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Active Value Investing & Recession Thoughts from John Mauldin

John Mauldin gives us a good read (pdf) in his recent Frontline Thoughts letter. Click here for the pdf version. Some highlights:

  • He quotes a housing analyst who predicts more foreclosures next year than this year, with little relief until 2014.
  • Mauldin sees market bottoming in 2011 or 2012
  • "Unemployment will be rising for at least another two quarters and probably through the middle of next year."
  • "By the middle of next year (2010), when I think we will finally hit an
    unemployment bottom, we will be down close to 8 million jobs, wiping out all the jobs
    created since the middle of 2004. Unemployment is likely to be more than 10%"
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Worthwhile read (slideshow) from Vitaliy Katsenelson, author of Active Value Investing: Making Money in Range-Bound Markets (Wiley Finance). After reading this slideshow, I may have to pick up his book! A couple of conclusions:

  • Buy and hold is in a coma
  • The saying that 90% of your returns comes from asset allocation is true in bull markets, but not range bound markets
  • Seek dividends
  • Stock selection matters!
  • Look overseas for opportunity
  • Cash is a great alternative in an absence of good stocks