"The important thing is to keep playing, to play against weak
opponents and to play for big stakes."  - Warren Buffett


Stingy Links
http://www.stingyinvestor.com/SI/articles/articlearchive.shtml

Stocks below net current asset value
http://news.briefing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?ArticleId=NS20081030153137TakingStock
"One of Graham's investment fund strategies, as explained in his
best-selling book The Intelligent Investor, was to buy stocks
that are valued at a discount to their net current asset value.
Graham called such stocks "bargain issues." In other words, Graham
would look for stocks whose current assets less total
liabilities was worth more than what the stock was trading at. This meant
that any plant, property and equipment, goodwill and long-term
investments were free."

Ben Graham then and now
http://www.forbes.com/free_forbes/2008/1110/056.html?partner=yahoomag
"In mid-1932, almost precisely at the bottom of the Great Crash,
Benjamin Graham turned up as a freelance writer in the pages of
FORBES. He was later to be known as the father of value
investing and as a mentor to Warren Buffett. But at the time he was the
manager of a fairly obscure hedge fund. That fund, which
combined long and short positions but was mostly long, was hurting. It
had tumbled 70% from its 1929 high. (The Dow was down 87%.)
Stocks had got too cheap, Graham pleaded. The fact that profits were
vanishing almost didn't matter. You could buy companies for
less than their net liquidating value. You got the goodwill and the
factories for nothing."

Cheap Japanese markets
http://www.forbes.com/free_forbes/2008/1110/060.html
"The Japanese market has been hit so hard this fall that some of
its corporate titans are trading at prices that value guru
Benjamin Graham would find to be bargains."

The other reason for Warren Buffett's success
http://online.wsj.com/article/SB122548632193589047.html
"Since the end of 1988, Berkshire's stock portfolio has grown
from $3.56 billion to $69.51 billion. That is a spectacular average
annual increase of 16.5%, far surpassing the 10.5% annualized
return of the Standard & Poor's 500-stock index. Of course, this
calculation is only a crude approximation, since it ignores the
cash that Mr. Buffett added in -- and moved out -- along the
way. Over the same period, the growth in Berkshire's book value per
share, which reflects all of Mr. Buffett's activities, not just
his stock-picking, was 19.9%. In other words, Mr. Buffett's
skill at picking publicly traded stocks pales alongside the value
he has added to the company through other means."

'Tax event' may be next for bruised PPNs
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081030/RCARRICK30
"For a supposedly safe investment, there sure are a lot of risks
associated with principal-protected notes. Tax changes being
considered by the Canada Revenue Agency could, in the words of one
issuer of principal-protected notes (PPNs), "have a material
adverse effect" on these investments. And then there's the
experience of the U.S. investors who hold PPNs issued by the once
illustrious but now bankrupt Lehman Brothers. They're waiting in line
to get paid along with other creditors."

Dig a grave for those wretched PPNs
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20081101/STBUYSIDE01
"I've called them the worst of both worlds - bad for equity
investors and inappropriate for those seeking a predictable flow of
income. And professional money managers would never buy one; the
odds are stacked against them. I'm talking about
principal-protected notes, or PPNs."

Good riddance
http://www.forbes.com/finance/forbes/2008/1117/026.html
"In Berkshire Hathaway's 2005 annual report Warren Buffett
offered the parable of the fictional Gotrocks family. Sole owners of
corporate America, this huge clan sits back and collects the
generous rewards of investing. Until fast-talking helpers arrive and
persuade some family members to pay the helpers to try to earn
more at the expense of other family members. But in total the
family ends up with less. Why? Because the Gotrocks are now paying
the helpers, thus diminishing the total return earned by all
the businesses in their portfolio. Worse, the Gotrocks are now
forced to pay taxes on the capital gains incurred as the helpers
swap stocks back and forth. After several go-rounds with different
helpers, the Gotrocks finally listen to an old, wise uncle who
advises them to fire all the helpers and simply reap 100% of
their investment gains themselves."

All bets are off
http://www.economist.com/finance/displaystory.cfm?story_id=12516688
"diversification has surely not offered the benefits most pension
funds expected. Indeed, it may have had perverse results. In
the old days, with equities trading at below-average valuations,
funds would now be on a buying spree. They could afford to ignore
the short-term risks because of the long-term nature of their
liabilities. Pension funds thus acted as an automatic stabiliser
for the market. This time round, that does not seem to be
happening. One reason may be accounting changes which make
pension-fund managers more focused on the short term. Another, however, may
be the strategic drive to diversification. The Wall Street
Journal has reported that CalPERS, America's largest public-pension
fund, has been selling shares to meet commitments to put more
money into private-equity firms."

