Stingy News Quarterly
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Stingy News Weekly
09: 09 16 23 30
08: 04 10 25
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06: 03 09 16 23 30
05: 05 12 19 26
04: 07 14 21 28
03: 03 11 17 24 31
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01: 06 13 20 27
12: 02 09 16 23 30
11: 04 11 18 25
10: 07 14 21 28
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08: 05 12 19 26
07: 01 08 15 22 29
06: 03 10 17 24
05: 07 13 20 27
04: 01 08 15 22 29
03: 04 11 18 25
02: 05 12 19 26
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11: 06 13 20 27
10: 02 09 16 23 30
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08: 07 14 21 28
07: 03 10 17 24
06: 05 12 19 26
05: 01 08 15 22 29
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03: 06 13 20 27
02: 06 13 20 27
01: 02 09 16 23 30
12: 05 12 19 26
11: 07 14 21 28
10: 03 10 17 24 31
09: 05 12 19 26
08: 01 08 15 22 29
07: 04 11 16 25
06: 06 13 20 27
05: 02 09 16 23 30
04: 04 11 18 25
03: 07 14 21 28
02: 07 14 21 28
01: 03 10 17 24 31
12: 06 13 20 27
11: 01 08 15 22 29
10: 04 11 18 25
09: 06 13 20 27
08: 09 16 23 30
07: 05 12 19 26 31
06: 07 14 21 28
05: 03 10 17 24 31
04: 05 12 19 26
03: 01 08 15 22 29
02: 01 08 15 22
01: 04 11 18 25
12: 07 14 21 28
11: 02 09 16 23 30
10: 05 12 19 26
09: 07 14 21 28
08: 01 10 17 24 31
07: 06 13 20 27
06: 01 08 15 22 29
05: 04 11 18 25
04: 06 13 20 27
03: 02 09 16 23 30
02: 03 10 17 24
01: 06 13 20 27
Perspective on the bear
Fund fees revisited
T class funds
Bonds vs. bond funds
Bear market protectors
Investing in bonds
Ignore bonds at your peril
Coping with change
Future of trust funds
Are fees excessive?
Top advisory model?
81-106 a step back
Poor fund classifications
A longer-term report card
The Stingy News Quarterly (Q1/2006)
New @ StingyInvestor
8 Stingy Stocks for 2006
"I look for two qualities when hunting for bargain stocks: they must be cheap and they must be safe. Not surprisingly, it is often difficult to find stocks that are both cheap and safe."
Graham Stock Gainers
"Over the past five years I've used Benjamin Graham's time-tested strategy for defensive investors to uncover undervalued U.S. stocks. So far, the results have been breathtaking."
Car bites dogs
"I like to begin each year by hunting for dividend income with the Dogs of the Dow and the Dogs of the TSX. Both versions of the time-honored Dogs strategy start from the simple premise that blue-chip stocks are too big to fail. The theory goes that if you can buy these stocks when they're in the doghouse and temporarily cheap, you can benefit from their juicy dividend yields and maybe even cash in on some capital gains as their share price recovers."
"I like to look through lists of beaten down stocks for good bargains. Naturally, I don't expect to find a good value every time but there are often a few candidates that make the search worthwhile. During a recent search I was pleasantly surprised to spot several gleaming brand names languishing unloved in the bargain bin."
Is Dividend Income Safe?
"After the collapse of the Internet bubble many investors turned to the relative safety of dividend income. At the risk of being labeled a "gloomy Gus", I have to point out that dividends aren't 100% safe. The intrepid dividend investor must be on the constant lookout for dividend cuts, inflation and high prices."
The Best of Stingy Links
Stingy Links: Academia
How is a hedge fund like a school?
"Hedge-fund guru Joel Greenblatt applied Wall Street principlesand $1,000 per studentto turn around a struggling Queens elementary school. And it worked, spectacularly."
