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MnD
Joined: 14 Jan 2008
Posts: 496
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 Posted: Sat Mar 15, 2008 8:56 am Post subject: Hey bottom-fishers, what looks cheap? |
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If the time to buy is when there's blood in the streets, what's looking oversold in your opinion?
In our IRA's we're always gaining cash due to income and CG distributions, I'm probably going to use it to buy more shares of the high yield corporate fund.
Any beat-up asset classes looking attractive yet?
I've never owned a muni fund but we do have a taxable account and our tax bracket is going a lot higher now that my wife went back to work full-time. A good entry point for muni's? |
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Valuethinker
Joined: 11 May 2007
Posts: 11410
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| Posted: Sat Mar 15, 2008 9:58 am Post subject: Re: Hey bottom-fishers, what looks cheap? |
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| MnD wrote: | If the time to buy is when there's blood in the streets, what's looking oversold in your opinion?
In our IRA's we're always gaining cash due to income and CG distributions, I'm probably going to use it to buy more shares of the high yield corporate fund.
Any beat-up asset classes looking attractive yet?
I've never owned a muni fund but we do have a taxable account and our tax bracket is going a lot higher now that my wife went back to work full-time. A good entry point for muni's? |
Large cap US equity, arguably. ex financials (which may be cheap, but may have further to fall)
You have a double whammy:
- falling US dollar, so you are getting these assets cheaper, and their diversified foreign exports and activities are more valuable
- financial gearing is at a historically low level, at least in the last 15 years or so. These companies are ironically directly less exposed to the debt crunch than at almost any time in the recent past
Another area to be looking would be the Japanese market. Depressed because of the impact of a rising Yen and slumping US economy, but fundamentally not expensive. Corporate (mis)governance remains a significant worry.
Korea might also still be cheap (I cannot really comment). |
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dave.d
Joined: 19 Mar 2007
Posts: 704
Location: Richmond, VA
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| Posted: Sat Mar 15, 2008 1:45 pm Post subject: |
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| I agree with Valuethinker's comments above, except add corporate bonds which by my analysis show the highest Sharpe ratio right now of any asset class (expected excess return over cash, divided by expected standard deviation). |
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SoonerSunDevil
Joined: 19 Feb 2007
Posts: 2001
Location: The desert
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| Posted: Sat Mar 15, 2008 1:54 pm Post subject: |
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Citigroup (C), Washington Mutual (WM), Bear Stearns (BSC) look cheap, and I'd consider shorting USO (United States Oil Fund Index, 1 share of the ETF represents .795 barrels of West Texas Intermediate Crude with delivery to Cushing, Oklahoma).
I wouldn't touch Bear Stearns, at least not yet, and I think Citigroup is more attractive than WM. Perhaps the strongest of the big banks is Wells Fargo, WFC. |
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Rose21
Joined: 27 Jul 2007
Posts: 478
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| Posted: Sat Mar 15, 2008 4:09 pm Post subject: |
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| Junior miners. |
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Valuethinker
Joined: 11 May 2007
Posts: 11410
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| Posted: Sat Mar 15, 2008 4:55 pm Post subject: |
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| OUJohnNasr wrote: | Citigroup (C), Washington Mutual (WM), Bear Stearns (BSC) look cheap, and I'd consider shorting USO (United States Oil Fund Index, 1 share of the ETF represents .795 barrels of West Texas Intermediate Crude with delivery to Cushing, Oklahoma).
I wouldn't touch Bear Stearns, at least not yet, and I think Citigroup is more attractive than WM. Perhaps the strongest of the big banks is Wells Fargo, WFC. |
Bear Sterns is doomed. Although the book value is $80, the assets will be sold off, and the bank will be a shell. Shareholders are unlikely to see much of a return.
It's actually worth nothing.
Citigroup. WM? I doubt they are really cheap. Not, at least, before they find a whole heck of a lot of new capital. |
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G12
Joined: 16 Apr 2007
Posts: 998
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| Posted: Sat Mar 15, 2008 4:58 pm Post subject: |
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| DRE. |
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SoonerSunDevil
Joined: 19 Feb 2007
Posts: 2001
Location: The desert
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| Posted: Sat Mar 15, 2008 5:04 pm Post subject: |
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| Valuethinker wrote: | Bear Sterns is doomed. Although the book value is $80, the assets will be sold off, and the bank will be a shell. Shareholders are unlikely to see much of a return.
It's actually worth nothing.
