strongWall Street Journal and Financial News/strongbr /br /By Jason Corcoranbr /br /15 December 2008 br /br /Fund managers have called the bottom too oftenbr /The investment horizon has experienced so many false dawns over the past 18 months that investors could be forgiven for regarding any rose-tinted outlook as a mirage.br /br /Every time the stock market suffers another steep drop, fund managers and investment sages pronounce that the market bottom is in sight and now is the time to buy.br /br /Fundamentals, technical signs and precedents may have backed up some of their theories but subsequent slumps in valuations have not borne out their views.br /br /Ken Kinsey-Quick, head of multi-manager strategies at UK asset manager Thames River Capital, said: “The problem with predictions is that no one has a perfect crystal ball. Anyone making a prediction is taking a risk which gives them about a 30% chance ...

Feel like getting angry? Treasury publishes latest debt/deficit details… But Fed now encouraged to intervene more… latest data show historic inflation drop… How to invest accordingly? Burritt on near-term trading, Grantham on the long haul… Byron King explains why $40 oil is “worst of both worlds”… Bill Jenkins explains the dollar’s recent downturn… Plus, the Dububble expands… refrigerated beaches on UAE shores…

However dire you think U.S. government’s fiscal condition has become… today we learn it’s even worse. For starters, would you invest in this business?

2008 fiscal year net operating cost: $1 trillion. Triple that of 2007. And those aren’t funky alternative accounting methods… today’s charts and numbers come directly from the 2008 Financial Report of the U.S. Government, issued yesterday.

What is “net cost”? It is “computed by subtracting earned revenue

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Stock market movements over the past few months have been characterized by increased volatility as uncertainty became paramount. And as new pieces of the economics puzzle are added every day, investors are increasingly grappling to make sense of the most likely direction of stock prices.

It seems to be a case of so many pundits, so many views. Has the market started bottoming out, or are bourses still in the grip of the bear? Or is a “muddle-through” trading range in store?

It is one thing to trade the market’s rallies and corrections, but this is easier said than done, with not many people actually getting it right with any degree of consistency. Others are of the opinion that the recipe for creating wealth is simply to

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Financial Week, November 2, 2008

Jeremy Grantham, chairman of Boston-based GMO LLC and a renowned wet blanket in the face of irrational exuberance, sounds uncharacteristically giddy these days.

… equity markets are “below trend lines” for the first time since 1994.

… CFOs should phase back into equities “with all deliberate slowness, as opposed to all deliberate speed,” Mr. Grantham warned, noting that markets typically overshoot on the downside by 20% or more.

… He predicted that the scars from the current downturn will be long lasting, and the effect on the money management industry profound. “A very substantial fraction of a generation of investors” is likely to be leery of stocks, just as they were in the 1930s, “40s and “50s, and again for most of the “70s, he said.

This is “truly the end of an era, and almost everything will be re-evaluated,” from interest

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Warren Buffett says buy. Jeremy Grantham says it will get worse. Both are celebrated value investors. Who is right? It all depends upon your view of the third derivative of investing. Today we look at valuations in the stock market. This is the second part of a speech I have given in the past few weeks in California and Stockholm. I am updating the numbers, as the target keeps moving. 

While from one perspective things look rather difficult, from another there is a ray of hope. What can you expect to earn from stocks over the next five years? It should make for an interesting letter. Note: this will be a little longer than usual, but part of it is there are a LOT of charts.

I likened this to the economic situation we are in now. With consumer spending “resetting” to a new lower level, we are going to have to

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This post is a guest contribution by David Shvartsman who blogs about big-picture trends on the Finance Trends Matter site.

Today’s post focuses on areas of investment that are starting to look attractive to seasoned investors.

Some of the well-regarded market veterans you’ll hear from on this topic are Julian Robertson, Jeremy Grantham, Jim Rogers and John Paulson.