"Recently, however, Bayes's ideas have made a comeback among computer scientists trying to design software with human-like intelligence. Bayesian reasoning now lies at the heart of leading internet search engines and automated "help wizards". That has prompted some psychologists to ask if the human brain itself might be a Bayesian-reasoning machine. They suggest that the Bayesian capacity to draw strong inferences from sparse data could be crucial to the way the mind perceives the world, plans actions, comprehends and learns language, reasons from correlation to causation, and even understands the goals and beliefs of other minds."
Herding and contrarian behavior
"Our experiment complements a large empirical literature on herding. Our results confirm the finding of the bulk of this literature that herd behavior driven by informational externalities does not seem to be an important force in fnancial markets. To the contrary, one could even argue that the observed contrarian behavior, which we find sometimes to be profitable, has a stabilizing effect as it implies that agents tend to differentiate their investments from those of their predecessors."
Stingy Links: Accounting
The footnote fanatic
"By obsessing over data buried in corners of corporate financial reports, onetime auditor David Trainer has come up with some surprising calls on stock buys and sells."
Stingy Links: Buffett
Berkshire Hathaway report for 2005
"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, "I can calculate the movement of the stars, but not the madness of men." If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases."
Buffett's biz worth less than sum of its parts
"The shares have been treading water for two years. And they no longer trade at a premium to the rest of the market. In fact, on 16 times earnings and just 1.7 times sales, they are cheaper than at almost any time since Bloomberg began tracking the data in 1990. And that ignores the fact that, in addition to all the businesses his company owns, Buffett is also sitting on an astonishing $92 billion in cash and stock market investments."
Students pitch Oracle of Omaha
"Lots of people get to study at the feet of a master, but not many get to pitch him on a billion-dollar deal."
"Graham didn't get excited about making money. I would come to him with a great investment idea, I'd say "we're going to get rich!". He didn't care (although Jerry Newman did). He wrote books because he had an academic nature. He wanted to explain investing in a way anyone could understand. Graham wanted to develop a method that a dentist in Iowa could follow, a system that someone with no special knowledge could use and make money. He wanted to provide a quantitative approach that anyone could follow. The three big ideas that came from Graham are all in The Intelligent Investor. 1) View stocks as pieces of businesses; 2) The market is a voting machine in the short term, but a weighing machine in the long term; 3) Margin of safety."
Warren Buffett's billion dollar secrets
"Buffett's time-tested belief: Investors don't always act rationally, the market isn't always efficient and bargains can be made. Competing with Efficient Market theorists, he says, is like playing bridge against opponents who were taught it does no good to look at the cards."
The trouble with being a legend
"Legendary investor Warren Buffett, the "Oracle of Omaha", has had an unusually lengthy period of underperformance and other troubles. Is he struggling under the weight of his own past achievements or is this just a blip in the legend of Warren Buffet?"
Stingy Links: Dividends
Dogs of the Dow
"The Dogs of the Dow strategy has outperformed (total return) the broader index in three of the last five years. Why the success? It pays to be contrarian in stock investing, especially when dealing with pedigree companies like the Dow industrials. These blue chips may run into trouble, but they stand a decent chance of rebounding along with the value of their shares."
Stingy Links: Dorfman
10 stocks for long haul
"As an investment technique, I don't recommend buying shares and forgetting about them, even though the results are sometimes pleasant. Still, I get occasional requests from readers for a list of stocks you can buy and leave alone for 10 years. So, here is my collection of 10 Stocks for the Long Haul."
January market moves suggest an up year in '06
"Stock-market investors love to take the market's pulse -- and never more so than in January. According to market lore, January has two special attributes. It tends to be a good month. And, good or bad, it tends to predict the rest of the year."
Value and momentum
"To qualify this time, a stock had to be up at least 6.3 percent year-to-date through March 3 (double the S&P 500's gain), and up at least 10 percent in the past 12 months. It also had to sell for 15 times earnings or less. From 40 qualifiers I've selected five to recommend: ConocoPhillips, Valero Energy (again), Cummins Inc., American Financial Group Inc. and Jakks Pacific Inc."
ConocoPhillips and NBTY are on the casualty list
"The list comprises stocks that have been roughed up in the latest quarter, and that I think have sound underlying businesses. I predict they will rebound."
