This could be the ultimate contrarian indicator but when one of the most depressing market watch says this bull has a few months of legs to run, do you listen?

From CNBC.com:

“We’re a believer; we’re celebrating. We think the rally has legs,” explains Gina Sanchez, Roubini’s director of equity and allocation strategy. (She is also a CNBC contributor.)

She tells us that Roubini’s firm currently recommends being overweight equities, playing cyclical areas of the market such as technology.  “Also we’d take some tilts into staples and telecom to collect yield. And we’d also be overweight ag and livestock. Generally we’d take advantage of the risk rally.”

She topped off the forecast by adding that investors have months to make money.

Roubini reportedly believes the recent action by the Fed and ECB will continue to make equities an attractive investment over the next few months.

On the flip side, Roubini doesn’t expect the rally to last long, according to the report. He thinks more pain will accompany the equity markets in the second half of 2012. He sees the S&P 500 ending the year at 1300, which would represent a 3.6% decline from current levels.

Joe Granville recently predicted DOW to drop by 4000pts. Today I came across contrarian investor David Dreman saying stocks have never been so cheap since 1982

So now we have one that offers a technical take and now David Dreman offers a fundamental take

1. People currently do not want to be in the market because they think this depression like scenario will continue
2. Stocks are very very cheap
3. Low PE, Low PTB and High Yield tend to outperform the markets
4. Great food, tobacco companies can go out of favor in secular bear which provides a great buying opportunity
5. His new matrix discussed in the book
   1. Diversification important have ever been
   2. Small caps will out performed and do better
   3. Psychological – The more we like something the more we are willing to pay and up to 100 times earnings
6. Lessons from 2008 bear
   1. If there is a loss don’t buy
   2. Financial stocks are difficult to evaluate

Here is David Rosenberg’s advice for the turbulent 2012: Stick to safe money management strategies that focus on income. They are defensive and cushion volatility.

1. Focus on safe yield
2. Dividend equities and preferreds
3. Low debt/equity and High liquid asset ratios
4. Oil and Gas Royalties and REITs
5. Low fixed costs and high variable costs, oligopolistic
6. Alternative Assets
7. Precious Metals

Strategies – SIRP (Safety and Income at a Reasonable Price) Deflationary Environment – David Rosenberg

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.

Here is a profile of Warren Buffett’s son, the man to take over as chairman of Berkshire Hathaway.

A lot of interesting thing

1. Non of his son’s graduated from university!
2. Warren made Howard pay rent and tied it to his weight
3. Howard does not believe that Bill Gates high tech agriculture methods for the poor is going to work.

I follow Jeremy Grantham because I think his valuation of asset classes is amongst the most accurate. For someone who can forecast asset classes order of returns 10 years ago to what they are now [See this report page 2 and 3 >>] they have to be really really good.

For folks who would like to know his prediction on the average returns of asset classes here it is

Grantham’s latest report is bearish. But it is based on their studies of 10 great bubbles and the trend these bubbles take before the next recovery.

Typically they went through a long long period of normalization at overly low price.

Question to investors is: how would you be living in that scenario? unemployed? war thorn? how would you feel if your Starhub price remains at $1.30 for 10 years?

20111201 – The Shortest Quarterly Letter Ever

For those interested in tracking my most current holdings, you can review my portfolio over here. Learn to use our Free Stock Portfolio Tracking Google Spreadsheet to track stock transactions.

So today we got this article on Berkshire Hathaway Inc, Warren Buffett’s main company investing $24 billion in third quarter.

Warren Buffett buying shares when stock market is down is not new information. But it’s the magnitude of it that is surprising.

The S&P 500 was not down a lot. certainly not down the 50% we seen in 2008 bear market.

So why did he invest the most in 15 years for a particular period?

The last time Buffett invested more than $20 billion in a period was 2008 when he did it in both the second and fourth quarters of the year. Buffett deployed more than $70 billion that year, including $10.1 billion on stocks, as the S&P 500 posted its biggest decline since 1937. This year, Berkshire bought $11.4 billion of stocks in the nine months ended in Sept. 30, while selling $885 million of equities.

Cash holdings dropped to $34.8 billion at the end of September from $47.9 billion on June 30. The hoard is replenished from maturing securities and profit from investments and the company’s more than 70 operating subsidiaries.

Now Buffett have shown in the past that he is comfortable in keeping a lot of cash when there is no good opportunity. What does he sees in a 14% drop in broad index valuation?

Unless against the historical low interest rate, stocks look very attractively value and the opportunity cost of staying in cash and losing purchasing power is too high.

