Investor Want a KracKeR? (KKR,LMNR,HAIN,QQQ,TREE)

Investor Want a KracKeR? (KKR,LMNR,HAIN,QQQ,TREE)   We’ve long admired legendary investor David Dreman, author of the ‘Contrarian Investment Strategies’ series of books.  His approach to value investing was a tremendous help to us when we began in the business some 25 years ago.  And even though the days of pure value investing are likely behind us for good, once a while a good opportunity does pop up, and we try to avail ourselves of it.   What was the essence of Dreman’s approach?   Contrarian investing for Dreman was a matter of finding desperately battered stocks and buying them for the long haul, say, three years or more.    Three measures, for him, marked a security that was ripe for purchase: a low price to book ratio, low price to earnings and a healthy dividend yield.   When those three metrics were in play, the stock was considered good value, and Dreman bought. But investing trends change and markets don’t always avail themselves of the systematic and disciplined approach that marked the last generation’s methodology.  Today, stocks will rise – even soar – with little if any of what Dreman sought before he bought.   Today, it’s all about momentum and…

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Stocks That Grow to the Sky (TREE,VOX)

Stocks That Grow to the Sky (TREE,VOX)   We want to take a moment to discuss that nastiest of all topics – indeed, the most contentious in all the financial world: INFLATION!   [Cue banging of gongs, montage of Soviet era labor camps, H-bombs blowing in Nevada and lots of Viet Nam era stills.] The reason for all the discord is that many want inflation, many more don’t, many see the corrupt nature by which it’s measured, others recognize the dangers of divergent wage and price inflation, and still others just can’t understand why prices have to rise at all.   Do they?   Good question, buttercup.  And we’re not sure we can answer it, except to say prices will always rise when the supply/demand calculus pushes them higher.  But as for the question of other, more structural reasons for inflation… well, you go talk to your local elected representative about that.   Inflation Will Burst Higher   Our goal today is to reiterate what we’ve already written repeatedly in this space for nearly a decade.  And that is, that as result of the unprecedented intervention in the markets and economy by the Federal Reserve and Treasury (not to mention…

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Shall We Take a Dip? (SPY,TLT,GOOGL,TREE)

We’re at something of a crossroads in the market today, and not because the battle of bulls and bears has reached a stalemate.  Those traditional crossings are more easily navigated than our current predicament.  With them, there’s still a set of lights that keeps traffic moving in a more or less orderly fashion.   What prevails today, rather, is an intersection that has neither clearly marked lanes nor working lights.  That is to say, everyone is either confused or uncertain and gazing over his shoulder at what the next guy’s doing.   It’s not a comforting situation.  And even though analysts and strategists and plain old traders like us are looking at the data and charts for clues as to where we’re headed next (particularly over the short term), the answers provided by those metrics are still fuzzy, and the truth is, we could bandy off in just about any direction over the next thirty days, then retrace just as madly in another. And the reason for all the befuddlement?   You guessed it.   The new administration in Washington is about the least predictable we’ve seen in the last half century – if not longer.  The bottom line is…

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Money Grows on Trees (TREE)

It stands to reason that while everyone was looking the other way (i.e., at the election and all the sturm und drang that followed it), the market would be setting records left and right.   And we’re not just talking about new all-time highs on the Dow and S&P 500.  The NASDAQ Composite has also broken to clear new highs, while both the long bond and gold appear to be probing new lows for their respective moves.  More than that, some of the biggest cash flows in the last five years out of the Treasury Bond market and precious metals are occurring as we write.   Have a look at the charts – All told, better than $12 billion left these two sectors in the past month, while over $34.5 billion entered the equity sphere.  That’s a level of buying we haven’t seen since October, 2013.   We mentioned last week that the financials had scored their biggest monthly gain in history with the end of trading in November, and we now add that recent data from Goldman Sachs shows that a number of widely watched stock metrics are also screaming ‘New Record!’, ‘Beware!’, and ‘Shave the Porpoise!’   Take…

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