Brands that make consumers emotional outperform the S&P 500 over time – MarketWatch 10-07-15

Salient to Investors:

MBLM found that from 2005 to 2014,  companies with intimate brands averaged 5% more revenue growth and 11% more profit growth than the S&P 500 index. The top-performing industry in the US was the auto industry, suggesting scandals did not dent customer enthusiasm.

Mario Natarelli at MBLM said only a quarter of the 52,000 brands surveyed evoked intimacy with their customers.

The top ten were, in order: Apple, BMW, Toyota, Amazon, Harley-Davidson, Disney, Coca-Cola, Whole Foods, GMXC and Samsung.

Read the full article at http://www.marketwatch.com/story/brands-that-make-consumers-emotional-outperform-the-sp-500-over-time-2015-10-06

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Opinion: Think VW’s stock can make you rich on a rebound? Think again – MarketWatch 09-23-15

Salient to Investors:

The final value of fines and lawsuits is not yet known so it is too early to bottom-fish Volkswagen stock. Cheating on emissions rules has affected 11 million VWs worldwide and it is not yet known how many countries’ regulators will get involved.

George Young at Villere looks for special situation stocks with single events that are assessable and containable, like Carnival and Apple, but unlike stocks like BP, where it took 3 months to cap the well and the ultimate total of fines and civil suits was indeterminable, and Volkswagen. Young prefers US companies because of GAAP accounting and liquidity and opportunities for diversification.

When picking stocks on special circumstances, look for growth and not just recovery plays.

Read the full article at http://www.marketwatch.com/story/think-vws-stock-can-make-you-rich-on-a-rebound-think-again-2015-09-23

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The Fall Of Volkswagen: How Analysts Are Reacting – Benzinga.com 09-22-15

Salient to Investors:

Tim Rokossa at Deutsche Bank said the consequences of Volkswagen’s intentional cheating could be far larger than in previous auto manufacturer cases, and makes its US turnaround significantly harder: though companies who fully cooperated with regulatory agencies received lower fines.

Harald Hendrikse at Morgan Stanley said Volkswagen faces penalties, significant costs to bring the cars involved into compliance, and a tarnished brand image, and while the company has plenty of net cash, its operating performance will suffer for some time.

Stephen Reitman of Societe Generale said a bigger concern for Volkswagen than the potential fine is the risk of criminal charges and the damage to its reputation because it used its clean diesel claims to differentiate itself.

Douglas Karson at Bank of America said the reported $37,500 fine per vehicle is very high considering the recall and penalties surrounding Navistar, GM and Toyota.

Alexander Haissl of Credit Suisse said Volkswagen’s €6.5 billion provision to cover legal costs is unlikely to be the final cost given regulatory penalties, civil litigation and market share losses, and will pressure its balance sheet and dividend payments.

Read the full article at http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5857041/the-fall-of-volkswagen-how-analysts-are-reacting?utm_campaign=partner_feed&utm_source=marketwatch.com&utm_medium=partner_feed&utm_content=analyst_ratings_page

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Jeremy Grantham: 3 Insights From a Top-Down Value Investor – The Motley Fool 06-02-15

Salient to Investors:

Jordan Wathen at TMFValueMagnet writes:

  • Eyquem found that from 1951 to 2013, the lowest PE decile of stocks compounded annual returns of 16.7% versus 9.3% for the highest decile.
  • Never pile in or out of an investment for the simple fear of falling behind.
  • No one gets fired for being average.
  • Individual investors’ single biggest advantage is not having to report to anyone, not having to match the market’s return every year.

Jeremy Grantham says:

  • Financial assets can be overpriced or underpriced but will always return to average.
  • Rewards come from buying cheap assets not from taking risks.
  • Professional investors’ behavior is driven by career risk. Keynes said their primary directive is first and last to keep their jobs and so never, ever be wrong on their own. The great majority therefore go with the flow, either completely or partially, thus creating the momentum that drives prices far above or far below fair price.

Read the full article at http://www.fool.com/investing/general/2015/06/02/jeremy-grantham-3-insights-from-top-down-value-i.aspx

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Dividend Stocks Could Be Dangerous in 2015, Ketterer Says – Bloomberg 12-31-15

Salient to Investors:

Sarah Ketterer at at Causeway Capital Mgmt said:

  • Buying energy stocks very incrementally as oil prices eventually reach a floor and rise again but no idea when. Looks for companies with tremendous financial strength that can continue to pay dividends. Smart companies will use  their balance sheet strength to buy distressed company assets.
  • Do not be passive and just buy the S&P 500 or a world index in an ETF because markets are fully priced and the largest weighted stocks are the most fully priced.
  • Active management fees pay to identify stocks left behind and avoid those that won’t blow up the portfolio.
  • Owns some Russian stocks but not aggressively. If crude oil stays at current prices or slightly higher, there will be further economic strains in Russia over the next several quarters.
  • Underweight US-listed stocks in global funds at 45 percent versus the almost 60 percent benchmark. Some of the best-managed oil and gas companies are US-domiciled.
  • Outside the US there are few tech stocks and no managed care. Some of the best opportunities in financials are abroad.
  • Consumer staples, utilities and health care globally are overpriced so it will be hard for them to meet expectations.
  • Likes industrial stocks in Europe that have fallen because of concerns about growth in China and Europe because they will end up outlasting their competitors, taking market share and becoming even more efficient. If businesses are doing their job and constantly evolving they can succeed even in a stagnant environment.
  • Investors worst mistake is short-term thinking, by selling at just the wrong time.

