Turnaround Investing Blog

George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Emerging Markets/International Stocks

A Reader Asks, "With so much turmoil and uncertainty in the U.S. economy, and even more fear of collapse overseas, do you ever recommend just getting out of the stock market all together and hunkering down with something safer like bonds?"

I never recommend getting out of the stock market entirely--or even making major changes to your allocation to stocks. The stock market is so unpredictable that if you bail out, the risk is very high that you will miss a significant upturn. Moreover, even if you make the right call to get out of the market, you then have to muster the courage to get back in. For example, I have a couple of friends who are very proud of the fact that they got out of stocks before the market crash in October 1987. The problem is that they’ve never gotten back into stocks and they’ve missed out on the huge run since then--the S&P 500 is currently nearly 400% from its pre-crash 1987 high. I strongly believe that the only way to participate in the long-term gains that stocks provide is to put as much money in the market as you can while still being able to sleep at night, and then leave it there.

Moreover, it is important to note that bonds are not as safe as they seem, especially right now. If interest rates go up--and they can’t go much further down--bond values will fall. And depending on the type of bond, the value could fall a lot. I’m not saying you shouldn’t own any bonds. I believe every investor should hold a mix of stock and bonds--and other assets--that is appropriate for their risk tolerance and their long- and short-term financial needs.

(Question submitted by Marvin S.)

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Is there value in bankrupt PG&E’s stock?

In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017


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What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."