Q&A with J. Royden Ward

Interview with J, Royden Ward, Chief Analyst, Cabot Benjamin Graham Value Investor
By Elyse Andrews, Contributor to Cabot Wealth Advisory 1/31/09

What are your thoughts about the wild year of 2008?

Good riddance is my initial thought. But 2008 shouldn't be dismissed without further examination. As a Benjamin Graham value investor, I pay less attention to the ups and downs of charts, the economy and the stock market. Rather, I focus on the most undervalued stocks with solid long-term potential. Recommending the most undervalued stocks in 2008, however, produced mediocre results as undervalued stocks became more undervalued since then. I have changed one of our methodologies in Cabot Benjamin Graham Value Investor and I'm happy to report that our new value investing method is working very well. During the last six weeks, the Classic Benjamin Graham Value Model has increased 13.4% compared to a decline of 7.1% for the Dow Jones Industrial Average!

What is your outlook for the stock market in 2009 and beyond?

The stock market below 9,000 is clearly undervalued. My forecast calls for a test of the November lows, followed by a slow stock market recovery in the second half of 2009. Be prepared for volatility, though. My outlook beyond 2009 is positive. The U.S. and other economies around the world will begin to recover. A new bull market will evolve before the economy starts its recovery. We will look back at this current debacle as the buying opportunity of a lifetime.

What is your outlook for value stocks in 2009 and beyond?

Value stocks have more potential than growth stocks during the next year or so. Long term (three to five years) prospects are excellent. Most investors, including the professionals, base their decisions on the outlook for the next six to 12 months. I prefer to look at a company's prospects in three to five years. The question is simple: Will the company be noticeably larger and more profitable three, four and five years from now?

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Headline News

Stock Picks


Shopify (SHOP), which came public in May of last year, is a new leader.


Roy Ward uses the PEG ratio to determine if the stock is undervalued or overvalued.


For AMZN to be undervalued, the stock would need to fall to 393. 50.

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