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Valuentum Weekly: Nothing Surprising, Well-Positioned!

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Image source: Cathie Wood’s flagship ETF, the ARK Innovation ETF (ARKK) has fallen more more than 40% from its 52-week high. This is nothing short of a complete and utter bloodbath for such an actively-managed fund, in our view. We note this for context. We’re not just talking about one or two or five stocks that are down 40% from 52-week highs, but the *entire fund.* Investors have to keep things in perspective. It’s perfectly reasonable within the context of a portfolio to have a few stocks off 10%, 20%, or maybe even 50% from all-time highs. However, if your entire portfolio is down 40%+ from 52-week highs, you’re doing something wrong. Hi everyone: It’s the most wonderful time of … Read more

Large Cap Growth Dominates, MLPs Have Suffered

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— Sign up to our new options commentary here. — $1,000/year. 4 ideas per month and more! — Image: Win = The options contract was closed as a win. Closed = the options contract was closed at a loss. Expired = The options contract expired worthless. Pie chart above does not consider ideas still open. Data through October 26, 2021. Results are hypothetical. No trading is taking place. Past performance is not indicative of future performance. — Please note that with options trading, investors can lose their entire premium. Don’t ever trade with money that you can’t afford to lose. Valuentum is an investment research publisher and accepts no liability for how readers may choose to utilize the content. By continuing with an … Read more

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually

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  Image: The area of large cap growth has trounced that of the 60/40 stock/bond portfolio for more than a decade. Image Source: Morningstar. By Brian Nelson, CFA We’ve all heard the stories. Professional stock pickers can’t beat a bunch of monkeys throwing darts at the pages of the WSJ. A cows’ investment decisions are just as good as the pros’. Stock prices reflect all available information so not even professionals have an edge (e.g. the efficient markets hypothesis). Most professionals can’t outperform their respective benchmarks, so how could mom and pop? Look at this from one of today’s bloggers: The traditional argument, which you’ve probably heard many times before, goes as follows: since most people (even the professionals) can’t … Read more

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. 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 … Read more

Large Cap Growth Has More Room To Run

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“The stylistic area of large cap growth has been one of our favorite areas because of the strong net cash rich, free cash flow generating, secular growth powerhouses that make up much of the space. The image is a rundown of the key Valuentum statistics for the top 15 holdings of the Schwab U.S. Large Cap Growth ETF (SCHG). We believe where large cap growth goes, so does the broader market, considering the hefty weightings of some of these stocks in other broad-based indices. Based on the high end of our fair value estimate range for this group of bellwethers, the broader U.S. markets still have room to run, to the tune of 7%+, despite the many highs already reached … Read more

Apple Remains a Free Cash Flow Generating Powerhouse

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Image Shown: Apple Inc remained a free cash flow generating powerhouse in fiscal 2021. Key line-items are underlined in red and blue. Image Source: Apple Inc – Fourth Quarter of Fiscal 2021 Financial Supplement with additions from the author By Callum Turcan On October 28, Apple Inc (AAPL) reported fourth-quarter earnings for fiscal 2021 (period ended September 25, 2021) that missed consensus top-line estimates and matched consensus bottom-line estimates. Apple’s CEO, Tim Cook, noted during the firm’s latest earnings call that “we set a new September quarter record of $83.4 billion” though “supply constraints” weighed negatively on its performance and “had around a $6 billion revenue dollar impact” last fiscal quarter. Silicon shortages were cited as a key headwind, with … Read more

Markets Look Vulnerable, Adding “Protection”

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Image: The S&P 500 (SPY) and corresponding 50-day (green), 100-day (purple), and 200-day moving averages (red). We expect the SPY may have to “correct” to the 200-day moving average, or about $412-$413 per share before it finds its footing. Self-inflicted wounds the past several weeks have altered the market’s sentiment for the worse, and we don’t think the selling is done yet. To read the email, please click here. — Hi everyone: — Volatility has picked up, and options trading is all the rage. — The markets are under pressure again this morning, and we’re not wasting any time to add put option “protection” to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. The last time we added … Read more

Facebook’s Stock Sell Off Explained

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Image: Facebook’s free cash flow generation has been resilient in the face of prior iOS updates, and we think it will continue to grow rapidly in the future. Source: Facebook. By Brian Nelson, CFA We never like to see a 10-rated stock sell off, even if it’s up more than 30% so far this year and up over 140% since it registered a 10 on the Valuentum Buying Index in January 2019, but that’s what we’ve been closely following with Facebook (FB). The stock experienced similar selling pressure during the summer of 2018, and while we’re huge fans of this underpriced tech giant in the long run, we think shares may face more selling pressure in the near term. Nonetheless, … Read more

The Investment Case for More Gender Diversity

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Image: The Impact Shares’ YWCA Women’s Empowerment ETF (WOMN) has trounced the S&P 500 since inception, while the SPDR SSGA Gender Diversity Index ETF (SHE) has bested the quantitatively-hailed small cap value ETF over the same time period. By Valuentum Analysts There has been a plethora of research over the years regarding the value of diversity on teams, in corporate boardrooms, and across asset management. The CFA Institute defines diversity as “the spectrum of human attributes, perspectives, identities, and backgrounds,” and notes that “the discussion around motivations for pursuing diversity in investment management often revolves around two main areas: ‘the business case for diversity’ (i.e., with more diverse perspectives, business outcomes will improve) and ‘because it is the right thing … Read more

Update on Best Idea Alphabet’s Self-Driving Taxi Upside

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Image Shown: Shares of Alphabet Inc Class C have boomed higher year-to-date as of early-September 2021. We see ample room for additional upside. By Callum Turcan We are enormous fans of large cap US equities because these entities then to be tremendous free cash flow generators, generally have net cash rich balance sheets, and their promising growth outlooks are underpinned by secular growth tailwinds. Alphabet Inc (GOOG) (GOOGL) fits the bill, and we include Alphabet Class C shares as a top-weighted idea in our Best Ideas Newsletter portfolio. Let’s provide some updates on the company’s self-driving taxi ambitions in this note concerning its Waymo spinoff. Self-Driving Taxi Upside Alphabet announced that it was spinning off Waymo, the company’s self-driving unit, … Read more