no_free_lunch

How about the morningstar wide moat focus (WMW) ETF? It is chosen by combining a list of high-moat stocks with the most reasonable valuations. It makes sense to me that high-moat stocks will do well over time and you have a whole range of analysts at morningstar defining high-moat. More importantly it has beaten the market by about 50% over past 5 years.

WarrenWatsa, It is an interesting chart but I am not sure how you would trade on it. It looks like valuations are extremely high, looking back over the past century, but then again they have been at these levels since mid 90's. Would it have been smart to sell out of the market in 1995? Another way to look at it is that to get to historical levels, even the 08/09 bottoms would have been way too high and you would have kept your money on the sidelines.

Interesting, similar experience on my android tablet.

Well first off, I did in the end pass on Banro, I just don't like the management. Also, believe me, I did have a look at Barrick and the other majors but especially Barrick. The thing is the low PE seems like a mirage. Have a look at their capital expenditures. Despite spending significantly more than they have made in profits over the past 4 years on new mines/upgrades their per share revenue is up only 60%, the price of gold went up roughly the same, maybe more. So basically had gold stayed constant they would have the same revenues as 4 years ago and are putting all of their profits back into the mines just to stay where they are at. I think the earnings are quite overstated when you look at it from that perspective.

If you read Mish Shedlock, his basic theory seems to be that you have to include debt outstanding in the money supply. The US has somewhere on the neighbourhood of $50T total debt (federal, state, municipal, corporate, personal), so printing $.5T a year suddenly doesn't sound that bad if that debt level is stalled out. I am not sure it is quite as simple as that, I would assume that different types of debt have different velocities and impact. Anyways, it might explain what is happening in the US and Japan. So I guess in direct answer to your comments, the printing can continue until the money supply gets closer to these debt levels (I have no idea how close) or until leveraging takes off again.

Has anyone done the research on Banro (BAA)? There are 4 analysts covering it and they are putting 2014 earnings at around $1 against a stock with a $1.32 stock price. When you dig into the details beyond that the story gets more ugly. The mines are in the congo, management is going to issue 25% more shares, continued push for expansion, etc. However, if they can meet their targets and the gold bear market ever ends they could do extremely well.

+1 for energold. I was actually thinking about it after I posted and going to mention it but liberty beat me. It is my only "gold" holding and due to it's diversification should do well when gold/oil rebounds. It probably deserves it's own board post.

They are mostly horrible businesses and I would do much DD even with the pullback. I don't know ANV specifically, most of them though just don't ever seem to generate much profit. Just make sure you consider share dilution and capital expenditures. Many of them are putting everything they make back into capital expenditures and yet their output doesn't increase. So if all of your profits are getting reinvested to generate the same profits later, in spite of record prices, that is not a good situation. When you add it all up it almost seems like raw gold is the better investment if the miners can't make money at the current price. If you find a diamond in the rough though, please post it.

Look at this link. The balance sheet section has a column with shares outstanding. I am curious to see what you find. http://investing.money.msn.com/investments/financial-statements?symbol=ibm

At least the market is rejecting the whole concept of this type of "bailout". I'm sure policy makers will learn a lesson from this and go back to the old, dependable printing press.

Last I checked on him, he made a fortune in the 90's by betting on AOL & DELL. Betting on them and holding. However I remember reading that in the last decade he gave up all of the overperformance. Basically there is no statistical proof, that I'm aware of, that he's superior. You just like him because he's buying Apple.

The problem is that it's not that weird. The same thing is happening every day in every developed countries with interest rates so low. My saving account pays, I think, 1.2% for instance. With inflation at 2% and 40% income tax, let me do the math ... yep I'm getting hosed. It's just happening at a glacial pace but this is becoming the new normal. Make the savers pay for the recklessness of others. Sure somebody had to pay but why the savers? Why not steal a stake in the banks? Why not stuff it to borrowers, everyone's debts are now increased by 10% for example. Without the bank bailout if they stepped out of the EU, interest rates would jack up and the borrowers would be fubar'd no? Why shouldn't the pay?

http://www.irishexaminer.com/breakingnews/world/cyprus-savers-lose-10-of-money-after-shock-bailout-588134.html Scary stuff. Developed work governments are now raiding people's bank accounts. One more reason I am scared to be in cash.

I'm a bit late on this one but I saw splunk in the list. I would just say, for what it's worth, that the people I know who use it really like their software. It is for doing enterprise search. Sort of like a google but for your IT department's log files and such. I don't mean to justify it's valuation, I fully agree it's extreme, just wanted to add my experience with it.

