BND

Markets Don’t Look Bad

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Image: The market-capitalization weighted S&P 500 (SPY) continues to hold its January breakout, while support held in mid-March. By Brian Nelson, CFA Though the regional banking crisis in the U.S. remains on investors’ minds, the panicky environment that has defined much of the past couple months has settled down somewhat, even as First Republic Bank’s (FRC) back remains against the ropes. The regional bank has suspended the dividends on several series of its preferred stock, and we’re hearing of advisor flight from the bank as it now appears to be fighting a consumer perception battle as it struggles to stay afloat. First Republic is clearly on the front lines of the regional bank crisis, and if the bank holds the … Read more

We Woke Up on the Wrong Side of the Bed

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By Brian Nelson, CFA Large Cap Growth Still Dominating Small Cap Value After the ‘value factor’ put up its worst performance in history during 2020, some retracement should have been expected in the subsequent 12-18 months, but large cap growth – our favorite stylistic area – continues to outperform. Since the publishing of the first edition of Value Trap: Theory of Universal Valuation in December 19, 2018, an ETF that tracks large cap growth (SCHG) has outperformed an ETF that tracks small cap value (IWN) by more than 45 percentage points. Using data that goes back to before the invention of the computer and television, researchers will tell you that there’s something called a small cap value premium. However, in … Read more

Is It Time To Turn Bullish? Inflation Tamed?

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To download the January 2023 edition of the Best Ideas Newsletter, please click here (pdf). ——————————————— About Our Name But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth,”…We view that as fuzzy thinking…Growth is always a component of value [and] the very term “value investing” is redundant.                          — Warren Buffett, Berkshire Hathaway annual report, 1992   At Valuentum, we take Buffett’s thoughts one step further. We think the best opportunities arise from an understanding of a variety of investing disciplines in order to identify the most attractive stocks at any given time. Valuentum therefore analyzes each stock across a wide spectrum of philosophies, … Read more

Stock Market Locked in Technical Downtrend; Millionaires Expect More Pain in 2023

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Image: The stock market has been locked in a downtrend through all of 2022, and the latest bull trap has spoiled the Santa Claus rally. 2023 may be an equally rough year. By Brian Nelson, CFA This market just doesn’t want to go higher in the near term, and the latest bull trap wasn’t encouraging at all. We think long term investors should stay the course, but it is looking more and more like we won’t see a stock market bottom until sometime in 2023. Santa brought coal this year. The false breakout of the downtrend on December 13 was very telling. Just when investors thought the markets just might be headed for a strong Santa Claus rally and a … Read more

Valuentum Weekly: Outsized Energy Exposure Continues to Buoy Newsletter Portfolios

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Image: Light crude oil futures once traded for roughly -$40 (negative $40) during the COVID-19 crisis, but have now rocketed to more than $120 in recent trading. Image Source: TradingView. This note was emailed to members Sunday, March 6, 2022. Markets   The S&P 500, as measured by the SPY, is down 9% year-to-date, a modest pullback, in our view, particularly in light of the fantastic performance the past few years. Though not necessarily welcome, a down year every now and then for the broader market indexes and a modest bear market can only be expected, at times. The Dow Jones Industrial Average, as measured by the DIA, is down more than 7% year-to-date (not too bad), while the Nasdaq–as measured by the … Read more

This Stock Market Doesn’t Scare Me

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Dear members:   It’s amateur hour at Seeking Alpha, it seems. Most have been calling for a market crash the past week or so, but it’s hard for me to take many writers over there too seriously. Neither should you. We had the crash in February/March of this year, and the Fed/Treasury will do what it takes to prevent another one, in my view. Let me say it for the first time: This stock market doesn’t scare me.  The reality is that we finally bumped up into fair value range. It wasn’t a day or two after I sent out a market alert to you to let you know that markets are now fairly valued when we started to see some … Read more

ALERT: Markets Now Fairly Valued

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Hi everyone: — Long-term investing is a great proposition. You have an incredible advantage over most professional investors that have to deliver on a quarterly or annual basis. The reason is due to something called time horizon arbitrage.  — For example, where most professionals are focused on near-term economic data or near-term earnings, you can focus on how the broader earnings trajectory might look like in 2022 and beyond. I think we’d both agree that the economic data or earnings performance for the remainder of 2020 won’t matter much when we turn the calendar to 2021 in just a few months–and in 2021, the market will be looking at 2022 numbers.  — Markets will always be forward-looking, and stocks are long-duration … Read more

Fed and Treasury Efforts Might Not Be Enough to Avoid Another Great Depression

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Image: The Energy Select Sector SPDR and Financial Select Sector SPDR, two securities removed from both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in August 2019 have been ravaged during this market selloff. We maintain our view that the energy and banking sectors are worth avoiding during this market meltdown. By Brian Nelson, CFA Let’s not mince words: We’re facing a global financial crisis and the real and growing probability of another Great Depression (not recession, but depression). The Fed has unleashed just about every backstop facility that it did during the Great Financial Crisis of 2007-2009, with the announcement the morning of March 23, and it is now even buying corporate bond ETFs (LQD). It’s possible … Read more

How Do We Use the Valuentum Buying Index?

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How Do We Use the Valuentum Buying Index (VBI)? By Brian Nelson, CFA   Hi everyone,     Hope you are doing great!  We often receive questions about how we use the Valuentum Buying Index (VBI) rating system, one of the key metrics we use to source ideas for our members, but we think it is equally important to mention up front that the VBI is only one of the many facets of our website and services. For example, if you haven’t checked out the Dividend Cushion ratios on the stocks in your portfolio or the dividend growth product (from individual reports to the newsletter and beyond), surely you are not maximizing your membership! Don’t forget about the Economic Castle rating, … Read more

Assessing Reactions to Trump’s Victory

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Image Source: Gage Skidmore Donald Trump will be the 45th President of the United States of America. Let’s dig into some of the reactions across the market. We’re keeping our cool. By Kris Rosemann and Brian Nelson, CFA The global markets often don’t know what to make of surprises, a characteristic that was on full display as news came rolling in that Donald Trump would soon become the 45th President of the United States, “trumping” Secretary Hillary Clinton in a decisive electoral college victory, despite the popular vote eventually going to the Democratic candidate. In the wee hours of the morning Wednesday, November 9, major markets across the globe were in shock, showing red almost across the board. At one … Read more