By Brian Nelson, CFA

Hi everyone,

Hope you are doing great! First, I wanted to let you know that we're still working to get the second release of the survey out to you. Your participation in the survey will determine whether we launch a new business, so please do fill it out and keep a watchful eye out for it. I will let you know shortly after it's sent out so you may be able to find the email easier.

As for the markets, the good news keeps coming in. Supporting our thesis that the Fed/Treasury have your back (April 29), the Fed all but telegraphed yesterday that it is watching the equity markets closely (and will do anything to support them), as after just a small sell-off last week, it reiterated that it is going to start buying "a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers," in addition to the investment-grade and junk bond ETFs it is already buying. With credit and liquidity concerns continuing to be off the table for the vast majority of the equity markets, more optimistic fair value scenarios can now be weighted more heavily within valuation models, and this sent the markets rallying heartily off the intra-day lows June 15. 

In addition to unlimited quantitative easing and "whatever it takes, squared" Fed policy, today, June 16, the Trump administration announced that it is weighing a $1 trillion stimulus bill to help support the economy. While uncertainties remain regarding specifics of the bill (it might include state assistance, extension of unemployment benefits, etc.), the move is consistent with the outsize spending we expect to further bolster the bull case, "ICYMI -- Stay Optimistic. Stay Bullish. I Am." We continue to emphasize that, in light of unlimited QE and runaway fiscal stimulus, the longer-duration components of intrinsic values are expanding considerably, and as a result, fair values, themselves, are actually rising during this recession and pandemic [a good estimate of the value of the S&P 500 today may be between 3,530-3,920, as outlined in the following: "Scribbles and More Newsletter Portfolio Changes.]."

What's more, in addition to the large number of "shots on goal" to develop a vaccine, "Excited By COVID-19 Vaccine Candidates (May 18)," health professionals are also making tremendous progress on therapies, too. Just today, for example, it was reported that "low doses of dexamethasone, a generic drug used to lower inflammation for other illnesses, decreased death rates (among people with severe cases of COVID-19) by nearly a third in patients on ventilators and by one-fifth in other patients receiving oxygen." It is clear that the healthcare community is making huge strides in fighting COVID-19, and it now has a life-saving drug to combat the disease as the new standard care in severe cases. From where we stand, things are looking much, much better than they did in February/March. Here's the current situation with COVID-19, per BBC (nowhere near as bleak as it was a few months ago):

From calling the top in February, to dollar cost averaging near the bottom in March, to "going fully invested" ahead of the market's surge, to staying positive on the markets as COVID-19 worries subside, we are again reiterating today our long-term bullish take on the equity markets. In our view, investors have yet to fully factor in the incremental value generation corresponding to the increased long-duration aspect of intrinsic value composition (see here, also see page 74-83 of Value Trap). For your convenience, the updated simulated Best Ideas Newsletter portfolio can be accessed here (login required), and the updated simulated Dividend Growth Newsletter portfolio can be accessed here (login required). Contact us at info@valuentum.com if you may have forgotten your password. 

All things considered, we remain excited about the newsletter portfolios, the track record of the Exclusive publication, and we continue to monitor the High Yield Dividend Newsletter portfolio closely, as we scour the markets for new options ideas. In case you missed it, we released the June edition of the Best Ideas Newsletter, which can be accessed here (pdf) yesterday. We remain bullish on the markets for the long run, and we continue to prefer exposure to big cap tech and large cap growth, arbitrary buckets that today capture many of the Valuentum stocks we include in the simulated newsletter portfolios. Many thanks again for your interest, and we're available for any questions. We sincerely hope you are enjoying your membership!