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 […]

Buffett to Disclose More on Derivatives; Tilson Ups Berkshire Stake

Warren Buffett says he will give more information on Berkshire Hathaway’s much discussed derivative bets in the company’s end-of-year-report, Reuters is reporting. The derivatives contracts call for the firm to pay out billions to purchasers if, by certain dates starting in 2019, four different market indices fall below agreed-upon levels. Rumors that Berkshire’s liabilities for the contracts could be more than previously thought caused the firm’s stock to plunge — and its credit default swap rates to surge — last month. Buffett isn’t expressing worry about the deals, however, nor is hedge fund manager and Kiplinger’s columnist Whitney Tilson. Tilson […]

Hulbert: Small-Cap Value Stocks May Be Ripe for Impressive Gains

Small-cap value stocks are risky but they also historically produce jaw-dropping gains at the begining of bull markets, Mark Hulbert writes in the New York Times. Referencing academic research performed by professors Eugene Fama (University of Chicago) and Kenneth French (Dartmouth), Hulbert writes that small-cap value stocks (stocks with the lowest price/book ratios) “gained 17.1 percent, on average, in the first three months following the 13 market bottoms since 1969, equivalent to an annualized rate of 88 percent.” We’ve started to see some signs of improvement in Validea’s value-based models as well, with our Piotroski, Dreman, Neff, and Graham models […]

Schwab CIO: Bounce Will Be Big — Don’t Miss It

Jeff Mortimer, chief investment officer of Charles Schwab’s mutual fund division, tells Fortune that the coming turnaround in the stock market will be a big one, and that investors should be building their positions now. Mortimer says that 47 percent of bull market gains usually come in the first 12 months, before many investors have summoned the courage to dive back into the market. Be aware that he doesn’t think we’re out of the woods yet — his estimate is that the “rough sledding” could continue for three to nine months — but his point is that the market will […]