Robot portfolio steams to 7th-straight victory
"For the seventh-consecutive year, the Robot Portfolio has vanquished the Standard & Poor's 500 Index, outperforming me and most other money managers I know. The Robot's return for 2005 was 29.2 percent, as against 4.9 percent for the index. Figures are total returns, including dividends. What is this Robot Portfolio? It is a simple computer- driven model that selects deeply out-of-favor stocks."
The stumblers list
"No one likes to falter at the start of a race. Yet a bad start doesn't rule out a victory. Every February I try to identify a few stocks that have stumbled out of the gate but that I think will regain their stride. Among the stocks I want to highlight this year are Pilgrim's Pride Corp. and Murphy Oil Corp."
"For the Nonsensical Nine, I look at U.S. stocks with a market value of $1 billion or more, selling for at least three times book value (assets minus liabilities per share). Then I select the three stocks that sell for the highest multiple of earnings, the three that sell for the highest multiple of revenue, and the three that have the highest ratio of debt to equity."
Stingy Links: Dreman
Value keeps steaming on
"Last year was my 25th as a Forbes Columnist, but the market didn't give me much of an anniversary gift. The struggle between bulls and bears in 2005 was reminiscent of 2004, with the S&P 500 even by October. Both times the market went on to rally later in the fall and finished the year ahead. At year-end 2005 the S&P clocked a 3% appreciation, in 2004 9%. With dividends added, last year's S&P total return was 4.9%."
Deficient Market Theory
"How nice life would be if all bad ideas went out of style, like the divine right of kings, medicinal bloodletting and leisure suits. Unfortunately, a muddled notion called the efficient market hypothesis refuses to go away. This absurd thesis holds that nobody can beat the market, stocks always are correctly priced according to what's publicly known about them and any mispricings are chimeras."
Stingy Links: Economy
Investigating a grim trade in stolen human tissue
"Nicelli allegedly got many of the corpses from funeral directors in New York, New Jersey and Philadelphia who had hired him to embalm them in his Brooklyn facility. A single harvested body could yield $7,000."
Marriage builds wealth and divorce destroys it
"A study by an Ohio State University researcher shows that a person who marries - and stays married - accumulates nearly twice as much personal wealth as a person who is single or divorced. And for those who divorce, it's a bit more expensive than giving up half of everything they own. They lose, on average, three-fourths of their personal net worth."
39 jobs where women make more than men
"In the 39 jobs listed below, women's median earnings exceeded men's by at least 5 percent and in some cases by as much as 43 percent."
Searching for the invisible man
"The French, according to George Bush, have no word for them, economic theory has surprisingly little room for them, and it is a mystery why anyone would choose to be one of them. Entrepreneurs are the leading men of capitalism, the venturesome protagonists who move the plot forward. But economic theory gives them few if any lines to read."
The middle class on the precipice
"During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months."
The land of leisure
"Over the past four decades, depending on which of their measures one uses, the amount of time that working-age Americans are devoting to leisure activities has risen by 4-8 hours a week. (For somebody working 40 hours a week, that is equivalent to 5-10 weeks of extra holiday a year.) Nearly every category of American has more spare time: single or married, with or without children, both men and women. The only twist is that less educated (and thus poorer) Americans have done relatively better than more educated ones (see chart). And that is not just because unemployed high-school drop-outs have more free time on their hands. Less educated Americans with jobsthe overstretched middle class of political lore - do very well."
Stingy Links: Fun
101 dumbest moments in business
"From notorious former mental institutions being converted into high-end condos, to candy bars with curious names, see the top examples of shenanigans, skullduggery, and just plain stupidity of the year."
The happiness business
"What matters to your sense of well-being, happiometricians conclude, is not your absolute circumstances but how you stack up against the neighbors. Even a millionaire will feel miserable in the company of billionaires, poor sod. I field-tested all this by reading a slew of academic papers on the subject. I found myself feeling a lot happier when I imbibed a rather expensive bottle of wine along with the papers, suggesting one empirically proven instance where wealth did improve one's sense of well-being. Indeed, the longer I continued the experiment, the happier I felt."
