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.


Volatility Up, Rates to Follow?

Excerpted from the October 2016 Issue

Our warning in last month’s issue that volatility was likely to increase proved to be very timely.  There were five days in September on which the S&P 500 moved by more than one percent (including one day when it dropped by nearly 2 ½%), after there was just one one-percent day in July and August combined.

Part of this volatility appears to have been caused by changing views on when the Fed will raise interest rates.  As we’ve said before, trying to bet on the Fed’s action is a loser’s game.  Your chances of getting it right are slim, and even if you guess right about when the Fed will raise rates, the market may react differently than you expect.  While everyone expects the stock market to drop in response to a rate hike, in the past the opposite has often happened.  Interest rate rises are usually in response to strength in the economy, which is generally good for stocks. 

The effect on bonds is much more clear-cut: when rates go up bond prices go down.  And the longer the term of a bond, the further it will fall.  Therefore our advice right now is to sit tight with your stocks and be very wary of bonds.

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Amazon = US GDP 1970

Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached. Read More.

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.

Read More.

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."