Valuentum Exclusive Analysis for the Discerning Investor

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Nov 17, 2021

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually
Image: Most asset allocators can’t even keep pace with the underperforming 60/40 stock/bond portfolio. Highlight added by author. Image Source: Wealth Management. Let’s get this industry back on track. This isn’t about going all-in on cryptoassets or being reckless with one’s capital the past 10 years, but merely picking stocks as a risk/wealth management strategy that approximated the S&P 500 for the past 10 years, and how that has crushed not only the best that quant has had to offer in small cap value but also indexing and asset allocation. One hundred and seventy percentage points of difference relative to the 60/40 stock/bond portfolio, which itself beat many of the “best” asset allocators out there!!! This isn’t about taking on more risk, but rather that active stock selection should be viewed in the same vein as asset allocation. Why do we continue to publish the obviously-biased research in favor of indexing and asset allocation when stock selection could have delivered so much more for investors while saving them billions in annual fees from ETFs, etc. Today, the SEC has a lot on its plate regarding SPACs, cryptocurrency, new issues, ETF approvals and beyond, but in our view, the SEC shouldn’t necessarily be prioritizing 2 and 20 fees more than the index-fund fee chain, and it shouldn’t necessarily be trying to eliminate payment for order flow (PFOF) any more than it should seek to eliminate low-cost index funds. Let us not kid ourselves: It's clear why index funds and passive is winning -- the fees are tremendous! All things considered, if investors want to believe risk is volatility and suffer with indexing and asset allocators, that is their prerogative, but what worked in the past (deviations from equity selection as in the 60/40 stock/bond portfolio) bolstered by high interest rates in the 1980s is far from relevant today (and making up alternative assets isn't going to help). We don’t need more indexing and asset allocation books these days. We need more common sense. Stop selling index funds and start trying to help investors.

Nov 12, 2021

Hard Work and the Trust That Binds
Image: Terry Johnson. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April 29, 2020, “ALERT: Going to “Fully Invested” – The Fed and Treasury Have Your Back,” when we saw the writing was on the wall for this blow off top. If nothing else, these three moves alone during the past couple years have paid for a lifetime of subscriptions.

Oct 13, 2021

Fastenal’s Latest Earnings Update Indicates US Economic Recovery Continues
Image Source: Fastenal Company – Third Quarter of 2021 IR Earnings Presentation. On October 12, Fastenal reported third-quarter 2021 earnings that beat top-line consensus estimates and matched bottom-line consensus estimates. The company’s latest earnings report reinforces our thesis that the US economy is continuing to recover from the worst of the coronavirus (‘COVID-19’) pandemic. In 2020, Fastenal generated over 85% of its total sales in the US. Fastenal provides products and services in the decentralized maintenance, repair & operation (‘MRO’) industry, a space where the company attempts to gain an advantage over distribution by locating its operations as close as possible to the economic point of contract with its customers. We view Fastenal as a bellwether to broader trends in the industrials sector. With that said, let's dig into its latest report.

Sep 14, 2021

Chevron Investing in Biofuels and Hydrogen
Image Source: Chevron Corporation – August 2021 IR Presentation. We are huge fans of Chevron’s dividend growth potential in the wake of the recovery seen in raw energy resources pricing year-to-date. Shares of CVX yield ~5.6% as of this writing, and we expect Chevron will steadily grow its payout going forward, aided by its promising free cash flow growth trajectory.

Jul 28, 2021

The Valuentum Buying Index’s Flow Chart
Image: The Valuentum Buying Index flow chart. Each stock in our general operating coverage receives a systematically-applied rating. The Valuentum Buying Index is a powerful tool to use in conjunction with a variety of other investment considerations from the Economic Castle, the Dividend Cushion ratio, the fair value estimate and range to forward-looking relative valuation assessments, the dividend yield, dividend growth prospects and beyond. We hope you continue to enjoy your membership, and please let us know if you have any questions.

Jul 14, 2021

10 YEARS OF EXCELLENCE AT VALUENTUM
Join Valuentum as it celebrates its 10th anniversary of putting investors first!

Jun 27, 2021

Two Alerts and Bull Market On!
Image Source: Mike Cohen. "We like stocks in an inflationary environment, and we love big cap tech and large cap growth in any environment." -- Brian Nelson, CFA

Jun 18, 2021

ICYMI: Watch Valuentum's November 2019 Presentation on 'Value Trap' Now!
YOU WILL LEARN  ---  * The pitfalls of valuation multiple analysis and the risks of extrapolating some empirical quantitative conclusions.  * A critical framework to view and interpret stock price movements and stock valuation.  * The universal nature of enterprise valuation to all things finance from competitive advantage analysis to dividend-growth investing and beyond.

Jun 11, 2021

Dividend Increases/Decreases for the Week June 11
Let's take a look at companies that raised/lowered their dividend this week.

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.