What a rigorous metric called "EVA" says about the value of stocks. Hint: it ain't pretty.
FORTUNE -- Forget P/Es. Trailing, forward, westward, or eastward, the venerable price-earnings ratio tells you little more about the value of a company than its marketing budget. Or (ugh!) its "consensus analyst rating."
The best measure of how companies perform for shareholders is a wonkish tool called Economic Value Added, or EVA. The advantage of EVA is MOREShawn Tully, senior editor-at-large - Aug 19, 2013 8:51 AM ET
A stunning government report says the U.S. economy has gone through a frightening structural change since the recession: a reduction in our capacity to grow. Here's what we need to do to turn things around.
By Shawn Tully, senior editor-at-large
FORTUNE -- A wonder of America is that, after every downturn, the economy inevitably regains its old, formidable growth trajectory. In good times, the U.S. expands its output faster than any MOREAug 15, 2013 8:00 AM ET
The Fed wants to keep long-term yields depressed, but its policies are riddling the market with risk.
FORTUNE -- Last Wednesday, at a conference in Cambridge, Mass., Ben Bernanke sought to clarify the statements that shocked the markets just three weeks earlier. This time, the Federal Reserve Chairman reassured his vast, anxious audience that his pledge to start shrinking the Fed's $85 billion in monthly purchases of long-term bonds, the latest MOREShawn Tully, senior editor-at-large - Jul 16, 2013 8:00 AM ET
Congress isn't likely to privatize the mortgage finance giants, so some hedge funds are turning to Plan B: suing the government.
For the past couple of years, a group of America's smartest investors have been betting big on Fannie Mae and Freddie Mac. The adventurous crew include John Paulson's Paulson & Co., Bruce Berkowitz of Fairholme Capital, and Richard Perry of Perry Capital. Their strategy is to exploit the remarkable revival of MOREShawn Tully, senior editor-at-large - Jul 8, 2013 1:19 PM ET
The desperate patchwork of fixes for Europe is deluding the best financial minds, including Goldman Sachs' Lloyd Blankfein, into believing that the euro is virtually certain to survive.
FORTUNE -- In an interview published last Saturday in the German national newspaper Welt am Sonntag (World on Sunday), Goldman Sachs CEO Lloyd Blankfein declared that the risk of a euro breakup has faded in the past year. Blankfein went on to argue MOREShawn Tully, senior editor-at-large - May 21, 2013 11:45 AM ET
Equities are actually pricey, just when the "experts" are claiming they're cheap.
FORTUNE -- On Friday, May 3, the S&P 500 powered past 1600 for the first time in its history. The latest surge lifted the index's gains since the start of 2012 to 28.3% and fortified the prevailing view that this mighty market will roar far into the future.
What the optimists -- almost everyone you hear in the analyst community MOREShawn Tully, senior editor-at-large - May 7, 2013 5:00 AM ET
Why it's more important than ever to focus on the dividends and buybacks that companies return to shareholders.
FORTUNE -- Dividend-paying stocks have generated intense debate in recent years. Has the rising market made their prices too high and their yields too low -- or is a dividend-heavy portfolio still the best way to garner superior returns? For Chris Brightman, that discussion misses the point. Brightman is the head of investment MOREShawn Tully, senior editor-at-large - Feb 14, 2013 5:00 AM ET
If Facebook wants to return even 10% annually to shareholders for the next ten years, it would need revenues approaching $70 billion by 2022, and 31% earnings growth annually. Good luck.
FORTUNE -- Facebook's stature with investors, severely diminished following its botched IPO in May, is enjoying a remarkable revival. Since sliding to less than half its offering price in September, the shares have surged 60% to over $28. Its fourth MOREShawn Tully, senior editor-at-large - Feb 5, 2013 11:17 AM ET
Among Benjamin Graham's nuggets of wisdom: Never judge a stock based on its past twelve months of earnings performance. Big spikes never last.
FORTUNE -- While riding the exercise bike at my health club during lunchtime, I've been pedaling through Benjamin Graham's classic, The Intelligent Investor. Last week, I read a passage that made me pedal faster. In Chapter 12 of the updated 1973 edition (with excellent notes by Wall Street MOREShawn Tully, senior editor-at-large - Jan 22, 2013 9:52 AM ET
If the government fails to enact structural reforms in spending, an entirely new source of revenue will be needed. The most likely one is a value-added tax that would crush the middle class.
FORTUNE -- You can't blame middle-income Americans for wondering whether the new "fiscal cliff" deal really protects them from big tax increases in the future. That's essentially what President Obama promised in championing the hike in rates for MOREShawn Tully, senior editor-at-large - Jan 14, 2013 10:21 AM ET
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