Market is cheapest it’s been since the early 80’s
Something momentous, at least for me. As of Friday investors are valuing the UK stockmarket at half what they thought it was worth at the beginning of the year – when I started measuring the market’s long-term price earnings ratio.
On the last day of 2007 it was worth 20 times the earnings of all listed [...]
The end of laissez-faire (again)…
Is this the most gripping financial confession ever?
REP. HENRY WAXMAN:
The question I have for you is, you had an ideology, you had a belief… and this is your statement — “I do have an ideology. My judgment is that free, competitive markets are by far the unrivalled way to organize economies. We’ve tried regulation. None [...]
‘Renaissance of Value’ postponed
I thought I’d discovered the holy grail of value investing. A company so cheap, you can buy its shares for less than two-thirds of its net working capital, or the balance sheet value of its cash, stock, and receivables assuming it has already repaid everything it owes.
Such bargains are rare, except in deep bear markets. [...]
Dampening speculation
Robert Peston*1, the Beeb’s transcendental business editor:
The Tories have talked about giving the Bank of England the power to vary the capital ratios of banks depending on credit conditions, which is a fancy way of saying that the Bank of England would be able to force banks to lend less in a period of economic [...]
Merv says the ‘R’ word, market doesn’t take him seriously enough
So, Merv’s uttered the word on everybody’s lips. Judging by the languid reaction of the stockmarket yesterday (at least by recent standards) it’s old news. Investors have been worrying so long about the prospect of the recession that the stock market had already dropped to a level that anticipates it.
But what kind of recession is [...]
Financial Shenanigans
Uh oh. Analysts say Wells Fargo, a big American bank, is putting a positive sheen on its results by cutting its loan-loss reserve in the same quarter it booked a £1bn increase in non-performing loans.
Writing off non-performing loans against a reserve has no impact on profits, but reducing the reserve boosts them, allowing the bank [...]
Mirror, mirror
Investors are groping around for the market’s bottom. We won’t know if they’re right until it’s a lot higher but that’s not a good reason for turning our backs on companies. In fact, investors should be scrutinising them closely. That’s why I’m working through a list of potential recovery stocks and why, though I sympathise with [...]
Banking crisis: Your questions answered
Many of our banks are to lose their independence, or some of it, investors are to lose their dividends, and the rest of us are going to find it rather more difficult to borrow for years to come. Even the bankers are resigning.
It’s hard to disagree with commentators that recent events are momentous, so what [...]
On the edge of the Death Zone
As stock markets fall, I’m slowly working through a list of companies that may recover strongly, companies that:
Were profitable over the last five years, both in terms of cash profit (cash flow per share) and accounting profit (earnings per share), and…
…Have long-term price earnings ratios (price to average earnings over at least five years) below [...]
The Subprime Solution
The boss told me I should review this book last Wednesday. On Friday, he dangled a copy over my shoulder and reiterated his suggestion. On Monday, the US Market fell further in one day than on any day since 1987 as the US Government failed to bail out banks that had overdosed on subprime mortgages.
His [...]
