This post is a guest contribution by Vitaliy N. Katsenelson*, author of Active Value Investing: Making Money in Range-Bound Markets and director of research at Investment Management Associates.

The stock market has dropped. Corporate profits have collapsed. And profit margins have reverted toward the mean. What is next?

Before I dive into the discussion, let me explain the chart below, which I named appropriately, “The pain of mean reversion.”

I looked at reported earnings for S&P 500 and compared them to the “average case” earnings scenario. In the “average case” scenario I took reported earnings of S&P 500 in the early 1990s and grew them at 6% – an average growth rate of GDP over the last century which happens

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This post is a guest contribution by Vitaliy N. Katsenelson*, author of Active Value Investing: Making Money in Range-Bound Markets and director of research at Investment Management Associates.

I often start my mornings with egg, cheese and turkey sandwich at Panera Bread. This morning was no different. While reading newspapers on my Kindle, sipping hazelnut coffee (I know I just lost respect of the true coffee drinkers), I started with yesterday’s FT, an article on China piqued my interest. China plays a very important role in the global economy and thus I pay close attention to it. I started reading:

“The benchmark one-year lending rate was cut by 27 basis points to 5.31 per cent, while the one-year deposit rate was lowered by the ...

American Express Company (NYSE:AXP) shares are down 50% in the last 3 months and trading under $20 a share.  Why care?  First off, Berkshire Hathaway is its largest stockholder with 151 million, or 13%, of AXP shares. Barron's says "Berkshire's stake suggests the company's stock may be near a bottom". At Barron's: American Express: Nowhere Near Its Credit Limit By ANDREW BARY

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AmEx CEO Ken Chenault is considered among the best

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