Shares in Asia rose on positive indications about recovery after Japan's government said their economy will expand for the first time in three years and industrial production rose at the fastest pace in six months in November, while China upwardly revised prior growth figures. Japan's Nikkei 225 Index rose 1.3% after it was reported that industrial production rose 2.6% in November versus the 2.5% estimate, despite a bigger drop in large retailer sales than expected at -9.6%. The Japanese government said on Dec. 25 that its 7.2 trillion yen ($78.8 billion) stimulus package unveiled earlier this month would probably boost GDP by 0.7% in 2010 and create about 200,000 jobs.
In China, the estimate of 2008 GDP was upwardly adjusted to 9.6% from 9.0% and the government said this year's previously reported quarterly figures will also increase. Chinese Premier Wen Jiabao reiterated the desire to cool property prices, saying that "property prices have risen too quickly in some areas and we should use taxes and loan interest rates to stabilize them," while maintaining a "moderately loose" monetary policy and a "proactive" fiscal stance, saying it would be a mistake to withdraw stimulus too quickly. Wen added that China will "absolutely not yield" to calls to allow the yuan to appreciate, saying that "Keeping the yuan's value basically steady is our contribution to the international community at a time when the world's major currencies have been devalued." Wen also addressed bank lending, saying "it would be good if our bank lending was more balanced, better structured and not on such a large scale," but that the situation "has been improving in the second half of this year."
Despite the property comments, shares of Chinese property stocks rose, and the Shanghai Composite increased 1.5%. Prices of property were also on the mind of investors in Hong Kong, after the city's government sold two sites at prices below market expectations, and the Hang Seng Index was the only major equity benchmark in Asia to decline, falling 0.2%, while South Korea's Kospi Index increased 0.2% and the Australian market was closed. In equity news, China Mobile (CHL $45) erased early losses and gained 0.3% despite a report that the company's Vice Chairman was being investigated by the government in connection with an unspecified "serious disciplinary breach."
[Schwab Alerts]
Monday, December 28, 2009
Monday, December 21, 2009
the worst decade ever for stocks
The U.S. stock market is wrapping up what is likely to be its worst decade ever.
In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.
Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.
The period has provided a lesson for ordinary Americans who used stocks as their primary way of saving for retirement.
Journal Community
Vote: Are you better off today than 10 years ago?
Many investors were lured to the stock market by the bull market that began in the early 1980s and gained force through the 1990s. But coming out of the 1990s—when a 17.6% average annual gain made it the second-best decade in history behind the 1950s—stocks simply had gotten too expensive. Companies also pared dividends, cutting into investor returns. And in a time of financial panic like 2008, stocks were a terrible place to invest.
With two weeks to go in 2009, the declines since the end of 1999 make the last 10 years the worst calendar decade for stocks going back to the 1820s, when reliable stock market records begin, according to data compiled by Yale University finance professor William Goetzmann. He estimates it would take a 3.6% rise between now and year end for the decade to come in better than the 0.2% decline suffered by stocks during the Depression years of the 1930s.
In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.
Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.
The period has provided a lesson for ordinary Americans who used stocks as their primary way of saving for retirement.
Journal Community
Vote: Are you better off today than 10 years ago?
Many investors were lured to the stock market by the bull market that began in the early 1980s and gained force through the 1990s. But coming out of the 1990s—when a 17.6% average annual gain made it the second-best decade in history behind the 1950s—stocks simply had gotten too expensive. Companies also pared dividends, cutting into investor returns. And in a time of financial panic like 2008, stocks were a terrible place to invest.
With two weeks to go in 2009, the declines since the end of 1999 make the last 10 years the worst calendar decade for stocks going back to the 1820s, when reliable stock market records begin, according to data compiled by Yale University finance professor William Goetzmann. He estimates it would take a 3.6% rise between now and year end for the decade to come in better than the 0.2% decline suffered by stocks during the Depression years of the 1930s.
Friday, December 18, 2009
the man who saved the economy (according to Warren Buffett)
Over dinner at the amazing Piccolo Pete's, the Italian restaurant in a working class neighborhood that seems to set aside most of the restaurant just for him, he said the economy had really been in desperate shape last fall.