Citigroup. WM? I doubt they are really cheap. Not, at least, before they find a whole heck of a lot of new capital. |
Valuethinker,
I don't think Bear Stearns is doomed, nor do I think shareholders are unlikely to see much of a return. I think Bear Stearns has a way to go until it's attractive to buy, but the Fed's infusion of capital into the markets along with JPMorgan Chase's decision to support Bear Stearns could bode well for future returns. I'll let you know when it's time to buy Bear Stearns 
Citigroup is the most attractive stock I see in the market at this point. C is cheap, and that is a bank that is "too big to fail." Several years ago, I missed the opportunity to buy AMR (the parent company of American Airlines) for $1.50 a share because "everyone" thought they were heading into bankruptcy. I hope the doom and gloom continues for Citigroup, because I am going to buy a few shares if the price heads lower. I am not going to make the same mistake on C that I made on AMR.
Washington Mutual is an interesting animal. They had the most exposure to the subprime mortgages, but before they went to hell, that was a company that was constantly increasing dividends, increasing earnings, etc. They are a long way from getting back to the top, but for $10 something a share, I don't think that's a bad price.
You disagreed with me on the banks, but didn't have a comment on USO. Any thoughts on crude oil?
John |
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SoonerSunDevil
Joined: 19 Feb 2007
Posts: 2001
Location: The desert
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| Posted: Sat Mar 15, 2008 5:09 pm Post subject: |
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I also think the U.S. Dollar is cheap relative to other currencies, specifically against the Euro and Yen. I don't know when it's going to happen, but sooner or later the U.S. Dollar is going to advance significantly against the Euro and Yen.
Valuethinker,
How are most Brits feeling about the strength of the Pound against the U.S. Dollar?
John |
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stratton
Joined: 04 Mar 2007
Posts: 6747
Location: Puget Sound
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| Posted: Sat Mar 15, 2008 5:12 pm Post subject: |
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| Valuethinker wrote: | | OUJohnNasr wrote: | Citigroup (C), Washington Mutual (WM), Bear Stearns (BSC) look cheap, and I'd consider shorting USO (United States Oil Fund Index, 1 share of the ETF represents .795 barrels of West Texas Intermediate Crude with delivery to Cushing, Oklahoma).
I wouldn't touch Bear Stearns, at least not yet, and I think Citigroup is more attractive than WM. Perhaps the strongest of the big banks is Wells Fargo, WFC. |
Bear Sterns is doomed. Although the book value is $80, the assets will be sold off, and the bank will be a shell. Shareholders are unlikely to see much of a return.
It's actually worth nothing.
Citigroup. WM? I doubt they are really cheap. Not, at least, before they find a whole heck of a lot of new capital. |
I don't see why anyone would even need to buy individual stocks. There are ETFs for mortgage REITS, insurance companies, regional banks, home builders, global financials etc. An investor can sub-sector shop to their hearts content.
Paul |
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Joe S
Joined: 13 Mar 2008
Posts: 64
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| Posted: Sat Mar 15, 2008 5:13 pm Post subject: |
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| Just wait a little while - it's going to get cheaper. |
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SoonerSunDevil
Joined: 19 Feb 2007
Posts: 2001
Location: The desert
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| Posted: Sat Mar 15, 2008 5:23 pm Post subject: |
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| stratton wrote: | I don't see why anyone would even need to buy individual stocks. There are ETFs for mortgage REITS, insurance companies, regional banks, home builders, global financials etc. An investor can sub-sector shop to their hearts content.
Paul |
Hi Paul,
You're exactly right that there's no need to buy an individual stock given the ETF options out there. I haven't owned an individual stock in over 4 years, but I'm tempted to purchase C if the price goes lower. Also, I'm not talking about taking a big position in C, either. Perhaps 2 or 3% of my portfolio. |
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G12
Joined: 16 Apr 2007
Posts: 998
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| Posted: Sat Mar 15, 2008 5:49 pm Post subject: |
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But buying etf's saddles you with the losers in addition to the stocks with high expected returns, and we all know we know the future of the market  . I believe the Vanguard Group is the 3rd largest institutional holder of DRE, it's out there at around 50% discount off its 12-month high and has a dividend pushing 9%.
I do own KBE and am glad it is not a large percentage of the portfolio as I think a couple of its holdings are going to stink, like C. Not in love with WaMu , either. It's just a little Mad Money, I haven't fallen off the wagon yet. |
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workingatit
Joined: 20 Apr 2007
Posts: 85
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| Posted: Sat Mar 15, 2008 6:05 pm Post subject: |
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rose: can you give examples of the junior minors you are referring to, or a way to access this group as a whole?
others: what is dre that you are referrring to? thought it might be an etf, but not showing up as such when i searched etf connect
thanks |
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matt
Joined: 04 Mar 2007
Posts: 914
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| Posted: Sat Mar 15, 2008 6:50 pm Post subject: |
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OUJohnNasr wrote:
| Quote: | Citigroup is the most attractive stock I see in the market at this point. C is cheap, and that is a bank that is "too big to fail."
