Most Recent Stingy News
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| Is the Value Effect Seasonal? |
| 01/26/12 5:40 PM EST Permlink | Value Investing |
| "This paper extends the research on value premium by examining patterns of seasonality exhibited in the book-to-market effect in major global equity markets. The results provide evidence supporting the January effect in the value premium phenomenon. Using stock market indices for Asia Pacific Europe, Australasia, and Far East (EAFE) and Europe, with and without the U.K., Scandinavian countries, the U.K., U.S., and Japan form 1975 through 2007, the paper provides out-of-sample evidence from twenty-one countries that comprise different index portfolios. As a robustness measures, we use regression analysis, paired means tests, and non-parametric tests to examine whether the persistence of the anomalous January value premium is real and significant. The annualized excess January value premium ranges from 42.96 percent for Scandinavian countries to 9.24 percent for EAFE markets with 20.28 percent for U.S. Even though such a predictable pattern exists, our analysis suggests that large standard deviations would not allow a viable investment strategy." |
| More Value Investing: How to buy a company for no money down |
| Invest like a legend: David Dreman |
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| How to buy a company for no money down |
| 01/26/12 5:38 PM EST Permlink | Value Investing |
| "At the beginning of 2012, for example, there was a grand total of 12 TSX-listed stocks which met the Ben Graham test. They had a median market capitalization of $100-million and a float of perhaps half that – barely sufficient to create a portfolio for a small investor. More important, the net-net valuation assumes that all of the current assets can be liquidated at 100 cents on the dollar. This is a reasonable assumption for cash and short-term investments, generous for accounts receivable and heroic for inventory. In addition, the decision to ignore all long term assets may be prudent with regard to intangibles, but many established companies hold undervalued fixed assets on their balance sheet. This is not a new problem, of course, and twenty five years ago I received screens from the New York-based brokerage firm Oppenheimer that addressed these issues. The official name was the collateral value screen, but Norm Weinger of Oppenheimer referred to it as his “Buy a company, no money down” list." |
| More Value Investing: Invest like a legend: David Dreman |
| Scouring the market's bargain bin |
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| Invest like a legend: David Dreman |
| 01/26/12 5:37 PM EST Permlink | Value Investing |
| "How I'd invest $100,000 right now: I’d put it in good-quality stocks in a portfolio large enough to diversify, or, for the average investor, an index fund. Stocks have traditionally gone up if we see inflation coming. We’re not seeing much inflation yet, but we’ve been printing an awful lot of money in the United States, they’ve printed $7 trillion since 2008. I’ve never seen the two not meet." |
| More Value Investing: Scouring the market's bargain bin |
| A market that even a skeptic can like |
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| Active or passive? Process should drive choice |
| 01/24/12 4:56 PM EST Permlink | Hallett |
| "Too many view passive and active investment as mutually-exclusive strategies decided upon via some quasi-political debate. On the contrary, I view active and passive as two strategies on the same continuum. Indeed, the ETF industry – once synonymous with passive investing – has created a blurring of the lines between active and passive strategies. The likes of Fundamental Indexing, equal-weighted indexes and other quant-driven indexes are pushing so-called ‘passive’ approaches closer to the active management side of the spectrum. That notwithstanding, as highlighted in my most recent Investment Executive article I am indifferent between passive and active investing – a view shared by my HighView partners and, accordingly, written into our firm’s investment philosophy." |
| More Hallett: Should you hold bonds in taxable accounts? |
| Mutual fund critics missing the big picture |
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| The constancy of safe asset demand |
| 01/23/12 7:57 PM EST Permlink | Bonds |
| "The findings are preliminary, but the authors calculate that the safe asset share — the percentage of safe assets to total assets in the US economy — has been roughly the same since 1952, at about 33 per cent." |
| More Bonds: The rally that wouldn't die |
| What zero bound? |
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| China housing set for hard landing |
| 01/23/12 7:56 PM EST Permlink | Real Estate |
| "The numbers are grim: China's property bubble is heading for a spectacular burst, and its effect on the country's economy will be widespread." |
| More Real Estate: House of horrors |
| Rising from the ruins |
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| Watsa no stranger to value |
| 01/22/12 9:36 PM EST Permlink | Watsa |
| "For someone who built an empire while dodging the media’s spotlight, Prem Watsa is taking an unusually public role by positioning himself at the heart of Research In Motion’s attempted revival." |
| More Watsa: Fairfax contrarian cashes in mightily |
| The $2-Billion Man |
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| Keep it simple |
| 01/21/12 4:26 PM EST Permlink | Law |
| "Unlike many in the banking industry, Petrou is not ideologically opposed to regulation. For instance, she was a critic of the lack of regulation that allowed so many sleazy subprime mortgage originators to emerge from the precrisis ooze. Yet, now, she’s worried about something different: that the hundreds of new mandates required by the Dodd-Frank law are creating a new kind of risk. She calls it “complexity risk.” As she put it in a speech she delivered last week in New York: “If we don’t understand the cross-cutting effects and inherent contradictions in all of the stringent standards now being written into final form, we risk doing real damage to the sound, stable and — yes — profitable financial industry regulators say they support and the economies sorely need.”" |
| More Law: Protest SOPA/PIPA |
| New generation of cross-border income trusts |
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| Asset Mixer Update |
| 01/20/12 4:54 PM EST Permlink | Stingy Investing |
| We've updated our Asset Mixer to include data for 2011. |
| More Stingy Investing: Periodic Table Update |
| The scourge of inflation |
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| Periodic Table Update |
| 01/20/12 4:52 PM EST Permlink | Stingy Investing |
