According to an article published by Bloomberg Cheapest Stocks in 16 years draws investors, "Investors are preparing to snap up shares of telephone, health-care and computer companies after last week's $2.1 trillion global stock market rout left U.S. equities the cheapest in 16 years."

I am always pondering stock valuations in search of bargains and have been thinking that there are many bargains to be had. Having come to this conclusion though is not based on the relative market strength or weakness, or whether the over all market is cheap or not. I am not interested in bear markets or bull markets. The average investor should view all markets and promoters of said markets as full of bull. The best way to invest in stocks is the same way you invest in friends - one by one, respectfully, fairly and refraining from judging the proverbial book by it's cover. You should look deeper and think long term.

Some companies have reported terrific earnings Intuitive Surgical (NASDAQ: ISRG), Apple Inc. (NASDAQ: AAPL) and some have been lackluster Johnson & Johnson (NYSE: JNJ). Some have been dismal like housing stocks Pulte Homes (NYSE: PHM) and Toll Brothers (NYSE: TOL). While one could make the argument that stock valuations are at a low point there is more to the story.

Since valuations -- think price-to-earnings (P/E) ratios -- are at a cumulative low, and the market prices stocks based on future earnings and growth of equity potential, then one has to assume the brokerage houses, investment banks, hedge funds, institutions and the like have priced in a continuation of the same low interest, high liquidity conditions that lead to this economic situation. I do not have such clarity in regards to this future.

Maybe the headline should not read "Stocks are the cheapest they have been in 16 years", maybe it should read "Large investors are more tenative than they have been in 16 years". After all look how fast they were jumping ship last Thursday and Friday. In any event, I will continue to write about specific opportunities and resist characterising the over all markets.

The word is in from my 18-year-old daughter and she loves it. Several of the early reports in the media editorialized about the Apple Inc (NASDAQ: AAPL) iPhone after a single user's report, or limited reporting. Some of my colleagues were criticized for writing commentaries from this limited view. My daughter might not be one of the first iPhone "beta testers" if not for the fact that her 18th birthday coincided with the product release date -- and her grandfather was intent on spoiling his granddaughter. I would not have spent the money myself since she already had a Blackjack that she was happy with, but she does like the iPhone better. Here are her comments sent to me via email.

Why I Love the iPhone

1. The screen is bigger
2. The buttons don't press in my pocket
3. The text messaging is more like a conversation because you can see what I write and what the other person writes at the same time just like instant messaging.
4. The calender is more user friendly
5. The ipod plays music out loud when the earphones aren't in
6. The earphones have a speaker so I can receive a call while listening to music
7. The internet is the same as on a computer and very user friendly
8. The weather and stock information allow you to quickly keep tabs on things

In the midst of writing a post about how bored I was reading Up & Down Wall Street by Alan Abelson each week in Barron's (subscription required) just to see him warn of the impending bear market again, and again and again, we got a dose today. In general I enjoy Abelson's wit, insights and vocabulary lessons each each week, but after 18 to 24 months of bearish warnings it was much over done.

Today, perhaps he is conjuring up his commentary for next week when he may really have something to taunt investors about. Given that the DJIA ($INDU) is down 148.27 (1.09%) to 13,501.70, the NASDAQ ($COMPX) was down 30.86 (1.16%) to 26.39.16, and the S&P ($INX) was down 21.73 (1.42%) to 1510.12, there is much to think about. As a buy and hold value guy I can ride out any storm, but I will share with you that today 12 of the 13 stocks in our latest portfolio are down. The one excepton is Tata Motors (TTM), closing at $17.94, up 0.21 (+1.18%). The original story: Chasing Value: Tata Motors LTD - patience, patience, GOT IT!

Two market darlings were also up Apple Inc. (AAPL) closed up $2.02 to $132.35 and Google Inc. (GOOG) was up nominally $0.78 to $543.34.

