Dorfman: Market Performance after Waterfall Declines – up 24% Over Next 12 Months

Value investment manager and Bloomberg columnist, John Dorfman, provides some historical stock performance statistics after periods of dramatic market declines (or what he calls, “waterfall declines”). According to Dorfman, “market action during and after ‘waterfall declines’ — sudden drops of 20 percent or more in a few days or weeks — tend to follow a pattern, featuring three phases. First there is the dramatic decline itself, often recession-related. Next there is a basing period of… Read More

Value Stocks: They’re Riskier Than You Think

This interesting Wall Street Journal article points out that value stocks, or value investing strategies, have been some of the hardest hit during this bear market and often times underperform during recessions. According to the author, “since the market peak in October 2007, an iShares exchange-traded fund designed to mimic value stocks in the S&P 500 is down some 56%, compared with 53% for the S&P 500 itself. The iShares ETF that mimics “growth” stocks… Read More

Buffett, the Long-Term Optimist: “America’s Best Days Lie Ahead”

Berkshire Hathaway published its long awaited annual report on Saturday. Warren Buffett, CEO of Berkshire, penned the first 20 pages or so. For those who haven’t read the letter yet, we encourage you to take a look as it provides Buffett’s thoughts on a host of issues, including the performance of Berkshire, the mistakes Buffett made last year, his outlook for the economy and other things. Link: Berkshire’s 2008 Annual Report & Letter

Bogle: Recession Will Be Long, But Market Bottom Has To Be Near

Vanguard Founder John Bogle continues to see a lengthy period of continued pain ahead for the U.S. economy — but now he says the stock market has to be getting near a bottom. Bogle, who in mid-November of 2007 — just weeks before the current recession began — said there was a 75 percent chance that the U.S. would enter a recession as consumers pulled back, told Bloomberg that the recession could last another two… Read More

Gross: Be Bold — But Don’t Nationalize Banks

PIMCO’s Bill Gross says that the U.S. government needs to be bolder in its handling of the financial crisis — and says that bank nationalization is not the answer to the problem. “The U.S. and global financial systems require credit creation and foreclosure prevention, not bank nationalization as currently contemplated by some,” Gross writes in his latest market commentary on PIMCO’s web site. “Trillions will be required in the U.S. alone and it is critical… Read More

Dreman on Why to Buy Bank Stocks, and How the Credit Crisis has Hurt Value Investors

Showing the contrarian bent that made him one of the most successful investors of all time, David Dreman says it’s time for investors to jump into banking stocks. “They will come back at some point. It’s essential to the economy,” Dreman tells Q1 Publishing. “We need a banking system we’re confident in. We can’t work without a banking system. We can patch it up for a while and the government will probably take some stake… Read More

Study: Index Funds Top Mutual & Hedge Funds

Index funds may sound boring, but in his latest New York Times column, Mark Hulbert offers some data that indicates index funds may, in the end, actually yield higher net returns than mutual funds and even hedge funds. Hulbert details a study performed by Mark Kritzman, president and CEO of Windham Capital Management and a professor at M.I.T. In the study (presented in the Feb. 1 issue of Economics & Portfolio Strategy), Kritzman developed an… Read More

A Crisis Crash Course from The Gurus

Forbes has put together an extensive guru-inspired special report entitled “Sage Advice to Save Your Portfolio”, explaining, “Extraordinary times require a special dosage of sage advice.” The feature includes pieces about the strategies of such great investors as Warren Buffett, Ben Graham, Philip Fisher, Peter Lynch, William O’Neil, John Templeton, James O’Shaughnessy, Martin Zweig, and Joseph Piotroski. In addition, the special report features articles from John Reese on what you can learn from the similarities… Read More

Want to Avoid Another Depression: Stop Talking About It

They say that those who don’t learn from history are doomed to repeat it. But, when it comes to the “Great Depression” comparisons now springing up amid this terrible economic climate, an equally fitting adage might be that those who dwell too much on history are doomed to repeat it — that’s essentially what Robert Shiller, the Yale University economist who predicted the housing bust and much of the current financial crisis, says. “The attention… Read More