The Stingy News Weekly (09/23/2013)
New @ StingyInvestor
Fishing for a bargain among small-fry
"Insisting on value helps to keep the prices I pay in line, while keeping an eye on dividend growth points the way to reasonably healthy businesses."
How to choose an actively managed fund
"There is a myth going around that most fund managers are bad stock pickers. It is undoubtedly true that some are, but it turns out that most beat their benchmarks over the long term."
Industry risk rating failing investors
"Floating rate note (FRN) funds are gaining in popularity because of their marketed 'promise' to protect capital during periods of rising interest rates. In Canada since the mid-2000s, FRN funds invest mainly in corporate loans bearing a fluctuating interest rate. They appeal to investors who fear rising interest rates - which is most - but offer competitive current yields. Investors seduced by this class of funds should be aware that hedging one risk often heightens exposure to other risks. And standard industry risk ratings fail to communicate this trade-off, which risks significantly understating these funds' true risk exposure."
Never bubbles today
"A cursory reading of the academic literature on asset prices reveals a litany of puzzles, conundrums, paradoxes, and anomalies. Much of the research on asset prices continues to rely on highly stylized models with identical agents, rational expectations, and optimizing behavior. According to the prevailing view, asset price surges that many would perceive to be bubbles are not really so. Instead, they are seen to reflect the influences of fundamental forces, such as a decline in risk appetite. This reminds me of the White Queen in Through the Looking-Glass, who says jam will be given every other day, but never today. Adherents of this view may admit that bubbles have occurred in the past - like the dot-com boom and bust. And they may even be willing to accept that bubbles are something to worry about in the future - say, in financial supervision. But, in practice, they are never willing to find a bubble in the present. There's always a reason why what looks like a bubble, walks like a bubble, and quacks like a bubble is not actually a bubble."
More on long-term returns
"Throw bonds into the mix and a 60/40 portfolio will generate just 2.77% real, the fourth lowest result in all the years since 1871. If we assume a 2% inflation rate, then nominal returns will be a little under 5%, compared with the 7.5-8% assumed by pension funds."
Berkshire billionaire with more than Gates
"There are probably other Berkshire billionaires to be uncovered. In a June 2010 Fortune magazine article, Buffett said that he knew of two Berkshire shareholders who qualify for the Forbes 400 list of wealthiest Americans, and weren.t on it."
Puerto Rico's pension crisis
"Puerto Rico can cover only 11.2 percent of its public pension costs, which is even less than the notoriously underfunded Illinois retirement system"
It doesn't work all the time
"There are valid theories on investing, and they work on average. If you pursue them consistently, you will do well. If you pursue them after failure, you can do better still."
Risk-free returns for everybody
"Investment professionals too often forget that a dollar saved in costs or fees is actually worth more than a dollar earned from investment returns (thanks to taxes). In addition, investing in cost and fee reduction can provide far greater returns per unit of risk than anything else an investment organization can do. In fact, there.s an argument to be made that cost and fee savings represent risk-free returns to investors."
How Detroit went broke
"Detroit is broke, but it didn't have to be. An in-depth Free Press analysis of the city's financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed - or refused - to make the tough economic and political decisions that might have saved the city from financial ruin."
The disappearance of James Duesenberry
"This is puzzling because his theory of consumer behavior clearly outperforms the alternative theories that displaced it in the 1950's - a striking reversal of the usual pattern in which theories are displaced by alternatives that better explain the evidence. His disappearance from modern economics textbooks is an intriguing cautionary tale in the sociology of knowledge."
DOW 30 Value Screens
S&P/TSX60 Value Screens
The Rothery Report
(Learn More | Subscribe)
The Rothery Report provides research on select deep-value stocks in North America. Discover overlooked and undervalued stocks in quarterly investment reports which provide detailed analysis of Canadian and U.S. stocks. Weekly email news and additional updates keep subscribers informed about new opportunities and developments.
|Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...|