Lookingstill, I think what you are doing is a VERY good idea. The future of the stock market is uncertain and you have major players betting that a significant decline could be had. In the 30's the market went down what 89%? Who's to say we couldn't see a 70%+ decline given the monstrous debt loads today. It is smart in this scenario to be diversified. The one thing is though, have you considered upkeep in your 5.5% return? Property upgrades & maintenance are not cheap unless you have time to DIY. If you can get 5%+ after all expenses from the rent + match inflation on price appreciation then you are about matching the long-term return of equities. If you can do this plus have a sizable stock portfolio I think you will do just fine. I would just keep in mind that property appreciates roughly at inflation so plan to exit when you see RE prices well ahead of inflation.

I see a $1B loss on the hedges in 2012 but where are you seeing that it is unrealized? It looks to me like there is a $238M liability related to the hedges on the balance sheet. If you look at page 13, section 7, it breaks out the assets and liabilities of the hedges. $238M liabilities (which is what shows up on the balance sheet), $207M assets. I think they true up every month or quarter. I'm not an accountant though, so let me know if you read it differently.

There is a note in the statement that book value is underreported due to investments in associates: That's an extra $21 / share, I realize that due to GAAP they can't include it, but would you guys include it in your analysis?

I certainly can understand the reason for being cautious here. I consider myself cautious despite being 0% cash. I just implement my caution mainly via well-priced stocks with moats. I disagree though with some of the arguments presented here based on metrics. I had a look at the shiller PE ratio and I don't really think it is particularly meaningful as far as a gauge of future returns. If you use 10 year returns, I will admit that at high PE levels the returns are poor. However, if you use 5 year returns, with a PE of 23 you actually get very good returns. Below are the occasions that the market first hit shiller PE of 23, along with subsequent aggregate 5 year returns (dividends reinvested): Sept 1928 : -30% Jan 1964 : 56% July 1995 : 187% Nov 2002 : 75% Feb 2011 : 16% (period to date) I would also note that the VIX levels in july 95 were in the 11-13 range, similar to how they are today. Does this mean that the odds are that the market will go up? NO! Who knows? It just goes to show that you have to be very careful in interpreting these numbers. Much of the negative analysis of high shiller PEs uses all of the PE values above a certain point. Why would you lump in results where the PE is in the 30's with a value of 23? There is also the fact that we are not really comparing apples to apples as there are recessionary earnings in '03,'08,'09 without which the PE would probably be in the high teens. Most of the preceding periods did not have these huge dips in their preceding earnings. I would also note that while hedge funds are increasing their exposure to stocks, pension allocations to equities have been substantially reduced. My two cents.

0% cash. Got about 2% in deep OTM puts that will pay off enormously in event of systemic failure. On the other hand if there is a 10-20% drop they're probably worthless. This is not greed but fear of price inflation. There is till a lot of money on the sidelines. Stocks look expensive when you look at their charts and everything is up 50%+. If you ignore the chart and look at the valuation there are still a lot of deals out there.

I am a little unclear on how they came up with the expected yield for equities. They claim it is based on the inverse of the PE but I am not sure which market they are basing this on. If you use the S&P, it has a PE of 15 or so, that would give you an expected yield of 6.7% as opposed to the 10-11% on the graph.

Matjone, If the assets are some type of hard commodity then you are absolutely correct, you stand to benefit from a yen depreciation. However, if the assets are cash/bonds/japanese real estate, anything valued in yen that doesn't have a market outside the country, you could get hit. If you come across any real bargains that meet the first criteria, please share them with the group.

Japan has been printing for almost 25 years, maybe it all falls apart this year and maybe it doesn't. Just keep in mind that people have been calling for this for years. If you look up Kyle Bass apparently he took some big losses betting against Japan a few years back.

I spent some time on this one a month ago and also found the valuations extreme. The case seems to rest on converting the real estate to high-rises. If they already had the high-rises then it would be a bargain. It seems to me that building these things when the real estate market is overheated is going to be expensive to the point of removing much of the value added. I gave up and threw it in the too expensive category.

I have spent a bit of time on micro-caps but without much luck. While they are certainly easier to understand, you really need to buy baskets of them as they have so little diversification. So this requires researching more stocks and kills the benefit of having a simpler story to understand. I also prefer the way bigger companies tend to have more reviews, this allows you to quickly learn the basic story and decide if you want to get into the annual reports. I find around the $1B market cap to be the ideal space but with obviously many exceptions. I think it was touched on here but in addition to scams you really need to watch executive compensation on micro-caps (say the under $50M ones). I have seen companies in this range where exec compensation is in the $1M range, given the size of the company that just takes too much out of margins.

I was thinking about this as well. As I am sure everyone heard there is a discussion within the Fed members as to when to end QE3. Were they to stop purchasing bonds, would the price not rise? The article suggested they were buying $500B a year, every for the States that has to have an impact, no?