BELIEVING A BULL MARKET

BELIEVING A BULL MARKET

When markets are rapidly rising, value investing invariably falls out of favor with the investing public. In an upward racing market, value stocks appear dull and stodgy as the more speculative issues rush toward new market highs. But come the correction, it all looks different. Stable value stocks seem like trusted friends.

Most bull markets have well-defined characteristics. These include:

• Price levels are historically high.
• Price to earnings ratios are high.
• Dividend yields are low compared with bond yields (or compared with a stock’s particular dividend yield pattern).
• Margin buying becomes excessive as investors are driven to borrow to buy more of the high-priced stocks that look attractive to them.
• There is a swarm of new stock offerings, especially initial public offerings (IPOs) of questionable quality. This bull market is what investment bankers and stock promoters call the “window of opportunity.” Because IPOs so often occur when Wall Street is primed to pay top dollar, seasoned investors joke that IPO stands for “it’s probably overpriced.”

THRIVING IN EVERY MARKET

Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

TIMING VERSUS PRICING

TIMING VERSUS PRICING

Since market cycles obviously do exist, wise value investors will make the best of them. There are two possible ways of taking advantage of the swings, Graham says:

· Timing
· Pricing

Research tends to confirm Graham’s belief that market timing, or anticipating the swings in advance, simply does not hold up. A 1995 study of market timing newsletter recommendations found that 75 percent did not do as well as a basic buy-and-hold strategy based on Standard & Poor’s 500 stock index. In cases where a newsletter beat the market for 2 years in a row, the newsletter had a less than 50 percent chance of doing so for a third year.

Since timing is well-nigh impossible, Graham suggested the pricing approach. By buying and selling on the basis of price, an investor will not have bought or sold in anticipation of a bull or bear market, but only after the fact. The investor buys after she knows that prices have declined and securities are undervalued. She sells when a bull market has pushed prices beyond the intrinsic value of the stock or bond.

By selling overvalued securities at the market’s zenith and resolutely holding cash, the investor will have the reserve funds to buy bargain issues when the market is at its nadir. Though market swings cannot be reliably and consistently predicted, they can be exploited once they occur.



THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

PAYING RESPECT TO THE MARKET

PAYING RESPECT TO THE MARKET

Though timing purchases and sales of stocks to coincide with market lows and highs often proves fruitless, value investors share two assumptions with the market timer:

· The market is frequently out of alignment with true value.
· There is a tendency for the market to correct itself.

Furthermore, both market timers and value investors intuitively and empirically know that market movements and fundamental value are related. Somehow, the price of a company eventually rises (and sometimes crashes) to realign with its actual value. Changing conditions, new information, or perhaps the awakening of investors to existing circumstances draws the market as surely as the moon draws the sea.



THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

SUITABLE SECURITIES AT SUITABLE PRICES

SUITABLE SECURITIES AT SUITABLE PRICES

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The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell.
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Though market conditions are easy to see in hindsight; they are, according to Security Analysis, almost impossible to predict in the near or distant future:

---------------

In a sense, the market and the future present the same kind of difficulties. Neither can be predicted or controlled by the analyst, yet his success is largely dependent on both of them.

---------------



THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

MR. MARKET

MR. MARKET

Mr. Market is an emotional wreck! His hair is unkempt. His nails are chewed to the quick. He endlessly taps his fingers on the desktop. He rushes from one crisis to the next, and if he has to sit for any length of time, his knee twitches compulsively. How does he keep his job on Wall Street? He is Wall Street.

Think of Mr. Market as a confused and changeable business partner, Graham told his students. Warren Buffett described Mr. Market’s business tactics. “Even though the business that the two of you own may have economic characteristics that are stable,” wrote Buffett, “Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems.”

Mr. Market is compulsive. He shows up every day and makes an offer for your part of the business. If you ignore him he is neither offended nor deterred. He will be there again the next day, and the next, and the next.

Also manic depressive, Mr. Market sometimes becomes euphoric. During these spells he can see only blue skies ahead and endless climbing profits. During those times he rushes in and offers an unrealistically high price for your shares. At the slightest negative news, Mr. Market’s spirits dive. His price then is ridiculously low.

But pay no attention to the mood swings. “Mr. Market is there to serve you, not to guide you,” Buffet explained.

If his offer meets your needs as an investor, you can accept it. If it does not, you may ignore it. If you take advantage of him, Mr. Market never remembers. Crazy as he is, Mr. Market is a convenient business partner.


THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

THRIVING IN EVERY MARKET

THRIVING IN EVERY MARKET

In almost every other walk of life, people buy more at lower prices; in the stock and bond market they seem to buy more at higher prices. (James Grant)

The October 1987 crash was a learning lab for all serious investors. As a result, investors came to understand that markets are never cured of their propensity to overheat and then to overcorrect. Markets may be continually in search of intrinsic value, but they do it the way a hunting dog searches for a scent. They rush madly back and forth across the clue, sniffing everywhere. The process can appear quite frenetic, even when the dog is on the track.

“Disregarding for the moment whether the prevailing level of stock prices on January 1, 1987, was logical, we are certain that the value of American industry in the aggregate had not increased by 44 percent as of August 25. Similarly, it is highly unlikely that the value of American industry declined by 23 percent on a single day, October 19,” wrote William Ruane and Richard Cunniff in the Sequoia Fund 1987 third-quarter report.

When a stock is undervalued, the stage is set for reversal. On that April 1995 day when Kirk Kerkorian and Lee Iacocca made a takeover move on Chrysler, did the actual value of the stock rocket from $39 per share to $55 per share overnight? Probably not. By most analytical standards, with a price-to-earnings ratio of 4, Chrysler was undervalued at $39. The takeover bid alerted investors to Chrysler’s situation, and at the beginning of September 1995, nearly 4 months afterward, the shares were still trading at around $55; even then the PE was only 8.

Such is the scatterbrained behavior of someone Benjamin Graham called “Mr. Market.”