The man who saved it, he said, was Ken Lewis, beleaguered head of Bank of America (BAC, Fortune 500). By buying Merrill Lynch just as everything at Lehman was falling apart, he put some confidence back into the system and stopped -- or helped mightily to stop -- a "run on the bank" which would have laid waste all of Wall Street.
If Merrill had failed, said Buffett, it would have been followed swiftly by Morgan (MS, Fortune 500) and then by Goldman. By overpaying wildly for Merrill, Lewis essentially saved the nation from financial collapse.
Without that buy, commercial paper would have simply stopped dead and the banks' slender capital would have been swamped by debt as that commercial paper could not be rolled over.
The man who saved it, he said, was Ken Lewis, beleaguered head of Bank of America (BAC, Fortune 500). By buying Merrill Lynch just as everything at Lehman was falling apart, he put some confidence back into the system and stopped -- or helped mightily to stop -- a "run on the bank" which would have laid waste all of Wall Street.
If Merrill had failed, said Buffett, it would have been followed swiftly by Morgan (MS, Fortune 500) and then by Goldman. By overpaying wildly for Merrill, Lewis essentially saved the nation from financial collapse.
Without that buy, commercial paper would have simply stopped dead and the banks' slender capital would have been swamped by debt as that commercial paper could not be rolled over.
value investing and longevity
VALUE investing is about buying undervalued securities. It's about looking at parts of the market where nobody is looking. And selling out when everybody starts to get excited.
Value investors have deep convictions on what they think offers value. And to minimise the chances of them being wrong, they allow for a significant 'margin of safety' - that is, the securities they buy into have to be so undervalued that even if things get much worse, there is not much room for them to fall further.
Value investing requires patience. It requires independence of thought. And because value investors have such deep conviction that what they buy is trading at below market value, even if the general market were to plunge, they don't panic. In fact, they would see this as an opportunity to buy more.
As a result of all these factors, value investors are said to sleep better at night. And conceivably, they are not so highly strung. Their stress level would be lower than those who chase after the market and whose mood swings along with it.
Perhaps all this explains why some well-known value investors live much longer than the average person.
Don't believe me? Let's see.
Benjamin Graham, father of value investing and mentor of Warren Buffett, is the author of Security Analysis and The Intelligent Investor. In Security Analysis, he advocated a cautious approach to investing. In terms of picking stocks, he recommended defensive investment in stocks trading below their tangible book value as a safeguard against future adverse developments often encountered in the stock market. A professor at Columbia Business School, he lived until 82.
David Dodd, also a professor at Columbia Business School and co-author of Security Analysis, lived until 93.
John Templeton was noted for borrowing money from family and friends when he was 27, to buy 100 shares of each company trading at less than US$1 (US$15 in current dollar terms) a share in 1939. He made many times the money back in a four-year period. He became a billionaire by pioneering overseas investment funds in the US. He died last year at 95, after devoting many of his later years to philanthropy.
Philip Fisher, author of the still-popular Common Stocks and Uncommon Profits, believed in long-term investing, in buying great companies at good prices, and then thumbing his nose at the taxman as he held, and held, and held. His most famous investment was his purchase of Motorola, a company he bought in 1955 when it was a radio manufacturer, and held until his death in March 2004 at age 96.
Another Philip, Philip Carret, the founder of Pioneer Fund, was also a hero of Warren Buffett. In his book A Money Mind at Ninety, he said he inherited his 'money mind'. He died at the age of 101. David Tripple, former chief investment officer of Pioneer Group, said: 'In 101 years, I don't think he ever once got sucked up into a fad or frenzy.'
Now let's look at some of the great value investors who are still active today.
Warren Buffett needs no introduction. He is 79 this year, and is still deploying his billions, most recently a US$26 billion bet on Burlington Northern Santa Fe railroad. He described the purchase as an opportunity to buy a business that's going to be around for 100 or 200 years.
Charlie Munger, vice-chairman of Berkshire Hathaway, has exerted key influence on the success of Mr Buffett's enterprise over many decades. He is 85 this year.
Martin Whitman is founder and portfolio manager of Third Avenue Value Fund. He is a 'buy and hold' value investor. He buys stock in companies he thinks have strong finances, competent management and an understandable business. Also, the company's stock must be cheap. He generally sells an investment only when there has been a fundamental change in the business or capital structure of the company that significantly affects the investment's inherent value, or when he believes that the market value of an investment is over-priced relative to its intrinsic value. He is 85 this year.
