Saturday, April 23, 2011

buying the dips

Morningstar tested whether "buying the dips" is a good investing strategy.

Their study showed that it is an underperforming strategy.

However...

Buying on dips hurt risk-adjusted returns over one-month horizons for almost every asset class. The result may seem counterintuitive in light of value investors' historical outperformance. However, value hunting and dip-buying are distinct strategies. Value is pegged to fundamental measures such as book value or earnings, whereas dip-buying is a price-driven rule--technical trading, really. It's possible for an asset to shed dollars and still be overpriced. Value is also realized over years-long horizons, while our dip-buying strategy only held for a month (though there were extended periods where it rode markets down). There's evidence that the worst-performing assets over the previous years go on to outperform in the long run as mean reversion brings valuations back up to historical norms.

Thursday, April 21, 2011

Joe Battipaglia

Read in Richard Band's Journal that Joe Battipaglia passed away of a heart attack.

Wall Street veteran Joseph Battipaglia, chief market strategist at Stifel Nicolaus, died at 55 from an apparent heart attack on Thursday according to Fox Business Network.

Battipaglia, well known in the finance industry for his opinionated views, was the former chairman of investment policy at brokerage Ryan Beck & Co, before it was acquired by Stifel in 2007. He also worked in executive positions at Gruntal & Co. and as an analyst at Exxon Corporation and Elkins & Co.

Battipaglia made a name for himself a decade ago as a consummate Wall Street optimist, remaining bullish on stocks up to and following the he bursting of the Internet bubble. His willingness to express his opinion to anyone who asked, unlimited availability and never-ending enthusiasm for the financial markets made him a media darling.

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Kudlow says goodbye.

Cavuto remembers Joe.