Bad vibrations
http://www.economist.com/finance/displaystory.cfm?story_id=12516680
"The great deleveraging, as it has become known, has also had a
big impact on the currency markets. Many investors have been
following a version of the 'carry trade', borrowing money in a
low-yielding currency. All they had to do was earn a higher return
from assets than the cost of their financing. Since the two big
currencies with the lowest yields over the past year have been the
dollar and the yen, those were the natural ones to borrow. When
asset prices fall, however, this strategy is disastrous.
Investors dash to sell assets and repay their debts. Since those debts
were incurred in dollars and yen, that means they have to buy
back those two currencies - hence their sharp recent rises."

World is 'drowning in oil' (again)
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=aZ_wEtBdohjM
"Three months ago, the world was running out of oil. Seriously. I
kid you not. Everywhere you turned, you heard whispers that the
day of petroleum reckoning was at hand. Now there's too much
oil, prodding OPEC to cut production targets for the first time in
two years. Last week, the Organization of Petroleum Exporting
Countries, confronted with the halving of oil prices since July,
announced a 1.5 million barrel-a-day cut in output."

New ETFs can serve as caution signs
http://www.thestreet.com/story/10444946/1/new-etfs-can-serve-as-caution-signs.html
"There are many notable exceptions, but all too often an ETF's
debut coincides with the moment when investors should be starting
to think about taking profits in the area of the fund's focus.
As is evident in the table below, this isn't a new phenomenon. In
1996, the incipient ETF industry was bolstered by the addition
of a quartet of Asian funds. Just 16 months later, Asian
currencies nosedived and stock prices throughout the region collapsed,
kneecapping investors with double-barreled blasts."

Channeling Graham and Dodd
http://seekingalpha.com/article/101084-channeling-graham-and-dodd-a-conversation-with-seth-klarman
"Klarman assembled a who's who of prominent value investors -
including Glenn Greenberg, David Abrams, Howard Marks and Thomas
Russo - to write introductory commentary to each of the book's
sections, drawing out the timeless wisdom in the original text and
combining it with additional insight and examples relevant to
today's market."

Is buy-and-hold dead and gone?
http://money.cnn.com/2008/10/24/magazines/fortune/buyandhold_okeefe.fortune/index.htm?postversion=2008102816
"The evidence shows that most investors get it wrong over and
over again. According to a study called the Quantitative Analysis
of Investor Behavior by financial research firm Dalbar, over 20
years through the end of 2007, the average equity-fund investor
earned an annualized return of just 4.5%, vs. the S&P 500's 11.8%
return. Why? In large part because investors, chasing
performance, shift money out of lagging funds and into hot ones at the
wrong times. We buy high and sell low repeatedly."

The man who beat the shorts
http://www.forbes.com/forbes/2008/1117/114.html
"Born in India, Watsa graduated from the prestigious Indian
Institute of Technology and moved to western Ontario in 1972 at age
22. Penniless, he lived with relatives while getting his M.B.A.
from the University of Western Ontario and moonlighting at night
selling air conditioners and furnaces. After taking over, and
renaming, an underwriter of trucking policies called Markel, he
added a dozen property and casualty insurers, among them the
well-known New Jersey firm Crum & Forster and TIG Holdings, once part
of San Francisco's Transamerica. Taking over management of the
investments, Watsa produced (according to Fairfax) a compound
annual return from 1993 to 2007 on its stock portfolio of 19.5%
(versus 10.4% for the S&P 500) and on its bond portfolio of 10.1%
(versus 6.6% for a Merrill Lynch bond index). One of his
earliest backers--and later a friend--was famed investor Sir John
Templeton, who died this year at age 95."

A return to thrift
http://money.cnn.com/2008/10/29/magazines/fortune/thrift_colvin.fortune/?postversion=2008103005
"Sometimes it takes a near-death experience to change bad
behavior. Think of your friend who quit Lucky Strikes after a coronary
incident. Or look at how banks are reducing their dependency on
debt after watching rivals go belly-up. On Wall Street this
process of reducing debt relative to equity is called deleveraging.
Main Street should be deleveraging too."

Who's buying?
http://network.nationalpost.com/np/blogs/wealthyboomer/archive/2008/10/28/who-s-buying.aspx
"Remember, when dealing with Mr. Market, fear is the cost of
getting a good price. It looks very grim out there and it might get
worse. But stock prices will reach their lowest when uncertainty
reigns and expectations are at their lowest. Investors are
currently very fearful and we think that it's time to get greedy."

