In his latest column for Barron’s, Mark Hulbert warns that “a careful analysis of the bond market leads to the same conclusion as six months ago: Long-term bets in the U.S. Treasury market would certainly appear to have a low probability of success.” According to Hulbert, the current 30-year Treasury yield (4.3%) isn’t nearly high enough to compensate investors for tying up their money for 30 years. Based on Yale economist Robert Shiller’s data, long-term Treasuries have exceeded inflation by an average of 2.4 percentage points per year over the last 140 or so years, a healthy outperformance, Hulbert notes. […]
In an interview with ABC, Warren Buffett discusses the state of the economy, where things are headed — and his thoughts on whether a second stimulus package is needed. Buffett also says which market index he follows most closely to get an idea of current conditions, and it’s one that might surprise you.
Columnist and money manager John Dorfman, who called the recent upturn in the market, says he believes the rally is sustainable until at least early 2010, in large part because the economy is on the mend. “To be sure, not all signs point to the rally continuing,” Dorfman writes in the Asbury Park Press. “On balance though, I think the evidence favors continued gains, pockmarked with occasional rude interruptions.” Dorfman points to both the Conference Board’s index of leading economic indicators, which rose in both April and May, and Ned Davis Research’s own leading indicators, all 12 of which are […]
Several strategists who produced big returns during the downturn, including George Soros and John Paulson, are seeing tough times ahead for the economy — but opportunities in the market right now. According to The Wall Street Journal, Soros is bullish on stocks in Brazil, China, and India. Corporate profits will likely not be as high as they were during the “super bubble”, but China will partially replace the struggling U.S. consumer, he says. “China is the major beneficiary of the collapse of the financial system,” Soros says. “For them it was an external shock. Because China is in a position […]
Newsletter guru and money manager Jim Oberweis says the strong performance of technology stocks this year isn’t a flash in the pan, but instead the start of a longer-term trend. “Part of the reason for the downfall of the tech sector was that from 1999 to 2000, stocks were valued so high that investors had priced in perfection, which is something that rarely occurs,” Oberweis tells AOL’s Daily Finance. “Over that period, we saw tech stocks lag even though company sales were growing just fine. [Then] over the last two years, corporate investment has been curtailed and after the financial […]
In their “Discovering Value” column in Kiplinger’s, Whitney Tilson and John Heins say they think the strong recent market rebound is overdone, because we’re not out of the financial sector woods yet. “We think the financial system has many years of significantly higher than normal losses to work through,” the duo writes. “As the greatest bubble in history deflates, it will continue to affect the economy, corporate earnings and the stock market.”
Longtime bank analyst Richard Bove tells Forbes Intelligent Investing that the banking system is actually better than analysts or the media are indicating. “What is not being seen is the fact that banking cash flows are staggeringly positive, that banking equity is at record levels, that reserves are ultimately going to come down, driving banking profits substantially higher,” he says. “Now, it may take two, three, four quarters before we start to see that. But that’s the positive that’s being missed.” Bove also covers a wide range of other topics in the interview, including how government intervention might affect the […]
In a wide-ranging interview, author and hedge fund guru Joel Greenblatt has responded to a myriad of reader questions on GuruFocus.com, offering his thoughts on portfolio strategy, macroeconomic analysis, and whether the potential popularity of his new website, FormulaTrading.com, will impact the success of his “Magic Formula”. Greenblatt’s formula, detailed in his Little Book that Beats the Market, includes only two variables: return on capital and earnings yield. Despite its simplicity, it has a lengthy track record of beating the market by a wide margin, and our Validea.com Greenblatt-inspired portfolio is doing particularly well in 2009 (see below for its […]
This month marks the 25th anniversary of Kenneth Fisher’s Forbes magazine column, and in his latest piece Fisher offers his thoughts on what has changed — and what hasn’t — in terms of his portfolio management advice. Among the principles Fisher says he still espouses: Avoid overpaying; Don’t just rely on the price/earnings ratio as a valuation metric; also look at the price/sales and price/book ratios; Compare companies both to the broader market and to their peers; Buy quality cheaply; Learn from your mistakes;
Fortune is running its annual “Best Advice I Ever Got” issue, with respondents ranging from golfer Tiger Woods to Google CEO Eric Schmidt to former Secretary of State and Ret. Gen. Colin Powell. It’s an interesting feature that often offers timeless, valuable wisdom. In the video below, Warren Buffett shares the best piece of advice he’s ever received, something he picked up 60 years ago from the late, great Benjamin Graham.
Marc Faber, the money manager and Gloom Boom & Doom Report editor who has an excellent track record of market calls, sees severe inflation coming, and says investors should be putting their money in gold and equities — not bonds and cash. Faber says he thinks we most likely saw the market bottom on March 9, in part because any major drops in the market will be met with more government stimulus. But he also says he has “zero” confidence in the government’s ability to reduce deficits and prevent big-time inflation.
Every other issue of The Validea Hot List newsletter examines in detail one of John Reese’s computerized Guru Strategies. This week’s issue looks at the Benjamin Graham-inspired Value Investor strategy, which is up more than 26% this year and has averaged annual returns of more than 16% since its July 2003 inception (vs. an average annual loss of 1.4% for the S&P 500). Below is an excerpt from the newsletter along with several top-scoring stock ideas based on the Graham investment strategy. Taken from the June 26, 2009 issue of The Validea Hot List Guru Spotlight: Benjamin Graham Today, many […]
A lot of investors and strategists are spending a lot of time these days trying to envision what the investment landscape will look like when the economy and market settle down. But growth stock guru William O’Neil, the founder of Investor’s Business Daily, says talk of a new era of investing is off the mark. “Actually, I think the market has reinforced almost every single thing we had in the book [his How to Make Money in Stocks, first published in 1988] years ago from the very first edition,” O’Neil tells MarketWatch’s Chuck Jaffe. “The market is driven by the […]
In his latest market commentary, Jim O’Shaughnessy writes that the market is seeing a major flip-flop in leadership similar to what often occurs at the end of recessions, and says that, despite the recent run-up, it’s still a good time to buy stocks. “While many of the once-in-a-lifetime bargains are gone, stocks still look attractively valued,” O’Shaughnessy writes on his asset management Web site. He cites the normalized price/earnings ratio of the S&P 500 (a measure that uses five years worth of earnings — 18 quarters of historical data plus two forecasted quarters) as evidence. When normalized P/Es are low, […]
A lot of strategists and investors have been talking about what the “new normal” will look like as the economy recovers from the recent financial crisis and unwinds the excess leverage that many companies and individuals had been using. Mike Thompson, managing director of Standard & Poor’s, offers some interesting thoughts on that new normal in this interview with CNBC. According to Thompson, companies had spent two decades building more leverage into their business models, and earnings increased along with that upping of leverage. Now, with a massive deleveraging going on, he says the big question is what kind of […]