To say that a value investor does not “play the market” is not to say that market cycles don’t exist and that they do not play an important role in the work of investing. One needs only to examine a chart of the movement of the DJIA over a long period of time – 10, 20 years or more – to see that there are wavelike advances and retreats in aggregate stock prices. Value investors realize that they cannot predict how low or how high a market indicator will move, or when a reversal will come. Market ebbs and flows are, admits Graham, an essential part of successful investing.



THRIVING IN EVERY MARKET
Value Investing Made Easy (Janet Lowe):

1. THRIVING IN EVERY MARKET
2. MR. MARKET
3. SUITABLE SECURITIES AT SUITABLE PRICES
4. PAYING RESPECT TO THE MARKET
5. TIMING VERSUS PRICING
6. BELIEVING A BULL MARKET
7. THE PAUSE AT THE TOP OF THE ROLLER COASTER
8. MAKING FRIENDS WITH A BEAR
9. BARGAINS AT THE BOTTOM
10. SIGNS AT THE BOTTOM
11. BUYING TIME
12. IF YOU ABSOLUTELY MUST PLAY THE HORSES

2009 presents a once-in-a-lifetime opportunity for the long-term investor

Financial investment predictions for 2009
By Anthony Keane January 05, 2009 12:01am

New year, new tips ... experts say 2009 presents a once-in-a-lifetime opportunity for the long-term investor.
Optimistic outlook for investors
Opportunities in stocks, real estate
Blue-chip bargains

MAKING investment predictions is a risky business, especially after the world's worst financial year in decades.
In January, 2008, nobody forecast the severity of the global financial crisis.
A year later, the resources boom is over, official interest rates have been cut by 3 percentage points and boring government bonds have delivered the best returns.
Here we are in January, 2009, and the financial predictions are flowing again, with Westpac, BHP Billiton and QBE Insurance some of the expert's stock picks for the new year.
After the stock market rout of 2008, most experts are forecasting a rebound in shares this year - as many quality companies now appear undervalued.

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Research group and fund manager Lincoln Indicators says large-capitalisation companies will lead the market recovery "due to increased investor confidence and perceived safety in these stocks".
Lincoln's list of possible outperformers includes Westpac, CSL, QBE Insurance, BHP Billiton and Leighton Holdings.
"Despite the fact that global markets are unlikely to recover to their pre-credit crunch position in the near future, we expect the market to rally in 2009 as the stock market presents a once-in-a-lifetime opportunity for the long-term investor," Lincoln chief executive Elio A'Amato said.
The Federal Government's stimulus plan would inject cash into the economy and underpin new infrastructure projects, giving a boost to engineering and construction companies, said Mr A'Amato.
PKF partner Tony Simmons said Australian shares and international shares were likely to be the best investment vehicles in 2009.
"Property may also be a good bet, provided you are not currently geared too highly.
"With lower interest rates and depressed property prices, it could well be a good time to get into the property market or to increase your holdings." Prescott Securities financial adviser David Middleton said 2009 was likely to be a sluggish year for world economies, with a recovery not expected until later in the year. "The good news is the coming year is unlikely to be as difficult as 2008, but then few years ever will be," he said. Those who invest for the long term and resist selling shares will be rewarded, he said.
"Any potential recession seems well and truly reflected in current prices, and this is not a time to be selling unless you have to." Maintaining liquidity and not becoming a forced seller is key, he said.
Prescott's recommends focusing on top-shelf industrial shares such as QBE Insurance and Toll Holdings, construction companies such as Leighton Holdings and Lend Lease, and healthcare companies such as Sonic Healthcare and Ramsay Healthcare.

http://www.news.com.au/dailytelegraph/money/story/0,26860,24871845-5015799,00.html

Averaging Down: Good Idea Or Big Mistake?

The strategy of "averaging down", as the term implies, involves investing additional amounts in a financial instrument or asset if it declines significantly in price after the original investment is made. It's true that this action brings down the average cost of the instrument or asset, but will it lead to great returns or just to a larger share of a losing investment?

Practical Applications

Some of the world's most astute investors, including Warren Buffett, have successfully used the averaging down strategy over the years. While the pockets of the average investor are nowhere near as deep as deep as Buffett's, averaging down can still be a viable strategy, albeit with a few caveats:

Averaging down should be done on a selective basis for specific stocks, rather than as a catch-all strategy for every stock in a portfolio. This strategy is best restricted to high-quality, blue-chip stocks where the risk of corporate bankruptcy is low. Blue chips that satisfy stringent criteria - which include a long-term track record, strong competitive position, very low or no debt, stable business, solid cash flows, and sound management - may be suitable candidates for averaging down.

Before averaging down a position, the company's fundamentals should be thoroughly assessed. The investor should ascertain whether a significant decline in a stock is only a temporary phenomenon, or a symptom of a deeper malaise. At a minimum, factors that need to be assessed are the company's competitive position, long-term earnings outlook, business stability and capital structure.

The strategy may be particularly suited to times when there is an inordinate amount of fear and panic in the markets, because panic liquidation may result in high-quality stocks being available at compelling valuations. For example, some of the biggest technology stocks were trading at bargain-basement levels in the summer of 2002, while U.S. and international bank stocks were on sale in the second half of 2008. The key, of course, is exercising prudent judgment in picking the stocks that are best positioned to survive the shakeout.

http://www.investopedia.com/articles/stocks/08/average-down-dollar-cost-average.asp?partner=NTU

Comment:

In a poker game, when would you put more money onto the table? Putting money on the table may results in a bigger loss or a bigger gain. Averaging down in buying stocks shares similar conotations. However, there are situations as listed above, when averaging down may be a strategy you can employ selectively.

Willem Buiter warns of massive dollar collapse

Willem Buiter warns of massive dollar collapse
Americans must prepare themselves for a massive collapse in the dollar as investors around the world dump their US assets, a former Bank of England policymaker has warned.

