Fusing Fundamental and Technical Analysis with lashings of Behavioural Finance. Investing in Australia and North America.
Robert Shiller and John Campbell initially published on P/E Ratio predicting later real returns in this 1988 paper. In 1996 Shiller followed up the research with this easily digestible paper on the topic. In summary he found that the random walk theory does not look right and that current valuations have a strong predictive ability for future long term returns. Over the short term noise prevents prediction, whereas over the long term, ten years, current valuation levels are predictive of future returns.
As I have said before the voting machine should be used for the short term, the weighing machine for the long term.
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This excellent article exemplifies a style of fusion investing, the fusion of business momentum and value.
When is price the same as value?
Woolworth’s stock price rolls back. It’s time to take a fresh look at the fresh food people.
Option Sellers Beware.
Regular readers of this blog know that I seldom talk about actual trades, I mentioned the reason for that in this post. Ironically the trade on Leucadia I spoke about ended up being my dumb trade of the month, talk about confirmation. So to invite disaster I thought I’d discuss what I’m currently up to, in case it’s not clear from my other musing.
Why should Australian’s bother investing in the USA.
- Diversity of companies. If you want to invest in tech, biotech, alternative energy or international companies then the US is the place to do so. If you want to invest in Chinese companies, then you’ll find their ADRs listed in America.
- Size. The Australian market is 2%, IIRC, of global markets. Size matters if you want exposure to the global economy.
- Because right now the Australian dollar is near to it’s all time highs and investing in the US actually decreases currency exposure rather than increases it as many people assume.
A look at S&P/ASX All Ordinaries P/E data since 1974.
Next week Monday through Sunday, Expiring Monthly have a special promotion. Everyone who subscribes March 15 through March 21 will be entered into a random drawing for prizes. Mostly books but also one mentoring session.
Current subscribers are not left out. There is a separate random drawing for them.
First issue goes live March 22.
A quick note to close out my adventures with Facet Biotech. Abbott purchased Facet today for $27 a share. I sold out last year at $17 for just under a three bagger. I thought Biogen had their tendrils in so deep with their partnering that no other offers would come.
Seth Klarman cleaned up, that extra $10 translates to an extra $35M for Baupost. Though on a percentage return basis I believe I did considerably better. It’s just a shame that percent returns don’t buy ski holidays to NZ! While I made over $10 a share, $20 would have been even nicer.
Safety Insurance Group Inc. (SAFT) the second largest private passenger insurer in Massachusetts reported Q4 2009 earnings in-line with analysts expectations of $0.93.
The results are better than a quick glance conveys as the headline numbers appear disappointing due to the one off settlement with the Massachusetts Attorney General’s office. Price to book is still under one, but has narrowed to 0.94. Earnings improvement YoY continues to suggest stabilisation of business. 1.3M shares bought back at around the lows of the year.
What have David Rosenberg and Seth Klarman got in common? Diddly squat as far as I know, except they wrote the best two things I’ve read in the last few days.
If you watch one thing today make it this amazing video clip by OK Go and Synn Labs.
Suntech Power Holdings Co. Ltd. (STP) scorched revenue and earnings estimates. Suntech’s Q4 results highlighted a company firing on all cylinders pulling further ahead of their competition.
EPS $0.27, $0.16 ahead of estimates. First half 2010 production already sold out.
This excellent article exemplifies a style of fusion investing, the fusion of business momentum and value.
