Charles Schwab’s Liz Ann Sonders — whose calls on the start and end of the “Great Recession” proved quite accurate — warns against hyperfocusing on Greece’s debt problems. “Even the broader European focus has largely seemed to overshadow developments in the United States, which remains the world’s largest economy,” Sonders writes along with Brad Sorensen and Michelle Gibley in commentary on Schwab’s web site. She says that industrial and manufacturing data has been encouraging in the U.S. recently, and that third-quarter earnings reports have overall been solid. “After factoring in the latest results and guidance, valuations are attractive, especially relative […]
In his latest article for Canada’s Globe and Mail, Validea CEO John Reese says that, while many of history’s greatest investors have been value-focused strategists, momentum can also be a critical part of successful approaches. “In fact, looking for stocks with good price momentum can be a big boost to returns — particularly during certain market conditions,” Reese writes. “James O’Shaughnessy, one of the gurus upon whose writings I base my Guru Strategies, has researched how the market’s affection for momentum varies over time. … His firm’s research has shown that momentum-type strategies tend to fare well in the second […]
Kenneth Fisher says the fact that GDP growth nearly doubled in the U.S.’s third quarter is far from the only positive economic sign out there — even though the media continues to focus on the negative. In a post on Forbes.com, Fisher points to a number of economic figures, including improving manufacturing numbers in the U.S.; strong recent retail sales figures; strong manufacturing numbers in Europe; and continued strong growth from China last quarter that indicates the country won’t have the “hard landing” many fear. Fisher says that there are negatives, too. “But even in periods of the most robust […]
Hedge fund guru Barton Biggs, who had been reducing equity exposure late in the summer months, has recently reversed course and has continued to up his exposure since the announcement of the new plan to stem Europe’s debt crisis. “This morning, all of the wise men of Europe and the economists are very negative about this European deal that was worked out last week,” Biggs tells Bloomberg. “The general feeling is that the right thing to do is to cut back on risk and that it is going to be a flop, and that all they did was kick the […]
In a rare joint interview, PIMCO’s Mohamed El-Erian and Bill Gross say that the US will continue to experience slow growth because of structural problems with the economy, and that the public sector must step in and spend money in areas in which the private sector isn’t willing to do so. Gross tells WealthTrack’s Consuelo Mack that he sees growth of 0% to 1% for the U.S. in the next 6 to 12 months, which means good investment opportunities will be few and far between. El-Erian, meanwhile, offers his take on the European debt crisis, and why Europe must have […]
On the Wall Street Journal’s “Total Return” blog, Jason Zweig highlights research that indicates human beings have an “optimism bias” — that is, we learn more from our successes than we do from our failures. And that, he says, has major implications for investors. Zweig says a new study, performed by a team of neuroscientists in London and Berlin found that “in short, humans don’t learn equally well from upside and downside mistakes.” Instead, “we pay more attention when the future turns out to be better than we expected.” “If you bought Apple at $60 a share thinking maybe it would […]
Top-performing fund manager Steven Romick, who often targets smaller stocks, is finding that the current market environment has larger stocks looking attractive because of their valuations. “We think owning good, large-cap, global, and growing businesses are a good place to invest today,” Romick tells Morningstar. “Those of which cannot adequately reinvest their capital should pay higher dividends. Wal-Mart (WMT) is an example of that. Its dividend growth far outstrips its earnings growth, and we expect that to continue into the future.” Bonds, however, are another story. “We refuse to own long-dated bonds of any ilk, particularly U.S. Treasuries,” Romick says. […]
Top value investor Charles de Vaulx is high on Japanese stocks and stocks of European companies with global exposure. De Vaulx tells Bloomberg that there are a lot of strong European firms that are “not that Euro-centric”. He also discusses why he’s putting a lot of his money into France, and why he thinks the European debt crisis is at its core a banking problem rather than a sovereign problem.
In an interview with CNBC, Validea CEO John Reese talks about his Warren Buffett-inspired strategy, and some stocks it’s high on right now. Reese explains how his model uses Buffett-based criteria to pick stocks, including earnings persistence — it looks for firms that have a 10-year history of consistently upping annual earnings. He also talks about some of the other criteria his model uses, and some stocks it’s keen on right now, including Coca-Cola and Stryker Corporation.
Contrary to popular belief, Mark Hulbert says the notion that stock market returns are strong in the years of presidential elections is wrong. In a recent MarketWatch column, Hulbert comes to that conclusion after examining the Presidential Election Year Cycle. “The implication of this theory is that, immediately after assuming office, presidents swallow whatever economic medicine is necessary, in order to set the stage for the recovery and economic good times that, come the next election, will convince voters with only short-term memories that happy days are here to stay,” he writes. That, he says, would mean that stock returns […]
Whitney Tilson says the U.S. economy is in better shape than most people think, and he is finding big value in a number of prominent companies’ shares. “The U.S. has already gone through and emerged from the subprime debt crisis,” Tilson tells MarketWatch. “There’s still an overhang and it has to work its way through,” he adds, but he says the U.S. is further along in resolving its problems than many other parts of the world. Tilson is finding opportunities in several areas of the market, including bank stocks like Goldman Sachs, Citigroup, and JP Morgan Chase and tech stocks […]
Michael van Biema, whose value-focused firm’s funds garnered several InvestHedge awards in 2010, says the Asian markets are offering particularly good opportunities for value investors. “They’re getting really, really cheap again, which of course, we like,” van Biema tells Forbes.com in reference to Asian stocks. “And you get a huge tail wind of growth. The best environment for a value investor is a place where companies get highly mispriced, so that you can buy firms that are undervalued in an overall economic environment where there’s a lot of growth. We see that in Asia. We see that in Latin America […]
Barry Ritholtz says that America needs to undertake a major infrastructure repair and rebuilding program, which would stimulate the economy and provide a number of other benefits. “We have allowed the transportation grid to get old and out of shape,” Ritholtz writes in a Washington Post op-ed. “Our interstate highway system is in disrepair; our bridges are rusting away, with some collapsing now and then. The electrical grid is a patchwork of jury-rigged fixes, vulnerable to blackouts and foreign cyberattacks. The cell system of the United States is a laughingstock versus Asia’s or Europe’s coverage. There are very few things […]
While investors often rush into larger blue-chip stocks and Treasury bonds when market fears are high, newsletter guru Jim Oberweis says that’s often the wrong move to make. “In my experience, some of the best gains on a rebound are seen in high-growth stocks that are usually too expensive to pass our valuation requirements,” Oberweis writes in his latest Forbes column. “These leading companies have exceptional sales and earnings growth, solid market positions with high barriers to entry and strong operating margins with the potential to expand. Everybody loves these stocks, and in normal times such companies trade at high […]
Author and Wharton Professor Jeremy Siegel says that the European Central Bank should provide the liquidity needed to help the debt crisis in Europe, and that such a plan doesn’t need to involve a full bailout of Greece. Siegel says it could involve a multi-trillion-euro “backstop” of debt guarantees, and says that such a move could spur European stocks to jump 15% to 20% in a single day. Siegel also says that because consumers are deleveraging, the U.S. needs to wait a bit before it starts austerity programs designed to clamp down on public sector leverage, as public and private […]