In any case, you seldom go wrong with taking his queue but from past experience he never always bought at the lowest point. Still would you fancy a purchase of Berkshire B Shares at $76?

[Buffett Broadens Portfolio by Spending $23.9B >>]

I run a free Singapore Dividend Stock Tracker . It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.

Drizzt:

Jeremy Grantham is someone I really like to read up on, simply because he managed to forecast the long term returns of 10 asset classes and got them correct.

I think that is no mean feat, people always forecast and in the end it is pretty far off. This goes to show his valuation model is great.

In this article 2 days ago, he talks that valuations have become better than months ago. And though he have an opinion on farmland and agriculture being the next super bull, he still advocate holding High Quality Blue Chips and great European blue chips.

Read some of my past postings on him here.

Value stocks, rich market

Grantham also doesn’t approve of Federal Reserve Chairman Ben Bernanke taking steps that he said essentially have put savers in a box. Keeping interest rates low, and stating that rates will remain in the cellar for at least a couple of years, forces people to take more risk with their money if they want yield and capital appreciation.

“You’re transferring money away from retirees” who must either delve into stocks, gold or some other higher-stakes investment, or languish in savings accounts and low-yielding bonds, Grantham said. “They could use that money. They would spend every penny.”

Instead, Grantham said the Fed’s policy puts money “in the hands of people who aren’t spending it — people who only buy BMWs and don’t support Wal-Mart.” This creates a vicious cycle in which, Grantham said, individual savers are penalized and restrain spending, while the beneficiaries are “bankers and corporations that can build factories all over the place — except they won’t because consumption is too weak.”

Accordingly, Grantham sees this path coming to no good end over the short-term. He said he expects another leg down for the U.S. stock market, one where shares could stay low-priced for years while U.S. economic growth plods along at maybe 2% annually instead of the relatively more robust historical average of around 3.4%.

But Grantham is an investor, not a politician, so his job is to hunt down opportunities in bull or bear markets. Nowadays, he’s finding more stocks that fit GMO’s strict value-investing discipline.

“If we adjust earnings to normal and apply an average P/E, you can finally build a decent portfolio today of global equities at a respectable long-term return,” he said.

The potential for gains is “modestly higher” outside of the U.S., he added, other than “high-quality blue-chips.” Mostly, he said he prefers discounted plays that are surfacing in Europe and emerging markets.

“In stocks you will eventually do OK at these prices,” Grantham said.

“The real danger is one or two of these building blocks falling over,” Grantham said. “You can buy a whole portfolio of slightly cheap global stocks, and the risk you take is that you get sandbagged by some of these major problems.”

Indeed, Grantham said that since there’s a “decent chance” of stocks becoming even cheaper, GMO is positioned slightly below normal in equities “because the risk profile of the world is way over normal.”

At the same time, he’s not jumping on the long-term-bond bandwagon. “One day we will have more inflation and our bonds will bleed like a pig,” Grantham said. “The only reason for buying long bonds is short-term or as a desperate haven for terrorized investors. But the potential to make longer-term real money is naught.”

Grantham runs a personal, non-profit foundation dedicated to the protection of the environment. For the foundation he has invested heavily in agriculture, commodities and natural resources. Timber is a favorite, as are fertilizer companies. He’s not a big fan of gold. “I own some myself as a pure speculation,” Grantham said — “just enough to mute the irritation of watching gold [prices] rise.”

For others, Grantham advised taking a page from GMO and buying shares in companies with strong finances and which produce goods that people need, as opposed to luxury items. Look for dividend-paying opportunities in emerging markets especially. “I would own emerging and EAFE (the MSCI Europe, Australasia, and Far East Index), including Japan,” Grantham said.

“In the end everything comes down to value, and they have suffered a lot more recently,” he said of non-U.S. markets. “Yes, it can get whacked in the next 18 months if the wheels come off, and the possibilities are likely, but if you hang in anyway you’ll make a respectable return.”

[Read the full article here >>]

At Investment Moats, I have written about Jeremy Grantham’s views in the past because he comes from a macroeconomic point of view. Much macroeconomic analyst focus on economics but do not tied closely to asset class selection well.

Jeremy Grantham is one who does it well.

You can check out his past views on the market and investment asset classes and assess how accurate they are.

Here is a good CNBC interview with Jeremy Grantham on his views of the market

1. Inflationary scenarios
2. Bullishness on actual commodity producing companies rather than refining or processors.
3. He is also big on franchise companies
4. Moderate overweight on emerging countries.

For more posts on Jeremy Grantham, check out some of these great articles