Whether you’re currently bullish or bearish on stocks and other asset markets, we think you’ll find some interesting points of views expressed here. Let’s jump right in …

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I published the first part of Jeremy Grantham’s latest newsletter, “Reaping the Whirlwind”, on this site a week ago. The second part of the report, “Silver Linings and Lessons Learned”, has also now been published.

Here is an excerpt from the report by the chairman of Boston-based GMO:

“When asked by Barron’s on October 13 if we would learn anything from this ongoing crisis, I answered, ‘We will learn an enormous amount in a very short time, quite a bit in the medium term, and absolutely nothing in the long term. That would be the historical precedent.’

“That is

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“Investors are taking losses of up to 90% in the $1.2 trillion market for collateralized debt obligations (CDOs) tied to corporate credit,” reports Bloomberg. Much of the losses have been triggered by the failure of Lehman Brothers and Icelandic bank.

The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves against losses after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.

– Meanwhile, Reuters reports that U.S. banks will need more $700 billion in government cash injections to stay afloat because “banks cannot predict how many of their loans will sour because they do not know how much the economy will shrink, and forecasts of

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Yesterday after the close, as I usually do, I went to the gym. As I waited for the next song on my iPod to kick in I heard two guys talking about the stock market. After the gym I went to Walmart and heard two other guys; "the most you can lose is $500." The crisis has made its way to main street.To any of my friends (acquaintances really) at WisdomTree, the dollar has had a big rally (I think counter trend) against almost everything. This might be a good time to to launch some of those currency ETFs especially the ones from some of the healthier (relatively anyway) economies like Israel, Norway, Chile and even though it is in a recession Singapore.At some point in the last couple of days I said I thought we might see daily moves ...

a href="http://bigpicture.typepad.com/comments/2008/10/an-obama-rally.html"An Obama rally?/a Barry Ritholtz gives his 2 cents. br /br /Latest a href="http://marketprognosticator.blogspot.com/2008/10/investing-carnival-17.html"Investing Carnival/a has a host of links on what mattress to hid your money under.br /br /Negativity still a feature with Monday's a href="http://feeds.investorplaceblogs.com/~r/InvestorPlaceBlogs/~3/FaGy9gYsqQY/throw_the_dog_a_bone.php"gains/a, but a href="http://cobrasmarketview.blogspot.com/2008_10_12_archive.html#582748378974610963"optimism/a apparent. The a href="http://adamsoptions.blogspot.com/2008/10/fishing-for-clues.html"wait-and-see/a approach may be best. a href="http://www.investmentpostcards.com/2008/10/14/jeremy-grantahm-still-holding-back/"Jeremy Grantham/a is going softly softly. TraderMike calls it a href="http://tradermike.net/2008/10/october_13_2008_recap_from_panic_selling_to_panic_buying/"Panic Buying/a.br /br /CXO's a href="http://www.cxoadvisory.com/blog/"Top-10 Guru excuses/abr /br /a href="http://www.bloomberg.com/apps/news?pid=20601087sid=a5q9KWDZwFyg"Finland/a basking in the sun?br /br /Japan is the new a href="http://biz.yahoo.com/ap/081014/as_japan_bailout.html"shining knight in armour/a.br /br /span class="fullpost"(Via a href="http://abnormalreturns.com/"Abnormal Returns/a). The end of the yellow a href="http://www.portfolio.com/views/blogs/market-movers/2008/10/12/the-end-of-the-bric-trade"BRIC/a road. br /br /a href="http://club.ino.com/trading/2008/10/fear-is-not-an-option-for-successful-traders/"Fear is not an option/a - time to roll up the sleeves and get to work.br /br /a href="http://www.tradersnarrative.com/why-the-price-dividend-ratio-is-better-than-pe-ratio-1947.html"Price dividend ratio/a over the Price earnings ratio br /br /span style="font-size:80%; color:#cccccc;"Dr. Declan Fallon, Senior Market Technician, a href="http://www.zignals.com"Zignals.com/a the free stock alerts, market alerts, and stock charts website ...