The stock market always looks ahead. That old axiom has never been more true as investors seek out companies that are slumping now but poised for better days ahead. Just look at the stock charts of Office Depot (NYSE: ODP), H&R Block (NYSE: HRB) and Sandridge Energy… Read More

Throughout much of the past year, a variety of financial websites — including this one — noted the sharp disconnect between projected growth rates and the price-to-earnings (P/E) ratios of many Chinese companies. It was easy to find companies growing 20% or even 30% while sporting only single-digit P/E ratios. For some, that disconnect was based on fears that the Chinese economic juggernaut would soon cool. For others, the inability to really know if these Chinese companies were legitimate was the main reason to avoid Chinese stocks. Increasingly, it’s those latter… Read More

Throughout much of the past year, a variety of financial websites — including this one — noted the sharp disconnect between projected growth rates and the price-to-earnings (P/E) ratios of many Chinese companies. It was easy to find companies growing 20% or even 30% while sporting only single-digit P/E ratios. For some, that disconnect was based on fears that the Chinese economic juggernaut would soon cool. For others, the inability to really know if these Chinese companies were legitimate was the main reason to avoid Chinese stocks. Increasingly, it’s those latter concerns that now rule the roost. An increasing number of Chinese companies are in the sights of short sellers, as they allegedly have little or no actual business underlying the seemingly impressive income statement figures. Case in point: China MediaExpress Holdings (Nasdaq: CCME). The company operates a massive advertising network on buses that ply China’s regional highways. Several short-sellers have attacked the company, noting that channel checks showed that many of the company’s claims were vastly overstated or were outright falsehoods. Shares of China MediaExpress have fallen nearly 50% since establishing a 52-week high… Read More

I love turnaround plays. Great comebacks usually start with stocks that are in the depths of depression, so unloved that the share price reflects only bad news. If you are among the early buyers at the first signs of a turning tide, your portfolio can be richly rewarded. Read More

Even for Warren Buffett, there are limits to how many good stocks one can follow. According to his latest quarterly filings for his firm Berkshire Hathaway (NYSE: BRK-B), he’s pared his portfolio to just 25 holdings by December 31, the lowest level in several years, and down from 33 three months earlier. He’s not running form the market, though. In fact, the total value of his portfolio rose to $52.6 billion in the fourth quarter from $48.6 billion at the end of the third quarter, even as Berkshire owned fewer names. Most intriguingly, Buffett’s tightening his focus. Read More

Even for Warren Buffett, there are limits to how many good stocks one can follow. According to his latest quarterly filings for his firm Berkshire Hathaway (NYSE: BRK-B), he’s pared his portfolio to just 25 holdings by December 31, the lowest level in several years, and down from 33 three months earlier. He’s not running form the market, though. In fact, the total value of his portfolio rose to $52.6 billion in the fourth quarter from $48.6 billion at the end of the third quarter, even as Berkshire owned fewer names. Most intriguingly, Buffett’s tightening his focus. Case in point: Berkshire’s decision to sell off the remaining 5 million shares of Bank of America (NYSE: BAC), worth about $745 million, while averaging up on Wells Fargo (NYSE: WFC). Too many headaches You can understand why he fell out of love with BofA. The bank seems to be a magnet for bad news, from botched acquisitions to sloppy mortgage processing. The bank’s missteps are becoming so well-known on Main Street that Buffett presumably fears that BofA’s long-term reputation has suffered. Shares of BofA rallied nearly 30% in December, which is… Read More

Legendary investor George Soros is a “big picture” guy. He likes to spot major themes and then find the savviest direct ways to benefit. This approach has served him well: he’s worth an estimated $14.2 billion and, according to Forbes, was the 35th richest person in the world in… Read More

Conviction. It’s a concept that is rarely heard in investment circles these days, but is still one of the key traits of top investors. When they have conviction, they stick with an investment idea for the long haul, undeterred by any near-term concerns that may shake their faith. Indeed, many investors will book profits if a stock has had a strong run. It’s human nature — for most of us. Microsoft (Nasdaq: MSFT) co-founder Bill Gates does the opposite. He continues to buy into his favorite ideas even after they’ve been powering higher. Case in point: AutoNation… Read More

