Why Corporate Cash Isn’t Helping Investors

Investors have been hearing for some time now about the hordes of cash being stashed on U.S. corporate balance sheets. In a recent column, The Wall Street Journal’s Jason Zweig explains a big part of why the cash stockpiles are so high — and why that cash might not be benefiting investors anytime soon. “U.S. companies are taxed at up to 35% when they bring home the earnings generated through the operations of their overseas subsidiaries,” Zweig writes. “They get a credit for any taxes paid to foreign governments — but, since the corporate-tax rate in the U.S. is one […]

Dreman Positions Portfolio for Inflation

David Dreman says stocks are generally cheap, but he’s still expecting that the U.S. will be jolted by a “really major dose of inflation” at some point down the line. “I’m not talking about at present — this could be two, three years out,” Dreman tells Forbes.com. “But I think we’re going to have a really major dose of inflation. Will it get as bad as it was from 1977 to 1981?  That horrendous period of inflation saw prices go up, on average, something like 9% a year? I don’t think we’ll get up there. But I think we might […]

Shiller Sees “Substantial Risk” in Housing

Yale Economist Robert Shiller says he’s more worried about the housing market than colleague Karl Case. Shiller, who told reporters that he sees a “substantial” chance that real home prices will drop another 15% to 25%, discusses his outlook on Bloomberg. Shiller also talks about the broader economy, and says that the turmoil in the Middle East adds to the chance of a double-dip recession.

Yacktman Still Finding Value

While the market is up close to 100% over its March 2009 low, top value manager Donald Yacktman says he’s still finding bargains. “We have bought Apollo Group — a private universities company — and H&R Block, which does tax preparation work in the US,” Yacktman tells the Financial News. “While the market is a lot higher than it was two years ago, it is unique to see so many large profitable companies selling as cheaply as they are.” Yacktman’s new purchases have something in common: “They were all cheap,” Yacktman explained, adding, “We very, very rarely sell on a […]

Case Talks Housing Market

Karl Case, co-creator of the S&P/Case-Shiller housing indices, talks about the recent housing data with Bloomberg. Case says it now appears the upturn in the housing market last year was a result of government subsidies. He discusses the factors impacting the market, and says that, while the market has been struggling, there are signs that sentiment is improving.

Berkowitz Talks Financials, Europe, and His Mistakes

In a lengthy joint interview with Advisor Perspectives and GuruFocus.com, Morningstar Fund Manager of the Decade Bruce Berkowitz offers his take on the market and several of his main holdings. Berkowitz, who went heavy into financial stocks after the financial crisis, says he remains confident in his financial holdings. “Loans created and underwritten since 2009, or even at the very tail end of 2008, are good loans, well documented, with better credit quality, better yields, and better fees,” he explains. “You have this digestive period of bad loans, and at the same time you have the ingestion of good loans. […]

Romick Keys on Large Caps, Cautiously

Top fund manager Steven Romick says large-cap stocks are offering better values than other options, and is positioning his portfolio to weather a pullback. “Large-cap companies are a much greater value, certainly than bonds,” Romick tells the Los Angeles Times, The Times says Romick has about 60% of his portfolio in stocks, “dominated by big names such as Wal-Mart, Occidental Petroleum Corp., Amgen Inc. and PetSmart Inc.” He has 23% of the fund in cash, with the smallest portion in bonds. Romick tells The Wall Street Journal, meanwhile, that the economic recovery is real, but could come with repercussions. “The […]

Top Fund Manager: Rethink International Investing

Mark Headley, who produced a strong track record with the Matthews Pacific Tiger Fund, says many American investors don’t have a good approach to international investing. Headley tells WealthTrack’s Consuelo Mack that while investors tend to take a solid long-term approach when it comes to U.S. stocks, they take a much more “flavor-of-the-month” approach to international stocks, jumping on whatever happens to be hot. Headley says now is a time to be cautious on Asia, explaining that he sees no need for investors to run into Asian stocks, but no reason to run away from them, either. Headley also talks […]

Oberweis Looks to Software Firms

Newsletter guru Jim Oberweis says he’s finding value in software firms that have competitive “moats”. In his latest Forbes column, Oberweis says companies with extremely predictable earnings and a high growth rate command higher price/earnings ratios from investors. He uses three criteria to assess a company’s future earnings potential: Are revenues recurring? Does the company have a sustainable competitive advantage? Will profit margins fatten as sales increase? “Software-as-a-service” companies are good examples of firms with strong recurring revenues, Oberweis says.

Food Price Surges Not Yet Leading to Core Inflation, Says Sonders

While food and other commodity prices have been rising sharply in recent months, Charles Schwab Chief Investment Strategist Liz Ann Sonders says the threat of that leading to generalized inflation remains low for now. “Rising food and energy prices do have an economic impact as they act as a tax on the consumer, which drains discretionary spending power,” Sonders writes in her latest commentary on Schwab’s site. “But as long as wage and unit labor cost growth is in check, there is unlikely to be widespread ability to pass along rising input costs to the end consumer. Rising commodity prices […]

Doll Says Signs Point Toward Buying Opportunity

With the economy in “reasonable shape” and unemployment falling, Blackrock’s Bob Doll says now may be the time for those still waiting on the sidelines to get back into stocks. “We’ve escaped from the brink,’’ Doll said at a recent Fort Lauterdale conference, the Miami Herald reports. “In our view, for now, the economy is in reasonable shape. … Historically, the best time to buy common stocks is when the unemployment rate is high and falling.” Doll also points to the Presidential Election Year Cycle as a reason for bullishness — the third year of the cycle, which we are […]

Rodriguez: No Time to Lose on Fiscal Reforms

Top fund manager Bob Rodriguez of  First Pacific Advisors says the U.S. needs to get is financial house in order — and soon. “We need significant fundamental reductions in expenditures at the Federal level this year because they’re not going to happen in 2012, which is an election year,” Rodriguez, back from his year-long sabbatical, tells Advisor One. “If not, by 2013 we’ll be sitting on more than $17 trillion in debt. Therefore, the window to start reform is only about seven months.” Rodriguez says his position on equities involves a “high degree of defensiveness”. The energy sector remains his […]

Rogers: “Mountain” of Corporate Cash to Help Market

In his latest Forbes column, John W. Rogers Jr. says that while pessimism remains in the market, he’s generally upbeat. “I am optimistic about the economy and the stock market in 2011 — although my expectations are more tempered than before,” Rogers writes. “The management teams I talk to every day have real conviction that their businesses have stabilized and are growing. Corporations are sitting on the largest mountain of cash ever, and eventually they will have to put it to work. They can reinvest in their businesses, make acquisitions, pay down or restructure debt, buy back shares or pay […]