When someone shares with you something of value, you have an obligation to share it with others.
Friday, 6 March 2009
Bear turns bear
Steven Leuthold, whose Grizzly Short Fund makes money for investors by betting companies will fail, says he wouldn’t invest in his own fund now because the U.S. stock market is close to its bottom.
(Bloomberg) -- Steven Leuthold, whose Grizzly Short Fund makes money for investors by betting companies will fail, says he wouldn’t invest in his own fund now because the U.S. stock market is close to its bottom.
Leuthold, who helps manage $3.2 billion as founder of Minneapolis-based Leuthold Weeden Capital Management, told investors to keep money out of the Grizzly fund yesterday after it rose 74 percent in 2008. He joined Bill Fleckenstein, who shut a 13-year-old bearish fund in December, and Marc Faber, who covered bets against U.S. stocks.
The 54 percent plunge in the Standard & Poor’s 500 Index since October 2007 gave the average short-selling hedge fund a 28 percent increase last year, the most among strategies tracked by Chicago-based Hedge Fund Research Inc. Leuthold says the S&P 500 may rise 40 percent this year because the U.S. economy won’t fall into a depression and stocks are the cheapest in 24 years.
“I personally would not have an investment in the Grizzly fund because I think we’re so close to a major market bottom,” said Leuthold in an interview with Bloomberg Television from Tucson, Arizona. “Every investor ought to be considering putting money into equities.”
Short sellers borrow stock and sell it with the hope of profiting by replacing it after prices fall. The number of shares held short on the New York Stock Exchange has fallen 26 percent from a July peak.
Cheapest Stocks
The first simultaneous recessions in the U.S., Europe and Japan since World War II pushed the price of the S&P 500 as low as 10.2 times earnings from the past year, the cheapest since 1985, according to data compiled by Bloomberg. About $1.2 trillion in bank losses tied to subprime mortgages sent financial companies in the S&P 500 down 82 percent from the February 2007 high, making them the cheapest relative to book value, or assets minus liabilities, since Bloomberg began tracking the data.
The S&P 500 dropped 4.3 percent to 682.55 today, driving the index to the lowest level since 1996, after Moody’s Investors Service said it may cut JPMorgan Chase & Co.’s credit rating and China quelled speculation the government will add to its stimulus plan. The gauge retreated 24 percent in 2009 for its worst start to a year on a record.
Leuthold, 71, said investors have become too concerned about the economy, which contracted at a 6.2 percent annual rate in the fourth quarter, the most since 1982, according to the Commerce Department. Comparisons between the current slump and the Great Depression are exaggerated, said Leuthold, who predicts the S&P 500 will rally to at least 1,000 this year.
‘Lot of Nothing’
Fleckenstein, president of Seattle-based Fleckenstein Capital Inc., says that while stocks may advance in coming months, they’re likely to lose the gains as the recession worsens and unemployment climbs.
The 55-year-old investor, who plans to open a fund that bets on both stock declines and gains later this year, said if he were managing a fund today he would be “doing a whole lot of nothing” and would have few short sales.
“Just because the market is going down, I don’t necessarily feel I want to put my capital at risk if I can’t find ideas that make sense,” said Fleckenstein. “It’s kind of dangerous to be shorting even though it’s working.”
Bought More Microsoft
Fleckenstein said he boosted his stake in Redmond, Washington-based Microsoft Corp. yesterday as the world’s largest software maker traded at 8.5 times profit, the cheapest since at least 1987. Microsoft added 1.5 percent to $16.12 yesterday after losing 73 percent of its value since December 1999.
The size of the stock market’s losses over the last 16 months is fooling investors into buying, according to David Tice, the chief portfolio strategist for bear markets at Federated Investors Inc., which manages $407 billion including the $1.1 billion Federated Prudent Bear Fund. Tice said in February that the S&P 500 may decrease as much as 50 percent this year.
“There are a lot of people that just hope stocks are going to up go because it was down a lot last year,” Tice said yesterday in a Bloomberg Television interview from Dallas. The S&P 500 traded for 6.6 times its companies’ 10-year average profits in August 1982 when an almost two-year retreat ended, according to data compiled by Yale University professor Robert Shiller. The benchmark index for American equities is valued at 12.3 times earnings now, Shiller’s data show.
Faber, who publishes the “Gloom, Boom & Doom Report,” said in a Feb. 23 interview on Bloomberg Television that investors shouldn’t short stocks because programs by the Federal Reserve and Treasury may ease the recession in the next three months.
The U.S. government pledged more than $11.6 trillion over the past 19 months to spur economic growth and bail out banks, according to Bloomberg data as of Feb. 24.
Faber, based in Hong Kong, didn’t respond to requests for an interview sent outside of normal business hours.
