Grantham: Economy Could Struggle for a While; Stocks Won’t

A couple more tidbits from Jeremy Grantham: the long-time bear who recently turned bullish tells USA Today that the economy could be in store for a lengthy period of trouble. “Grantham thinks that ‘we could have something reminiscent, in some respects, to the Japanese situation’ that began in the early 1990s and continued well into this decade — a long, low-grade deflationary recession’,” the newspaper reports. “U.S. investors in stocks and bonds may have to… Read More

Grantham Says ’09 Analyst Earnings Estimates Much Too High

Jeremy Grantham, manager of the $100 billion investment firm GMO, believes analysts’ 2009 earnings estimates are “vastly overstated”, writes Forbes James M. Clash. “Grantham says S&P 500 earnings could easily drop 30% to $65,” Clash says, adding that Grantham “thinks the index is close to fairly priced at its Nov. 13 close of 911. But he notes that bear markets overshoot as often as bull ones do. So he guesses that the index will bottom… Read More

Dreman: Now Is One of Greatest Buying Opportunities of Your Life

In Forbes new “2009 Investment Guide” issue, contrarian specialist David Dreman says that now is the time to buy stocks. “Do not flee the market by selling your quality stocks,” Dreman writes. “Yes it’s the worst bear market since 2000-02, and stocks are trading at valuations not seen in decades, but equities will come back.” Dreman has been pretty bullish in recent months, but he now appears to be a making a major bull call… Read More

PIMCO’s Gross: Stocks Cheap — According to Old Standards

Bill Gross, managing director of investment manager PIMCO, says stocks are selling at very low historical levels — but only if looked at “in the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates”. Unfortunately, Gross writes on PIMCO’s web site, “That world … is in our past, not our future”. Gross — who six years ago incorrectly predicted the Dow, then at about 8,500, would fall… Read More

Bogle on Buy-and-Hold Bashers, Recession, and The Bounce

In an interview with the Associated Press, John Bogle says he expects the current recession will last longer than many think, perhaps as long as two years. But despite that prediction, he says critics who have been questioning the sensibility of a buy-and-hold approach are wrong. “They’re wrong to question it,” he says. “Because for all of the last century really, stocks have gone up and down with some frequency. In fact, this is my… Read More

Buffett, Berkshire Navigating Subprime Better than Many

While many have criticized Warren Buffett’s recent Goldman Sachs stock buy (Goldman shares have tumbled since Buffett bought $5 billion in preferred stock on Sept. 23), Bloomberg’s Ari Levy reports that Berkshire Hathaway’s overall financial stock performance has been well ahead of the sector average in recent months. Writes Levy, “Berkshire’s bank-related investments rose 36 percent in the third quarter, while the 84-member Standard & Poor’s 500 Financials Index declined 0.2 percent.” For the past… Read More

Siegel Answers Critics: Yes, Stocks Really Are Cheap

Jeremy Siegel isn’t backing down from his contention that stocks are “dirt cheap”. While his recent comments about the market being undervalued have led to criticism, Siegel writes in Yahoo! Finance today that “Yes, Stocks Are Dirt Cheap”. Using a variety of long-term earnings figures, Siegel presents evidence supporting his view of the market’s current value. “The low level of stocks today is not a result of investors expecting current depressed levels of earnings will… Read More

Icahn: Some Stocks, Senior Debt Offer “Great Opportunity”

Renowned corporate-raider-turned-sharholder-activist Carl Icahn tells Barron’s that there are great buying opportunities in this market, particularly in stocks and senior corporate debt. Icahn talks about the problems with corporate management in America, as well as the stake he has in Yahoo! (he owns around 5.4% of the firm) and his ideas on how to maximize shareholder value. Icahn — who stressed that the market could get worse despite the great values that exist — also… Read More

Buffett to Disclose More on Derivatives; Tilson Ups Berkshire Stake

Warren Buffett says he will give more information on Berkshire Hathaway’s much discussed derivative bets in the company’s end-of-year-report, Reuters is reporting. The derivatives contracts call for the firm to pay out billions to purchasers if, by certain dates starting in 2019, four different market indices fall below agreed-upon levels. Rumors that Berkshire’s liabilities for the contracts could be more than previously thought caused the firm’s stock to plunge — and its credit default swap… Read More

Hulbert: Small-Cap Value Stocks May Be Ripe for Impressive Gains

Small-cap value stocks are risky but they also historically produce jaw-dropping gains at the begining of bull markets, Mark Hulbert writes in the New York Times. Referencing academic research performed by professors Eugene Fama (University of Chicago) and Kenneth French (Dartmouth), Hulbert writes that small-cap value stocks (stocks with the lowest price/book ratios) “gained 17.1 percent, on average, in the first three months following the 13 market bottoms since 1969, equivalent to an annualized rate… Read More