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%"
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