Investment legend David Dreman has nothing good to say about Ben Bernanke. As he put it in his latest Forbes.com column article: ”Fed Chairman Bernanke has an almost flawless record of poor forecasts and policy decisions since his tenure began in 2006. capability of grasping the Fed Policies”.
In particular, he targeted the wrongness of the latest round of quantitative easy – dubbed “QE2”. He thinks it is not working, as the interest has gone up rather than gone down; it had made the creditors of the US unhappy and their dumping or stop buying of Treasury will cause interest to go higher. Dreman foresees high inflation down the road as the result of QE2.
Despite of pending inflation, Dreman still recommended four stocks, which he claim are immune to inflation:
Read Dreman’s article in full text here.
GuruFocus tracks Dreman’s stock portfolios, check out the details by clicking on David Dreman.
In particular, he targeted the wrongness of the latest round of quantitative easy – dubbed “QE2”. He thinks it is not working, as the interest has gone up rather than gone down; it had made the creditors of the US unhappy and their dumping or stop buying of Treasury will cause interest to go higher. Dreman foresees high inflation down the road as the result of QE2.
Despite of pending inflation, Dreman still recommended four stocks, which he claim are immune to inflation:
Inflation can be kind to insurers.Chubb Corp. (CB, Financial) is a giant property and casualty firm serving individuals and businesses worldwide. Net premiums inched up 1% in the first nine months of 2010 and look to go higher with either inflation or a healthier economy. Chubb trades at 9 times trailing earnings and 1.1 times book value, and the stock yields 2.5%.
Energy is another inflation play. Marathon Oil (MRO, Financial) is the fourth-largest U.S.-based integrated oil and gas company. Net production is more than 400 thousand of barrels of oil equivalent per day, with proved reserves of over 1.7 billion barrels. Shares fetch a modest 12 times earnings and yield 2.9%.
Drugs don't mind inflation, either. Merck & Co. (MRK, Financial) has over 20 promising compounds in late-stage development. Vorapaxar, designed to treat cardiovascular issues, could generate annual sales north of $1 billion. Merck yields a juicy 4.2% and trades at a modest 11 times trailing earnings.
The widening spread between long-term and short-term rates helps JPMorgan Chase (JPM, Financial). Earnings for 2010 are expected to be $3.85 per share, up 72% from last year. JPMorgan presents good value at a P/E of 11 on trailing EPS and only 9 times expected 2011 earnings.
Read Dreman’s article in full text here.
GuruFocus tracks Dreman’s stock portfolios, check out the details by clicking on David Dreman.
