Weekend Reading for Equity Investors: Focusing on Fundamentals

Equity investors liked what they heard from central bankers Mario Draghi and Ben Bernanke earlier this month and have pushed most global indices higher. Chinese stocks, coping with a steady flow of skepticism and negative economic news, have been a notable exception. Looking ahead, as corporate earnings come back into focus, the bullish sentiment may very well fade without meaningful signs of a sustained economic recovery.

Here are some stories you may have missed recently.

What Strategists are Saying

• Michael Mauboussin on the importance of expectations. (Legg Mason Capital Management)
• Howard Marks advises, “Move forward, but with caution.”(Oaktree Capital, PDF)
• John Hussman says equities have reached a low-water mark. (Hussman Funds)
• Samuel Lee on avoiding the hedgehog’s error. (Morningstar)

Investing in Macro-Driven Markets

• Are you afraid of QE3? Seth J. Masters of AllianceBernstein recommends you buy real assets. (Context)
• What should investors do when fundamentals don’t matter? (Greycourt, PDF)

Earnings Outlook Dims

• US companies are gloomy about earnings growth. (Financial Times)
• Several of the most commonly-cited reasons by companies for their growing bearishness. (ThomsonReuters)

On Growth Investing

• How does growth investing measure up? (Enterprising Investor)
• A youthful populace helps make the Philippines an economic bright spot in Asia. (NY Times)
• “Emerging markets should be treated as individual entities, not blocks,” says Ruchir Sharma, author of Breakout Nations. (CFA Institute Magazine)

Focus on Valuation

• Mebane Faber on building trading models with the 10 Year CAPE. (Cambria Investment Management)
• Authers looks at an irrational exuberance indicator. (Financial Times)

Buffett’s Genius Confirmed

• Warren Buffett’s Alpha explained. (Enterprising Investor)
• Buffett as the merchant banker of last resort. (Forbes)

Alas, We All Can’t be Warren Buffett

• SEC study says retail investors lack basic financial literacy. (SEC, PDF)

For more news and trends, visit the Equity Investments Community of Practice.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.