Behavior Finance Pioneer on Efficient Markets, Bubbles

Richard Thaler, the researcher whose work has brought such key behavioral finance issues as myopic loss aversion to light, says recent events have shown markets are not efficient, but that they are still the best way to employ capital. “Counting the earlier bubble in Japanese real estate, we have now had three enormous price distortions in recent memory,” Thaler wrote in The Financial Times. “They led to misallocations of resources measured in the trillions and… Read More

Siegel Fires Back on Long-Term Data

Last month, we highlighted Wall Street Journal columnist Jason Zweig’s criticism of the long-term stock return data that Jeremy Siegel has used in his book, Stocks for the Long Run. Zweig said that the data Siegel used for 1802-1870 was “rotten with methodological flaws”, saying it was cherry-picked, filled with survivorship bias, and included an estimated dividend yield that was likely too high. The criticism was big news — Siegel’s book is something of a… Read More

Fisher: It’s a Bull

Money manager and columnist Kenneth Fisher writes this month in Forbes that the bear market has indeed ended. “This rally has taken stocks up 55% from their Mar. 9 low, as measured by the Morgan Stanley All World Index. That’s far bigger than any global bear market sucker rally,” Fisher writes, reiterating his previous contention that we had been in a “reverse bubble” — a climate in which fear pushed prices down to irrationally low… Read More

Mauldin to Bulls: Not So Fast

John Mauldin, the economist and strategist from Millennium Wave Investments, isn’t buying the bullish views many strategists are now offering. In an interview with Yahoo!TechTicker, Mauldin says the market has gotten “way ahead of its fundamentals”. Mauldin says too many are trying to compare this recession to past recessions. “This recession is completely different,” he says. “It’s a deleveraging recession. …. And that’s a completely different animal.” In such a climate, he says, fundamentals are… Read More

Goldman’s Cohen Says Bull Market Has Begun

Goldman Sachs Senior Investment Strategist Abby Joseph Cohen says Goldman believes we’re in a new bull market, and that the S&P 500 should be at 1050 to 1100 by year-end. “We are beginning to see improvement, even in the labor market,” Cohen told CNBC. “We do think that the new bull market has begun. … [But] don’t expect it to look to look like a ‘V’; expect it to look like a series of upward… Read More

Are Stocks & Real Estate the Places to Be?

Known as the dean of contrarian investing, David Dreman is staying true to his against-the-tide approach, telling CNBC that he thinks stocks and real estate — two of the areas hit hardest in the past couple years — are the place to be moving forward. (Thanks goes to Value Investing Pro for posting the video.) Dreman says he thinks the stock market will be volatile but overall be “much higher” over the next three to… Read More

Reese on Market-Beating Buffett Model

In an interview with FOX Business News, Validea CEO John Reese talks about his Warren Buffett-based Guru Strategy and model portfolio, which is up 34.6% this year. Reese discusses the specifics of how his Buffett-based approach works and what variables it keys in on, and he explains why his model is significantly outperforming both the S&P 500 and Buffett’s own Berkshire Hathaway this year. In addition, Reese offers three “Buffett-type” stocks that his model is… Read More

Stiglitz Sees “Malaise” Ahead

Joseph Stiglitz, a two-time Nobel Prize winner and Columbia University economist, sees more rough sledding for the economy, and says the government should provide more stimulus funding to help with state government shortfalls and consumption slowdowns. Stiglitz tells Yahoo! TechTicker that, while the sense of economic free-fall has ended, the likelihood of real gains in employment anytime soon are “very remote”. There is serious risk of an “extended malaise” as the economy recovers, he says.

Krugman on the Stimulus, Inflation, Stocks, and Healthcare

In a wide-ranging interview with Advisor Perspectives, Nobel Laureate, Princeton Professor, and New York Times columnist Paul Krugman says not to quit on the government’s current stimulus package, that he’s not too afraid of inflation, and that stocks don’t appear to be significantly over- or undervalued right now. Regarding the stimulus, Krugman says, “It’s important to remember that the stimulus package has barely kicked in, a point that is lost in the 24/7 reporting on… Read More

Dorfman Adjusts for Post-Recessionary Climate

Thunderstorm Capital Chairman and Bloomberg columnist John Dorfman says the market and economy should continue to trend upward at least into next year. Dorfman says he’s emphasizing industrial cyclicals, materials stocks, and energy stocks in his portfolios, and is cutting back on utilities and healthcare stocks, two areas he had focused on during the downturn. He also offers some interesting thoughts on where tech stocks might be headed, and gives a couple stock picks. [youtube=]