Market Mystery Solved!

Breaking. The stock market is a teenage daughter.

Expecting Alpha

As the year winds down — and we get this blog launched — we’ll be going back to a number of our favorites, a few oldies-but-goodies.  Some will share fodder for investment-related and life-related pondering.  Others will convey research methods and findings, but they’re all intended to help you (particularly if you’re new to Manifest Investing) to get to know us better.  This was written after attending a Martina McBride concert this summer — and it’s clear that the stock market does behave very much like a teenage daughter, sometimes.

Benjamin Graham had it all wrong.

I’ll let that heresy sink in for a minute.

I ain’t complainin’, but I’m tired.
So I’m just sayin’ what I think.
And if we’re being honest,
Then honestly I think [we all] need a drink.

Graham — hailed as the father of fundamental analysis and value investing — often used a characterization for…

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Methuselah & The Lottery Ticket

Expecting Alpha

The lottery winners hail from Arizona and Missouri. They’ll be splitting a $550,000,000 jackpot — probably choosing the lump sum payout, with proceeds to both of them estimated at $200,000,000. The event is inescapable on the news and it’s ubiquitous in all forms of media.

But it comes at a gut-wrenching expense. The reality is that it’s a tax (75-80% of all lottery proceeds go to the lottery crack dealers who skim some off the top and dole out the balance to government accounts.) A friend shared an observation this morning that as he bought a ticket for the fun of it last night near Philadelphia, two ladies clothed in rags — potentially homeless — skipped at least one meal to purchase $40 worth of lottery tickets. To me, that qualifies as a gut-wrenching tax.

Let’s compare the prospect of netting a winning lottery ticket to sitting down at the…

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Annual Super Bowl Poll (2015)

It’s time for our annual Super Bowl survey.

Once again, there’s not a clear “old NFL” team again this year. But Marshawn Lynch likes Skittles and all of those Super Bowl pigskins will be inflated with laser precision accuracy to the right pressure. A victory by the surging National Conference champions would be “most like” an OLD NFL victory … so investors across this nation probably ought to be in the Seattle camp. The Patriots are clearly on old AFL team and the stock market is vulnerable to a Super correction at some point.

The defending champion Seattle Seahawks are led by QB Russell Wilson. Wilson has a streak of 83 straight games — dating back to high school (I think) — where his team has led in the scoring column in each game. That’s quite a streak and it was seriously in jeopardy last week versus the Packers, but an improbable miracle kept Wilson’s run intact. Many people will expect the Seahawks to lead Tom Brady’s Patriots on Sunday — some even at the end of the game.

It’s time to get out there and BUY SOME STOCKS. 🙂

We’re 6-for-9 having mistakenly selected the Broncos (62%) over the Seahawks (38%) last year.

Our Selections

XLVIII: Denver Broncos (Super Bowl won by Seattle Seahawks)
XLVII: San Francisco 49ers (Super Bowl won by Baltimore Ravens)
XLVI: New York Giants (defeated the New England Patriots)
XLV: Green Bay Packers (defeated the Pittsburgh Steelers)
XLIV: New Orleans Saints (defeated the Indianapolis Colts)
XLIII: Pittsburgh Steelers (defeated the Arizona Cardinals)
XLII: New England Patriots (Super Bowl won by New York Giants)
XLI: Indianapolis Colts (defeated the Chicago Bears)
XL: Pittsburgh Steelers (defeated the Seattle Seahawks)

March of Some Favorite Mentors

Expecting Alpha

A favorite from March 2012, celebrating the usefulness of Value Line and honoring a couple of legends — Chuck Allmon and Walter Schloss.

My responsibilities at Better Investing included the opportunity and privilege to correspond and spend time with some of the most exceptional investors in stock market history. From Peter Lynch to John Bogle and the likes of John Neff, the moments were treasured and the mission was a continuous focus/emphasis on deriving lessons that could be applied to our long-term perspective. The objective is simple. Discover wisdom and lean on experience in an effort to maximize the relative returns of everybody all around us.

Current day favorites include many of you, Jeremy Grantham, Brad Perry and until a few days ago … one of the denizens of Graham-and-Doddsville, Walter Schloss. More on Mr. Schloss in a minute. Another long-time is a favorite for many of you, Charles Allmon…

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This Week at MANIFEST (12/12/2014)

Just One Thing

We took a few moments during the red carpet session during the February 2011 Round Table to celebrate Jack Palance and Billy Crystal. Specifically, we focused on the scene from City Slickers where Jack shares secrets of life with Billy Crystal — focusing on that ONE THING. In that spirit we encouraged the knights and damsels for their one thing in the realm of long-term investing.

