Can Turtles Fly?

The stock market may rally strongly--I can see it rising 15% within a short period of time--but don't expect it to do well. Most of you reading this are stockpickers or sector investors so it doesn't necessarily matter what "the market" does. However, it influnces individual securities. I would still buy and sell based on valuations--and seemingly solid companies are selling at low prices right now--but do keep the macro scenario in mind. There are three "issues" that will hurt the market over the next 6 months. The first thing I don't like about the market is the fact that everyone is putting too much hope into the various bailouts/interest rate cuts/etc being considered. People are looking for a silver bullet that will solve everything but we are not slaying a single vampire but countless numbers of them. The bailout bill from last week was a good example of the market having too much of an expectation. The market sold off and has been heading down ev...

Martin Whitman of Third Avenue released his thoughts of the current investment environment in his 3Q 2008 shareholder letter. There is a lot of insightful thoughts in the letter so even if you don't agree with Whitman, it's well worth reading it. In particular, he touches on some of his distress investments and likens the current environment to the 70's (in terms of attractive valuations.) So anyone that thinks you can only match Buffett in the 70's has their chance. I particularly like his explanation for the GMAC Senior Unsecured bonds (not that I have access to them or anthing.) As to be expected, he comments on MBIA and Ambac. He also raised his stake quite a bit, although it's still quite small for his fund. I was uncertain in the past about Whitman's investments in the monolines; I wasn't sure if he was just testing the waters. With his latest addition, I am pretty certain that he is making a committed bet with the bond insurers. As Whitman points out...

I feel that Japan is one of the most undervalued markets out there, and have been looking for an investment in some Japanese company. I kept getting dissapointed with the low ROE of Japanese companies. For example, why even consider Makita (6586) when Black & Decker (BDK) has consistently had substantially higher ROE? If you do look at Japan, do note that a lot of companies are cyclical industrial companies (P/Es may look low near the top.) A couple of companies that seem attractive are Fanuc (6954) and Yaskawa (6506), two world-class industrial companies producing motors, factory robots, and the like. I decided to concentrate on Toyota Industries (TSE: 6201). I decided to look at it after seeing its stock price fall quite a bit over the year. Toyota Industries is a long-term Martin Whitman pick. I just started going through his shareholder report history and he first bought it in 1998 . He has been adding to it lately and I figured I should study this company further. Here are som...