When you are widely considered the greatest investor in the world, people want you to give them advice on what they should do. But in a recent CNBC appearance, Warren Buffett also have some valuable advice on what you shouldn’t do, and CNBC compiled a five-point list.
Worried about the U.S. economy? Emerging markets? Europe? Kenneth Fisher says not to focus on short term problems, but instead the enormous long term potential he sees in play.
“Forget today’s myopic warnings of emerging markets meltdown, deflation death spirals, perma-stagnation and all the rest,” Fisher writes in The Financial Times. “In 20 years your world will be exponentially more prosperous and your quality of life immeasurably better.”
Charles Schwab Chief Investment Strategist Liz Ann Sonders says she thinks the market’s recent turnaround has more to do with a belief that weather has been behind some weak economic data than it does with a belief that a weaker economy will lead the Federal Reserve to slow its plan to taper its asset purchases. “There is a lot of indication that [the weak data] has been very dependent on the weather, but I also think we’re well past the point where the market is going to rally on negative news,” Sonders tells Yahoo! Finance’s Daily Ticker. Continue reading
Could historically high profit margins be the result of more foreign profits, making the high margins a new reality rather than anomaly? Fund manager John Hussman says the data says ‘no’.
The stock market’s struggles and some weakness in recent economic data have scared some investors out of stocks. Top strategist Charlie Dreifus of Royce & Associates isn’t one of them. Continue reading
Blackstone’s Byron Wien says stocks are still on track for a strong year, though he thinks the short term weakness may not be over. Continue reading
Charles Schwab’s Liz Ann Sonders says that the specter of the 2008 financial crisis and market crash is still haunting many investors — and that’s a good thing. “I think it’s the muscle memory of the financial crisis,” Sonders tells Bloomberg Surveillance in discussing how investors are today reacting differently to market declines than they have in the past. Continue reading
One of the top economic forecasters says he doesn’t agree with those who see a slowdown coming for the U.S. economy this year. Continue reading
James Montier and GMO are known for their conservative, cautious approach — a mindset that has helped the firm often recognize market and economic problems well ahead of others. So, what scares Montier right now? The lack of assets offering a “margin of safety”.
“I just can’t find any assets that have a particularly high margin of safety,” Montier tells Advisor Perspectives. “There is nothing that reaches out and screams, ‘Hey, I’m really undervalued.’ Therefore, you are in this situation where you’re stuck in this kind of foie gras market where you’re being force-fed risk assets. That is a very uncomfortable position to be in.” Montier says you have to balance that against the idea that we are in a period that is very different from the past, in that central banks are keeping rates extremely low. That means building a portfolio that can withstand potential rate hikes, and which can also survive if rates remain low for a long while more — no easy task.
“You have to recognize that this is the purgatory of low returns,” Montier says. “This is the environment within which we operate. As much as wish it could be different, the reality is it isn’t, so you have to build a portfolio up that tries to make sense. That means owning some equities where you think you’re getting at least some degree of reasonable compensation for owning them, and then basically trying to create a perfect dry-powder asset.”
Montier talks about how to create that perfect dry powder asset in an environment in which it is not naturally occurring. He also discusses why he thinks profit margins are going to revert to their mean, and why criticisms of the 10-year cyclically adjusted P/E ratio are off base.