By Edmund Conway, Economics EditorLast Updated: 3:05PM GMT 06 Jan 2009

MPC founder member Willem Buiter. Photo: CHRISTOPHER COX
The long-held assumption that US assets - particularly government bonds - are a safe haven will soon be overturned as investors lose their patience with the world's biggest economy, according to Willem Buiter.
Professor Buiter, a former Monetary Policy Committee member who is now at the London School of Economics, said this increasing disenchantment would result in an exodus of foreign cash from the US.
The warning comes despite the dollar having strengthened significantly against other major currencies, including sterling and the euro, after hitting historic lows last year. It will reignite fears about the currency's prospects, as well as sparking fears about the sustainability of President-Elect Barack Obama's mooted plans for a Keynesian-style increase in public spending to pull the US out of recession.
Writing on his blog , Prof Buiter said: "There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many. But learning takes place."
He said that the dollar had been kept elevated in recent years by what some called "dark matter" or "American alpha" - an assumption that the US could earn more on its overseas investments than foreign investors could make on their American assets. However, this notion had been gradually dismantled in recent years, before being dealt a fatal blow by the current financial crisis, he said.
"The past eight years of imperial overstretch, hubris and domestic and international abuse of power on the part of the Bush administration has left the US materially weakened financially, economically, politically and morally," he said. "Even the most hard-nosed, Guantanamo Bay-indifferent potential foreign investor in the US must recognise that its financial system has collapsed."
He said investors would, rightly, suspect that the US would have to generate major inflation to whittle away its debt and this dollar collapse means that the US has less leeway for major spending plans than politicians realise.

http://www.telegraph.co.uk/finance/4125947/Willem-Buiter-warns-of-massive-dollar-collapse.html

WSJ to Warren Buffett: "Time to Get a New Crystal Ball"

Monday, 27 Oct 2008
WSJ to Warren Buffett: "Time to Get a New Crystal Ball"

Posted By: Alex Crippen
Topics:Derivatives Investment Strategy Stock Market Warren Buffett
Companies:Berkshire Hathaway Inc.

MORE DOUBTS ABOUT THE ORACLE

........... there's are other Buffett-doubters out there, especially when it comes to his public call to buy U.S. stocks now.
A common theme is that as a billionaire, Buffett can afford to put his money down now and wait for the profits, which could be years away. The rest of us have more pressing problems.
In the Times of London, Jennifer Hill argues that Buffett Is Wrong: The Market Madness Is Still Far From Over.
In Canada, the National Post's Diane Francis echoes the sentiment with Buffett Is Wrong: Avoid Stocks and Buffett Is Wrong: Part II.
On Seeking Alpha, Brian Keith Anderson lists 5 Reasons to Ignore Buffett and C.S. Jefferson asks "What If Warren Buffett Is Wrong About the Markets?"
There are also defenders, of course, including the often pessimistic Doug Kass, who made a profitable short-term bet against Berkshire Hathaway's stock price this year.
The key question, as it often is when talking about Warren Buffett and his famously long-term view of things, is whether an investor sees enough future pleasure to overcome pain in the present.
Buffett's investing record suggests we should be looking very carefully.

http://www.cnbc.com/id/27400058/

Asian Stocks Hit 2-Month High as Risk Returns

Asian Stocks Hit 2-Month High as Risk Returns

Topics:South Korea Australia Stock Market Singapore Hang Seng Nikkei Shanghai Stock Exchange
By: CNBC.com 05 Jan 2009

Asian stocks hit a two-month high Monday, with investors betting the global economy will start to recover later this year by shedding some of their big holdings of safe-haven government bonds.

The Australian dollar pushed to a three-month high against the U.S. dollar as investors embraced higher-yielding currencies, taking heart from calmer financial markets and expectations for big government stimulus spending packages in coming weeks to revive growth.

The dollar edged up across the board, mainly getting a boost as the euro stumbled. Traders said the single currency's surge in December was due more to factors such as investors repatriating funds before year-end and was likely overdone. Commodity prices generally firmed, with oil prices climbing above $47 a barrel on increased tensions in the Middle East, Russia and Ukraine.

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Japan's Nikkei 225 Average began 2009 on a strong note, closing 2.1 percent higher in a shortened session and hitting a two-month high on hopes this year will be better than last, the worst in the Nikkei's history. Honda Motor and other exporters climbed on a weaker yen.

Resource-linked firms such as trading houses surged as oil jumped more than 3 percent, after an Iranian military commander reportedly called on Islamic countries to cut oil exports to supporters of Israel over Israel's ground offensive in the Gaza Strip to stop Hamas rocket attacks.

Seoul shares gained 1.4 percent with banks including KB Financial rallying on expectations of a rate cut, while auto makers advanced on strengthening views their earnings may not be as bad as feared.

Australian stocks finished down 0.7 percent as banks gave up early gains, precious metal miners fell on lower gold prices and investors sold offshore earners likely to be hurt by a stronger Australian dollar.

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Hong Kong shares rose 3.5 percent, with China Mobile rising for a second day on hopes that Chinese telecom operators will soon be issued licences to offer third generation (3G) services. China's Lenovo Group climbed after the Chinese magazine Caijing said the world's No.4 personal computer maker was set to announce a major restructuring plan on Jan. 8 including changes of its top management. Aluminum Corp of China jumped 9.5 percent, tracking similar gains in its Shanghai listed scrip on hopes that it would benefit from the government's infrastructure building plans.

Singapore's Straits Times Index rose 5.2 percent. Shares of plantation firms such as Golden Agri and Wilmar International rose on higher palm oil prices. Benchmark palm oil prices in Malaysia rose 1.5 percent after crude oil climbed on worries over supplies after an Iranian military commander reportedly called for an oil boycott.

China's Shanghai Composite Index rose 3.3 percent, with industrial metal producers leading the gains on hopes they would benefit from the government's infrastructure building plans. Coal producers also outperformed, partly because of a surge in global oil prices due to tensions in the Middle East. Shenhua Energy gained.

