In an interview with MoneyShow.com, Validea CEO John Reese discusses which of his “Guru Strategies” has performed best over the long haul, and some of the key lessons he’s learned in implementing his models, which are based on the approaches of some of history’s greatest investors. “The models still continue to work” years — and even decades — after being developed, Reese says. “I have actually been keeping track of the portfolios since 2003 based upon the original strategies. Eleven out of 12 models have continued to outperform the S&P 500, some have outperformed the S&P 500 by a factor […]
How many stocks should an investor own in order to diversify away stock-specific risk? Some interesting data shows that it may be fewer than you think. The data comes from hedge fund guru Joel Greenblatt’s book, You Can Be A Stock Market Genius, and was highlighted by top value investor Whitney Tilson a few years back (and recently reprinted on The Motley Fool website). According to Greenblatt’s book, the risk-reduction benefits of adding more stocks to your portfolio significantly decreases once you get to about 20 or so stocks. Tilson, citing the data, said that “owning two stocks eliminates 46% of […]
Legendary Vanguard founder Jack Bogle says he’s cautious heading into 2012, and that investors need to take a long-term perspective. “With the economy, I’m cautious,” Bogle recently told the Associated Press (a tip of the cap to NPR for highlighting the interview). “I don’t expect a boom in consumer spending over the next two or three years. People don’t have the wherewithal to spend a lot more, and in today’s world, they don’t have the confidence. Confidence can change overnight, but wherewithal cannot.” “If you’re investing in stocks with idea of a one-year outcome, you should not invest,” Bogle adds. […]
While Jeremy Grantham’s GMO has been gloomy about the outlook on stocks, the firm’s head of asset allocation says there are also good opportunities in the market right now. “We think there is money to be made,” Ben Inker tells The Boston Globe. “There’s plenty of stuff to be worried about. [But] there’s actually a fair number of stocks worth owning. For us, that’s exciting.” Inker tells the Globe that it’s a bad time to own bonds, and say many high-quality stocks are cheap right now. He likes dividend payers and large, stable, profitable firms that do well whether the […]
Could Warren Buffett be on the lookout for more tech stocks? That’s a question that Validea CEO John Reese examines in a recent article for Canada’s Globe and Mail. “Not long ago, that question would have seemed foolish. Warren Buffett avoided investing in technology companies, saying that the nature of their businesses did not allow him to determine which tech companies truly had ‘durable competitive advantages’ over their peers,” Reese writes. “But with Mr. Buffett’s company, Berkshire Hathaway, having scooped up more than $10-billion (U.S.) worth of International Business Machines’ stock over the past few months, it’s now a question […]
Top fund manager Bill Nygren says that the best thing investors can do in 2012 is buy more stocks. “The best idea for 2012 is for investors to increase their equity exposure and decrease bond exposure,” Nygren tells CNBC. “We think stocks are cheap.” He says he thinks it’s a mistake for investors to chase hot bond performance, with many stocks trading at “very, very attractive valuations”. Nygren also says it’s important to think long-term, and not try to time the market in the short term. And he talks about some of his current holdings, like JPMorgan Chase and Intel.
Blackrock’s Dennis Stattman, whose Global Allocation Institutional fund has been one of the better performing funds in its class over the past five and ten years, says he’s keying on companies that are based in developed markets but have exposure to the strong growth in emerging markets. Stattman also tells Bloomberg that he takes a longer-term approach to investing and doesn’t try to time the market in the short term. He says he doesn’t think investors should be focusing too much on any one country or any one currency, and adds that he’s overweight energy stocks and has begun “nibbling” […]
Top mid-cap fund manager Jonathan Simon says he’s adding some risk to his portfolio heading into 2012, and is high on some regional banking stocks. Simon tells CNBC that he is particularly concerned with a company’s free cash flow, and how it uses that cash. “They have to have a very disciplined approach to capital allocation — maybe making acquisitions, paying down debt, paying a dividend or a stock buyback,” he says. “That’s the key.” He says he’s cautiously adding some more economically sensitive stocks to his portfolio, and he mentions some that are on his radar right now, including […]
Barry Ritholtz of The Big Picture blog and FusionIQ says investors need to know who they are up against when managing their portfolios — and says that to find perhaps the greatest enemy, you don’t have to look far. Writing a guest piece for John Mauldin’s “Thoughts from the Frontline” newsletter, Ritholtz says the first two main enemies investors face are “Mr. Market” himself (who often stands by impartially as cheap stocks get cheaper or pricey stocks get more overvalued) and other investors (primarily professional investors, who have an array of staff and tools on their side that individual investors […]
Wharton professor and Stocks for the Long Run author Jeremy Siegel says stocks are as cheap as they’ve been since the early 1950s, when the interest-rate climate is taken into consideration. Siegel tells CNBC he doesn’t think that Europe’s debt crisis will lead to a Lehman Brothers-type event. He says he “loves dividend-paying stocks”, and is buying those types of stocks across the globe.
The stock market may either be significantly overvalued, or it may be selling near historically low levels — it all depends on whom you’re talking to and what valuation metric they’re using. And in his latest column for Canada’s Globe and Mail, Validea CEO John Reese says that means investors shouldn’t rely on one single measure of value when making decisions. “I believe strongly in using cold, hard data when investing,” Reese writes. “The problem is that any single piece of data can lie. That’s why it’s so important to consider a variety of information. You might say that, when […]
Templeton Asset Management’s Mark Mobius says the European debt crisis isn’t as bad as many believe, and he expects it to be resolved in mid-2012. “The European crisis isn’t as deep and terrible as people think,” Mobius told the Brazilian newspaper Valor Economico, according to CNBC.com. “Nations there are in a process of negotiations and that takes time.” Mobius added that the size of derivatives contracts tied to European government debt is a real risk for investors, however. He also says he thinks that the weak performance of emerging market stocks in 2011 is setting up a recovery for them […]
Wells Capital’s Jim Paulsen says that investors can feel free to worry about Europe’s debt crisis, but that it shouldn’t stop them from owning stocks. Paulsen tells Yahoo! Finance’s Breakout that the European fears are overshadowing a “pretty convincing reacceleration story in the U.S. economy.” He thinks that if Europe’s economy flat-lines, it would be a drag on the global economic recovery, but it wouldn’t be a “game-ender” for the U.S. and the rest of the world — much as when Japan, which was then the world’s second-largest economy, went into a depression in the early 1990s but didn’t drag […]
Top fund manager David Winters says that now is not the time to be fleeing stocks, and that he feels “like a kid in a candy store” because of the abundance of values in the market right now. Winters tells WealthTrack’s Consuelo Mack that he thinks people “are gonna make a lot of dough” in stocks if they can find businesses that capitalize on shifting global trends. Both he and investment manager Chris Davis discuss how investors’ short-sightedness leads to self-destructive investing behavior — namely buying high and selling low. “Lower prices increase future returns. It’s as simple as that,” […]
While Japanese stocks have for years has yielded little for investors, some top value investors are keen on the country. In a column for SmartMoney, Brett Arends writes that Japan’s “stock market is cheap. Possibly very cheap — at a time when nearly everything else looks pricey. The Nikkei 225, Japan’s major stock market index, trades at just 10 times forecast earnings. The dividend yield is up to 2.3 percent — a hefty amount in a country with zero inflation. … Japanese equities today trade for half of annual revenues, according to FactSet. (The figure for the U.S.: 1.2 times […]