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Citigroup is too big to fail, but that says nothing of returns to shareholders. Too big too fail means avoiding default on all of their creditors and customers and has nothing to do with equity. Don't expect a big payoff if it ends up getting nationalized. |
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SoonerSunDevil
Joined: 19 Feb 2007
Posts: 2001
Location: The desert
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| Posted: Sat Mar 15, 2008 7:35 pm Post subject: |
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| matt wrote: | OUJohnNasr wrote:
| Quote: | Citigroup is the most attractive stock I see in the market at this point. C is cheap, and that is a bank that is "too big to fail."
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Citigroup is too big to fail, but that says nothing of returns to shareholders. Too big too fail means avoiding default on all of their creditors and customers and has nothing to do with equity. Don't expect a big payoff if it ends up getting nationalized. |
Citigroup will go bankrupt before it is nationalized. |
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timid investor
Joined: 27 Sep 2007
Posts: 601
Location: alabama
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| Posted: Sat Mar 15, 2008 8:19 pm Post subject: |
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Closet market timers!
I couldn't resist  |
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Random Musings
Joined: 22 Feb 2007
Posts: 1715
Location: Pennsylvania
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| Posted: Sat Mar 15, 2008 8:53 pm Post subject: |
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On an asset class basis - nothing seems super cheap right now. The banks may seem cheap from their big declines, but it could get uglier - I still think there are more writedowns to come. I still think Countrywide is going to be one of the whipping boys that the government will allow to fail - even with the supposed buyout...
RM |
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Rose21
Joined: 27 Jul 2007
Posts: 478
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| Posted: Sat Mar 15, 2008 9:23 pm Post subject: |
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| workingatit wrote: | | rose: can you give examples of the junior minors you are referring to, or a way to access this group as a whole? thanks |
Some familiar examples would be Great Basin, Eldorado, and NovaGold. Try this chart:
http://www.resourcestockguide.....ge.php?p=1|1|4|0|0|33|0
I am not aware of any ETFs dedicated to the juniors. The closest I think you can get in a fund is UNWPX and TGLDX, which give them a comparatively high weighting.
Regards, Rose |
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Opponent Process
Joined: 18 Sep 2007
Posts: 2195
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| Posted: Sat Mar 15, 2008 9:46 pm Post subject: |
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SNOOP. |
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EmergDoc
Joined: 02 Mar 2007
Posts: 5474
Location: Home sweet home
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| Posted: Sat Mar 15, 2008 10:58 pm Post subject: |
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Cheap is in the eye of the beholder. In the eyes of all the beholders, nothing is "cheap." It is all fairly priced. To know something is cheap, you need to know something that others don't.
Every year I go through each asset class and consider what I think it will do this next year. Every year I am wrong with regards to more than half of them. I suspect the ones which I am right about is simply luck. I suggest you start doing the same if you think you can determine what is "cheap" and what is not. I believe Bogle said there might be a small handful of times in your ENTIRE investing career (50-70 years) when you should pay attention to valuations. What makes you think this is one of those times? Sharpe ratios, P/Es, and P/Bs aren't very good for forecasting purposes as I recall. Sure, I'd rather buy at a P/E of 4 than a PE of 34, but I'm not sure there is anything that says buying at a PE of 16 is any better than buying at a P/E of 18, as far as future returns. The E seems to change just as fast as the P.
As far as buying Bear Stearns or any other individual stock, what is so hard to understand about the concept of diversifiable risk?
The question "what's cheap right now" seems to be a combination of "What has gone down recently" and "what is about to start going up?" The first question is easy to answer, but the second is no easier by virtue of combining it with the first.
_________________
1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course |
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G12
Joined: 16 Apr 2007
Posts: 998
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| Posted: Sun Mar 16, 2008 4:39 pm Post subject: |
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| Quote: | others: what is dre that you are referrring to? thought it might be an etf, but not showing up as such when i searched etf connect
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Duke Realty, a REIT. No guarantees from me, though.
When Citi quits dragging down KBE I might think about buying more. |
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Warner
Joined: 19 Apr 2007
Posts: 185
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| Posted: Sun Mar 16, 2008 5:50 pm Post subject: |
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EmergDoc says: | Quote: | | I believe Bogle said there might be a small handful of times in your ENTIRE investing career (50-70 years) when you should pay attention to valuations. |
James Grant says: | Quote: | | Anyway, I understand now, as I did not in my youthful days of certitude, that the financial future is a closed book, that prophecy is usually profitless and that the best an investor can generally hope to do is to identify extremes of sentiment and valuation as they periodically present themselves. Just how few members of the 2007 class of The Forbes 400 made their money by guessing about tomorrow is a fact to ponder. |
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