© 2009 CNBC.com

Simon Woodroffe, the founder of Yo! Sushi has most of his £1.6m pension in cash

Simon Woodroffe, the founder of Yo! Sushi has most of his £1.6m pension in cash
Simon Woodroffe OBE, 56, is the millionaire founder of Yo! Sushi. Having sold a majority stake in his business in 2003, he sold his remaining 22pc in March. He lives with his 18-year-old daughter, Charlotte, on a £1m houseboat in Chelsea.

By Mark Anstead
Last Updated: 9:38AM GMT 12 Dec 2008

Simon Woodroffe on fame and fortune. Photo: ANTHONY JONES
Where did you put the money from selling your remaining Yo! Sushi stake?
I split it between three deposit accounts. I've always banked with NatWest for my personal account (since I was 16); my business account has always been with Barclays and I have a deposit account with a firm of financial advisers called Sterling Assurance, which I set up when I wanted to transfer money out of stocks and shares.

Are you very active as a stock market investor?
When I sold a stake in Yo! Sushi in 2003 I wanted to invest around £1m and I looked around to find an adviser. I've got a good accountant but I didn't have anyone to invest wisely for me. Eventually I put it into mutual funds with Sterling Assurance but then, when everything started to dive this year, I realised that wasn't working. I now see my dream of an ideal adviser doesn't exist – you have to take responsibility for your own decisions.

In early September I decided to take my money out of funds and into a deposit account with Sterling. I was very late doing it and I lost about £200,000 on the value of my portfolio last year, but at least I got it out before the really big crash so I congratulated myself on not losing another 20pc. I think now the only way for me to make money in stocks is if I find out more about it. In the past I have always felt out of my depth.

Why are you going to try again?
Because I think it makes sense to spread my money across asset classes and the stock market must rise again. And, with interest rates coming down, the money I have on deposit won't keep pace with inflation. But, when I do it, I'll do it with enthusiasm, taking an interest and assuming responsibility.

I live to this motto – follow your fear to find your destiny. One of my fears is I don't understand the stock market properly, so I will face up to that and find out more about it. In my experience when you do that you find things are simpler than they appear.

Read more http://www.telegraph.co.uk/finance/personalfinance/fameandfortune/3722321/Simon-Woodroffe-the-founder-of-Yo-Sushi-has-most-of-his-1.6m-pension-in-cash.html

These Stocks Will Burn You

These Stocks Will Burn You
By Rex Moore December 27, 2008 Comments (16)

In his article "The Market's 10 Best Stocks," my colleague Tim Hanson pointed out the benefits of searching for the next multibagger success stories among the smallest of companies.
And I agree with him: The best stocks of the next decade will not be huge companies. Why not? This chart should explain. Look how large each of these businesses would become if they increased just 10 times in value over the next decade.

Company
Current Market Cap (billions)....10-Bagger Market Cap (trillions)
General Electric (NYSE: GE)....$164....$1.6
Citigroup (NYSE: C)....$36....$0.4
Bank of America (NYSE: BAC)....$64....$0.6
Pfizer (NYSE: PFE)....$115....$1.2
Intel (Nasdaq: INTC)....$78....$0.8
Google (Nasdaq: GOOG)....$94....$0.9
Cisco Systems (Nasdaq: CSCO)....$95....$1.0

While it's certainly possible, we probably won't have a trillion-dollar company by 2018 -- much less see any of these large caps turn into 20- or 30-baggers. So we can count the giants in that chart out of the running for best performer of the next decade.

Instead, the greatest chance for the greatest gains comes from the smallest of companies, like the Tiny Gems that the Motley Fool Hidden Gems team follow. These half-pint companies are capitalized at less than $200 million, and there's plenty of room for them to grow before they run into the headwinds of large numbers and their prospects become more limited.
But before you take a free trial and jump headfirst into the micro-cap waters, listen up: This ride is not for everybody.

Buckle up

With great potential reward comes great risk. Just as a tiny company has the greatest chance at outlandish gains, it also has the best chance of going belly up. Bankrupt. Gone ... along with your money. And the volatility along the way to greatness or the graveyard may give you whiplash.
Thus, these Tiny Gems are best suited for risk-tolerant investors with a long-term outlook.
That said, two things can greatly reduce the chance that your portfolio will get torched by tanking Tinies:
1. Believe the balance sheet. This is where you can tell whether a company is in danger. Little cash and large amounts of debt are a big warning sign, especially for businesses not yet turning a profit. Go back through the past several balance sheets. Is the company burning through cash? How fast? My advice: Stick to profitable companies with cash-to-debt ratios of at least 1.5.
2. Buy a "basket" of these micro caps. In other words, allocate the amount of funds you normally would for one stock to several of the Tinies -- four or five, for example. That way, you're giving yourself more of a chance at finding at least one huge gainer, which will more than make up for it if one or two of the others lose most of their value.


Rex Moore helps the team pan for micro caps and is an analyst for Stock Advisor. He owns no companies mentioned in this article. The Motley Fool owns shares of Pfizer, as well as shares and covered calls of Intel. Bank of America and Pfizer are Motley Fool Income Investor recommendations. Pfizer and Intel are Motley Fool Inside Value recommendations. Google is a Rule Breakers selection. The Motley Fool is investors helping investors.
Read/Post Comments (16)

Your million-dollar portfolio: Why Now Is Not the Time to Sell

Why Now Is Not the Time to Sell
By Tom Gardner December 30, 2008 Comments (40)

Two weeks ago, Vanguard founder Jack Bogle -- who Fortune magazine named one of the four investing giants of the 20th century -- visited Fool Global Headquarters to talk about the collapse of the stock market.
Bear markets, he believes, separate the speculators from the true investors. Your average speculator is three times more interested in the price of a stock than the merits of underlying businesses -- and bear markets can shake these speculators out of stocks, sometimes forever.
The real investor, by contrast, obsesses over the long-term potential of a business and tries to create true wealth over rolling 10-year periods.