Recently, the Financial Times interviewed two active investors who are well past 100. Irving Kahn is the oldest active money manager on Wall Street at 103. Mr Kahn says he ignores market gyrations and typically holds stocks for at least three years and up to 15. His firm, Kahn Brothers, compares its philosophy to tending an orchard with different types of fruits, some of which ripen more slowly than others. Mr Kahn incidentally was Mr Graham's first teaching assistant and helped him with Security Analysis. Like Mr Graham, Mr Kahn seeks unloved and obscure stocks, eschewing high fliers.
Roy Neuberger and the company he founded, Neuberger Berman, also subscribe to similar principles. Mr Neuberger retired at 99 and today, at 106, is still consulted regularly by his 68-year-old protege Marvin Schwartz. The latter credits Mr Neuberger with providing appropriate perspective during recent hard times. 'In almost each and every instance, he advised us to buy in what would be a passing negative period,' Mr Schwartz was quoted by FT as saying.
The website Monevator also recently explored whether being a great investor also means you'll live longer. The article postulated why some of them lived to such a ripe old age. Among the reasons given were:
* Job satisfaction - People who are happier and lead productive lives have been shown to live healthier, longer lives. There's no doubt all these investors loved investing.
* Active mentally - Lots of old people in Japan now do brain training to ward off Alzhiemer's disease and other degenerative brain ailments. What could be more testing than trying the impossible - beating the market through stock picking?
* Eustress - the flipside of distress, eustress is a form of positive stress, associated with achieving in life.
* Intelligence, good upbringing and better health care - all the investors enjoyed these.
My take is that their longevity stems from their love of life in general. In a tribute to Philip Carret, the Outstanding Investors Digest wrote: 'Although he died at the age of 101, which many would consider to be a ripe old age, he was as young at heart, vital and as active to the last as anyone we know.'
[via brknews]
Value investors have deep convictions on what they think offers value. And to minimise the chances of them being wrong, they allow for a significant 'margin of safety' - that is, the securities they buy into have to be so undervalued that even if things get much worse, there is not much room for them to fall further.
Value investing requires patience. It requires independence of thought. And because value investors have such deep conviction that what they buy is trading at below market value, even if the general market were to plunge, they don't panic. In fact, they would see this as an opportunity to buy more.
As a result of all these factors, value investors are said to sleep better at night. And conceivably, they are not so highly strung. Their stress level would be lower than those who chase after the market and whose mood swings along with it.
Perhaps all this explains why some well-known value investors live much longer than the average person.
Don't believe me? Let's see.
Benjamin Graham, father of value investing and mentor of Warren Buffett, is the author of Security Analysis and The Intelligent Investor. In Security Analysis, he advocated a cautious approach to investing. In terms of picking stocks, he recommended defensive investment in stocks trading below their tangible book value as a safeguard against future adverse developments often encountered in the stock market. A professor at Columbia Business School, he lived until 82.
David Dodd, also a professor at Columbia Business School and co-author of Security Analysis, lived until 93.
John Templeton was noted for borrowing money from family and friends when he was 27, to buy 100 shares of each company trading at less than US$1 (US$15 in current dollar terms) a share in 1939. He made many times the money back in a four-year period. He became a billionaire by pioneering overseas investment funds in the US. He died last year at 95, after devoting many of his later years to philanthropy.
Philip Fisher, author of the still-popular Common Stocks and Uncommon Profits, believed in long-term investing, in buying great companies at good prices, and then thumbing his nose at the taxman as he held, and held, and held. His most famous investment was his purchase of Motorola, a company he bought in 1955 when it was a radio manufacturer, and held until his death in March 2004 at age 96.
Another Philip, Philip Carret, the founder of Pioneer Fund, was also a hero of Warren Buffett. In his book A Money Mind at Ninety, he said he inherited his 'money mind'. He died at the age of 101. David Tripple, former chief investment officer of Pioneer Group, said: 'In 101 years, I don't think he ever once got sucked up into a fad or frenzy.'
Now let's look at some of the great value investors who are still active today.
