DIA

Euphoria Running Rampant: Investigating Some of the Hottest Names Around

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Image Source: Tesla Roadster As we march forward in what Morgan Stanley has dubbed a bull market of “epic proportions,” euphoria appears to be at levels perhaps not seen since the dot-com bust of the early 2000s. Let’s take a look at some of the “hottest” names on the market. By Kris Rosemann and Brian Nelson, CFA Earlier this month, Ireland (IRL, EIRL) borrowed five-year paper at a -0.008% (negative 0.008%), meaning that the country is being paid to borrow. If you recall, we penned a piece in April 2016, that commented on an obscure article in the Journal where a Danish couple was being paid interest on their mortgage (that’s right – they are being paid interest, not paying … Read more

The “Hierarchy” of Valuentum Idea Generation

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Let’s talk about this hierarchy of idea generation in this note. —  A version of this article was sent to members previously. New content has been added.  — Note: We continue to work to optimize the signal-to-noise ratio in our work, and we are evaluating expanding our update cycle to half-year periods to better bolster the signaling aspects of the Valuentum Buying Index (VBI). In our widely-read case study (see here), the VBI showed its ability to rank equity returns over a forward 12-month period, and we think a migration to less-frequent updating may make the most sense to better capture the forward-looking dynamics of the system. We think this will help weed out false breakouts and other noise that could be harmful. You shouldn’t think of … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

Still Bullish — Stocks for the Long Run!

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Excuses not to pick stocks are only exposing biases these days. By Brian Nelson, CFA The S&P 500 (SPY), Dow Jones Industrial Average (DIA) and Nasdaq (QQQ) continue to hover near all-time highs, and all appears well. We maintain our bullish take on the markets and believe that we are in the early innings of a long bull market that started following the washout March 2020 during the depths of the COVID-19 meltdown. Stock bull markets tend to average about 4.4 years in duration, with the last one enduring ~11 years, while bear markets are very abrupt, lasting only 11.3 months on average, the last one a very short 1.1 months, according to data from First Trust. We’re about 15 … Read more