Are you an investor, or are you a speculator?

According to Mr. Bogle, that single distinction makes all the difference in investment returns over a lifetime. True investors -- those who do not try to time the market -- take home most of the rewards of the market.
That's tough to accept after the second-worst year for stocks in the last century -- because we're all hurting, speculators and investors alike. But Bogle's right. When you factor in frictional costs and short-term tax rates, it's extremely difficult for speculators to make long-term money by trying to time their way into and out of bull and bear markets.
Just look at the decline from annual highs of these five truly great American companies:

Berkshire Hathaway (NYSE: BRK-B), down 38%
IBM (NYSE: IBM), down 38%
FedEx (NYSE: FDX), down 38%
Disney (NYSE: DIS), down 37%
Microsoft (Nasdaq: MSFT), down 47%

These are companies with multidecade histories of success. They're five of the greatest businesses in American history. Yet in a matter of just months, their value has been nearly cut in half. And you don't have to dig to find greater calamities. Gannett (NYSE: GCI), the publisher of USA Today, is down 80% from its highs. Bank of America (NYSE: BAC) is down more than 70%.

The world's stock markets right now are a graveyard of broken dreams.

And yet, on average, had you attempted to sell these stocks near their highs, to pay the commission costs, to pay the tax penalties, and then to try to time your way back into them, you'd almost certainly have failed. Jack Bogle has proven this over his 60 years of investment scholarship and application.
Investors, on the other hand, suffer along with everyone else when the bear market hits, but let time and compounding work their magic. Just look back on history -- master investors like Charlie Munger and Shelby Davis suffered big losses during the 1973-74 bear market en route to growing portfolios valued in the millions (or, rather, the hundreds of millions).

Your million-dollar portfolio

We think you can do the same -- no matter how much you've lost. And we've returned to the world of publishing in the belief that now is not the time to sell your stocks. If anything, it's the time to scrabble together cash to buy more.

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Tom Gardner is co-founder and CEO of The Motley Fool. Tom owns shares of Microsoft, but no other companies mentioned in this article. Disney, FedEx, and Berkshire Hathaway are Motley Fool Stock Advisor recommendations. Disney, Berkshire, and Microsoft are Inside Value selections. Bank of America is an Income Investor recommendation. The Motley Fool owns shares of Berkshire Hathaway and is investors writing for investors.
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http://www.fool.com/investing/general/2008/12/30/why-now-is-not-the-time-to-sell.aspx?source=iomsitcag0000001#125610

The Best Way to Prepare for the Coming Market

The Best Way to Prepare for the Coming Market
By Todd Wenning December 26, 2008 Comments (18)

http://www.fool.com/investing/general/2008/12/26/the-best-way-to-prepare-for-the-coming-market.aspx?source=iomsitcag0000001#125605

In fact, the very same thing happened in the 1920s.
The parallels are clearer and clearer.

... are doomed to repeat it?

When Noyes was writing, the full scope of the Great Depression was yet to befall the country -- but many of the elements in play then look very familiar: rising unemployment, a government struggling to respond, and a financial system in shambles.
He was encouraged, however, that Americans in 1930 had already begun to discard "completely the dangerous illusions of the past two years and making ready to meet and turn to the American community's advantage whatever realities may be ahead of us."

Something similar seems to be happening today.

In fact, in the three months ending in September, American household debt decreased for the first time in more than 50 years. That trend is likely to continue, regardless of the government's many efforts to pump more credit into the hands of consumers. While massive de-leveraging is bad for the economy in the near term, it's what we desperately need if we're to return to healthy economic growth over the long run.

Writing a different future

In the 10 years following Noyes' observations, the stock market remained a roller coaster and, despite some hopeful rallies, never even came close to the highs of October 1929. Indeed, the market's total return from 1931 to 1940 was essentially zero, despite the significant volatility it endured in the meantime.
While I'm not going to try to predict the near-term market, it would serve us well to consider the possibility that the market will provide lackluster returns in the coming years. That makes learning about all of the tools at our disposal -- tools that can help you generate more income, reduce your portfolio's volatility, and increase the benefits of diversification -- even more important.

3 Bubbles That Will Shape 2009

3 Bubbles That Will Shape 2009
By Morgan Housel December 16, 2008 Comments (25)

It’s as reliable as the sun rising in the east: Financial bubbles burst. All of them do. Always. Usually in grand fashion. Over the years, there have been dozens and dozens of them, and every single one has ended badly. Shall we reminisce? Here are a few big ones:
Tulip mania
The South Sea bubble
The railroad bubble
The Roaring '20s
The 1980s buyout bubble
The dot-com bubble
The housing bubble
The American Idol bubble (Fun fact: More people vote for American Idol than typically vote for the winning President)
There are probably more, but you get the idea: As long as there has been an economy, there have been bubbles.
So what bubbles might underline 2009? Here are three distinct ones I can think of.

Bubble No. 1: Treasuries

As I write this, a three-month Treasury bill yields 0.005%, a 10-year note will fetch you 2.5%, and a 30-year bond will score you a spectacular 3.007%. For comparison's sake, inflation has averaged 3.42% since 1913.
If the expectation is that every other asset class will be eroded by deflation, skimpy returns on government bonds might not be a bad idea. I bet most investors would have loved to achieve "only" a 0.005% return over the past year, compared to the destruction of nearly every other asset class.
Still, the stampede into Treasuries will eventually burst. It has to. One of two factors practically guarantees this:
Things will get better; investors will regain an appetite for risk, and move away from Treasuries.
Things will get worse, prompting more bailouts and more stimulus packages, eroding faith in the dollar.
Either way, the Treasury bubble won't be fun when it bursts. Having sent the government's borrowing costs higher, Uncle Sam might have a tough time funding its trillion-dollar endeavors, and this could leave companies like Citigroup (NYSE: C), General Motors (NYSE: GM) and Ford (NYSE: F) up in the air should they come back, hats in hand, asking for more ... which, come to think of it, probably isn't a bad thing.


