the end of this year, and […]

Using Free Cash Flow Yield, Lynch- and Berkowitz-Style

In his latest Forbes.com article, Validea CEO John Reese takes a look at stocks that might interest two of history’s top investors, Peter Lynch and Bruce Berkowitz. Reese notes that Berkowitz — Morningstar’s domestic fund manager of the decade — focuses his analysis on “free cash flow yield”. Free cash flow is essentially the cash that a firm can use to grow its business, pay dividends or pay off debt — all of which are critical factors for investors, Reese notes. Free cash flow yield is thus free cash per share divided by share price. Berkowitz has said he likes […]

Arnott Sees “Another Tough Slog” in Coming Decade

While many are predicting that the coming decade will feature some strong bounce-back gains for stocks after a poor 2000s, Rob Arnott of Research Affiliates says not to count on it. In a piece written with John West for IndexUniverse.com, Arnott says that the standard market-cap-weighted 60/40 stocks/bonds allocation “is likely to disappoint. Again. Net of inflation, it could even be worse than the past 10 years.” Arnott and West, who last month showed how a portfolio diversified over 16 different asset classes could’ve produced returns of more than 8% in the last decade, say alternative asset classes like emerging […]

Ritholtz: No Signs Rally Is Ending

Barry Ritholtz of Fusion IQ and The Big Picture blog remains bullish on stocks, saying that he sees no indication that the rally is in its final stages. “As long as the fed is going to make money free … it’s hard to find a short, other than some company restating earnings,” Ritholtz tells Yahoo! TechTicker. “Nothing [in the market internals] is saying, ‘Hey it’s all over but the crying.’” Ritholtz, who saw both the credit crisis and the rally coming, says the “easy” trade now would be to move to cash amid fears that the rally is petering out […]

Shiller: Confidence Pushing Housing Prices Higher, But Hurdles Remain

Yale Economist Robert Shiller, one of the creators of the S&P/Case-Shiller home-price index (which new data shows rose for the seventh straight month in December), says buyer confidence is behind the recent rebound in home prices across the U.S. Shiller tells Bloomberg that he thinks a lot of new buyers are jumping into the housing market because they think the recession has ended, and want to “get in first”. Shiller also discusses what issues could derail the housing recovery.

Guru Strategy Rating Changes: GE, Eli Lilly on the Rise

Each week, we take a look at which stocks John Reese’s 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 John’s strategies have upgraded or downgraded today. Among the bigger names: General Electric and Eli Lilly.

O’Shaughnessy: Stocks The Place To Be Over Next Several Years

Author and money manager James O’Shaughnessy says that the Federal Reserve’s recent increase of the Discount Rate was “not a big deal”, and that he’s still very bullish on stocks over the longer term. O’Shaughnessy tells CNBC that he thinks factors are in place that will make stocks the “asset class of the choice” over the next three to five years.

A Different Take on Valuations

Liz Ann Sonders, Charles Schwab’s chief investment strategist, says in her latest market commentary that the recent downturn helped temper some of the investor optimism that was becoming “troublesome”, and that — despite the big gains stocks have made in the past year — stock valuations continue to look attractive. Sonders’ favorite valuation gauge is the “normalized” price/earnings ratio, which uses four-and-a-half years of historical earnings and two quarters of projected earnings. She also uses the average of reported and operating earnings. Using that approach, she says, “we’re right at the long-term median valuation of just more than 17 times […]

Bogle: Keep It Simple

In an interview with Texas’ The Statesman, Vanguard’s John Bogle says the key to successful investing is keeping things simple, and not allowing short-term performance to impact your decisions. “[The biggest problem in investing] is that people are focused on short-term performance,” Bogle tells Scott Burns. He says that there will always be some funds that beat the market in the short term, but that “the willingness to project the immediate past into the future” is what hurts many investors. Bogle says many investors fail to realize that investment returns are made up of two major parts: fundamental return, which […]

Gross: Don’t Sweat the Discount Rate Hike

Does the Federal Reserve’s discount rate hike mean increases for other key interest rates are coming? Not according to PIMCO bond guru Bill Gross. Gross tells CNBC that he thinks the Fed won’t move the Federal Funds rate for at least six more months. He thinks the yield curve will continue to steepen, not shrink, as some fear, and that continued low rates are a positive for equities.

Lynch: This Is “Extraordinary Period” for Investing

In an exclusive interview with Israel’s Globes, mutual fund legend Peter Lynch says he thinks the past ten years have been an anomaly for the stock market, and that we are currently in an “extraordinary period” for stock investing. “The significance of the lost decade is very simple,” Lynch said, referencing the term some have used to describe stocks’ performance over the past ten years. “Companies earn more than they did ten years ago, and they are traded at lower prices than they were then. There’s an investment opportunity here. There are companies on the market with good balance sheets […]

Stiglitz: More Stimulus Likely Needed to Avert Double-Dip

Nobel laureate and Columbia economist Joseph Stiglitz continues to believe that the U.S. needs another stimulus package, or else it will risk having high unemployment “through the middle of the decade” and a weak economy for the next several years. While much of the first stimulus funding has yet to be spent, he tells Yahoo! TechTicker that he sees a real risk of a double-dip recession without a second package that focuses on helping with state revenue shortfalls and job creation.

Herro Looking to the Market’s Unloved

Top fund manager David Herro is high on a number of unloved areas of the market — including Japanese stocks, luxury good makers, and much-maligned automaker Toyota. “One of the secrets, I think, to successful long-term investing is to really look for where the true values are,” Herro, Morningstar’s domestic fund manager of the decade, tells Bloomberg. “And where the true values are usually is where the momentum is not.” Herro also explains why he has underweighted the popular BRIC nations.

Guru Strategy Rating Changes: Energy Firms on the Move

Each week, we take a look at which stocks John Reese’s 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 John’s strategies have upgraded or downgraded today. Among the bigger names are several energy companies.