Small-Cap Investing: How to Play The Emerging Small-Cap Rally

by Louis Basenese, Advisory Panelist Associate Investment Director, The Oxford Club Wednesday, January 7, 2009: Issue #911

Forget the grim news that Alcoa (NYSE: AA) is slashing costs and cutting 13% of its workforce. We all know times are tough. But the market’s a forward-looking beast. And right now, it’s doing exactly what I predicted on November 19. It’s favoring small caps over large caps.

In December the little guys put up big numbers - a 5.8% gain versus a mere 1.1% uptick for the large guys, based on the Russell 2000 and S&P 500 indexes.

Before I get to my favorite ways to screen and play this emerging small-cap rally, let me first address my critics.

My last column failed to convince some of you. Others thought I simply skimped on the proof. Or more specifically, that I failed to tell you why

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The Best Stock Market Buy Signal In 51 Years

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, January 5, 2009: Issue #910

Media pundits keep reminding us how tough 2009 will be economically. Nevertheless, I predict this will be a good year for the stock market.

How can this be?

The stock market is a leading indicator. It generally falls before consumers and investors realize just how bad the economy is.

It also recovers long before economic activity picks up. Perversely, that means stocks often plummet during good economic times and rally during recessions… or worse.

In the January issue of The Oxford Club Communiqué, for example, I note that:

In the 13-month recession in 1926-27, the market went up 41.1%.

 

In the eight-month recession in 1945, it went up 19.5%. In the 11-month recession in 1948-49, it went up 15.2%.

 

In the 10-month recession in 1953-54, the stock market went up 24.2%.

 

In ...

The 4 Biggest Investment Myths of 2008

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, December 29, 2008: Issue #907

Pessimism about the U.S. economy and financial market is so thick right now you could cut it with a knife.

I’ll be the first to admit that times are tough. But Americans have seen tough times before. And we have always prevailed.

Too many investment myths have gone unchallenged lately. Today I plan to refute them - and explain why financial markets are likely to perform much better than most investors believe in the year ahead.

Let’s begin by examining the four biggest investment myths circulating right now…

Investment Myth #1: The Era of Free Markets is Over

It’s true that many of the apostles of free-market economics have begged Congress for government intervention during the current credit crisis. But nobody is seriously arguing that

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Small-Cap Stocks: The Most Important Trend Headed into 2009

by Louis Basenese, Advisory Panelist, Investment U Associate Investment Director, The Oxford Club Wednesday, December 23, 2008: Issue #906

Yesterday we got confirmation that the U.S. economy contracted by 0.5% in the third quarter. And most economists expect the downturn to accelerate, with GDP checking in as low as negative 6% in the fourth quarter. Here’s why I’m not concerned…

A more important trend is emerging. Remember, on November 19 I told you to consider going big, by going small with small caps. Well, the markets didn’t leave much time for preparation.

In that short span, small caps jumped 6.38%, almost tripling the returns of large caps, based on the Russell 2000 and Russell 3000 indexes. Of course, it’s too early to declare a full-blown rally. But we shouldn’t be ignorant to the subtle shifts in market leadership.

Remember, the market’s a forward-looking beast. And

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I.O.U.S.A. & The Coming Entitlement Meltdown

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, December 22, 2008: Issue #905

During the current economic crunch, top executives at Bear Stearns, Lehman Brothers and other financial giants received hundreds of millions of dollars in compensation… just before their firms keeled over.

This is galling to many. But the excessive and unwarranted compensation at Bear Stearns and Lehman doesn’t bother me, personally. Why? Because I never owned a share of either one of them.

However, we all have a stake in the future of the U.S. economy. No one can afford to ignore how Uncle Sam spends money. Fiscal policy will play a key role in determining the strength of the economy, the performance of our financial markets and the value of the dollar.

The incoming Obama administration is talking about spending up to a trillion dollars - a temporary shot in the

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The Falling U.S. Dollar: Taking An About-Face

by Louis Basenese, Advisory Panelist, Investment U Associate Investment Director, The Oxford Club Wednesday, December 17, 2008: Issue #902

Investing requires tough decisions. What to buy? When to buy? How much?

But none more difficult than this: Admitting the fundamentals no longer support an investment you own. Or, as the French philosopher Geoffrey F. Abert summed it up over 900 years ago, “It often takes more courage to change one’s opinion than to stick to it.”

And today I’m living proof.

Just three weeks ago, to the day, I declared, “The dollar’s not done.” I laid out my case about Jim Roger’s being wrong.

But I’m officially changing my stance on the falling U.S. dollar.

To be clear, it’s not because I finally saw the light, recognized the error of my ways, or heeded the “sage” advice of so many of you that wrote in to chastise my

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The Truth About Options: Buying Puts & Calls On Stocks

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, December 15, 2008: Issue #901

Readers often ask me the truth about options and the advisability of buying puts and calls on stocks.

Let me begin by saying that options are tools, nothing more. Tools can be used to build something. Or they can be used to tear something down.

The key is to understand and master your tools and, more importantly, not destroy wealth when your intention is to create it.

Let’s start by defining our terms…

The Difference Between Put & Call Options?

Here are the differences between put and call options:

A put option gives the owner the option of selling a stock at a specific price, again known as the strike price, over a given period of time.

 

A call option gives its owner the option to buy a stock ...

Investing Like Warren Buffett: Take Your Cue From the World’s Best Investor

by Alexander Green, Chairman, Investment U Investment Director, The Oxford Club Monday, December 8, 2008: Issue #897

Not long ago I excerpted a recent New York Times column by Warren Buffett explaining his take on the recent market sell-off.

Despite the dour economic outlook, Buffett expects U.S. companies to report record profits within five years. He is getting fully invested in stocks in his own personal account. Since Warren Buffett’s column originally ran on October 14th, however, the S&P 500 has dropped 13%.

Hardly a day goes by that I don’t get emails telling me that Buffett “blew it.” He was “too early.” Or he “failed to call the bottom.”

I beg to differ …

Warren Buffett’s Economic Outlook

For the record, here is part of

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Oxford Industries, Inc. (OXM) manufactures and markets branded and private label apparel for men, women and children. The company sells its products under brands like Tommy Bahama, Indigo Palms, Island Soft, Ely & Walker, and Oxford Golf. Oxford also holds exclusive licenses to produce and sell certain products under the Tommy Hilfiger, Nautica, Geoffrey Beene, Slates, Dockers, and Oscar de le Renta brands.We are lowering our estimates ahead of Oxford's third quarter earnings report, which is scheduled for December 9. When it reported second quarter results, the company lowered its guidance for the second half of the year. But that report was prior to the dramatic slowdown that we've seen in retail over the last several weeks, and conditions are worsening. We are taking our 2008 EPS estimate from $1.89 to $1.69 and our 2009 EPS estimate from $2.19 to $1.68. While the stock ...