Bubble No. 2: Fear

Have a look at these fear indicators:
In January of 2007, the spread between corporate junk bonds and U.S. Treasuries was just 2.65%. Yesterday, it was more than 20%.
Annaly Capital (NYSE: NLY) -- which invests solely in Fannie Mae and Freddie Mac securities -- saw the spread on its investments surge from 0.67% to more than 2% over the past year, even though those investments technically became less risky after the government nationalized and guaranteed Fred and Fan.
Credit default swaps on Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) surged to 440 basis points last month (higher than Citigroup's at the time), meaning some assumed a Berkshire bankruptcy was a very real possibility within the next five years.
What started years ago as a bubble of optimism has morphed into a bubble of fear today. Sure, reckless speculation needs to be purged out of the system, but an economy that's unwilling to take any risk is just as bad as one that's oblivious to it.
One worry is that even financially healthy consumers will become gripped by fear, slamming their wallets shut and exacerbating an already beleaguered economy. Another is that investors' hesitation to take any risk could stifle the venture capital investments that produce the Googles (Nasdaq: GOOG) of the world, hurting our chances of staying globally competitive when we need it the most.
Let's not forget that when Franklin D. Roosevelt warned, "The only thing we have to fear is fear itself," it was in the context of factors he thought could prolong the Great Depression. And he was right.


Bubble No. 3: Distrust

In just the past week, we've been blindsided by two (really, three) big stories that could lead to a bubble of distrust:
Illinois Governor Rod "do I hear $500,000" Blagojevich undermining the credibility of politicians.
Money manager Bernard Madoff, whose self-described Ponzi scheme may have blown through $50 billion.
The Securities and Exchange Commission being asleep at the wheel while Madoff committed perhaps the largest financial fraud in history.

All three are pretty appalling. What's scary is that the few bad apples who make all the headlines ruin it for the honest politicians (I'm sure they exist) and credible money managers that are vital to the economy. The old saying that "capitalism is based on trust" is getting tested, and that's a scary, scary proposition. If these shady headlines keep up at this pace, one fear is that we could become a culture that dismisses even sound financial advice and refuses to accept almost everything politicians do, which certainly isn't a recipe for anything economically healthy.
This could just be a partial list, of course. Any other potential bubbles you can think of? Feel free to share your thoughts in the comment section below.

http://www.fool.com/investing/general/2008/12/16/3-bubbles-that-will-shape-2009.aspx

Value? Growth? Both!

Value? Growth? Both!
By Julie Clarenbach January 2, 2009 Comments (0)
http://www.fool.com/investing/general/2009/01/02/value-growth-both.aspx?source=ihptclhpa0000001

The same company can be both a growth and a value stock. Value investing, after all, wants to buy companies selling at a discount to their intrinsic value. Growth investing wants to buy companies that will grow their bottom lines -- and presumably your investment -- many times over. But there's nothing excluding fast-growing stocks from being undervalued. That's why Warren Buffett himself said that "growth and value investing are joined at the hip."

Putting the puzzle together The other piece that gets lost in the "value vs. growth" debate is this: You shouldn't be buying only one stock anyway. You should be building a portfolio. And that portfolio should be -- say it with me now -- diversified.

One premise of diversification is that different kinds of stocks do better in different market environments. Putting together assets that don't move in the same direction at the same time will create the best chance for high returns with lower overall volatility. Notice how each of these different investment classes go into and out of fashion at different times:

Large Caps
Small Caps
International
REITs

So when you're picking stocks, make sure you choose from a variety of categories:

• Large-cap stocks, being more established, typically endure less volatility; small-cap stocks, on the other hand, are more risky but also have the potential to be more rewarding.
  
• Value stocks provide downside protection and a reasonable assumption of an upside, while growth stocks take advantage of room to double, triple, and quadruple in value.
  
• Domestic stocks take advantage of the unparalleled power of American industry -- but emerging economies, which don't always move in lockstep with developed economies, have room to grow much faster than ours.
  
• While they have may have a reputation for being slow growers, dividend payers have historically boosted performance for investors: From 1960 to 2005, about 80% of the market's returns came from reinvested dividends.
  
• Diversifying across industries ensures that your portfolio isn't wiped out from unforeseen economic, political, or natural disasters. While the credit crisis bankrupted numerous financials and pushed department store stocks down an average of 64% in 2008, discount stores, biotech, and waste management have held their own.

Your portfolio should have all of these: large caps and small, value stocks and growth, domestic stocks and international, as well as some dividend payers -- all from a variety of industries.

Whoa -- how many stocks are we talking here? It won't necessarily take dozens of stocks to diversify in all of these ways, because, as I mentioned earlier, the same stock can fit into multiple categories.

Take "technology, media, and financial services company" General Electric (NYSE: GE) as an example. Where would it fit on this list? It has a market cap of $170 billion, Morningstar considers it a value stock, it currently yields 7.9%, and while it's based in Connecticut, half of its revenue comes from outside the United States.
Or what about tiny China Fire & Security (Nasdaq: CFSG)? It's a $190 million growth company selling fire-protection products to Chinese corporations.
Every single stock you consider is going to fit many different categories, and thus will diversify your portfolio in multiple ways. The key is to fit your holdings together to achieve meaningful diversification, so that you can enjoy strong returns with minimal risk.

The Foolish bottom line

As important as diversification is, it's secondary to buying stocks worth holding for the long run.

But as you consider the world of stocks worth holding, you want to make sure you're blending them together for a portfolio that can earn you great returns while weathering all kinds of markets.

The Worst Is Yet to Come

The market has separated out those businesses that are undervalued and those businesses that are of concern going forward. The smart investor shall take this opportunity to seek out undervalued good quality companies in this severe bear market.