Home prices in 20 U.S. cities fall 16.6%
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9TjGswnG9Es&refer=home
"House prices in 20 U.S. cities declined in the year ended in
August at the fastest pace on record as more properties went into
foreclosure before the credit crisis deepened this month. The
S&P/Case-Shiller home-price index dropped 16.6 percent in August
from a year earlier, as forecast, after a 16.3 percent decline in
July. The gauge has fallen every month since January 2007, and
year-over-year records began in 2001."

Greasing the slide
http://www.newyorker.com/talk/financial/2008/11/03/081103ta_talk_surowiecki
"The great paradox of the sell-off, then, is that the factors
that were supposed to increase the flow of information to
investors, foster long-term thinking, and encourage contrarian positions
did exactly the opposite. If there's a silver lining in all
this, it's that investors who can endure past the present moment now
have the chance to buy what at least look like very cheap
stocks. Still, it's not surprising that investors have been unwilling
to step up. It's hard enough to catch a falling knife. But it's
nearly impossible when hedge funds are hurling it."

Evil Wall Street exports boomed
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0jln3.CSS6c&refer=home
"While the collapse was most visible in the stock markets, the
cause was the loss of confidence in the world's biggest bond
market, structured finance. So far, it has led to the worst financial
crisis since the Great Depression, the disappearance or
takeover of more than a dozen banks, including three storied Wall
Street firms, and almost $3 trillion in government expenditures and
guarantees to contain the contagion."

Treasury may purchase stakes in insurers
http://www.bloomberg.com/apps/news?pid=20601087&sid=anTJ_3YAl.1k&refer=home
"The Financial Services Roundtable, a trade association of the
100 largest banks, securities firms and insurers, pressed Treasury
to broaden its guidelines so that insurance companies,
broker-dealers, automobile companies and institutions controlled by
foreign banks could also sell stakes to the government."

Why do markets create bubbles?
http://www.forbes.com/home/2008/10/21/why-bubbles-economy-markets-bubbles08-cx_th_1021harford.html
"Bubbles are like pornography: Everyone has his or her own
opinion as to what qualifies, but it is impossible to pen a precise
definition. If you wish to push the metaphor further, both are
also fun for a while, if you like that sort of thing, but apt to
end up making you feel deflated and embarrassed. Bubbles are also
embarrassing for the economics profession. It's not that we have
no idea what causes bubbles to form, it's that we have too many
ideas for comfort. Some explanations are psychological. Some
point out that many bubbles have been stoked not by markets but by
governments. There is even a school of thought that some famous
bubbles weren't bubbles at all."




Tip Sheet
http://www.stingyinvestor.com/SI/strategy/tipsheet.shtml

ETF Counterparty Risk
http://www.ndir.com/SI/strategy/tipsheet/10-31-2008-ETF-Counterparty-Risk.shtml
The crash of 2008 sent a hoard of once-mighty financial institutions
to the graveyard.  Even worse, the problems that infected them spread.
The hunt is now on for anything that may have been touched by
counterparty risk, which rears its head when banks fail.  Some
investors are even looking farther afield and are starting to worry
about their exchange traded funds.

The Downside of Dividends
http://www.ndir.com/SI/strategy/tipsheet/10-29-2008-The-Downside-of-Dividends.shtml
Stocks with big dividends have a reputation for holding up
well during downturns.  But many dividend stocks have been decimated
during the recent sell off.




DOW 30 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                   P/E P/B P/S P/D Yield
============================================ === === === === =====
Pfizer  (PFE)                                 4   4   2   5    5
General Electric  (GE)                        4   4   3   5    5
Verizon  (VZ)                                 2   4   4   5    5
AT&T  (T)                                     3   5   3   5    5
Alcoa  (AA)                                   5   5   5   5    5
Bank of America  (BAC)                        1   5   2   4    4
EI DuPont  (DD)                               5   3   4   4    4
Merck  (MRK)                                  1   2   1   4    4
Citigroup  (C)                                0   5   2   4    4
Caterpillar  (CAT)                            5   3   5   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                           P/E P/B P/S P/D  VR
============================================ === === === === =====
Alcoa  (AA)                                   5   5   5   5   0.9
Caterpillar  (CAT)                            5   3   5   4   1.4
General Electric  (GE)                        4   4   3   5   1.5
Pfizer  (PFE)                                 4   4   2   5   1.5
EI DuPont  (DD)                               5   3   4   4   1.8
AT&T  (T)                                     3   5   3   5   1.9
Verizon  (VZ)                                 2   4   4   5   2.1
Chevron  (CVX)                                5   4   4   3   2.2
Merck  (MRK)                                  1   2   1   4   3.0
Home Depot  (HD)                              2   3   5   3   3.2
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
Alcoa  (AA)                               5   5   5   29.95 160.39
Chevron  (CVX)                            5   4   3   92.50  24.00
Caterpillar  (CAT)                        5   3   4   47.13  23.38
Bank of America  (BAC)                    1   5   4   28.69  18.69
Walt Disney  (DIS)                        4   4   1   30.55  17.90
General Electric  (GE)                    4   4   5   22.87  17.21
AT&T  (T)                                 3   5   5   31.01  15.84
JP Morgan Chase  (JPM)                    1   5   3   44.44   7.72
Pfizer  (PFE)                             4   4   5   18.54   4.71
EI DuPont  (DD)                           5   3   4   32.95   2.84
Kraft  (KFT)                              2   4   4   29.68   1.72
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 