You can read all the trials and tribulations of the day here: Stocks Decline After Downbeat Forecasts, but in summary, oil up, 30 year mortgages up, retail sales down and sub-prime loans still haunting the market.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the Principal for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

For some reason stock trading is still running rampant in the market despite all the evidence to the contrary that it is a bad idea. It is a bad idea to pay fees and taxes (or take losses, even worse) no matter how low because they eat away at your overall returns. It is a bad idea because the basis of the decision to buy or sell has little or no fundamental rationale except momentum, or charts, or news of the day, or analysts' calls, or a Cramer rant. But most importantly to me it is a bad idea because all of the most successful and wealthiest investors do the opposite -- Warren Buffett, Bill Miller, Eddie Lampert and Carl Icahn just to name a few.

Since history has proved over and over and over that day trading is a loser's game, why do it? The only reason I can think of is for the adrenaline rush. It's the sport of it. Just watch Cramer and you can see the crazed sports fanatic looking for a fix. He makes it exciting! He makes it an adventure! He needs something to talk about!

If he followed a process enjoyed by Buffett or Miller his show might be on the air monthly instead of several times a week. Instead of frantic or manic gyrations he would be making a few boring comments and calm suggestions about a few stock possibilities before encouraging his viewers to tune in next month. Cramer and other traders have built up business as a sport and as entertainment. But, if you want to get rich, follow the investors not the traders.

Yesterday evening I went to see the movie Transformers with my 11-year-old son. (I think he will be broadcasting to every kid he sees today that it is a must-see.) Before the movie we visited the Apple Inc. (NASDAQ: AAPL) store a few doors down from the movie house. It was crowded and the whole store had been transformed into an iPhone store. The wall banners, storefronts, and the first product table by the door were dedicated to the new phone and there was a security guard hovering around the display table.

We played with the phone for a while and it has some impressive features. I think it is clearly a marketing success, and is so different from all the other phone options that it is likely to blow past Apple's projections of sales in the ten million range through the first 12 months. I do not think it would be hard to imagine 20 to 25 million units sold in the first 12 months. Many of my colleagues have been huge Apple stock promoters, the most enthusiastic Georges Yared has taken the lead in this respect. If you followed his lead you made money.

From my own value perspective I could not justify buying Apple but that is not to say that by some measures there is not value. So I decided to take a look at the metrics and here is my read on the stock now.

• Price-to-earnings P/E (TTM) 34.71
• Price-to-sales P/S (LFY) 3.85.
• Price-to-book P/B (LFY) 6.55
• Price-to-cash-flow P/CF 32.20
• Return-on-equity ROE (TTM) 22.85
• Profit margin: 10.3%
• Dividend: none

Nothing could be further from the truth, but this is one of many silly comments that Peter Cohan received this week after posting Four reasons I'll never own an iPhone. I can assure our readers that quite the contrary, Peter and all of our bloggers are quite bright ... even when I disagree ... and even when there is an occasional error of fact. Over the past year the quality of writing has continually improved. Our editors work hard and we writers converse often during the day. Comments like these may suit some individuals relief of personal angst but educate no one; offer no reason except that the commenter sharply disagrees, and to me are basically worthless.

Last year I recall receiving conflicting comments about something I wrote. In three quick retorts, I was called a moron, then brilliant, then an idiot ... thankfully all of my antagonists had something more to say so that I could possibly learn something. This has been known to happen.

Interestingly, and at the risk of being called an idiot also, I happen to agree with Peter, that the iPhone is not a "must have", will be cheaper later, and as has been born out by those that chose to be "beta testers" this week end, many of their iPhones are currently very cool looking paper weights thanks to AT&T's poor preparation for the onslaught of activations required and not done.

Actually I have nothing against the iPhone specifically, I choose not to carry any type of PDA. I get no peace now and certainly do not want to become a slave to text messaging or the web, more than I am now. To me, a PDA is a long leash required by upper management to keep track of middle management.