-----

The Worst Is Yet to Come
http://www.fool.com/investing/high-growth/2008/12/24/the-worst-is-yet-to-come.aspx
By John Rosevear December 24, 2008

Great rally we're having, isn't it? In the past month, the S&P 500 has risen from around 750 to right around 900 before falling back slightly. Right now, you've got a nice neat 15% gain. Think we're through the worst of it?
Think again.
My magic crystal ball doesn't work any better than anyone else's, but if I had to guess, I'd say we'll be back down near the lows before winter ends. Consider:

• Reality -- and more pessimism about the economy -- may set in after the Obama administration takes office and optimism gives way to the sober understanding that the new team's economic solutions will take time to work, and will be expensive.
  
• Along the same lines, the recession has hit Wall Street and the upper echelons of corporate America very hard, but the serious pain is just starting to filter down to Main Street. That process will intensify over the next few months.
  
• Past bear markets have been marked by sharp rallies off the lows -- followed by sharp declines right back down. The true end of a bear market is typically marked by a point of maximum fear. That's when it seems like everyone's throwing in the towel, and when there's little talk of bargain-hunting.
  

That last point is the one that's most convincing for me. Do you think we're at the point of maximum fear? If you've been investing for a while, root around in your memory and think back to late 2002.

What I want right now are the stocks that we'll be citing as examples during the next bear market, seven or 10 years down the road, the ones that will be 20-baggers or 40-baggers, the growth leaders of the coming decade.


Some comments:
On December 25, 2008, at 3:58 PM, dibble905 wrote:
If November 20 wasn't 'retesting the lows' set on October 27, in terms of the dow... I don't know what to tell you. The drop was quick and enormous, with that week in October registering the worst week by absolute and percentage terms in history.
We are now back to the early 2003 levels for the S&P and Dow, erasing pretty much all of the recovery and expansion that has occurred in the past 5 years. And worse yet, that places us back to 1998 before even the dot come bubble.
We are at the cheapest valuation in history in terms of companies with tangible, real assets (Dow & S&P). If this is not an opportunity, I don't know what to tell you. If there is more to fall, so be it. But it will be driven by emotions rather than logic.
All of this 'the worst has yet to come' is out there, everyone is reading about it, everyone knows about it. The collective expectations of the world are priced into these stock price right now, and unless something overly catastrophic beyond even the worst expectations become true, the markets will rebound in the next year. Fear is in these markets, fear will continue to be in these markets. It will limit upward movements, but I really cannot see large scale drops like we have seen in October/November without what I suggested above.
And to provide some support for my argument, hedge funds and mutual funds have enormous cash positions waiting on redemptions or to protect their positions. Either way, even if things do get worse, what's left to sell to drive markets down so much more? As well, when these large funds sell, someone's buying it -- who's buying these assets? It looks like the companies themselves are installing share buyback programs and insiders are actively purchasing. These may be a publicity stunt to stop the blood shed, but you know what, it'll probably work because it shows some confidence -- something that's been lacking lately. We also no longer see all stocks following the same broad market declines -- strong companies are rebounding 100-200% from their lows. The Dow and S&P aren't producing the same results, but that just separates the ones that were oversold and the ones that do have material concerns going forward.
Be diligent and prudent, and you'll live through this. But don't hold off on an investment because you 'fear' a bigger drop coming. Unless you have some basis surrounding that, it's all emotion -- and no one rewards you for emotions.

Report this Comment On December 25, 2008, at 6:43 PM, dgmennie wrote:
The latest stock market tumbles serve to underscore the fact that putting money into equities is essentially a GAMBLE (as opposed to an investment). How many blue-chip big-name companies and "sure things" of just 10-20 years ago still qualify as such today? Far too many have gone belly-up or merged themselves out of existence. Too often common stock owners are left holding worthless paper (hello ENRON). And this trend will continue, as the timeline for getting in and (more importantly) GETTING OUT becomes ever shorter and more unpredictable (DO YOU HAVE INSIDE INFORMATION?). Unless you are a very skilled and lucky stock trader who is emerged in the markets full-time, you will eventually LOOSE BIG. Depending on others to watch out for your best interests in this game is nonsense (I give you the 50-billion Ponzi scheme all over today's headlines).
Instead, look carefully at the bond market. Certain corporate issues may be acceptable. Many municipals offer reasonable returns backed by the fact that states and local governments cannot simply disappear someday, leaving their debts unpaid. Fortunately, the yuppie go-go crowd finds the plodding predicrtability of these investments a turn-off. All the more reason why those who value protection of principle over "the next big thing" should get on board. IMPORTANT: Own the bonds themselves, not a "bond fund" whose assets will be churned with the profits sucked off by incompetent and overpaid managers.

