Reese: Five Hot Stocks With Staying Power

In his latest column for Forbes.com, Validea CEO John Reese takes a look at what stocks have actually been among the biggest gainers while the market has plunged in the past couple months. These stocks can be awfully tempting for investors, who are trying to latch on to any sort of positive market vibes amid this difficult climate. But, Reese cautions, buyers should beware: “Blindly following hot stocks can get you in trouble,” he says, “and in this environment, it can spell disaster for your portfolio. Simply going with stocks that have been hot during an incredibly anomalous climate is […]

“Dr. Doom”: Things Will Get Worse — But No “Armageddon”

New York University Professor Nouriel Roubini — who has been dubbed “Dr. Doom because of the predictions of financial woes he’s (often correctly) made in recent years — tells Yahoo’s Tech Ticker that he sees another 20 to 30 percent of downside risk for stocks, but adds that he’s not in the “financial Armageddon camp”. Roubini, who is also the chairman of the RGE Monitor research group, sees a severe recession through 2009, but doesn’t think we’ll see another Great Depression, or a repeat of the decade-plus deflationary recession that has plagued Japan. Want proof that he sees a good […]

PIMCO Co-CEO Calls for “New Thinking”

PIMCO’s Mohamed El-Erian says that “Only New Thinking Will Save the Global Economy”. El-Erian believes that the situation will get worse before it gets better, saying that we are moving toward a “different destination” and one that results in “more market accidents, disorderly sectoral realignments and additional shifts in policy.” He goes on to say that “we are also in the midst of a prolonged increase in precautionary behavior among entities that have suffered massive wealth destruction and face a multi-year clean-up of assets and businesses. Without further adjustments, there will be an aggravation of the negative feedback loops that […]

Legg Mason Managers: Depression Unlikely, But Concerns Remain

Top managers from Legg Mason, including Chuck Royce, Hersh Cohen and Isaac Souede, think that stocks are priced for a depression but that a depression is unlikely (Souede thinks there is a 20% chance of a global depression). At Legg Mason’s year-end investment briefing, the managers said “the stock markets won’t rebound until the global credit crisis is fixed.” Royce, Legg’s ace small cap manager, “hopes to start seeing ‘signs of spring’ in the next six to nine months.” Cohen went on to say that he worries that many investors who have lost money in this market may not come […]

Why Buy & Hold Isn’t Dead

Validea CEO John Reese today writes for MSN’s Strategy Lab that those proclaiming the death of buy-and-hold investing are premature in their claims — very premature. Buy-and-hold has a two-century-plus track record of success, Reese says; for market-timers to claim that the approach is “dead” after one very bad year or so just doesn’t make sense — especially now, before market-timers have faced their toughest challenge. “If the riskiest part of market-timing involves missing the turnaround [because you are late jumping back in the market] — and we haven’t yet reached the turnaround — how can market-timers now be claiming […]

Cramer Calls The Dow Bottom

RealMoney and CNBC’s Jim Cramer writes today on TheStreet.com that he believes the Dow Jones Industrial bottomed about two weeks ago when it hit the 7350 range during intraday trading. Going stock-by-stock through the Dow, Cramer — who about two-and-half weeks ago said he was finding few, if any, stocks to buy — says “it would be very hard to drop more than 1,000 points. Very hard, especially given the newfound view from many people that ‘the bad news is in.’” Cramer says that he can’t see many of the Dow stocks hitting the lows they hit a couple weeks […]

Looking for The Bottom? Legg Mason’s Miller Says We’ve Hit It

Legg Mason fund manager Bill Miller — who once beat the S&P 500 for a remarkable 15 straight years before hitting an ugly patch over the past couple years — said Wednesday that “it looks as if the bottom has been made” in U.S. stocks, Reuters reports. Miller, speaking at Legg Mason’s annual luncheon for media, said that all long-term investors believe that stocks are now cheap, but he also said credit markets must regain health before the market can rally. Miller also said the Federal Reserve should buy stocks and junk bonds to help the U.S. avoid a deeper […]

Grantham: Economy Could Struggle for a While; Stocks Won’t

A couple more tidbits from Jeremy Grantham: the long-time bear who recently turned bullish tells USA Today that the economy could be in store for a lengthy period of trouble. “Grantham thinks that ‘we could have something reminiscent, in some respects, to the Japanese situation’ that began in the early 1990s and continued well into this decade — a long, low-grade deflationary recession’,” the newspaper reports. “U.S. investors in stocks and bonds may have to write off $20 trillion,” according to Grantham. “When you write off that much of your net worth, it changes your world.” But while he foresees […]