Peace to all.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

In June of 2006, after a month of writing for BloggingStocks, I wrote about our original "Great 8" stocks. Amazingly this is my 300th story - never thought that was possible. It's been fun and educational. During the last few months I started three special sections with the coaxing of Amey Stone and with the coaching of Sarah Gilbert. I decided to go back to the beginning and review the original "Great 8" again and see how my discussion points panned out.

In the past year the Federal Reserve Board has sat on the fence leaving interest rates untouched, however, their hemming and hawing has moved the market at times as fear and greed and speculation had the usual effect of jiggling the market from time to time. Housing starts have fallen steadly to scary levels in some parts of the country. The Iraq war is still on the front pages as the death toll increases and President Bush's influence evaporates.

In last year's report I said "there are no bargains yet, but there are some very interesting developments in the fundamentals" - - so what now?

Apple Inc (NASDAQ: AAPL) was the big winner to the upside in the past year followed by Google Inc. (NASDAQ: GOOG). Time Warner Inc. (NYSE: TWX) aided by the influence of Carl Icahn, major stock buy-backs and changes in AOL and the cable business, has also performed well. The following were the four things that seemed noteworthy at the time. All of them were relevant to what happend.

1. TWX has a very low price-to-book ratio.
2. GE has powerful products to sell -- literally: aircraft and standby power engines, water resource management and equipment. Plus it has a strong dividend.
3. WMT had a very low price-to-sales ratio before and it is still extremely low at .64. While the stock price is going nowhere and has not for years they seem to be creating more shareholder equity. They are a huge company so the prospects are that they move up slowly over time but are not goin to be exciting to watch -- unless they are building one next door to you house.
4. GOOG has an extraordinary return on invested capital (ROIC).

Here's my take on all eight stocks:

It wasn't the bagels burning up, it was the owner.

Before work I often stop by New York Bagel & Deli (NYBD) in Santa Monica for coffee, a bagel and the word on the street. Well this morning I got an earful from my friend Brian Gruntz, the owner, about the pay and severance package Bob Nardelli received for running The Home Depot (NYSE: HD)...before bailing out after failing to increase shareholder value in terms of share price. Hundreds of millions of dollars...for what?

Even though it is almost six months later, Brian still finds it outrageous that Nardelli and other CEOs are rewarded for contributing nothing to their company's bottom line, or shareholders', and often negative results due at least in part to their failure of leadership. Brian went on to rant about a story he read somewhere linking CEO performance and the construction of personal mansions, which start to pop up, like oracles, six months before their demise.

On Friday June 1, 2007 Jon Ogg reported Cramer's sell block: Sell Charter and Apple - Yes sell Apple Inc (AAPL). Why? It's now a trading stock. He thinks you should sell right before the iPhone comes out, wait for a dip, and then buy it back. This is very stupid advice on many levels...or at least very funny for those with a sense of humor.

First, one must look at the tax implications of selling Apple and buying it back. It could end up that you will lose money if you have to pay taxes on short term gains. And those of us in California and other States with high taxes would still pay around 22.5% on long term gains. Therefore, if Cramer sees an opportunity to trade out and back in, it better leave room for making up the taxes and fees. How big a swing does Cramer envision? It would have to be 30% for the long term guys and maybe 40% for the short term investors to make this trade worth while. This is all highly speculative and no amount of homework will give you the answers you seek.

Second, what if Cramer is wrong and the stock does not dip or it only goes down 10% followed by a lateral period and then more upward movement? Then what do you do? Now you are playing a guessing game with a high probability of guessing wrong, and you will be unhappy you got left behind and paid the taxes too.

In fairness to Cramer, I happen to agree that it might be time to take something off the table and book some profits. However, it might be wiser to take those profits and put them into a better value, diversify and protect your earnings rather than try and get back into Apple again. There are plenty of wise investors that have been seeing some fluff in Apples current stock price and have been advising the same thing. Sell some, keep some, and limit the speculation.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

A few days ago I received the following inquiry from a frequent reader of my blogs on Chasing Value.