1. Anne Manning shared that it’s SHARING. “The longer I do this, the more I learn. And this group of long-term investors is so helpful, so warm that it makes a challenge less challenging.”

2. Mark Robertson shared that it’s simply the power of TIME. “TIME is not a 4-letter word. TIMING is a 4-letter word.” “The longer I do this, the more I’m able to put speed bumps and bubbles into context and remain focused on the long-term perspective.”

3. Cy Lynch would single out PATIENT DISCIPLINE. He shared his story of being patient with a promising home improvement in the Atlanta area back when the enterprise had 4-8 locations. The company bought a group of stores in the New Orleans area to expand geographically and the stock price tanked. The rest of the story is that Cy still owns many shares of Home Depot — AFTER distributing many shares along the way to his favorite philanthropic causes. (Cy is apparently the Susan Lucci of these award programs. He doesn’t have the highest or lowest performing selections … he’s a rock near the middle of the pack — although he’d admit that he’s ready for Bio-Reference Labs to take off.)

4. Ken Kavula centered on the small company philosophy, reinforcing that there’s powerful motivation behind the recipe to include a blend of small, faster-growing companies in the mix with blue chip, slower-growing stalwarts. It’s also possible — and very, very highly recommended — to be stubborn about quality when dealing with the promising companies. During the program, Ken shared that his purchase of PRAA dates back to 2003-2004 and was probably inspired by the Forbes Best Small Company list at that time.

5. Hugh McManus: “Patience is genius in disguise.”

Coming Events and Attractions

We’ll continue our expanded coverage of the update stocks this month as part of our quarter long test drive of this feature and the studies and shared ideas it delivers. Please tell us what you think and feel free to join in the Forum discussions for the deeper dives on some of the stocks.

Save the Date: The December Round Table will be held on December 30 at 8:30 PM ET. Register via: https://www2.gotomeeting.com/register/256833802

Companies of Interest: Value Line

The average Value Line low total return forecast for the companies in this week’s update batch is 3.0%.

Materially Stronger: None.

Materially Weaker: Cliffs Natural Resources (CLF), Seattle Genetics (SGEN), Allscripts Healthcare (MDRX), Huntington Ingalls (HII)

Coverage Initiated:

Discontinued:

Name Change: Wellpoint (WLP) is now Anthem (ANTM)

Companies of Interest: Morningstar

The average price-to-fair value (P/FV) ratio at Morningstar for the companies in this week’s update batch is 107%.

It’s clearly not Black Friday … and we left a few of the significantly overpriced (by virtue of nosebleed P/FV ratios) on the list.

Companies of Interest: S&P

The average price-to-fair value for the companies in this week’s update batch is 96% — according to S&P. That’s a significantly different opinion than Morningstar, in general … and again.

Market Barometers

The median Value Line Low Total Return (VLLTR) Forecast is at 3.7% — unchanged from 3.7% last week.

Stocks to Study

The following update stocks are ranked in the top 10th percentile of all companies we follow (MANIFEST Rank > 90) and this display provides a wide berth of dueling opinions, as usual.

Round Table (October 2014)

Round Table (October 2014)

The October session of the Round Table is tonight.

This is a FREE webcast where we name some favorites, perform some analysis, discuss market conditions and keep track of all selections made since inception about 4 1/2 years ago. The tracking portfolio leads the market with a positive relative return (vs. Wilshire 5000) of +0.6%. (The absolute return is 11.6% annualized) 50.6% of all decisions have outperformed the market since selection.

Stocks likely to be featured:

  • Copa Holdings (CPA)
  • Fastenal (FAST)
  • Synaptics (SYNA)

Registration and Event Details: https://www.manifestinvesting.com/events/160-round-table-october-2014-october-28-2014

Market Barometer ($USHL)

Investors seem to be a bit sidelined and the traders, hedgies and hackers are festive over their plus or minus 300 point swings in the market — all the while they pretend to wring their hands and sweat cold. That steady market climb of the last few years is awfully boring for them. Getting fired by CALPERs probably feels like a wedgie to many of them. Don’t be surprised if they continue to take it out on “us.”

We looked at $USHL last week, but we’ll keep a close eye on a break below +100 and we note that the long-term trend is still quite strong. Remain defensive, seek high-quality but it’s still business as usual for an investor with a long time horizon.

 ushl 20141015