Warren Buffett needs no introduction. He is 79 this year, and is still deploying his billions, most recently a US$26 billion bet on Burlington Northern Santa Fe railroad. He described the purchase as an opportunity to buy a business that's going to be around for 100 or 200 years.
Charlie Munger, vice-chairman of Berkshire Hathaway, has exerted key influence on the success of Mr Buffett's enterprise over many decades. He is 85 this year.
Martin Whitman is founder and portfolio manager of Third Avenue Value Fund. He is a 'buy and hold' value investor. He buys stock in companies he thinks have strong finances, competent management and an understandable business. Also, the company's stock must be cheap. He generally sells an investment only when there has been a fundamental change in the business or capital structure of the company that significantly affects the investment's inherent value, or when he believes that the market value of an investment is over-priced relative to its intrinsic value. He is 85 this year.
Recently, the Financial Times interviewed two active investors who are well past 100. Irving Kahn is the oldest active money manager on Wall Street at 103. Mr Kahn says he ignores market gyrations and typically holds stocks for at least three years and up to 15. His firm, Kahn Brothers, compares its philosophy to tending an orchard with different types of fruits, some of which ripen more slowly than others. Mr Kahn incidentally was Mr Graham's first teaching assistant and helped him with Security Analysis. Like Mr Graham, Mr Kahn seeks unloved and obscure stocks, eschewing high fliers.
Roy Neuberger and the company he founded, Neuberger Berman, also subscribe to similar principles. Mr Neuberger retired at 99 and today, at 106, is still consulted regularly by his 68-year-old protege Marvin Schwartz. The latter credits Mr Neuberger with providing appropriate perspective during recent hard times. 'In almost each and every instance, he advised us to buy in what would be a passing negative period,' Mr Schwartz was quoted by FT as saying.
The website Monevator also recently explored whether being a great investor also means you'll live longer. The article postulated why some of them lived to such a ripe old age. Among the reasons given were:
* Job satisfaction - People who are happier and lead productive lives have been shown to live healthier, longer lives. There's no doubt all these investors loved investing.
* Active mentally - Lots of old people in Japan now do brain training to ward off Alzhiemer's disease and other degenerative brain ailments. What could be more testing than trying the impossible - beating the market through stock picking?
* Eustress - the flipside of distress, eustress is a form of positive stress, associated with achieving in life.
* Intelligence, good upbringing and better health care - all the investors enjoyed these.
My take is that their longevity stems from their love of life in general. In a tribute to Philip Carret, the Outstanding Investors Digest wrote: 'Although he died at the age of 101, which many would consider to be a ripe old age, he was as young at heart, vital and as active to the last as anyone we know.'
[via brknews]
Tuesday, December 08, 2009
Value Line's Samuel Eisenstadt fired
For 63 years, Samuel Eisenstadt was probably Value Line Inc.’s most valued employee. The statistician created an investment strategy that proved successful for decades and was endorsed by none other than Warren Buffett. But today he embarks on something new — unemployment.
Late last Friday afternoon, the firm’s new chief executive, Howard Brecher, called Mr. Eisenstadt and told him that his services were “no longer needed” and he was retiring, effective immediately, according to Mr. Eisenstadt. Yet the 87-year-old, who helped drive the Nazis out of France and Belgium as a member of the U.S Army’s 8th Armored Division, was in no mood to be shoved aside.
“I refuse to accept the explanation that I’m retiring,” Mr. Eisenstadt said. “I’m not retiring, and I don’t plan to retire. My mind is still sharp and wrapped up in my work. This is a very sad ending, and it really hurts.”
[via veryearly1]
Late last Friday afternoon, the firm’s new chief executive, Howard Brecher, called Mr. Eisenstadt and told him that his services were “no longer needed” and he was retiring, effective immediately, according to Mr. Eisenstadt. Yet the 87-year-old, who helped drive the Nazis out of France and Belgium as a member of the U.S Army’s 8th Armored Division, was in no mood to be shoved aside.
“I refuse to accept the explanation that I’m retiring,” Mr. Eisenstadt said. “I’m not retiring, and I don’t plan to retire. My mind is still sharp and wrapped up in my work. This is a very sad ending, and it really hurts.”
[via veryearly1]