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There Will Be Volatility

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By Brian Nelson, CFA Last year, 2022, was a big test for equity investors, and the downside volatility that we witnessed during the year wasn’t comfortable, to say the least. Following the COVID-19 crash and rebound during 2020, and then the market surge in 2021, it wouldn’t be a stretch to say many investors’ heads are probably still spinning from all the volatility witnessed to start this decade. That said, part of what we’ve been warning about the past few years with respect to the equity market, especially in Value Trap, is that the proliferation of price-agnostic trading (e.g. quant, machine/algorithmic trading, etc.) will only lead to more and more market volatility, so while we were somewhat surprised by last … Read more

Serious Question: What Are You Looking At?

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Image: Stocks with the largest 52-week losses, according to YahooFinance. By Brian Nelson, CFA Thank goodness that you’re subscribed to a service that didn’t include any of the above as top ideas in their simulated newsletter portfolios. Many were chasing returns in 2021 and are now left holding the bag this year, but we stuck to our methodology and processes, and we didn’t expose members to tremendous risks. That’s what it’s all about.  With that said, let’s talk about how we successfully navigated a number of these terrible ideas in the Exclusive publication, a monthly resource that includes an income idea, a capital appreciation idea, and a short idea consideration, released to members each month on the 8th. Exclusive Long Ideas … Read more

Microsoft Is Buying Activision On Way to Becoming Video Game Giant

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Image Shown: Microsoft Corporation is buying Activision Blizzard Inc, the largest buyout for a US tech firm ever. Image Source: Microsoft Corporation – January 2022 IR Presentation covering its acquisition of Activision Blizzard Inc By Callum Turcan On January 18, Microsoft Corporation (MSFT) made history by making an all-cash offer to purchase Activision Blizzard Inc (ATVI) for $95 per share. The boards of both companies have already approved the deal. Inclusive of Activision’s net cash position, the deal is worth $68.7 billion which makes it the largest buyout ever for a US tech firm according to CNBC. This deal is expected to close in fiscal 2023 (Microsoft’s fiscal year ends in June). Once it closes, assuming the deal pasts antitrust … 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

Microsoft Soars, Strong Revenue Growth Continues Unabated

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Image Shown: Microsoft Corporation put up a solid fiscal third quarter earnings report and we continue to be big fans of the name. Image Source: Microsoft Corporation – Power Point Earnings Presentation Covering the Third Quarter of Fiscal 2022 By Callum Turcan On April 26, Microsoft Corporation (MSFT) reported third quarter earnings for fiscal 2022 (period ended March 31, 2022) that beat both consensus top- and bottom-line estimates. Shares of MSFT jumped higher by ~4%-5% in afterhours trading on April 26 as investors cheered on the good news and its promising near term outlook. Microsoft’s cloud-oriented products and services were a bright spot in the fiscal third quarter and underpinned its impressive pricing power. The firm was able to stay … Read more