In any given year, an up-and-coming fund manager is able to make some great investment moves, propelling him to the top of the annual leaderboard. But only a select few have the vision and the skill to lead the pack for decades at a time. The Oracle of Omaha might be the best of them all.#-ad_banner-# Over many decades, Warren Buffett has made his clients huge sums of money —… Read More

In any given year, an up-and-coming fund manager is able to make some great investment moves, propelling him to the top of the annual leaderboard. But only a select few have the vision and the skill to lead the pack for decades at a time. The Oracle of Omaha might be the best of them all.#-ad_banner-# Over many decades, Warren Buffett has made his clients huge sums of money — and equally important — has helped them to avoid losing lots of money when the broader market slumps. Just how awesome has he been for shareholders? His portfolio has outperformed the S&P 500 in 24 of the past 30 years. In that time, he’s garnered an 18% annualized return, compared to an 11% annualized return for the S&P 500. Most impressive of all, Buffett doesn’t rely on some secret formula. While other investment pros talk about their “black box” approach to… Read More

Stock prices reached new highs last week as headlines warned of a weak economy. This might be an illustration of the old saying that “bull markets climb a wall of worries.”… Read More

After the markets steadily fell over the second half of 2008, the first trading day of 2009 brought a dose of investor optimism, with the S&P 500-stock index rising 3% to close at 932. Hopes of a sustained rebound were quickly dashed as the index went on to finish below 700 just a couple of months later. Even the boldest investors, piling their final funds into the market in search of deep value, were about ready to throw… Read More

After the markets steadily fell over the second half of 2008, the first trading day of 2009 brought a dose of investor optimism, with the S&P 500-stock index rising 3% to close at 932. Hopes of a sustained rebound were quickly dashed as the index went on to finish below 700 just a couple of months later. Even the boldest investors, piling their final funds into the market in search of deep value, were about ready to throw in the towel. And then, the clouds suddenly parted on the morning of March 10, 2009, and stocks began to climb and climb. A little more than four years later, the S&P 500 has racked up a stunning 150% gain. Yet as the market moves ever higher, investors have grown antsy. The rally hasn’t come on the heels of a robust economic expansion. Instead, the U.S. economy… Read More

As earnings season reaches the halfway point, we’re once again seeing stunningly large share buyback announcements. Yet investors are scratching their heads. These buybacks are often seen in tandem with share prices hitting fresh multi-year lows. Gone are the days when companies would… Read More

You don’t hear much from George W. Bush these days. You’ll occasionally see a clip of him at a speaking engagement or in a photo-op from time to time, but other than that, not much. What’s he been up to? Allow me to share with you a prediction. I think… Read More

The efficient-market hypothesis isn’t perfect, but it is useful.  According to the EMH, market prices reflect all available information about the future. In other words, the stock price of Apple (Nasdaq: AAPL) includes the best guesses of iPhone and iPad sales trends from millions of investors. Individually, any prediction is just as likely to be wrong as it is to be correct. Collectively, the predictions are often fairly accurate. Available information can change suddenly, and that is why we often… Read More

The efficient-market hypothesis isn’t perfect, but it is useful.  According to the EMH, market prices reflect all available information about the future. In other words, the stock price of Apple (Nasdaq: AAPL) includes the best guesses of iPhone and iPad sales trends from millions of investors. Individually, any prediction is just as likely to be wrong as it is to be correct. Collectively, the predictions are often fairly accurate. Available information can change suddenly, and that is why we often see large price changes when earnings are announced. If a company reports earnings that are better or worse than expected, the market needs to incorporate that information into the current price. As millions of traders make their best guess about what the new information means, we often see gaps on price charts showing their excitement or disappointment.#-ad_banner-# The efficient-market hypothesis extends beyond stock markets and applies to commodities and financial futures as well. Changes in interest rates, for example, are seen when… Read More

If you’d like us to answer one of your investing questions in our weekly Ask The Expert Q&A column, email us at editors@investinganswers.com. (Note: We will not respond to requests for stock picks.) Question: When’s the best time of year to invest? –Valerie V., Seattle Investors have become well acquainted with the phrase “Sell in May and go away,” which suggests that stocks only generate… Read More

If you’d like us to answer one of your investing questions in our weekly Ask The Expert Q&A column, email us at editors@investinganswers.com. (Note: We will not respond to requests for stock picks.) Question: When’s the best time of year to invest? –Valerie V., Seattle Investors have become well acquainted with the phrase “Sell in May and go away,” which suggests that stocks only generate gains until Memorial Day, after which they slip in value before rising again after Labor Day. Is this axiom on the mark, or is it a myth? Well, in an analysis of 100 years’ worth of monthly returns, Bespoke Investment Research couldn’t find any such trend. The Dow Jones Industrial Average (DJIA) rose 0.37% on average every June, 1.39% each July, and 1.01% every August. Then again, the market tends to modestly rise in most months, with February… Read More

Going against the masses rarely pays off in investing. Finding an opportunity that the rest of the market is completely missing, identifying the right instruments, calculating the right amount of leverage and… Read More

Risk equals reward, right? This has been an investment concept for more than a century. The notion implies that every asset class delivers gains that account for their volatility and risk. Bonds (which have default risk) generate modestly better returns than cash, large-cap stocks have delivered better returns than bonds over the long haul, and small-cap stocks,… Read More

Risk equals reward, right? This has been an investment concept for more than a century. The notion implies that every asset class delivers gains that account for their volatility and risk. Bonds (which have default risk) generate modestly better returns than cash, large-cap stocks have delivered better returns than bonds over the long haul, and small-cap stocks, the riskiest asset class of all, are expected to generate the best returns of all, at least for investors who can stomach the wild swings. But is the adage really true? Are you really compensated for risk with better returns? The answer may surprise you. To see whether you are taking on too much risk in search of rewards, let’s turn to Stanford University professor William Sharpe, who devised a handy measure of risk-adjusted returns back in the 1960s. His “Sharpe ratio” is used… Read More

Earnings are supporting higher stock prices, and new records for the S&P 500 seem within reach. S&P 500 2,000? SPDR S&P 500 (NYSE: SPY) ended the week virtually unchanged. Friday’s close of $169.11 was only 6 cents below the previous week’s close, a difference of 0.04%. It was a relatively dull week with the difference from the low to the high being only 1.38%. Since the bull market… Read More

Earnings are supporting higher stock prices, and new records for the S&P 500 seem within reach. S&P 500 2,000? SPDR S&P 500 (NYSE: SPY) ended the week virtually unchanged. Friday’s close of $169.11 was only 6 cents below the previous week’s close, a difference of 0.04%. It was a relatively dull week with the difference from the low to the high being only 1.38%. Since the bull market began in 2009, the average weekly range of SPY has been 3.38%. Earnings continued to come in above expectations, and quarterly earnings for companies in the S&P 500 are on track to reach an all-time high. Analysts are optimistic that this trend in earnings should continue for at least the next year, expecting earnings per share (EPS) for the stocks that make up the S&P 500… Read More