S&P/TSX60 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks              P/E P/B P/S P/C P/D Yield*
======================================= === === === === === ======
Biovail (BVF)                            1   4   3   5   5    5
Teck Cominco Limited (TCK.B)             5   5   4   5   5    5
Bank of Montreal (BMO)                   3   4   2   1   5    5
CIBC (CM)                                0   3   1   4   5    5
Husky Energy (HSE)                       4   2   3   3   5    5
National Bank of Canada (NA)             2   4   2   4   5    5
Sun Life (SLF)                           4   4   4   1   5    5
Bank of Nova Scotia (BNS)                4   2   1   1   5    5
Transalta (TA)                           2   1   3   3   5    5
Manulife (MFC)                           4   3   4   4   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                       P/E P/B P/S P/C P/D  VR
======================================== === === === === === =====
Teck Cominco Limited (TCK.B)              5   5   4   5   5   0.3
First Quantum Minerals Ltd. (FM)          5   5   4   5   3   0.7
Husky Energy (HSE)                        4   2   3   3   5   1.3
Petro Canada (PCA)                        5   4   5   4   3   1.4
Sun Life (SLF)                            4   4   4   1   5   1.4
Biovail (BVF)                             1   4   3   5   5   1.5
Nova (NCX)                                5   4   5   4   3   1.7
Bank of Montreal (BMO)                    3   4   2   1   5   1.8
Magna Cl.A (MG.A)                         4   5   5   5   4   1.8
Thomson (TOC)                             5   0   0   0   3   1.9
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                            P/E P/B P/D   G$   dG$(%)
======================================== === === === ====== ======
ACE Aviation (ACE.B)                      5   5   0  193.43 3475.4
Teck Cominco Limited (TCK.B)              5   5   5   39.66 230.48
First Quantum Minerals Ltd. (FM)          5   5   3   81.98 222.75
Inmet Mining (IMN)                        5   5   1   75.05 177.44
Petro Canada (PCA)                        5   4   3   74.86 148.38
Magna Cl.A (MG.A)                         4   5   4   99.59 146.27
Nova (NCX)                                5   4   3   33.94 116.86
Sun Life (SLF)                            4   4   5   52.07  83.66
Talisman Energy (TLM)                     5   4   2   19.26  61.75
Nexen Inc. (NXY)                          5   3   1   28.69  49.87
Canadian Tire (CTC.A)                     4   4   2   66.90  46.07
Agrium (AGU)                              5   3   1   63.05  36.55
Yamana Gold Inc. (YRI)                    1   5   3    7.85  36.49
Manulife (MFC)                            4   3   4   31.91  32.28
BCE (BCE)                                 4   3   4   45.35  29.45
Bank of Montreal (BMO)                    3   4   5   54.27  26.16
Canadian Pacific Rail (CP)                4   3   2   65.76  20.56
Toronto Dominion Bank (TD)                3   3   4   67.23  18.12
Husky Energy (HSE)                        4   2   5   41.28  14.04
Suncor Energy (SU)                        4   2   1   32.79  13.26
Barrick Gold (ABX)                        3   4   2   30.75  11.57
National Bank of Canada (NA)              2   4   5   49.74  10.03
Telus (T)                                 4   2   4   45.32   6.46
Bank of Nova Scotia (BNS)                 4   2   5   42.52   5.80
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

*Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml 


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Books for Stingy Investors

What Works On Wall Street
by James O'Shaughnessy

Historical stock data is what O'Shaughnessy's book is all about.
If you want to know how straightforward stock selection
techniques have done, pick up What Works on Wall Street and you'll find
out. O'Shaughnessy's book is a must have reference for any
serious student of the market.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0071452257/


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The Rothery Report
http://www.rotheryreport.com/ 

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ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008.
All rights reserved. The securities mentioned in this report are not
appropriate for all investors. Consult your professional investment
advisor before making any investment decision.  While all reasonable
effort is made to ensure the accuracy of information and data
contained herein, accuracy can not be guaranteed. Past performance is
not a good predictor of future performance.  Results are not
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information in this newsletter, and in its related website, is not
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