ebook essays pieces of the puzzle
Monday, August 23rd, 2010
chip yields

During a number of presentations on growth and value over the years, I’ve used Intel (INTC) to show how stocks can vacillate between those two camps with some regularity.  (The drug group is also a good case study.)  Here is the yield on Intel.  Looking at it and the other valuation ratios for INTC, there’s no doubt what the market thinks now about the company, and the decision to purchase McAfee (MFE) didn’t change the thinking.  Given its commanding position in its industry and its strong balance sheet that will give it the flexibility to respond to opportunities, it seems likely that it will one day catch the fancy of investors again, just as it has many times before.  However, with value stocks, worrying less about the “if” is nice, but the “when” is what really matters.  (Chart:  Bloomberg terminal.)

momentum for momentum

Sometimes it’s hard to choose these section headings.  This one could be under “academic research,” “industry white paper,” “hot topic,” and even some others.  It’s a journal article by a professor who is paid in part by an investment firm, summarizing academic research on a subject of keen interest to investors.  And well worth reading.  It is a feature from Investments & Wealth Monitor by Tobias J. Moskowitz, entitled “Momentum Investing,” posted by the firm Dorsey Wright, practitioners of that approach.  I like the article because it is a straightforward and easy-to-read summary of the academic research related to momentum strategies.  While it’s clear in its advocacy, it’s worthwhile for any type of investor to ponder.  I especially like the thoughts about combining value and momentum, given my recent piece on “combo platters.”  (Thanks to Derek Hernquist for suggesting it.)

those aging advisors

The business of providing financial advice is in a state of flux, with structural changes going on at the same time that long-held investment maxims have proved painful for investors.  The environment is such that there will be some big changes in the next few years that we can’t see yet.  After a quarter century with the wind at its back, the industry is finding it tough to run into it.  Perhaps it’s time to go sideways, by getting truly innovative.  Maybe a “youth movement” should be part of it.  A Financial Advisor article indicates that the demographics of the advisory business makes it a “stagnant industry.”  Firms need to re-invent themselves and some new blood wouldn’t hurt.

in wall street

“When the market plummets, a scary thrill runs along the curbs.  There have been so many panics.  So many men have been ruined.  So many ghosts of bulls, bears, wolves and slaughtered lambs hover between the churchyard and the river that, although the Street has been reforming for thirty years, its reputation persists.” — Securities, Exchanges, and the SEC, 1965.

the end of the alphabet

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