Grantham Says ’09 Analyst Earnings Estimates Much Too High

Jeremy Grantham, manager of the $100 billion investment firm GMO, believes analysts’ 2009 earnings estimates are “vastly overstated”, writes Forbes James M. Clash. “Grantham says S&P 500 earnings could easily drop 30% to $65,” Clash says, adding that Grantham “thinks the index is close to fairly priced at its Nov. 13 close of 911. But he notes that bear markets overshoot as often as bull ones do. So he guesses that the index will bottom out between 600 and 800.” Clash also delves into the trouble with analysts’ estimates, particularly during downturns, when they are slow to lower their estimates. […]

Dreman: Now Is One of Greatest Buying Opportunities of Your Life

In Forbes new “2009 Investment Guide” issue, contrarian specialist David Dreman says that now is the time to buy stocks. “Do not flee the market by selling your quality stocks,” Dreman writes. “Yes it’s the worst bear market since 2000-02, and stocks are trading at valuations not seen in decades, but equities will come back.” Dreman has been pretty bullish in recent months, but he now appears to be a making a major bull call that goes beyond specific sectors or stocks. “There is almost an endless choice of quality businesses trading at or near liquidation prices,” he says, telling […]

PIMCO’s Gross: Stocks Cheap — According to Old Standards

Bill Gross, managing director of investment manager PIMCO, says stocks are selling at very low historical levels — but only if looked at “in the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates”. Unfortunately, Gross writes on PIMCO’s web site, “That world … is in our past, not our future”. Gross — who six years ago incorrectly predicted the Dow, then at about 8,500, would fall to 5,000 — says increased government regulation, decreased leverage, and higher taxes will hamper entrepreneurialism and innovation. He adds that he still believes in stocks […]

Bogle on Buy-and-Hold Bashers, Recession, and The Bounce

In an interview with the Associated Press, John Bogle says he expects the current recession will last longer than many think, perhaps as long as two years. But despite that prediction, he says critics who have been questioning the sensibility of a buy-and-hold approach are wrong. “They’re wrong to question it,” he says. “Because for all of the last century really, stocks have gone up and down with some frequency. In fact, this is my tenth bear market, and two of them, in 1973-4, and then in 2000-2002, markets went down 50 percent – more than the current market decline.” […]

Buffett, Berkshire Navigating Subprime Better than Many

While many have criticized Warren Buffett’s recent Goldman Sachs stock buy (Goldman shares have tumbled since Buffett bought $5 billion in preferred stock on Sept. 23), Bloomberg’s Ari Levy reports that Berkshire Hathaway’s overall financial stock performance has been well ahead of the sector average in recent months. Writes Levy, “Berkshire’s bank-related investments rose 36 percent in the third quarter, while the 84-member Standard & Poor’s 500 Financials Index declined 0.2 percent.” For the past year (through September), a weighted basket of Berkshire’s financial stocks rose at an average quarterly rate of 2.3 percent, according to Bloomberg data, while the […]

Siegel Answers Critics: Yes, Stocks Really Are Cheap

Jeremy Siegel isn’t backing down from his contention that stocks are “dirt cheap”. While his recent comments about the market being undervalued have led to criticism, Siegel writes in Yahoo! Finance today that “Yes, Stocks Are Dirt Cheap”. Using a variety of long-term earnings figures, Siegel presents evidence supporting his view of the market’s current value. “The low level of stocks today is not a result of investors expecting current depressed levels of earnings will persist, but rather a result of record risk premiums in the debt and equity markets,” he writes. “When these extraordinary risk levels return to normal, […]

Icahn: Some Stocks, Senior Debt Offer “Great Opportunity”

Renowned corporate-raider-turned-sharholder-activist Carl Icahn tells Barron’s that there are great buying opportunities in this market, particularly in stocks and senior corporate debt. Icahn talks about the problems with corporate management in America, as well as the stake he has in Yahoo! (he owns around 5.4% of the firm) and his ideas on how to maximize shareholder value. Icahn — who stressed that the market could get worse despite the great values that exist — also thinks that many hedge funds are set to fail over the next few years, as managers deal with not making very much in fees due […]