Stingy Links: Funds
Seven sins of fund management
"How can behavioural finance inform the investment process? We have taken a hypothetical 'typical' large fund management house and analysed their process. This collection of notes tries to explore some of the areas in which understanding psychology could radically alter the way they structure their businesses."
Stingy Links: Government
"Mind you, the soothing platitudes are undoubtedly met with exuberant joy by one group: the con artists. Placated and passive investors make great customers. When the investments fail, blame is placed on anything but lax financial reporting requirements."
More than a notional improvement
"For much of the past 25 years, most discussion of state pensions has been about funding: getting today's workers to save now in order to pay for their own retirement later. Systems in many countries have moved from pay-as-you-go financing, in which today's workers pay for today's pensions, towards individual accounts in which workers accumulate their own cash."
"Will insurance companies be able to sell variable annuities to anyone over 60 anymore? With Sarbanes-Oxley and the Financial Accounting Oversight Board firmly in place, U.S. regulators are zeroing in ever more closely on other issues they see as the next big threat to investors' wallets. One is executive pay. The other, not yet garnering the same headlines, is the selling to retirees of variable annuities, the long-term, tax-deferred investment plans that have stirred controversy over alleged dubious sales practices across the insurance industry."
The States' tobacco addiction
"Philip Morris is America's largest maker of cigarettes, a product legal to use but problematic to merchandise legally. Cigarettes are stigmatized by common sense and all state governments. But because those governments are increasingly addicted to cigarette tax revenue, the governments must be careful not to make cigarettes so expensive they do not sell well."
The tip of the scandal iceberg?
"An acquaintance who works for a welfare office in Ontario was recounting over dinner recently her experiences dealing with recipients who obtained benefits fraudulently. Pausing momentarily, she said: "But our internal auditor has found worse stuff." "He says some recipients were sending their welfare payments to designations in Iraq. He is so appalled that he is ready to go public." I contacted the auditor indirectly (through the acquaintance) to try to ascertain the details, but his ardor for whistle blowing is wavering as he reflects more seriously on the possible repercussions to career and family."
Card Money in New France
"The French were constantly at war with the Iroquois. In 1684, new soldiers had arrived from France for another campaign against them. However, in the fall of that year, the annual appropriations failed to arrive. The intendant of the colony, Jacques de Meulles, had no funds to pay colonial officials and troops. (The intendant was what could be called the top bureaucrat in the colony, second only to the governor who represented the king.) In June 1685, he decided to issue his own credit notes. Because good paper was rare, he collected the playing cards in the colony and, with his seal and signature, issued them in various denominations as paper money. By an ordinance, the cards became legal tender and merchants had to accept them."
Stingy Links: Indexing
ETFs claiming superior stock selection draw fire
"Call it the Battle of the Eggheads. The latest upstart in the evolving exchange-traded fund business is a set of ETFs linked to indexes that claim superiority over standard market benchmarks. Proponents of these new measures say their sophisticated, proprietary strategies can identify winning stocks. Not everyone agrees."
Index ETFs: watch your weight
"Unlike most S&P index funds, which are market-cap weighted, the Rydex S&P Equal Weight Fund offers greater exposure to undervalued stocks"
Stingy Links: Law
HD: Why he couldn't do it today
"Going public and entrepreneurship were the keys to our success. If you're a public company today, you have to be surrounded with lawyers and you can't make a decision without a lawyer on one side of you and an accountant on the other side. Today, you just can't use your business judgment to take the risks that must be taken for a new company to succeed. And, one share value-killer lawsuit can kill a startup company. Back in 1978, those lawsuits were rare. Today, all you have to do is pick up a newspaper and read about one after another."
Stingy Links: Management
When the blind see better
"The combined compensation for the heads of America's 500 biggest companies increased by 54% in 2004. Harvard professor Lucian Bebchuk's calculations show that the top five executives now collect 10% of the average big firm's net income, double the percentage a decade ago. This is a problem that affects not just morale but competitiveness."
