We hope you enjoyed your Labor Day weekend.

A while back, I was thumbing through my bookshelf copy of Graham & Dodd’s classic text, Security Analysis, first authored in the 1930’s.  Coincidentally, this was just before the recent Wall Street Journal article declaring the “Decline of the P/E Ratio,” among other articles that occasionally allude to their work.  Strangely, the two seem to be most readily acknowledged either in times when they’ve been dismissed as passé, out-of-step with cutting-edge quantitative techniques, or, conversely, their traditional and straightforward ways of looking at the world have been “rediscovered” by investors discouraged by complicated modern methods. Read more

Summer Is Almost Over, Thank Goodness!

We’ve just past an anniversary. It might have been in May but more likely in June or July. Our economic recovery is now a year old, hard to believe since there is about as much angst about the economy now as there was a year ago or two years ago. Most people in the investing world worry about the economic future all the time, but usually the worry is about just how fast we’re growing. Today the worry is whether or not we’re growing. This whole debate misses one very important point, we’re still growing! Read more

Investing is a confidence game. Without a certain expectation of return, no one will defer current consumption and invest for future consumption. Currently, we are being overwhelmed by a lack of confidence in that return. People have been fed a fairly steady diet of bad news about nearly everything and never given the whole story in such a way as to increase that expectation of return. It was Will Rogers who quipped “I’ve stopped worrying about the return on my money. Now I just worry about the return of my money.” We all have a piece of Will Rogers in us these days. But, the big question is whether that attitude is warranted and will it continue? Read more

As Herb Stein Might Say

Let’s take A Look at Our Cumulative Debt. The topic seems to be much in the news, so maybe a little data would help understand just where we are. Read more

We have been getting a little short-term focused in recent missives. We apologize for this short-coming. We really need to think and act long-term all of the time. What does it mean to think and act long-term? Well, not everyone has the same idea about that, but here is ours: don’t worry about the short-term outlook, worry about meeting long-term goals. No one is going to meet their long-term goals by sitting in cash, especially at 0.10% yields. Very few people are going to meet their long-term goals by buying bonds with coupons of 3%, especially when you have to pay a premium to get them. The math just doesn’t work that way. The only way for anyone with a long-term return requirement of 6% or 7% is going to meet that goal is by owning stocks, real estate and commodities most of the time. Read more

We hope your Holiday weekend was a good one.  

With the general negative sentiment and outlook surrounding the world markets over the past several weeks and months, we have to wonder how many “sellers” remain.  If we go back to the basic underpinnings of what a market represents-a structure for exchange, dictated by constantly-changing supply and demand-what else would need to be “priced in” for more shares in various companies to be sold?  That’s correct, companies with value and individual merits, as opposed to just index numbers.  We have a tendency to forget this relationship as well as the one that strong pessimism and market troughs on a graph tend to appear together.  The centuries-old “buy when you see blood in the streets” adage has been effective, although it doesn’t feel so positive at the time.  Read more