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Markets Up Big; Upside Volatility

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Image shown: The S&P 500 ETF (SPY) since August 2017. The index has broken through support and is now bouncing back to resistance. By Brian Nelson, CFA Good morning everyone, Are you watching these markets? This is incredible. The Dow finished down 660 points yesterday (briefly dropping 700 points), and today, the Dow is currently trading up 600 points at the time of this writing. Granted, there was Apple’s (AAPL) poor first-quarter 2019 guidance yesterday and the strong jobs report today, but this volatility is not “normal,” no matter what others are saying. A couple announcements up front. For those that already ordered our book Value Trap, I will send you the pdf download to your email address just to make sure … Read more

Valuentum Stock Screeners

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This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more

Market Mayhem — Alerts for Members

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During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA  brian@valuentum.com

Plenty of Reasons for Prudence in Today’s Market

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Image shown: SPDR S&P 500 ETF (SPY) share price performance since early 2016. Source: TradingView.  Market volatility looks to be here to stay. Let’s take a look at some of the recent developments that have market observers concerned. Let’s also dissect recent commentary from Fed Chairman Jerome Powell. By Kris Rosemann Volatility in US equities (SPY) is back in a notable way and is not likely to disappear anytime soon. Market participants continue to weigh the pros and cons of a number of factors, including 1) rising interest rates and their impact on asset prices, 2) the massive corporate debt loads found across the landscape (global debt to GDP ratios are at all-time highs), 3) a seemingly strong and steady US economy, … Read more

In The News: Oil Price Slump Continues, GE Cutting Baker Hughes Stake, and Home Depot’s Outlook

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Let’s take a look at some of the top stories from around the markets, including a number of energy-related headlines and what Home Depot sees in its near-term outlook. By Kris Rosemann Crude oil prices (USO) continue their recent slide as oversupply fears creep back into the fore. OPEC recently cut its forecast for 2019 global oil demand growth for the fourth consecutive month, and the cartel expects supply growth from non-OPEC countries to exceed demand growth in the year. OPEC noted that its expectations for oil demand growth to slow relative to prior forecasts goes hand in hand with recent downward revision in the IMF’s recent reduction in global economic growth estimates. President Trump continues to target Saudi Arabia … Read more

General Electric: The Quintessential Falling Knife

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Image Source: Valuentum The story of General Electric (GE) is a great one to illustrate how we think about equities. After being a long-time bull on the company, we had removed General Electric from the simulated newsletter portfolios while it was trading a few dollars shy of $30, but that is not the point of this piece. What we want to illustrate is how hazardous catching falling knives can be (see the three stages above). Many an investor believes that stocks are less expensive just because they have fallen in price. This is simply not the case. The relative expensive or cheap nature of a stock is based on a comparison between its price and value. A stock’s price can fall, … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

General Electric Stripping Businesses, Dividend in Aggregate

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Image source: GE investor presentation By Kris Rosemann Though it had long ago become apparent that General Electric (GE) was struggling to generate ample cash flow from its industrial operations, “GE Takes the Plunge, Halves Dividend,” speculation had been running rampant on how new CEO John Flannery would handle the mess of a business he had been handed. Investors may have thought they got the answer in late 2017 when the company announced billions in dollars of divestitures and a dividend reduction, but here we are again, discussing what will become of GE’s once sprawling portfolio of industrial assets. With its dividend reduction in November 2017, GE announced its intention to refine its portfolio to focus on its three core … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.