Stingy Links: Markets
Brain scans show link between lust for sex & money
"The pleasure of orgasm, the high from cocaine, the rush of buying Google Inc. at $450 a share --- the same neural network governs all three, Knutson, 38, concluded. What's more, our primal pleasure circuits can, and often do, override our seat of reason, the brain's frontal cortex, the professor says. In other words, stocks, like sex, sometimes drive us crazy."
The yield curve
"The paper that they published used the spread between the 90 day T-bill and the ten year bond. For the record, the average ten year bond since 1982 has yielded 7.31%, the average 90 day T-bill was 5.49% and the average spread was 1.82%. For the record, today we have the 90 day at 4.08%, the ten year at 4.39% for a difference of 0.31%. They used the 90 day average of the spread rather than the actual one day spread. This is important. There are several times where the yield curve inverted for a few days but did not stay that way for long. Recessions did not follow. So, the fact that the two year and the ten year inverted this week does not mean we will see a recession next year. In fact, it may not mean anything other than it was a slow week in the bond pits. We saw the spread on the yield curve roughly where it is today in 1996. It was four years later that we had a recession. Hear is a graph of the 90 day-ten year yield curve spread."
The asset of choice for the long run
"Where should you invest your hard earned money? Using history as a guide, the answer overwhelmingly is in stocks."
A focus on the exceptions that prove the rule
"Despite the shortcomings of the bell curve, reliance on it is accelerating, and widening the gap between reality and standard tools of measurement. The consensus seems to be that any number is better than no number - even if it is wrong."
The marketplace of perceptions
"Like all revolutions in thought, this one began with anomalies, strange facts, odd observations that the prevailing wisdom could not explain. Casino gamblers, for instance, are willing to keep betting even while expecting to lose. People say they want to save for retirement, eat better, start exercising, quit smoking - and they mean it - but they do no such things. Victims who feel they've been treated poorly exact their revenge, though doing so hurts their own interests."
Go for momentum or recovery?
"Should investor's stick with last year's star performers -- or bet that loser sectors will rally? Let's see what history tells us"
Stingy Links: Real Estate
Most overvalued housing markets
"Sixty-five of the nation's 299 biggest real estate markets are severely overpriced and subject to possible price corrections."
Foreclosures: Bargain hunters beware!
"You might think that a slowing real estate market would make foreclosure investing a snap. Don't bet on it."
From Dutch history, an exuberant lesson
"What makes Pieter Fransz's neighborhood unique - and uniquely interesting to some economists who are studying today's global real-estate boom and wondering whether the bubble that has been expanding for the past decade and more is in the process of bursting - is what real-estate experts call a constant quality index."
Stingy Links: Retirement
Retirees: look out below
"The number of private pension plans fell by 75% over the past two decades to 31,000 and now cover a mere 20% of workers. In 2004 alone, 11% of surviving plans were frozen to new contributions, according to Barclays Global Investors. All told, less than half of U.S. workers are now offered any pension plan at all"
"Studies show that many people overestimate their knowledge of everything from inflation to risk diversification and compound interest. One survey in Australia found that 37% of people who owned investments did not know that they could fluctuate in value. In America 31% did not know that the finance charge on a credit-card statement is what they pay to use credit."
Stingy Links: Stocks
The wit and wisdom of Peter Lynch
"Peter shared his rules/observations on investing (8 of them) and proceeded to share some thoughts on each point and then talked about 10 wrong-headed and dangerous things that people say (often to themselves) about investing. It never hurts to review the fundamentals and glean insights from superstars like Peter so we took the time to share the essense of his message below."
The dirty little secret about buybacks
"The problem, says Thomas M. Doerflinger, an equity strategist at UBS, is that you can't easily tell how much of what companies say they're spending actually gets to investors. In a recent report on what he calls "vanishing buybacks," Doerflinger found that the number of shares in the S&P 500 has continued to increase despite the bigger share-repurchase outlays by companies. In 2004, when companies reported spending some $197 billion on buybacks -- nearly 2% of the market value of the index -- the number of shares outstanding increased by 1.8%. In the 12 months through June 2005, shares increased 0.7%, and only a third of the companies actually shrank their share counts by at least 1%."
