No video this week or next.
After the close on Friday I saw a segment on the network with a mutual fund manager and a chap who I believe is a strategist at one of the big banks. Both felt that there were a lot of values out there to be had in places like financials and retailers and they didn't seem to be particularly concerned with the threats of bear market and or recession.
I know some of the theories as to why people like this go on TV to deliver these sorts of messages and I understand most of the theories in this regard but I can't really reconcile why they feel the need to do this.
It makes more sense to me to reiterate the extent to which cycles and the occasional down turn are normal events, they often have similar contributing factors and investors need to decide whether they should take any defensive measures to mitigate the full brunt.
Telling people its ok, don't worry seems more likely to incite panic at the bottom than studying how the market really works (slow declines versus fast declines as one example) as opposed to pointing that bear markets are guaranteed to come along every so often.
Valuations for financials only look cheap if you assume the estimates are correct--how many people really want to make that bet?
Even if you have no analytical ability whatsoever in terms of knowing when the bottom might come you don't need to be Warren Buffet to realize things in the stock and bond markets aren't quite right these days.
The two gentleman in the segment referred to above do a great disservice by not really acknowledging that there are problems and that getting in now might be a good price relative to five years from now but that there could be some serious grief first.
Compare this to Whitney Tilson who came on earlier in the day and owned being early on a couple of purchases last year and conceded that buying now could be a huge home run or not.
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8 comments:
A sure fire way to lose money is to listen to people talking their book on TV. About 3 months ago, I listened to a fellow (who was also invited back about a month later) talking about the attractiveness of insurance stocks. AIG was one of his picks. At $60 it was undervalued. He must really love it now at a 15% discount.
Now, I could only shake my head in disbelief. Why? So many of these insurance companies have portfolios steeped in structured finance. Supposedly he was an expert in this sector. You would have thought that he would have mentioned these securities that are in a state of valuation turmoil. I'm only a peon, but I knew only because I've studied it with some rigor--amateur study without a doubt, but study nonetheless. In fact, I'm living testament that amateur investors, if they are willing to spend some time studying and thinking, can equip themselves to better evaluate the quality of the "investment testimony" they read/see/hear.
And with respect to banks and homebuilders--the clarion cry is that relative to book value they are cheap. Well book value gets written down when you have worthless or materially overstated assets. Of course, dividend yields get touted too....the factors that make the investment community abandon a stock causing its price to plunge and dividend yield go up, are generally the same factors that require a company to conserve capital and cut the dividend. These facts are so often omitted in the breathless recommendation of stocks that are a great value.
That's not to say that there are not some terrific deals to be had. But in general, most of us do not have access to the information that would allow us to make that determination. Vulture cash is wallowing in the books to determine if there is value--and they are capable of understanding the risks. The balance of the investing public, to include portfolio managers and and money runners, are NOT in a position to make this call with any expertise.
The proliferation of media news that essentially is entertainment designed to juice up ratings is viewed too seriously by many who should know better.
Talking heads, authors shilling books, celebrity stock market mavens, money honeys, east coast male yelling machines, CEOs puffing up their company - or themselves, the list of characters filling all media, but especially cable, seems never ending.
I have mentioned previously in a comment that I enjoy reading old issues of business newspapers, magazines and internet sites and see how laughably wrong almost all so-called experts are, given the passage of time.
Media of all types financial are a source of entertainment for me. None take the place of personal research, patience and a humble attitude and time on task to, with a little luck, invest extremely well.
T
I think the best one was when Ken
Fisher was on the international
channel in December. He told
everyone over and over again
"Now is the time to invest in the
US" Well, maybe with the down
dollar but I hope the people that
followed him are in their 20's.
If you go to Ken Fisher's website, he is still an unqualified bull for 2008. go figure....
Sam
Are you saying I should stop watching CNBC and Fox News Saturday morning? :-)
I just posted my models if you're interested: www.regimenia.com
Neither Banks or Financials are in my top 9 U.S. Sectors.
Here is a thesis I like. Please find holes in it.
Certain commodities (grains, oil, metals, gold) are
in a bull market that is likely to run for many years.
Given the demand/supply situation in these, they
are no longer really cyclical in the way that they were
in years past, when supply was less of a problem.
The geopolitics of food and energy have created a
new paradigm.
An interesting new ETF capitalizes on these and more, perhaps Roger has spoken about it before, and I missed it, here is some info on it. It does have
a very high expense ratio, however.
Ticker symbol GCC the Greenhaven Continuous Commodity Index Fund aims to track the performance of the Continuous Commodity Total Return Index, an equal weighted basket of 17 commodities (corn, wheat, soybeans, live cattle, lean hogs, gold, platinum, silver, copper, cocoa, coffee, sugar, cotton, orange juice, crude oil, heating oil and natural gas).
Thanks,
Scoot
"The two gentleman in the segment referred to above do a great disservice by not really acknowledging that there are problems."
Picking on Bush and Kudlow?
politicians are in a tricky spot, whether they should be or not is a different matter but they are.
i do not know what kudlow's purpose is--you can be very gung ho patriotic and still understand that down turns come along every now and then.
GCC is equalweight 17, i believe that is the number, commodities and has the least exposure to energy than any other broad-based commodity product.
Personally I would not put too much into their not being cyclical. an allocation makes sense but not being cyclical is too big of a bet for me.
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