To paraphrase an old Wall Street advertisement, when Seth Klarman speaks, people listen. He tends to shy away from most investment conferences, but when he does hold court, it’s standing room only. And for good reason. His book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” is considered to be a classic of the modern era, fetching more than $1,000 on Amazon.com, now that it is out of print.  And he backs up… Read More

To paraphrase an old Wall Street advertisement, when Seth Klarman speaks, people listen. He tends to shy away from most investment conferences, but when he does hold court, it’s standing room only. And for good reason. His book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” is considered to be a classic of the modern era, fetching more than $1,000 on Amazon.com, now that it is out of print.  And he backs up his words with numbers. The hedge fund manager has racked up 20% annualized gains for nearly three decades. Outside of the Oracle of Omaha, Warren Buffett, such sustained greatness is hard to find. What is Klarman’s secret? Identifying value investments that have a built in margin of safety. He will only make an investment if he is extremely confident that the investment won’t lose much value, even if his initial… Read More

So far this year, stock market gains have been driven by price-to-earnings (P/E) ratio expansion. That could change in the second half of the year. Earnings Growth Could Add To Market Gains Second-quarter earnings have been coming in slightly better than expected. Nearly two-thirds of companies reporting so far have beaten expectations. Earnings per… Read More

So far this year, stock market gains have been driven by price-to-earnings (P/E) ratio expansion. That could change in the second half of the year. Earnings Growth Could Add To Market Gains Second-quarter earnings have been coming in slightly better than expected. Nearly two-thirds of companies reporting so far have beaten expectations. Earnings per share (EPS) for the S&P 500 index are on track for 3.9% growth compared with a year ago. With growth being so slow, many analysts are worried about a potential market decline. As usual, concern grew when major indexes dropped from all-time highs last week.#-ad_banner-# After losing 1% last week, SPDR S&P 500 (NYSE: SPY) is still up about 23.5% on a total return basis in the past 12 months. Total return has come from earnings… Read More

Mario Gabelli is the value investor’s value investor.  Using a powerful value plus a catalyst stock-picking methodology that has been described as “Benjamin Graham and David Dodd plus Warren Buffett,” his GAMCO… Read More

In any given year, Standard & Poor’s must find a dozen or so new companies to include in its vaunted S&P 500 index.#-ad_banner-# Existing components invariably get acquired, or stumble so badly that they are disinvited from this select group. Getting a tap on the shoulder from S&P is great news, simply because the billion-dollar S&P 500 index funds must immediately buy their shares to give them a proper weighting. Read More

In any given year, Standard & Poor’s must find a dozen or so new companies to include in its vaunted S&P 500 index.#-ad_banner-# Existing components invariably get acquired, or stumble so badly that they are disinvited from this select group. Getting a tap on the shoulder from S&P is great news, simply because the billion-dollar S&P 500 index funds must immediately buy their shares to give them a proper weighting. Analysts at Credit Suisse recently gave the topic some thought, highlighting 10 strong candidates. Later on, I’m going to add another eight of my own in a moment. And in part two of this series, I’ll cite the three most appealing stocks in the group on a purely fundamental basis.  What’s In The S&P 500? Many might suspect that Standard & Poor’s simply chooses companies with the largest market values for inclusion in the index. But… Read More

In any given year, an up-and-coming fund manager is able to make some great investment moves, propelling him to the top of the annual leaderboard. But only a select few have the vision and the skill to lead the pack for decades at a time. The Oracle of Omaha might be the best of them all.#-ad_banner-# Over many decades, Warren Buffett has made his clients huge sums of money —… Read More

In any given year, an up-and-coming fund manager is able to make some great investment moves, propelling him to the top of the annual leaderboard. But only a select few have the vision and the skill to lead the pack for decades at a time. The Oracle of Omaha might be the best of them all.#-ad_banner-# Over many decades, Warren Buffett has made his clients huge sums of money — and equally important — has helped them to avoid losing lots of money when the broader market slumps. Just how awesome has he been for shareholders? His portfolio has outperformed the S&P 500 in 24 of the past 30 years. In that time, he’s garnered an 18% annualized return, compared to an 11% annualized return for the S&P 500. Most impressive of all, Buffett doesn’t rely on some secret formula. While other investment pros talk about their “black box” approach to… Read More

Stock prices reached new highs last week as headlines warned of a weak economy. This might be an illustration of the old saying that “bull markets climb a wall of worries.”… Read More

After the markets steadily fell over the second half of 2008, the first trading day of 2009 brought a dose of investor optimism, with the S&P 500-stock index rising 3% to close at 932. Hopes of a sustained rebound were quickly dashed as the index went on to finish below 700 just a couple of months later. Even the boldest investors, piling their final funds into the market in search of deep value, were about ready to throw… Read More

After the markets steadily fell over the second half of 2008, the first trading day of 2009 brought a dose of investor optimism, with the S&P 500-stock index rising 3% to close at 932. Hopes of a sustained rebound were quickly dashed as the index went on to finish below 700 just a couple of months later. Even the boldest investors, piling their final funds into the market in search of deep value, were about ready to throw in the towel. And then, the clouds suddenly parted on the morning of March 10, 2009, and stocks began to climb and climb. A little more than four years later, the S&P 500 has racked up a stunning 150% gain. Yet as the market moves ever higher, investors have grown antsy. The rally hasn’t come on the heels of a robust economic expansion. Instead, the U.S. economy… Read More

As earnings season reaches the halfway point, we’re once again seeing stunningly large share buyback announcements. Yet investors are scratching their heads. These buybacks are often seen in tandem with share prices hitting fresh multi-year lows. Gone are the days when companies would… Read More

You don’t hear much from George W. Bush these days. You’ll occasionally see a clip of him at a speaking engagement or in a photo-op from time to time, but other than that, not much. What’s he been up to? Allow me to share with you a prediction. I think… Read More

The efficient-market hypothesis isn’t perfect, but it is useful.  According to the EMH, market prices reflect all available information about the future. In other words, the stock price of Apple (Nasdaq: AAPL) includes the best guesses of iPhone and iPad sales trends from millions of investors. Individually, any prediction is just as likely to be wrong as it is to be correct. Collectively, the predictions are often fairly accurate. Available information can change suddenly, and that is why we often… Read More

The efficient-market hypothesis isn’t perfect, but it is useful.  According to the EMH, market prices reflect all available information about the future. In other words, the stock price of Apple (Nasdaq: AAPL) includes the best guesses of iPhone and iPad sales trends from millions of investors. Individually, any prediction is just as likely to be wrong as it is to be correct. Collectively, the predictions are often fairly accurate. Available information can change suddenly, and that is why we often see large price changes when earnings are announced. If a company reports earnings that are better or worse than expected, the market needs to incorporate that information into the current price. As millions of traders make their best guess about what the new information means, we often see gaps on price charts showing their excitement or disappointment.#-ad_banner-# The efficient-market hypothesis extends beyond stock markets and applies to commodities and financial futures as well. Changes in interest rates, for example, are seen when… Read More