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.

Stock Market Forecast: As January Goes...

Excerpted from February 2014 Issue

…so goes the year. This saying is one of many gimmicks that investors use early in the new year to try to predict how the stock market will perform in the year to come. With the stock market turning down in January, many investors are looking to various crystal balls for guidance on where the market is going for the rest of the year. Among the other “indicators” that people look at are things like the following:

  • First five days of January--if the market is up in the first five days of January, it will be up for the full year, and vice versa.
  • Super Bowl winner--if an NFC team (or a former NFC team) wins the Super Bowl, the market will be up; if an AFC team wins, the market will be down.
  • Hollywood indicator--if Hollywood comes out with a blockbuster film about Wall Street (such as The Wolf of Wall Street) around the beginning of the year, that is supposed to be negative for the market.
  • Butter Production in Bangladesh--supposedly if you multiply the annual change in butter production in Bangladesh in the preceding year by two, it will give you the exact percentage by which the S&P 500 will move in the year to come.

Of course, there are several basic problems with all of these. First of all, they have little or no economic basis. You could perhaps argue that the market’s movements in January may give some indication of investor sentiment that could carry on through the year, but a lot can happen in the next 11 months to change that sentiment. And most of the other indicators rely much more on coincidence than even a whiff of economic reality. The second problem with these stock market indicators...

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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."