Chicken Run: Value manager's dream?
"On the surface, chicken stocks like Sanderson Farms, Gold Kist, and Pilgrim's Pride are a value manager's dream. Most of them are not very leveraged, they generate a decent return on capital, and best of all, they trade at single-digit P/E based on last year's earnings.So, are chicken stocks the value manager's dream, or are they a value trap in the making?"
"Lots of top-quality stocks are trading near 52-week lows, so investors have plenty of opportunities."
The tragedy of General Motors
"The Detroit giant is a weird, scarred combination: a carmaker doing poorly, and an insurance company engulfed by its obligations. It's heading for a wreck -- which is why CEO Rick Wagoner has the toughest job in business."
Stingy Links: Trusts
Pyramid income trust
"I'm offering you a guaranteed opportunity to make a fortune. You can get in on the ground floor of an investment idea that has been so thoroughly researched I'm tempted to use the words "sure thing." I need you to give me money so that I can buy a business. The type of company is irrelevant; I'll just grab the first thing that comes along. Profitable or unprofitable, it just doesn't matter. I'm going to cook the books anyway. We're just in for a quick flip. With a little magic, we can sell it for three times what we paid."
Stingy Links: Value Investing
'Odds investor' O'Shaughnessy likes to play the house
"The most successful investment strategies I've ever tested all can be put on the back of a business card. When the math gets higher than algebra, it's pretty certain that you'll lose your money."
Value investing and the business cycle
"Empirical evidence suggests that value investing based on high valuation ratios (that is, book-to-market ratio, earnings-to-price ratio, cash flow-to-price ratio, and dividend yield) tends to outperform growth investing based on low valuation ratios. This superior performance is robust for all economic conditions, meaning that investors will be better off investing in stocks with high valuation ratios versus stocks with low valuation ratios regardless of economic conditions. The benefits of value investing are even greater during periods of contraction than during periods of expansion."
The price of victory
"Call him the bad-news bull. As chief investment officer of the $1.8 billion Olstein Financial Alert Fund (OFALX), Bob Olstein has made a career out of digging into the numbers and buying up the stocks everyone loves to hate."
The best investor of his generation
"He walked away from Goldman, racked up better returns than Buffett...and talked kidnappers into letting him go."
How Eddie Lampert picks his stocks
"Like Warren Buffett, Eddie Lampert calls himself a "value investor," meaning he buys into companies whose assets he calculates are worth more than the current trading price. "The idea is that I'm going to pay this price and great things may happen, but they don't have to happen for me to do okay," he says."
Neff shares picks
"Neff beat the Standard & Poor's 500 index by an average of 3.15 percentage points a year over the 31 years that he managed the Vanguard Windsor Fund. Investing for his own account since his retirement in 1995, Neff says he has widened his lead. As a value investor, he shops for sturdy investments among stocks hitting 52-week lows."
5 key lessons from Bill Nygren
"Buy stocks only when they sell for at least a 40 percent discount from their fair market values. If things do not go as well as you expect with an investment, this provides downside protection. If things go well, this gives a slingshot effect on the upside as the market closes the gap between a firm's price and its value."
A meeting with Mr. Greenblatt
"I have gravitated towards Buffett over the years. Good things happen to good businesses. I prefer good to cheap. But I do not categorize companies very often. I look at the spinoff area, for instance, but I am mainly looking for good businesses. I am an "equal opportunity money maker." It's all investing. Figure out what something is worth and pay a lot less."
Patient Capital Management Q4
"The overvaluation is even more evident when trying to find specific undervalued securities. In a Canadian universe of approximately seven hundred publicly listed companies with a market capitalization of greater than one hundred million we could only find thirty eight candidates with a debt equity ratio of less than one and a price to book ratio of less than 1.2x. During more typical market conditions this group would yield approximately two hundred prospects. In depressed markets this screen would provide more than four hundred possible investment opportunities."