Times Money's top 10 investment gurus

October 29, 2008
Times Money's top 10 investment gurus

Genuine stock market experts are a rare breed, and their investment thinking is never more valuable than when the financial world is in turmoil, as it is today.
So here at Times Money we have come up with a list of our top ten stock market gurus of all time.
1. Benjamin Graham
He is generally regarded as one of the most influential thinkers on investment management. His book, the Intelligent Investor, is still selling more than 50 years after he wrote it.
Mr Graham’s basic idea was that you should be looking to buy companies worth ten dollars a share for five dollars a share. The way you determined which companies were selling at way below their book value was to make a detailed study of their balance sheets. He believed in cautious investment following thorough analysis and abhorred ill-informed speculation.
2. Warren Buffett.
The ‘sage of Omaha’ has put his investment skills to good use and is now the world’s richest man. In the process he has made millionaires out of many of the shareholders in Berkshire Hathaway, his main investment vehicle.
Mr Buffett’s basic idea is that there are a handful of truly outstanding businesses around - and a lot of mediocre ones. The investor’s skill comes in identifying the rare great businesses and then in waiting for the moment when a great business is selling at a really attractive price. He is down to earth - he won’t invest in a business he doesn’t understand - and very patient. He is prepared to wait a long time for the right sort of company to turn up. As he would put it, he is like a baseball player who is ready to stand at the plate for ball after ball until he finds one he can hit into the stands.
3. Philip Fisher
Mr Fisher, the father of Ken Fisher, was a renowned growth investor who was a passionate exemplar of the "buy and hold" approach.
His main idea was that the best way to invest is to buy a limited number of outstanding stocks and simply hold them for years and years. If you have chosen the right stocks in the first place - and that’s obviously a big if - then their real quality will shine through over the long term.He was very definitely not an in and out trader. As he put it: “If the job has been done correctly when a common stock is purchased, the time to sell it is - almost never.”
4. T Rowe Price
Mr Price shared the long-term perspective of investors such as Philip Fisher. He, too, believed in the virtues of "buy and hold" and practised them with a vengeance. In 1972, looking back at a portfolio he had started in the 1930s, he found that he had held a number of stocks, such as Merck, the pharmaceutical company, and Black & Decker, the household tool company, for more than 30 years. Over that time they had made him a lot of money.
5. John Templeton
Sir John, who died earlier this year, was a classic contrarian investor. He embodied the dictum : "Buy when others are frantically selling and sell when others are greedily buying". While others were looking for gems in a jewel shop, he would be looking for diamonds in a dustbin. He was quite happy to buy what others were throwing away and believed that the stocks offering the best value would be those that other investors had completely neglected.
His most celebrated coup came in 1939, just after war had broken out in Europe. He reasoned, correctly, that although the immediate outlook was bleak, the war would provide a massive boost to US industry. He instructed his broker to buy 100 dollars’ worth of every single Wall Street stock that was priced at a dollar or less. Within four years he had sold his unusual portfolio of stocks for four times its original value.
6. Mark Mobius
Dr Mobius is from the Templeton stable of investment managers and has become a specialist in emerging markets. He shares something of Mr Templeton’s contrarian style. As he puts it: “We seek out shares that other investors have rejected. We go where others fear to tread.”
But above all he is a value-based stockpicker. He focuses on putting together a portfolio of good quality stocks, irrespective of which country they are from. One of his great strengths is that he immerses himself in his subject, travelling tens of thousands of miles each year to visit companies and meet their managements. He says:, “At Templeton we like to get out from behind our desks. We are also active investors, ready to get alongside management and take a seat on the board.”
7. Anthony Bolton
Mr Bolton is perhaps the best known UK fund manager of recent years, though he has now stepped back from the hands on running of funds. Like Mark Mobius he is a contrarian investor, as he demonstrated recently by indicating that he was putting some of his own money into bank shares just when everyone else was seeking to make a rapid exit from the sector.
One of his great skills is correctly anticipating market trends. He foresaw the end of the most recent bull run some months before the market peaked in the summer of 2007 and had already battened down the hatches before the market storms set in.
8. Neil Woodford.
Mr Woodford has taken over Mr Bolton’s mantle of best known UK fund manager and one of his great skills is being able to achieve very good performance with enormous sums of money that would weigh down a lesser investor. His two principal funds contain more than £13 billion of investors’ money.
Mr Woodford, like Mr Bolton, is something of a contrarian investor, and he shows considerable skill in keeping ahead of the investment pack. He had been warning about the excessive levels of debt in the UK and US long before the credit crunch struck and had sold all his bank and property shares before those two sectors collapsed.
He takes a top-down view of the economy and is not afraid to make big sector bets. In the past few years he has invested heavily in tobacco and utilities at a time when they were distinctly unfashionable areas to put your money.
9. Nils Taube.
Mr Taube, who died earlier this year, was Britain’s longest-serving fund manager. Like John Templeton he was fond of buying stocks that had been overlooked by other investors. He made a name for himself by keeping a cool head during the stock market slump of 1973-74 and was investing when most other people had despaired of shares ever recovering.
He called the market right again in 1987, when he anticipated the October crash of that year and was selling stocks short in the months running up to the dramatic drop in share prices.
10. Robin Geffen.
Mr Geffen might be viewed as something of a "new boy" because his company, Neptune Investment Management, was launched only in 2002. But Mr Geffen has nearly 30 years of investment management experience under his belt and it is now showing in the outstanding performance of his Neptune stable of funds.
Mr Geffen takes a thematic approach to investment and, like Mr Woodford, is prepared to take big sector bets. He is not constrained by index weightings and will seek out value wherever he finds it. He is quite prepared to go against the trend where he thinks this makes sense. For example while energy companies make up 60 per cent of the Russian stock market Mr Geffen’s Russian fund has just 22 per cent of its portfolio in energy.

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Posted by MAtherton on October 29, 2008 at 10:30 AM in Invest Permalink

How share ownership has gone out of fashion

From The Times
January 2, 2009
How share ownership has gone out of fashion
Patrick Hosking, Business and Finance Editor

For decades the proportion by value of shares directly owned by private individuals has been shrinking as they come to rely more on occupational pension schemes or pooled investment vehicles such as unit trusts.
Michael Kempe, operations director for Capita, said: “Never in modern times has share owning been less fashionable. The combination of falling share prices and the long-term trend by private investors to reduce their holdings has seen 2008 end with a whimper.”
He said that the booming residential property market had till recently diverted money that might otherwise have gone into the share market: “The lure of getting rich quick in the property market has mopped up a lot of money. Since 2000, at least £150 billion has been piled into the buy-to-let market alone.”
However, Mr Kempe predicted the trend could be reversed in 2009, citing evidence that small shareholders were starting to dip their toes into the stock market again in October and November after being net sellers for most of 2008. In the year just gone, they traded £7.2 billion in shares, compared with more than £14 billion in 2007.
“Normally private investors shun volatile markets and they have been sitting on the sidelines for much of the past year. But it seems the lows of October and November proved irresistible to many.” They bought a net £645 million of shares in those two months, he said.
Mr Kempe expects market conditions to improve in 2009. “But it seems too early to call a bottom just yet,” he said. “The recent upswings have all the characteristics of bear market rallies and have soon petered out.”

http://www.timesonline.co.uk/tol/money/investment/article5430122.ece