The Stingy News Weekly (12/09/2013)
New @ StingyInvestor
Hewlett-Packard may finally compute
"When it comes to stocks, I take a different tack and look for the long-term losers. It might seem counter intuitive, but such stocks tend to be inexpensive based on various measures of financial merit and they've had time to make improvements. Both factors are positives."
Why a stock screen is only a first step
"Take Reitmans (Canada) Ltd. as an example. The ladies' wear specialty apparel retailer, based in Montreal, ran into trouble over the last few years."
My top 10 peeves
"Clifford S. Asness discusses a list of peeves that share three characteristics: (1) They are about investing or finance in general, (2) they are about beliefs that are very commonly held and often repeated, and (3) they are wrong or misleading and they hurt investors."
Index effect raises concerns
"Goodhart's law was widely cited in the 1980s, when the UK government tried to control inflation by targeting the money supply. But policymakers found that as soon as they focused on a monetary aggregate such as M-3, the measure started to misbehave. The law is familiar to those in the indexing business, too. Investors have long been aware of the distortions that can arise when large volumes of money track or reference a particular measure of the stock market."
Prem Watsa opens up about BlackBerry
"Bets on debt-ravaged Greece or ailing phone maker BlackBerry would make many investors flee, but for Prem Watsa both are part of a 'cautious' strategy he employs to manage Fairfax Financial's US$23.3 billion portfolio. Indian-born Watsa, 63, often compared to U.S. investor Warren Buffett, another self-made man, prides himself on a strategy of investing in stocks and markets others avoid."
"Norbert's gambit remains the least expensive way to convert Canadian and US dollars at a discount brokerage. For investors looking to buy US-listed ETFs, learning this technique can save hundreds of dollars by sidestepping the wide currency spreads charged by brokerages."
Key new findings on stock selection
"Better and more consistent results are achieved when a composite of individual factors is used. A value composite helps avoid value traps and can show some seemingly pricey stocks to be attractively valued. Financial strength and earnings quality composites are better used to identify stocks to avoid."
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