Read the full article at http://www.bloomberg.com/news/2014-12-31/dividend-stocks-could-be-dangerous-in-2015-ketterer-says.html

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Today’s Top 50 Stock List – Navellier Growth 09-24-14

Salient to Investors:

Louis Navellier looks for stocks with strong fundamentals, including sales growth, earnings growth with smart leadership, and with strong buying pressure.

For the complete list go to http://navelliergrowth.investorplace.com/free-report/top50stocks/index.html?atg_sid=IZ8547&atg_sid_pay=UK8527&en=4434405

The Dumb Money Is Getting Smarter Every Day – Bloomberg 09-17-14

Salient to Investors:

  • Amateur investors are giving up on trying to beat the market, while even the most sophisticated investors are rejecting strategies that require advanced math and managers with million-dollar salaries. ICI reports the average expense ratio on an equity mutual fund is down 25% in 10 years.
  • Boston Consulting estimates the market share of index funds and ETFs has doubled since 2003.
  • Target-date funds are taking over retirement plans, and are the favorite of young workers.
  • Grant Easterbrook at Corporate Insight said that the new online advisors eliminate a million features that only 5% of the user base actually wants.

Read the full article at http://www.bloomberg.com/news/2014-09-17/the-dumb-money-is-getting-smarter-every-day-.html

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Fidelity Reviewed Which Investors Did Best And What They Found Was Hilarious – Business Insider 09-04-14

Salient to Investors:

James O’Shaughnessy of O’Shaughnessy Asset Mgmt said:

  • Fidelity found that their best performing accounts were those of people who forgot they had an account with them.
  • The shorter you hold a stock, the more likely you are to lose money.

Barry Ritholtz found that when families fought over inherited assets and did not touch those assets for say 10 or 20 years, those years were the best period of performance.

Richard Bernstein of Richard Bernstein Advisors found:

  • Over the period December 31, 1993 to December 31, 2013 the average mutual fund investor underperformed every investment asset class except Asian emerging market and Japanese equities, and even underperformed cash.
  • The average mutual fund investor would have improved performance by simply buying and holding any asset class other than Asian emerging market or Japanese equities.
  • The underperformance suggests the average mutual fund investor consistently bought assets that were overvalued and sold assets that were undervalued.
  • When chaos occurred, the average mutual fund investor ran away.

Read the full article at  http://www.businessinsider.com/forgetful-investors-performed-best-2014-9

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Identity Crisis in S&P 500 as Range of Valuations Narrows – Bloomberg 09-02-14

Salient to Investors:

  • P/E ratios among the 50 largest companies in the S&P 500 Index deviate from the mean by an average 22%, nearly the lowest on record since 1990. An average of 380 Index companies rose in each of the last 5 years, versus 307 in the 1990s. In 2007, the deviation in P/E ratios for the 50 largest Index companies was 25%, the lowest since at least 1990, the beginning of a decade when the average deviation was 37%. The deviation was highest at 57% in 1999.
  • Eric Schoenstein at Jensen Quality Growth Fund sees less interest in picking stocks than just investing in markets, with buyers are making too few distinctions among good and bad companies, and could exacerbate selling once it begins – the fact that everything moves in lockstep up means they would probably drop in lockstep down.
  • Hayes Miller at Baring Asset Mgmt said stocks should not be valued as similarly as they are, which is abnormal and unsustainable.
  • Scott Clemons at Brown Brothers Harriman Private Banking said people are buying stocks for the sake of buying stocks – akin to the late 1990s in only one area, dot-com, of the market.
  • ETFs make it easy to accumulate large positions without regard to the individual companies.
  • Brent Schutte at BMO Global Asset Mgmt said everyone was a stock picker in the 1990s, whereas today everyone does strategic asset allocations and buys index funds, which narrows valuations.
  • Doug Foreman at Kayne Anderson Rudnick Investment Mgmt said many companies and industries are doing very well, so the market does not feel the need to price one group much higher than everything else – a much better balance.
  • Morgan Stanley forecast a slower though sustained rise in the S&P 500 to 3,000 by 2020 amid continued US economic strength.
  • Merck trades at 17.2 x earnings with analysts forecasting profit will be little changed in 2014, the same valuation as Qualcomm with an estimated earnings growth of 32%. Apple is valued at 16.6 x earnings with a projected earnings growth of 14%, versus 20.8 x for PepsiCo with a projected earnings growth of 5%.
  • Todd Lowenstein at Highmark Capital Mgmt sees a whole group of stocks in growth purgatory, and expects returns from here to come less from multiple expansion and more from fundamentals.

Read the full article at http://www.bloomberg.com/news/2014-09-01/identity-crisis-in-s-p-500-as-range-of-valuations-narrows.html

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REMINDER: You Are ‘Shockingly’ Terrible At Investing – Business Insider 08-12-14

Salient to Investors:

Richard Bernstein at Richard Bernstein Advisors found:

  • Over the period from December 31, 1993 to December 31,  2013, the average mutual fund investor underperformed every asset class and category, including cash, except Asian emerging market and Japanese equities.
  • The average investor would have improved performance by simply buying and holding any asset class other than Asian emerging market or Japanese equities.
  • Investors consistently bought overvalued assets and sold undervalued assets.
  • In periods of chaos, investors ran away.

Read the full article at  http://www.businessinsider.com/typical-investor-returns-20-years-2014-8

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