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Market Analysis by Richard Pzena
Old 01-29-2009, 04:13 AM   #1
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Market Analysis by Richard Pzena

Pzena Investment Management - Investment Analysis

Everyone has his own idea of valuation. Here is one, along with comments on value dispersion within the equity space.

Ha
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Old 01-29-2009, 06:36 AM   #2
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Their conclusions are:
Quote:
1. The expected return on equities at current valuation levels is higher than at any time in at least the past 28 years;
2. Valuation spreads are wide, an environment that favors the value investor;
3. We believe equity returns should surpass those of fixed income securities of equally rated issuers; and 4. Equity returns surpassed those of even junk bonds coming out of the last financial crisis in 1990.
Makes you want to just run right out and buy value equities, doesn't it?

Well, maybe I'll just hold off on that for a while...
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Old 01-29-2009, 06:49 AM   #3
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I'm Sold!!
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Old 01-29-2009, 06:56 AM   #4
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Originally Posted by haha View Post
...along with comments on value dispersion within the equity space.
Ha, looks like you've been reading way too much Wall Street psychobabble. You're beginning to sound like a technical analyst.

Repeat after me: Head and Shoulders is a dandruff shampoo, not a buy/sell signal.
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Old 01-29-2009, 08:00 AM   #5
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Soooo - when are these people gonna get real tech talk wise and learn how to pornounce and spell: Norwegian or pssst Wellesley even.

Do notice I said pornounce!

heh heh heh -
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Old 01-29-2009, 08:33 AM   #6
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I hope he's right. Maybe I will come close breaking even one day. Pretty sad when your main objective in life is just to break even.
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Old 01-29-2009, 08:42 AM   #7
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Hmmm, he's not trying to sell something, is he? Never mind ...
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Old 01-29-2009, 08:46 AM   #8
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"Value dispersion within the equity space" is what happens when you combine a financial sales pitch with Star Trek, I think.
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Old 01-29-2009, 08:55 AM   #9
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"Value dispersion within the equity space" is what happens when you combine a financial sales pitch with Star Trek, I think.
I'm beginning to suspect the Borg are about to launch an investment newsletter...
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Old 01-29-2009, 12:09 PM   #10
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Well clearly this thread met a real need on the board.

I should start more like this!

Ha
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Old 01-29-2009, 12:27 PM   #11
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Soooo - when are these people gonna get real tech talk wise and learn how to pornounce and spell: Norwegian or pssst Wellesley even.

Do notice I said pornounce!

heh heh heh -
I hope the widow in your story didn't own BAC or C.
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Old 01-29-2009, 02:09 PM   #12
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Haha, thanks for the link. It's nice to see some hint of possible good news on the horizon, especially for those of us with holdings tilted to value stocks. I came in off the ledge to read the whole thing.

Valuations are tricky things--the true book value of a lot of these companies is far from clear, so I don't know if anyone can say what the true P/B is right now for one stock or a whole group (particularly for the financial stocks). Still--I'll take positive news wherever I can find it.
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Old 01-29-2009, 02:28 PM   #13
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Haha, thanks for the link. It's nice to see some hint of possible good news on the horizon, especially for those of us with holdings tilted to value stocks. I came in off the ledge to read the whole thing.

Valuations are tricky things--the true book value of a lot of these companies is far from clear, so I don't know if anyone can say what the true P/B is right now for one stock or a whole group (particularly for the financial stocks). Still--I'll take positive news wherever I can find it.
My feeling is that the graph on the left is meaningless becasue of the very low current interest rates.

But the book value graph, since it is not based on absolute values but only relative values at different times, is likely to be helpful.

Also this graph shows that 2000 was also a great time for value investors, and I found that to be true. So many people piled into highflyers that there wasn't much money left for real companies.

I feel the same way now. I am agnostic about the S&P, but there are sure quality individual stocks available at good prices.

Ha
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Old 01-29-2009, 03:12 PM   #14
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I hope the widow in your story didn't own BAC or C.
She owned both - but also electric, gas, water utilities, telephone, big oil, pharma, REITs, food, etc.

Other Dogs - Dow chemical, Eagle shipping, Borg Warner, Aetna insurance.

After Superbowl - may be doing some shifting - or just hurry up and wait on others.

heh heh heh - Will be interesting which sectors are still holding up say 6 mo's from now - dividend wise.
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Old 01-29-2009, 03:35 PM   #15
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Interesting article thanks for posting ! From a women's point of view I think Liz Claiborne has ruined their brand by letting too many cheaper labels use it . Liz Claiborne used to attract slightly older well off women but now it markets to the masses which cheap looking and poorly made clothes . That brand needs a total redesign or it needs to return to it's roots .
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Old 01-29-2009, 05:12 PM   #16
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Yikes of the three stocks listed 2 were down nearly 20% today Allstate and Liz Claiborne. And the third JNJ I own
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Old 01-30-2009, 08:40 PM   #17
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I heartily agree with the article -- unless it's different this time. Unfortunately I think that's a distinct possibility. But I'm still glad I rebalanced.
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