WSJ, Grantham on The Trouble with Earnings

Is the market cheap, as investors like Bruce Berkowitz and David Dreman have said recently? Or is it still overpriced, as others, like Jim Rogers and Bill Gross, have maintained? The answer may depend on which set of corporate earnings you look at. That’s the issue The Wall Street Journal’s Mark Gongloff examines today. Gongloff discusses the difference between operating earnings (which exclude supposed one-time expenses like writedowns to give a better idea of the profitability of a company’s underlying business) and reported earnings (which include those “one-time” expenses). The reported earnings are often less than operating earnings during tough […]

Five Top Managers Are Buying — Cautiously

Noticing a trend that we’ve picked up on in recent weeks, Fortune notes that several extreme value investors have begun to see good, safe buys in the current market. In an interview with the magazine, top fund managers Robert Rodriguez, Susan Byrne, Jeremy Grantham, Tom Forester, and Leslie Christian all tell Fortune that they’re seeing a attractive stocks in the market right now — though they all remain somewhat cautious in this unprecedented environment. Rodriguez, who had been holding a good amount of cash in the past couple years because he believed the market was overvalued, said his screening system […]

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. […]