Hi Sheldon, what do you think about: Gannett Company (NYSE: GCI)

P/S - 1.72, P/B - 1.65, P/cash - 9.9, dividend - 2.1%, P/E - 12.4

Publishing sector - quite hot at the moment? ...alex

Alex , you are developing a pretty good understanding of the numbers I look at. Now you should add something else to your calculations. The actual business it is in. When we look at American Home Mortgage Investment (NYSE: AHM) (see Someone asked about Amercian Home Mortgage) or IndyMac Bancorp (NYSE: IMB) (see Chasing Value: IndyMac Bancorp - once in a lifetime,) or many other fallen banks and mortgage companies, we can be confident they will bounce back if they survive the lows. There will always be banks.

Each passing generation seems to accept a greater level of intrusion into its life. When George Orwell wrote 1984, most people were aghast at the level of scrutiny by "Big Brother"-- this doesn't seem to be the case anymore! We accept that cameras follow us all day long, our email is screened and our wireless communications are not protected by the constitution. We accept that the president does not need a warrant to tap our phones if he thinks we are a risk to national security, or even just says so ... or perhaps we do not accept that last.

Our great grandchildren will have access to information about us that will give them insights never before imaginable. They will understand what made us tick better than ever before. There will certainly be internet archaeologists. They exist now, but they're called data miners.

Some day soon you may have an internet memory chip in your head that is installed at birth, giving you instant access to all data ever created -- a real memory chip. As scary as it sounds, it may be coming. Each generation accepts a greater level of techno insidiousness; just look at all the people happy to have a phone sticking out of their heads. Perhaps people will first have cell phones implanted in their heads before memory chips. Not only will it happen, but future generations will ask their grandparents why they wouldn't want such a thing.

This is an update through April 30, 2007 after many companies have reported their first quarter earnings and the Dow Jones Industrial Average (DJAI) passed the 13,000 watermark and set new record highs. We are still in the midst of earnings season. This is my fourth follow-up report. Not enough time to prove much but plenty of time to make or lose some money. If you want to refer to the original article from December 28, 2006 see: You don't have to be 007 to find the best picks for 2007!

This month an interesting trend took hold. Even with the indices reaching new highs and many stocks doing so as well, it seems there must be some caution in the wind. This is the first month that my value approach lead the pack and Cramer's approach, whatever it is, took a back seat. Not only is Cramer lagging each of the indices, but four of his six speculative and growth picks were down while all three of his value picks were up. Google seems to be dead in the water for now, having reported tremendous growth and beating analyst's guestimates again by a wide margin, it still has not gained any traction even in an up market.

Earlier today Douglas McIntyre posted Dow 13,000? -- Stocks to put in the dumpster. Then Georges Yared posted Rebuttal to Dow 13,000: Stocks for the dumpster which got me thinking about what the numbers say. What are the fundamentals? Do they matter? Georges is on record supporting Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) growth stories and Doug took them both down a notch today.

Before I even begin I must share that among my colleagues, I hold these two in the highest esteem. They offer market and stock opinions that are very worth considering and often give me ideas. Georges disagrees with Doug about Google being overpriced and the market has tended to agree with him. I think Doug however, is simply reminding investors that sometimes when such euphoria takes hold it might be worth taking pause. I often like to make my stock decisions on the week end when the market is closed for exactly this reason.

Since I am a value investor I would have a natural tendency to lean toward Doug's slant on the subject but the interesting thing to me is that nothing Georges has said is inaccurate. But what do the numbers tell us, if anything about these ideas.

This is an update through March 30, 2007 bringing the first quarter to a close. Earnings season is now upon us. It is my third follow-up report. Three months is a short time in the market for long term investors, and an eternity for a day trader. If you want to refer to the original article from December 28, 2006 see: You don't have to be 007 to find the best picks for 2007!.

