The Benefits of Base Rates

By Jack Forehand (@practicalquant) —   Wall Street prediction season is upon us. It is the time of year when all the major investment banks and market pundits will issue their 2019 market outlooks. They will tell you what they think will happen in the next year and will even by nice enough to give you exact price targets they think the S&P 500 will reach by year end. Unfortunately for all of us, those predictions won’t… Read More

Yale’s Social Investing Needs Clarity

According to an article in Bloomberg by columnist Nir Kaissar, Yale University recently announced that its $29.4 billion endowment could exit private investments it “deems unethical, extending a policy it has long applied to investments in public markets.” But the article argues that the attention garnered by sustainable investing “hasn’t yet translated into investment,” at least as measure by the flow of funds into ETFs: The industry, writes Kaissar, has a basic problem: “Investors are… Read More

Paulsen: Bull Market Needs a 15 Percent Correction

During a recent interview on CNBC, Leuthold Group’s chief investment strategist said, “I think a good gut check to sentiment, like a 15 percent correction, might be just the ticket to extend this bull market.” Jim Paulsen said a correction is necessary to reflect rising interest rates, peaking earnings, and slower economic growth, adding, “What we need is a lower valuation, I think, to sustain a different environment if this recovery is going to continue.”… Read More

Most Read Posts on Validea’s Guru Investor

Below are links to our most popular posts for this week on Validea’s Guru Investor blog.- [1] When Hypothetical Becomes Real [2] Mohnish Pabrai’s Ten Commandments of Investment Management [3] Learning from the Mistakes of Legendary Investors [4] Ideas for Where to Invest $10,000 Now ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Should the Coming Yield Curve Inversion Frighten Investors?

A recent article in Forbes discusses the growing buzz about an impending yield curve inversion and the repercussions for the economy and stock market. “Inverted yield curves have successfully warned about each of the seven recessions over the past 50 years,” the article reports, “which is why investors keep an eye out for them.” When an inversion takes place (the difference between short- and long-term yields falls below zero), the article notes, it “warns that… Read More

Some Buyout Firms Taking Debt-Laced Dividends

A new Moody’s report shows that certain aggressive buyout firms are taking debt-financed dividends from the companies they own, and “potentially jeopardizing their ability to navigate a downturn,” according to an article in Institutional Investor. The report shows that, since the end of 2009, Leonard Green & Partners, American Securities, Golden Gate Capital, TPG, and Apollo Global Management “have most frequently taken debt-financed dividends from companies they’ve bought,” with Apollo standing out because the dividends… Read More

Ideas for Where to Invest $10,000 Now

An article in Bloomberg offers ideas from a panel of experts regarding where to invest $10,000 in today’s financial markets. “It’s a challenging period, ” the article contends, “and an opportunity. The market’s inevitable cycles however painful, are made for disciplined investors.” The experts recommend investments “ranging from digital payment companies to bargains in Japanese and Korean equity markets to high-dividend consumer staple stocks and long-dated U.S. Treasury bonds.” Here are some highlights: Russ Koesterich,… Read More

Richard Bernstein: Income-Chasing a Losing Approach

At a recent press luncheon sponsored by Eaton Vance, Bernstein Advisor CEO Richard Bernstein argued that financial advisors and investors who have “spent the last two years looking for income are big-time losers—they just don’t know it yet.” This according to a recent article in Financial Advisor magazine. Bernstein said that back in 2000, “advisors didn’t want income,” but that after a decade of rock-bottom rates, income has become the primary focus for “yield-starved clients.”… Read More

Investing Strategies of American Billionaires

An article in last month’s Forbes offers a synopsis of the investment approaches of some of our country’s prominent billionaires: Warren Buffett, CEO of Berkshire Hathaway– Buffett uses a “common-sense playbook” of investing in companies that have a track record of making money, that have strong management teams and low debt levels. His mantra is summarized as, “only put your money into companies you understand, and don’t overpay.” Mark Cuban—This investor became a billionaire through… Read More

How to Survive a Bear Market Attack

A recent article in Advisor Perspectives discusses how investors can protect themselves from a bear market (defined as a 20% or higher decline in stock prices). The article offers the following advice: “Run from recessionary bears and stand your ground against others.” As the bull market continues, it says, many a watchful eye are focusing on the yield curve, economic data or “anything to try to get an edge on when to exit the stock… Read More