The magic money machine
"In November, Joel Greenblatt, a hedge fund manager in Manhattan and now an adjunct professor at Columbia Business School, zoomed onstage with the fanciest money machine yet. Greenblatt, who is no fan of delicate understatement, calls his the Magic Formula and espouses it in his newly published treatise, modestly entitled The Little Book that Beats the Market. The Magic Formula consists of picking U.S. stocks that are both highly profitable (as measured by their return on capital) and also relatively cheap (as measured by their earnings yield)."
Talking panic buying with Joe Feshbach
"Hedge fund manager Joe Feshbach looks for value in crisis. The manager of Joe Feshbach Partners seeks out companies that are in trouble, anything from accounting scandals to criminal investigations to management turmoil. In short, Feshbach likes to buy when everyone is selling."
Traditions in value investing
"Value investing is partly a state of mind. It is characterized by habitually relating the price of a stock to the value of the underying business. Basic principles of fundamental analysis are the tools. They arise from three traditions"
Templeton's Mobius outlasts critics
"Mobius says his "buy-and-hold" strategy helps him to avoid chasing gains that may not last and to develop the wherewithal to invest in markets that have underperformed. "I'd love to be a stock jockey, but that implies that you're able to anticipate events that happen from one day to the next, and that's really impossible," he said. "We tend to take a longer view and not go overboard in any one direction.""
Stingy Links: Whitman
Third Avenue Q1 2006
"The Fund's definition of Net-Nets is taken from Graham and Dodd's Security Analysis, but with a few twists. Graham and Dodd relied on a GAAP classified balance sheet to define current assets in order to ascertain if a common stock was a Net-Net. TAVF uses its own judgment rather than GAAP classification to define current assets in order to decide what is a liquid, i.e., current, asset."
Third Avenue Q4
"During the quarter, I reread three volumes authored by great economists: The General Theory of Employment, Interest and Money by John Maynard Keynes, The Road to Serfdom by F. A. Hayek, and Capitalism and Freedom by Milton Friedman. I came away with the impression that each was observing the earth with their naked eyes from 80,000 feet up. They missed a lot of details that are part and parcel of every value investor's daily life."
Whitman's "cowardly" safe-and-cheap way
""It is absolutely crazy to pay more than 60 cents on a dollar for non-controlling interests in businesses. The outsiders always face agency problems," said Marty Whitman."
What's wrong with value investing?
"Value investors never hesitate when they ask "What's the bad news?" and "What's wrong?" Last year, Seth Klarman talked about the bad news of value investing and complained that the field is getting too crowded. On February 16 th, 2006, Martin Whitman went further to make a list about what's wrong with value investing in his talk at NYSSA."
Stingy Links: World
Eying Brazil for business
"A republic since 1889, the Republica Federativa do Brasil, after years of erratic military escapades, peacefully transitioned to the presidential democracy in 1985. Since then, Brazil began to pursue modern development and growth on various fronts, including promulgating the constitution in 1988, defeating the hyperinflation--accumulated to astronomical digits during 1964-94, heavily promoting foreign investment and trade, deregulating the markets, privatizing numerous state owned companies, and relinquishing the dollar-linked exchange rate in 1999."
Gloom in France
"This year, for the first time, almost the entire proceeds of French income tax will go to pay interest on public debt. In his report, Mr Pebereau said that, on present trends, France's public debt will jump from 66% of GDP to 100% by 2014."
Stingy Links: Zweig
Good advice, or advice that sounds good?
"In the short run, however, the best way to get ahead is to check your conscience at the door. Most readers, and all too many editors, want to hear about the newest, the hottest, the get-rich-quick schemes, the secret "keys to wealth" that have miraculously been overlooked or hidden by "the experts." Good advice easily gets drowned out by advice that just sounds good. In 1999, any journalist who peddled the sexy idea of putting all your money in tech stocks was hailed as a genius. At the same time, anyone who preached the sober gospel of caution was called a "moron," a "f--head" or an "ignorant a--hole." (That is a delicate selection from among the thousands of e-mails that criticized my online columns in 1999 and 2000.) When markets go mad, the responsible financial journalist has to stand as a voice of reason -- even though leaning against the wind isn't easy in a hurricane."
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