Summary of Results:

• James Cramer's average return on his 9 picks was 2% after two months but now stands at: +2.82% an improvement. Adding the dividend portion (.66 x .25) of 0.165 brings Cramer's gain to 2.99%. Last month it was his speculative stocks that supported his gains. This month they pulled back and his gains came from his best pick so far, Apple Inc. (NASDAQ:AAPL)
• The Indexes remained slightly negative, the DJIA leading the way south: -1.2%. Adding it's portion of the dividend yield (1.8 x .25) of .45 brings it up to a gain of 0.85 for the quarter.
• My picks are down for the year, but improved from -1.9% last month, to a negative of -0.61% for the quarter. Adding the dividend portion of (3 x .25) of .75 brings my quarter to a slight gain of 0.14% which is negligible. My picks are the most volatile now with super gains over 25% from Valero Energy (NYSE:VLO) and super losses from PetroChina Co. (NYSE:PTR) which was at an all-time high when I mentioned it. Both companies are in the same industry, but PetroChina's profits are more closely regulated.
• Google (NASDAQ:GOOG) provided an +8.1% return in January, slipped to -2.9% in February and YTD has moved up for a smaller loss: -1.0% Although it has been an erratic three months Google has managed to float within a tighter range lately.

Not much change since last month. Since the quarter has concluded I added one quarter of the the dividends to the results. This is one of the criteria I used in my stock picks and will have an impact on the final results. Only 3 of Cramer's picks pay dividends averaging about .66%; the Indexes pay a higher average of 1.8%; my picks average still higher at about 3%; and Google does not pay a dividend. The flatter the market is this year the more the dividends will be a factor.

I still remain very comfortable with my stock picks and believe this year will prove to be a "Tortoise and Hare" story. It is my belief that 'Value' will beat 'Growth' and 'Indexing' over the long run. Google is a wild card! Two of my picks continue to be mentioned as buyout candidates; Dow Chemical Co. (NYSE: DOW) and Home Depot (NYSE:HD). Home Depot is receiving the most negative discussion in business circles these days but I see it as becoming a greater value at the lower price.

The following are the closing prices as of December 28, 2006 and three month returns for the seven stocks I recommended plus the addition of Spectra Energy that was spun out of Duke Energy (NYSE:DUK).

This is an update through February 28, 2007 which has come and gone all too quickly. It is my second follow-up report. Two months is a short time in the market for a buy and hold guy like me, and ages for a day trader. If you want to refer to the original article from December 28, 2006 see: You don't have to be 007 to find the best picks for 2007!.

Summary of Results:.

• James Cramer's average return on his 9 picks was 5.86% last month but now after two months is: +2%. Interestingly it is his speculative stocks that are up the most. Best pick so far Level 3 communications.
• The Indexes all reversed from positive territory to slightly negative, the DJIA leading the way south: -1.2%.
• Liber return is negative at -1.9% held down by my inclusion of PetroChina which is down 22%. I cautioned about buying this stock at close to an all time high. However, for the purposes of this story I used that number as my starting point. Best pick so far Valero Energy.
• Google provided an +8.1% return in January and has since slipped for a YTD loss: -2.9% Among all considerations Google had the poorest showing in the last month going from first to last.

After each quarter I will be adding the dividends to the results. This is one of the criteria I used in my stock picks and will have an impact on the final results. Only 3 of Cramers picks pay dividends averaging about .66%; the Indexes pay a higher average of 1.8%; my picks average still higher at about 3%; and Google does not pay a dividend.

I still remain very comfortable with my stock picks and believe this year will prove to be a "Tortoise and Hare" story. It is my belief that 'Value' will beat 'Growth' and 'Indexing' over the long run. Google is a wild card! Two of my picks continue to be mentioned as buyout candidates; Dow Chemical Company and The Home Depot.

The following are the closing prices as of December 28, 2006 and two month returns for the seven stocks I recommended plus the addition of Spectra Energy that was spun out of Duke: