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Tag: Stock Market

Don’t mistake a lack of volatility for low risk

Don’t mistake a lack of volatility for low risk

“Beta is a more or less useful measure of past price fluctuations of common stocks. What bothers me is that authorities now equate the beta idea with the concept of risk. Price variability yes; risk no. Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in…

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Warren Buffett Describes How To Pick Stocks

Warren Buffett Describes How To Pick Stocks

Warren Buffett is the greatest investor alive today. After starting with a strategy based on value investing, Buffett’s investing has developed over the years to a more quality-based style, a change that’s produced huge returns for both himself and investors of Berkshire Hathaway. Buffett wasn’t born with all of his investment acumen. Over the years his strategy has developed and changed with experience into what it is today. “In my early days as a manager I, too, dated a few…

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Diversification: What Is It Good For?

Diversification: What Is It Good For?

The investing world can be a complicated place. There are two main approaches to portfolio management when it comes to concentration. The first approach is broad diversification, favoured by value investors such as Benjamin Graham (Graham’s advice of having a well-diversified portfolio of 30 or more deep value stocks) and more recently Noble Prize winning economist Harry Markowitz in his Modern Portfolio Theory, and Dr John Lintner, both of whom strongly advocated diversification. On the other hand, there’s the highly concentrated…

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Should You Buy A Company After A Dividend Cut?

Should You Buy A Company After A Dividend Cut?

First published at ValueWalk.com Should you buy a company after it has cut its dividend? That’s the question Morgan Stanley’s analysts have tried to answer in a European Equity Strategy research note sent to clients today and a reviewed by ValueWalk. Morgan’s research has been prompted by renewed investor interest in dividend cuts. Against a depressed earnings base, the market’s dividend payout level looks high in a historical context and the median stock’s payout ratio is close to a 20-year…

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The 6 General Principles Of Value Investing

The 6 General Principles Of Value Investing

First published at ValueWalk.com What are the fundamental principles of value investing and how should you interpret them? Joseph Calandro, Jr., a Managing Director of a global consulting firm, Fellow of the Gabelli Center for Global Security Analysis at Fordham University, author of Applied Value Investing, and a Contributing Editor of Strategy & Leadership, published a paper earlier this year that seeks to answer this question. I should say now that this is only a brief summary of the paper…

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Societe Generale Developed And Emerging Market Deep Value Screen

Societe Generale Developed And Emerging Market Deep Value Screen

Société Générale publishes a monthly update on the performance of several value orientated fundamental trading strategies across both developed and emerging markets. For deep value investors, one of the most interesting screens is the Graham & Rea deep value screen. The screen is a strategy developed by Benjamin Graham and James Rea. It uses a set of ten basic investment criteria used to identify deep-value opportunities. These criteria are also known as Graham’s last will, and the Benjamin Graham deep…

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Finding Value With The Piotroski F-Score Part 2

Finding Value With The Piotroski F-Score Part 2

**This article first appeared on Seeking Alpha and was published on 06/02/2015. This is the second in a series of articles looking at the investment performance of the Piotroski F-Score over the space of year. You can find the first part of this series, which explains the methodology behind the F-score, as well as an initial summary for each company, here. Finding value The F-Score was designed to hunt out value opportunities that are profit-making, have improving margins, don’t employ…

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Market Sentiment

Market Sentiment

“…The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to…

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Chinese Debt; The Looming Crisis

Chinese Debt; The Looming Crisis

2.6 trillion yuan, or around $0.5 trillion of Chinese non-financial corporate debt is expected to come due during 2014. This figure includes principal repayments and interest and is the largest figure on record for Chinese companies. Last year gear ratios among non-financial Chinese companies reached 93%, while the average across Asia remained below 70% and has done for the past decade. But with so much debt coming up for repayment, Chinese companies are facing an increasingly hostile lending environment. Back…

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Corporate Cash Reaches a Record High.

Corporate Cash Reaches a Record High.

We live in a period of all-time highs. NYSE margin debt is at an all-time high, US debt is at an all-time high and the S&P 500 and DOW are at all-time highs.  However, interest rates remain at all-time lows. So then, it is surprising to find out that cash & short-term investments on the balance sheets of S&P 500 companies, excluding financials, have reached a level not seen before.  Indeed, according to data from Factset the S&P 500 cash…

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