Top Bond Manager Says Icahn’s Wrong

At an Investment conference in New York on July 15th, billionare Carl Icahn told the audience of an impending high yield bond market crash. But top bond manger Mark Notin is not so concerned.
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Dreman: It’s Time To Buy Banks

Contrarian guru David Dreman says that, while he sees a couple of big economic risks for the US right now, he’s still bullish on the stock market. Why? Because there just aren’t other attractive options.

In his latest Forbes column, Dreman says that the lack of wage growth for the middle and working classes and misguided Federal Reserve policies are big concerns. But there’s nowhere else to turn for decent returns, he says. “The chance of a 5% to 10% return on equity investments sure beats 3% on 30-year Treasurys,” he writes. “Remember that inflation is the enemy of long bond holders. A 1% rise in rates results in an 18% drop in principal on a 30-year bond. By contrast, inflation has always been a major supporter of stocks over time. Since 1945, for example, the dollar has lost 92% of its purchasing power. The Dow Jones industrial average, by comparison, is up 93 times from the beginning of 1946.”

Dreman says he thinks the best way to invest given lofty market valuations is to buy bank stocks. “Financial institutions are now finally emerging into a new, far more positive world,” he writes. “Most have adjusted to the new heavily regulated environment, and loan demand is rising. Higher interest rates should increase spread income over time. Importantly, American banks have some of the lowest loan-to-capital ratios in the world. This combination should result in both higher dividends and appreciation over the next few years.”

Paulsen: Calmness And Valuation Make Market Vulnerable

While investors have been fixated on the Greek debt crisis, James Paulsen of Wells Capital Management says there’s another big factor that markets must deal with.

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Streaking Serving Sector Still Serving Up Values

In his latest column for Seeking Alpha, Validea CEO John Reese says the US service sector has been on a remarkable run. And, he says good buys remain in the sector.

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Faber On The China Threat

China’s slowing economy may be the biggest threat to the global economy according to Marc Farber.

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Industry Rankings: Networking Stocks Top The Growth Chart

Every day, Validea uses John Reese’s Guru Strategy investing models to rank dozens of industries using a myriad of financial and fundamental data. The rankings include a value index, a growth index, and an overall index that takes both growth and value factors into account. Here’s a look at some of the current top-rated industries using the growth index.

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Guru Strategy Ratings: GMCR Rising, CMG Falling

Each week, we take a look at which stocks John P. Reese’s Guru Strategy computer models have newfound interest in, and which they have soured on. Here’s a look at some of the stocks John’s strategies have upgraded or downgraded today.

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