Ten Lessons from The Oracle

MSN.com’s Michael Brush writes today that the current tough times call for “a dose of optimism, wisdom, and insight”, and he thus offers 10 lessons on “the basics”, as taught by Warren Buffett. The lessons mostly focus not on financial expertise, but instead on psychology. “Buffett’s investment success comes from some easy-to-grasp human qualities as much as sophisticated expertise in balance sheets,” Brush writes.”Buffett would be the first to say his homespun and positive philosophy… Read More

Buffett’s ’08 Bargain Binge: $20 billion +

The final tally from Warren Buffett’s 2008 buying spree: $20 billion-plus. “While most investors panicked or were forced to sell, [Buffett] put more than $20 billion to work last year, positioning his insurance-focused conglomerate to profit if the economy and markets recover in coming years,” writes Alistair Barr of MarketWatch. Buffett’s firm had about $44 billion in cash entering ’08, according to Barr, who notes that Buffett had had trouble finding attractively valued investments in… Read More

More Fund Managers Snatching Up Bargains

Money has been flowing out of mutual funds at an incredible rate in the past year, but three well-known fund managers see opportunity in the flight from stocks, BusinessWeek’s Tara Kalwarski writes. Kalwarski interviewed John Rogers of Ariel Fund, David Herro of Oakmark International Fund, and Tom Marsico of Marsico Focus Fund, and found that all are responding to big losses last year by doing quite a bit of bargain hunting right now. Rogers’ fund… Read More

Looking Back at Benjamin Graham’s Lectures – 1946 & 1947

Diehard value investors will appreciate the transcripts of lectures featured in “The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend,” by Janet Lowe. Posted on John Wiley & Sons’ web site, the “lectures are from the series entitled Current Problems in Security Analysis that Mr. Graham presented at the New York Institute of Finance from September 1946 to February 1947.” A special thanks to Todd Sullivan (find him at http://valueplays.blogspot.com) for posting these… Read More

Fisher: Better To Be A Little Early Than A Little Late

Ken Fisher, CEO of Fisher Investments and Forbes columnist, says “it’s better to be a little early than a little late getting back into stocks.” Fisher explains that the stock market is a discounting mechanism, representing “a guess about where the economy (and corporate profits) will be 6 to 24 months in the future.” Fisher warns not to expect an economic recovery before mid- to late-’09, but he says that does not mean that stocks… Read More

Buffett’s “Timeless” Predictions

CNBC.com outlines eight timeless predictions by Warren Buffett on its Warren Buffett Watch blog. While CNBC labels these as predictions, we tend to think of these more like lessons that Buffett offers up to long-term stock market investors. After a year like 2008, Buffett’s lessons provide some perspective on dealing with recessions, bear markets and investor psychology. 1. Recessions can’t be avoided forever. 2. We’ll survive current and future recessions just as we’ve survived past… Read More

Looking at Berkshire’s Holdings by ROE, ROA & ROI

We know that following Warren Buffett’s investments, even after they are publicly disclosed, can produce stellar long-term returns for investors. Knowing this, we decided to take 30 of Berkshire’s Q3 holdings and look more closely at each company’s returns on equity, assets and investment (Validea’s Buffett-based model uses ROE in its formula). By looking at ROE, ROA and ROI, we are able to see what firms in Berkshire’s portfolio are generating the highest return to… Read More

O’Shaughnessy: History Tells Us Now Is The Time to Buy

Jim O’Shaughnessy, Chairman and CEO of O’Shaughnessy Asset Management, believes that equity valuations “present buying opportunities akin to 1974 and 1982.” He writes that investors need to ignore short-term volatility and market-bottom calling, and instead focus on where stocks will be three to five years from now. O’Shaughnessy offers a number of historical stats that put the recent decline, volatility and opportunity in context. One is that “there have only been 66 days that the… Read More

Hulbert: Current Crisis is “Textbook Illustration” of Liquidity Shock

In his regular New York Times column, Mark Hulbert looks at the stock market’s behavior since the credit crisis began and references a 2001 academic study to glean some insight as to what we can learn from these types of periods. He writes, “you can view the markets’ behavior since mid-2007 as a textbook illustration of a statistical pattern uncovered years ago by two finance professors, Lubos Pastor of the University of Chicago and Robert… Read More

Cash-to-Stock Market Ratio has Leuthold Group Bullish on Stocks

The amount of cash, bank deposits, and money-market funds ($8.85 trillion) is equal to 74 percent of the market value of U.S. companies, according to this Bloomberg article. The cash-to-stock market value ratio is the highest it’s been since 1990, according to Federal Reserve data compiled by Leuthold Group and Bloomberg. This huge cash hoard has made some professionals, including Eric Bjorgen of the Leuthold Group, more positive about equities. “There is a store of… Read More