Videos

by Rob Bennett

Wade Pfau, Associate Professor of Economics at the National Graduate Institute for Policy Studies in Tokyo, Japan, has posted preliminary research at his web site showing that Valuation-Informed Indexing provides more wealth for 102 of the 110 rolling 30-year periods in the historical record while Buy-and-Hold does better in 8 of the periods.

Pfau’s research is breakthrough stuff, in my assessment. That said, I believe that his research greatly understates the benefits of Valuation-Informed Indexing (changing your stock allocation in response to big swings in valuations). There are six reasons.

1) Pfau’s research assumes an unlikely scenario — that Buy-and-Holders will hold to their high stock allocations in the face of huge losses.

I just posted this on www.GuruFocus.com, thought the readers would be interested.

I had the pleasure of hearing David Einhorn speak earlier this week. I wanted to try to catch everything he said so I put my notes in short bullet points. He covered a lot of interesting topics including his book Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story, the Federal Reserve, St. Joe and more.

Below are the notes I took. Enjoy!

Read more

By SeekingDelta.com

After a pullback last week in individual investor sentiment this week’s jump puts the sentiment reading back in the elevated range. The NAAIM (active money managers) survey for this week showed an increase of 6.0% in bullish sentiment while the AAII (individual investors) survey showed large increase of 9.5%.

Read more

By Christine Song of http://csongbird.com/

It’s earnings season once again which means public companies are reporting their financials for the quarter ending Dec. 31st. And in my small cap corner of the investing world, one thing I’m seeing a lot of is companies that are either on a spending spree buying other companies or they’re selling off their non core businesses – really, two sides of the same coin. Now if you’re fortunate to own a company doing one or the other, and the market likes the move, then you’ve been rewarded with a nice pop in the stock price. So you’re probably wondering, is it time to sell?

http://seekingdelta.wordpress.com

A couple of interesting things this week from Robert Shiller.

First, in an interview with The Browser he discusses how human psychology drives capitalism and its contributions to the financial crisis. Robert Shiller on Human Traits Essential to Capitalism.

In the interview he recommends five books on the topic. They are:

1. Adam Smith The Theory Of Moral Sentiments
2. The Passions and the Interests: Political Arguments for Capitalism before Its Triumph
3. Nudge: Improving Decisions About Health, Wealth, and Happiness
4. Fault Lines: How Hidden Fractures Still Threaten the World Economy
5. Winner-Take-All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class

   Read more

I did not want to enter the whole Egypt topic because I try to keep my political views separate from my site. Once I decided this was a topic I must discuss, I planned on writing this piece earlier, unfortunately my computer crashed and I had to wait a few days. I reasoned that this topic is so important to commodity prices I must discuss it.

Anyway you probably have read a million articles about Egypt and are thinking what does this financial blogger know about this issue? Well actually I am very in-tuned to politics and mid-east politics in particular. I have lived for years in the region and have close family there. In addition, I listen to several journalists and reporters who have much better sources and a much better understanding of the situation then 99% of the media.   I have made several correct predictions about the whole situation before the media.  On Friday I commented on SeekingAlpha:

If Mubarak survives which I am praying he does even though he is a dictator (unfortunately there is no alternative) he will have to appoint Omar Suleiman as successor, there is no way Gamal would be accepted anymore. He already fled the country.

Sorry for all the delays, my computer hard drive completely crashed and I had no time to work from home. The good news is most of the articles appearing on the site in the future will be mine. I have found time in my busy day to devote to some high quality articles.

I also have a surprise for the readers very shortly. Stay tuned.

This video was sent to me by Bloomberg TV yesterday. It is an interview with legendary value investor Bruce Berkowitz, who was named mutual fund manager of the decade by morningstar. He runs the $17 billion Fairholme fund with the motto “ignore the crowd”.

Below is the video and highlights.

**MANDATORY CREDIT: BLOOMBERG TELEVISION**

Read more

by Rob Bennett

Not one study supports the claim that the market is efficient.

Not one.

Millions of people believe that there are studies supporting this claim. I don’t dispute that for a second. But people believing that there are studies and there actually being studies are two very different things. It’s important that those trying to understand how stock investing works keep the distinction in mind.

Read more

Tim du Toit is editor and founder of Eurosharelab. On his website he reveals what more than 20 years of equity investment have taught him – sometimes at considerable cost. To discover how you can avoid costly mistakes and enjoy greater profits, sign up for his free newsletter “Investing that makes sense” at www.eurosharelab.com

am sure, especially if you use an internet based stock broker, you have seen or used some of the numerous types of orders you can choose from.

But do you know what they all mean?

And do you know that they can also increase your returns by giving you a better purchase and sale price?

In this article I will give you a quick overview of the different order types and how you can optimally use them.

Read more

With the State of The Union earlier this week and the new Congress coming into session earlier this month, I thought it would be interesting to look at politics and stock market returns.

The New York Times ran an op-ed by Tommy McCall on October 14^th 2008 titled Bulls, Bears, Donkeys and Elephants. The article showed data which indicated that the stock market does far better under Democratic Presidents than Republican presidents, using data from 1929.

Read more

by Rob Bennett

A fellow on a discussion board who is highly skeptical of Valuation-Informed Indexing made what I had to acknowledge was a good point the other day. I am always going on about how valuations must be taken into account in investing analyses. This fellow (he posts as “GW”) noted that he has been taking some money out of his portfolio to finance a vacation. Vanguard has been willing to pay him the full stated value of his portfolio amount even though Rob Bennett says that we should be marking down stock prices to reflect the reality that today’s P/E10 value is in the low 20s and the fair-value P/E10 value is 15. Do I think that Vanguard should pay him something less than the stated value of his portfolio?

Read more

In an earlier post I noted my performance for 2010 and how it was calculated. I promised to get to all my buys and sells for the first quarter. I mentioned my gains since inception as 29% from early 08, and 25.85% for 2010. I have ~36 holdings right now. I like diversification but I plan on lowering this number because it is too hard to keep track of all these stocks due to time constraints.

Below I listed my buys for the 4^th quarter of 2010. I will get to sells in a post early this week. I do not have exact numbers from my broker but I have a rough estimate of ~13 return in Q410, almost matching the S&P500’s return for the entire year in one quarter!

Read more

David Alan Tepper is the founder of Appaloosa Management, which is a $3 billion hedge fund investment firm based in Chatham, N.J., just west of New York City. David Tepper initially became interested in the stock market as a young boy watching his father trade stocks in his hometown of Pittsburgh.

Read more