“I see the comments from my readers and a lot of them, they want to short the market,” said Faber, 63, on Feb. 23. “This is something I would not necessarily do.”
1 comment:
Bear turns bear
5 March 2009
(Bloomberg) -- Steven Leuthold, whose Grizzly Short Fund makes money for investors by betting companies will fail, says he wouldn’t invest in his own fund now because the U.S. stock market is close to its bottom.
Leuthold, who helps manage $3.2 billion as founder of Minneapolis-based Leuthold Weeden Capital Management, told investors to keep money out of the Grizzly fund yesterday after it rose 74 percent in 2008. He joined Bill Fleckenstein, who shut a 13-year-old bearish fund in December, and Marc Faber, who covered bets against U.S. stocks.
The 54 percent plunge in the Standard & Poor’s 500 Index since October 2007 gave the average short-selling hedge fund a 28 percent increase last year, the most among strategies tracked by Chicago-based Hedge Fund Research Inc. Leuthold says the S&P 500 may rise 40 percent this year because the U.S. economy won’t fall into a depression and stocks are the cheapest in 24 years.
“I personally would not have an investment in the Grizzly fund because I think we’re so close to a major market bottom,” said Leuthold in an interview with Bloomberg Television from Tucson, Arizona. “Every investor ought to be considering putting money into equities.”
Short sellers borrow stock and sell it with the hope of profiting by replacing it after prices fall. The number of shares held short on the New York Stock Exchange has fallen 26 percent from a July peak.
Cheapest Stocks
The first simultaneous recessions in the U.S., Europe and Japan since World War II pushed the price of the S&P 500 as low as 10.2 times earnings from the past year, the cheapest since 1985, according to data compiled by Bloomberg. About $1.2 trillion in bank losses tied to subprime mortgages sent financial companies in the S&P 500 down 82 percent from the February 2007 high, making them the cheapest relative to book value, or assets minus liabilities, since Bloomberg began tracking the data.
The S&P 500 dropped 4.3 percent to 682.55 today, driving the index to the lowest level since 1996, after Moody’s Investors Service said it may cut JPMorgan Chase & Co.’s credit rating and China quelled speculation the government will add to its stimulus plan. The gauge retreated 24 percent in 2009 for its worst start to a year on a record.
Leuthold, 71, said investors have become too concerned about the economy, which contracted at a 6.2 percent annual rate in the fourth quarter, the most since 1982, according to the Commerce Department. Comparisons between the current slump and the Great Depression are exaggerated, said Leuthold, who predicts the S&P 500 will rally to at least 1,000 this year.
‘Lot of Nothing’
Fleckenstein, president of Seattle-based Fleckenstein Capital Inc., says that while stocks may advance in coming months, they’re likely to lose the gains as the recession worsens and unemployment climbs.
The 55-year-old investor, who plans to open a fund that bets on both stock declines and gains later this year, said if he were managing a fund today he would be “doing a whole lot of nothing” and would have few short sales.
“Just because the market is going down, I don’t necessarily feel I want to put my capital at risk if I can’t find ideas that make sense,” said Fleckenstein. “It’s kind of dangerous to be shorting even though it’s working.”
Bought More Microsoft
Fleckenstein said he boosted his stake in Redmond, Washington-based Microsoft Corp. yesterday as the world’s largest software maker traded at 8.5 times profit, the cheapest since at least 1987. Microsoft added 1.5 percent to $16.12 yesterday after losing 73 percent of its value since December 1999.
The size of the stock market’s losses over the last 16 months is fooling investors into buying, according to David Tice, the chief portfolio strategist for bear markets at Federated Investors Inc., which manages $407 billion including the $1.1 billion Federated Prudent Bear Fund. Tice said in February that the S&P 500 may decrease as much as 50 percent this year.
“There are a lot of people that just hope stocks are going to up go because it was down a lot last year,” Tice said yesterday in a Bloomberg Television interview from Dallas.
The S&P 500 traded for 6.6 times its companies’ 10-year average profits in August 1982 when an almost two-year retreat ended, according to data compiled by Yale University professor Robert Shiller. The benchmark index for American equities is valued at 12.3 times earnings now, Shiller’s data show.
Faber, who publishes the “Gloom, Boom & Doom Report,” said in a Feb. 23 interview on Bloomberg Television that investors shouldn’t short stocks because programs by the Federal Reserve and Treasury may ease the recession in the next three months.
The U.S. government pledged more than $11.6 trillion over the past 19 months to spur economic growth and bail out banks, according to Bloomberg data as of Feb. 24.
Faber, based in Hong Kong, didn’t respond to requests for an interview sent outside of normal business hours.
“I see the comments from my readers and a lot of them, they want to short the market,” said Faber, 63, on Feb. 23. “This is something I would not necessarily do.”
Post a Comment