Daily Posts Archive
To the next president, I would say this: Get the financial system back on track by setting an example for the American people. Instead of spending more than you have, live within your means, save money for a rainy day and invest in the future. Nearly every presidential candidate says he is going to reduce spending and balance the budget, and some have done better than others once elected, but now, perhaps more than ever, we need the government to get spending under control.
This is a dangerous time for investors, but it’s only partly because of what the bear market is doing to your portfolio. In my experience, these are the times when investors tend to stray far outside the bounds of any normal, prudent system; they do exactly the wrong thing at exactly the wrong time. And that’s what really kills them.
Finding the next big winners is one thing, but handling them is something altogether different.
Admittedly, the list of good-looking stocks is extremely small these days; that’s how it is at market bottoms. But the few stocks that do reveal strong investor support are worth following closely--particularly if they have great growth stories--because they’re the stocks most likely to lead the next market advance. One sector we’re keeping on eye on is the airlines.
I recently received a question from a reader asking about some of the terms we use when writing about investing. I’ll bet the questioner isn’t the only reader who’s confused about some of our investing terminology. So today I’m going to rundown a list of terms that appear frequently in our writing.
Two weeks ago, I attended the Value Investing Congress in New York City, and was fortunate to listen to quite a few very successful value investors. I also was able to meet speakers and other investors to learn more about their approach to investing in the current turbulent stock market. The experience was very enlightening, and I came away with some valuable insights that I want to pass along to you.
A team of reporters from Reuters calculated how much the world’s investment banks had disclosed writing down from derivatives in the past year, from the third quarter of 2007 through the second quarter in 2008, ending July 31. The total? $404 billion. In just four quarters, Wall Street wiped out its previous 10 years of profits. Even the airlines aren’t that bad.
You may be the kind of person who automatically genuflects when the name of Warren Buffett is mentioned, or not. My opinion of him has varied over the years. In my youth, I just couldn’t understand why someone who obviously doesn’t care about money would devote his life to making more of it. These days, knowing how little he is leaving to his family members and how little he even cares about which philanthropies will benefit from his wealth, I think I understand him a little better.
Many people in their early 20s or under were too young (or not even born yet) to remember any economic problems from the last couple of decades. They’ve grown up in the recent boom times and are having difficultly adjusting to a more frugal way of life. Meanwhile, the pressure on teenagers to have name brand clothes and shoes, an iPod, cell phone and video game system has probably never been greater. This has been fed, in part at least, because of the booming economic times in which this generation was raised.
Just wanted to start with a quick word of optimism about the future of the stock market, and the potential for making money in the months and years to come. I was pleased to attend the Contrary Opinion Forum in Vermont last weekend with Timothy Lutts--Tim’s been going for 22 years straight, while this is my fourth or fifth visit since I came to Cabot back in 1999--and it’s always a treat.