Conviction. It’s a concept that is rarely heard in investment circles these days, but is still one of the key traits of top investors. When they have conviction, they stick with an investment idea for the long haul, undeterred by any near-term concerns that may shake their faith. Indeed, many investors will book profits if a stock has had a strong run. It’s human nature — for most of us. Microsoft (Nasdaq: MSFT) co-founder Bill Gates does the opposite. He continues to buy into his favorite ideas even after they’ve been powering higher. Case in point: AutoNation (NYSE: AN). I told you about his interest in the company three months ago when shares traded for about $26. His bullishness came at a time when many analysts thought that shares were fully-valued on the basis of near-term operating metrics. With shares up about 42% to almost $34 since then, you’d think Gates might be content to book his profit.  But he’s buying even more. In fact he’s made three huge purchases, boosting his holdings by roughly 1.7 million shares… Read More

I look forward to every earnings season. It’s a time when companies on my watch list may stumble, placing them squarely into value territory. As long as the long-term investment thesis is intact, you’ve got a rare chance to step in when shares are 20%, 30% or even… Read More

Five weeks into 2011, and investors are looking at their first bona fide bubble of 2011. All that money sloshing around global markets, led by the Federal Reserve’s massive easing policy, was bound to start igniting various speculative asset classes. Gold surely looked frothy in 2010, and in 2011, it’s copper that’s looking bubble-icious.     You have to take a 15-year look at copper prices to understand just how crazy the current market looks. For a decade up until 2005, copper usually traded for $75 to $100 a pound. That price reflected a nice equilibrium… Read More

Five weeks into 2011, and investors are looking at their first bona fide bubble of 2011. All that money sloshing around global markets, led by the Federal Reserve’s massive easing policy, was bound to start igniting various speculative asset classes. Gold surely looked frothy in 2010, and in 2011, it’s copper that’s looking bubble-icious.     You have to take a 15-year look at copper prices to understand just how crazy the current market looks. For a decade up until 2005, copper usually traded for $75 to $100 a pound. That price reflected a nice equilibrium between supply and demand. It was also a period of steadily declining output of copper, as second-tier and third-tier mines were hard-pressed to make money. China changed the whole dynamic. As its economy started to take off during the past decade, demand for copper, which is used in many industrial and construction applications, soared, pushing prices up above the $300 mark in 2006, 2007 and 2008. Although copper prices eventually cooled, China learned its lesson. The next time copper prices took off, China would have ample supplies on hand to draw upon… Read More

Another day, another gain. That’s been the story for the S&P 500 lately, which has rallied higher in 12 of the last 15 trading sessions since January 20. As they say, “this bull has legs.” A rising market is surely enjoyable, but the higher it moves, the greater the chance that profit-taking will be just around the corner. That may happen when market strategists begin to talk about stocks becoming expensive when measured by traditional metrics. So here are four items I watch to see if the bull can keep running… 1. Money pouring… Read More

Another day, another gain. That’s been the story for the S&P 500 lately, which has rallied higher in 12 of the last 15 trading sessions since January 20. As they say, “this bull has legs.” A rising market is surely enjoyable, but the higher it moves, the greater the chance that profit-taking will be just around the corner. That may happen when market strategists begin to talk about stocks becoming expensive when measured by traditional metrics. So here are four items I watch to see if the bull can keep running… 1. Money pouring into domestic stock funds — POSITIVE The direction of the stock market is simply a function of supply and demand. When fund managers are given more money to work with, they put it into stocks, pushing share prices up. And they got plenty of firepower last quarter, bringing $45.5 billion, according to Lipper Fund Services. (90% of that went to actively-managed funds and the rest went to exchange-traded funds, or ETFs.) That was more than funds took in for the first three quarters of 2010. And the spigot keeps flowing. In the past two weeks (ended… Read More

I’ve been looking at the 2010 initial public offerings (IPOs) that have doubled in value — or more — and found a name poised for even more upside and another one that now looks vastly overvalued. Pricing an IPO… Read More