| We've updated our periodic table of annual returns for Canadians to include data for 2011. |
| More Stingy Investing: The scourge of inflation |
| Analyst Expectations |
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| Super fracking |
| 01/18/12 4:41 PM EST Permlink | Science |
| "As regulators and environmentalists study whether hydraulic fracturing can damage the environment, industry scientists are studying ways to create longer, deeper cracks in the earth to release more oil and natural gas." |
| More Science: The new diamond age |
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| Lower prices via new tech |
| 01/18/12 4:35 PM EST Permlink | Markets |
| "Due to the record levels of natural gas production and the unseasonably warm weather this winter, prices keep falling. The price for U.S. natural gas futures contracts dropped to a ten-year low of $2.47 per million BTUs in trading on the NYMEX yesterday" |
| More Markets: Cycle bodes ill for the markets |
| Natural gas bear market |
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| Protest SOPA/PIPA |
| 01/18/12 -3:57 PM EST Permlink | Law |
| "Many of the webs most important and integral websites are protesting seriously flawed legislation called SOPA. It would greatly damage the linking structure of the internet, allowing companies to close down websites on flimsiest of premises. It would criminalize even pointing to any site that itself points to a site where there is a Copyright violation. Over the years, the copyright cartel — this includes Disney and other major content companies — have bought themselves a Congress. They prevented works that were scheduled to enter the public domain, as envisioned in the US Constitution, from doing so. SOPA is the latest attempt to censor the public’s access to independent information and manipulate copyright laws. The new law works to their own benefit and the public’s detriment." |
| More Law: New generation of cross-border income trusts |
| A license to lie, backdated |
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| How sneaky governments steal your money |
| 01/17/12 11:12 PM EST Permlink | Government |
| "Many nations in the developed world are in deep do-do with their debt levels. On one hand they need growth to earn their way out of their problems, while on the other they’re being forced into anti-growth austerity measures by markets, concerned about their spiralling interest obligations. It’s a grim position for those of us brought up to expect an unrelentingly rosy economic outlook. This isn’t a new situation, though. We’ve been here many, many times before and governments have, by design and evolutionary accident, developed many, many ways of dealing with these problems. The cunning thing is that many of these involve stealthily thieving from their own citizens, but done so surreptitiously that, if we’re not careful, we won’t even notice it." |
| More Government: Why you can’t find heritage poultry |
| Smoke Screening |
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| The rally that wouldn't die |
| 01/17/12 12:10 PM EST Permlink | Bonds |
| "Last year's surge came in the 30th year of a historic rally. Since 1981, long-term Treasury bonds have returned 11.03% annually, 0.05 percentage point better than the Standard and Poor's 500-stock index." |
| More Bonds: What zero bound? |
| No money for sauerkraut |
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| Mutual funds vs ETFs |
| 01/16/12 11:08 PM EST Permlink | Funds |
| "The market share lost by mutual funds is not surprisingly shifting to ETFs. ETF fees tend to be lower, yet they provide better liquidity and the ability to time the market, including intraday trading. That makes ETFs appealing not just to retail investors, but to institutions as well." |
| More Funds: Hedge-fund performance and liquidity risk |
| Who got the margin call? |
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| This relatively inegalitarian isle |
| 01/16/12 10:50 PM EST Permlink | Economics |
| "Of course, it’s important to put charts like this in perspective, which is why we should also consult Miles Corak, the University of Ottawa professor whose work has been used here by Krueger (and Krugman). Here’s Corak’s unabridged Great Gatsby Curve. ... A rather different picture, innit?" |
| More Economics: The economist zone |
| Economics has met the enemy it's economics |
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| The scourge of inflation |
| 01/14/12 3:02 PM EST Permlink | Stingy Investing |
| "Inflation is the silent killer of retirement dreams. It sneaks in over the years and nibbles away at nest eggs, leaving people poorer than they once thought. How does it do the dastardly deed? By reducing the purchasing power of money over time." |
| More Stingy Investing: Analyst Expectations |
| Economic omens |
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| The rise of the new groupthink |
| 01/14/12 3:01 PM EST Permlink | Behaviour |
| "Our companies, our schools and our culture are in thrall to an idea I call the New Groupthink, which holds that creativity and achievement come from an oddly gregarious place. Most of us now work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in. But there’s a problem with this view. Research strongly suggests that people are more creative when they enjoy privacy and freedom from interruption. And the most spectacularly creative people in many fields are often introverted" |
| More Behaviour: When reinforcement fails |
| Stories make me nervous |
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| Should you hold bonds in taxable accounts? |
| 01/13/12 12:54 PM EST Permlink | Hallett |
| "Investors fortunate enough to have money to save and invest over and above their RRSP and TFSA contributions need both asset allocation and asset location strategies. The standard advice is to stuff all of the bonds in RRSP, TFSA and similar accounts to defer or shelter tax on interest income (otherwise 100% taxable). Similarly, stocks usually dominate non-registered accounts because they generate more lightly-taxed capital gains and (in the case of Canadian stocks) dividends. But with bond yields having fallen (i.e. bond prices having risen) in the face of weak stock prices, this traditional asset location advice may not hold for everyone." |
| More Hallett: Mutual fund critics missing the big picture |
| Leveraging + High Payout Funds = Unhappy Ending |
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| What zero bound? |
| 01/13/12 12:47 PM EST Permlink | Bonds |
| "Negative interest rates are a big puzzle. Easy stories miss the point: 'flight to quality,' 'need for collateral,' etc. Those stories don't explain why bonds are worth more than money." |
| More Bonds: No money for sauerkraut |
| The difference between AAA and AA+ |
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