Image Source: US Embassy
“Any man who may be asked in this century what he did to make his life worthwhile, I think, can respond with a good deal of pride and satisfaction: ‘I served in the United States Navy.'” – John F. Kennedy
I felt inspired today. Maybe it was President Barack Obama’s reference to a new “war on cancer” in this week’s State of the Union speech, akin to that of John F. Kennedy’s mission to “go to the moon,” or maybe it was something else, but I was reminded of the great Jack Kennedy and the second quote above: what a man does to make his life worthwhile.
If I were asked what I did to make my life worthwhile, part of that answer would include founding this “beacon for good” called Valuentum. If you look at what we’ve done in the short time we’ve been in existence, it is with a tremendous deal of pride and satisfaction that I can say we must have saved investors of all types billions and billions of dollars. I get an email almost every week along the lines of: “thanks for warning about SeaDrill,” or “thanks for the unerring call on Kinder Morgan,” or “nice call on the MLPs.”
We’ve saved good people, good money.
I don’t think people know the story of Valuentum, but we’re the underdog; we’re the longshot. You know we don’t get a cut of your assets every month; you know we don’t get a commission when you buy or sell something, and you know exactly how much you pay our team for all the work we do. One of our members recently chuckled, “how do you make any money when you charge so little?” The reality is that I can’t see a scenario where someone couldn’t find value in our service. Whether you’re an advisor or an individual or a fund manager, having Valuentum’s newsletters and fair value estimates as a resource should be an absolute no-brainer.
I fear at times the Chartered Financial Analyst (CFA) designation may be losing some of its awareness among mom-and-pop investors. Believe it or not, the financials industry is the only one where you don’t need a specific designation to sign off on managing money for others – anyone can legally do it. Yet, you need a CPA to audit financials; you need an MD to practice medicine; you need a JD to practice law. You even need a driver’s license to legally drive a car! Yet, anyone can manage anyone else’s money. It puzzles me, but it also explains why there’s so much “stuff” out there (putting it politely).
Nowadays, there are even content “farms” that allow anonymous authors to write about companies they own…boy how far we have come since the Global Analyst Settlement that paved the way for independent research. Some may now even believe that it is a “good thing” for a writer to have “skin in the game.” My goodness, do they really think a “biased” author is going to be honest if something is truly wrong with the company before they get out first? Personally, if someone holds the charter, I’d give them a couple years to feel out their work. If they have the charter and have made the calls that we have, I’d say stick with them for a lifetime. We’ve done some pretty incredible things.
Last month marked a doubling of the Best Ideas Newsletter portfolio since its inception. The news came and went without much fanfare, but it was a rather big deal for our flagship product. We continue to make progress toward the goals of both newsletter portfolios. We cover over a thousand companies, but I think readers continue to keep a close eye on our work on MLPs. We keep saying that ship has sailed; after all, we’ve been warning about the group since the peak, even before Barron’s picked up our first bearish piece in mid-June. I still get readers telling me how wrong we were since Energy Transfer Equity (ETE) went from $8 to $12 or $15… Do they know we’ve been warning about this business model since ETE was $35? Remember when we warned about Kinder Morgan (KMI) at $40?
Sometimes it’s really hard to find a way to help people, but I won’t stop trying, which brings me this next rudimentary point. Since the March 2009 panic bottom in the markets, the S&P 500 has effectively tripled. In many ways, even a modest downdraft of 10%-20% in 2016 can be expected. This could pose a headwind for newsletter portfolio constituents. If investors move broadly out of equities, the nature of index funds and index ETFs almost guarantees pressure on the individual securities they hold. From my buyside days, it’s commonly known that roughly 30% of a stock’s return comes from the overall market, 40% from its industry, and 30% from individual characteristics, give or take. With the proliferation of indexing in recent years, broader market returns have probably only become more important to individual stock returns. This is reality.
With all of that out of the way, this newsletter edition is one of my favorites. Kris has written up an updated take on the auto industry, and we’re taking a close look at Ford (F) and GM (GM) for addition to the Best Ideas Newsletter portfolio. Obviously, you know we’ve moved out of shares of Alibaba (BABA) and Rio Tinto (RIO) in the Best Ideas Newsletter portfolio, but we also talk about our wanting to scoop up Chipotle (CMG). To wrap things up, there are a couple well-traveled pieces about our definition of timeliness and how we think about forecasting, both in valuation and with respect to the dividend. I hope you enjoy, and most of all, I hope you choose to stick with Valuentum!
The Best Ideas Newsletter will be released later today, January 15, as originally scheduled.