H

Attack COVID-19 With Forward-Looking, Expected Data

by

President of Investment Research at Valuentum Brian Nelson shares his financial wisdom in detailing how the world must attack COVID-19 with forward-looking expected data (not backward-looking, empirical data) as the global economy faces what could become the worst business environment since the Great Depression, irrespective of government fiscal stimulus. — Editor’s note: Brian emphasizes the importance of “expert analysis” over “backward-looking analysis,” and we would like to clarify that he is not giving personalized advice. Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free. Brian Nelson owns shares in SPY and SCHG. Some … Read more

US Fiscal Stimulus Update

by

Image Source: frankieleon The US Congress is debating and working on a massive multi-trillion dollar fiscal stimulus package to mitigate the negative impact the ongoing novel coronavirus (‘COVID-19’) pandemic is having on the domestic economy and to provide for additional healthcare funds to cash-strapped entities to combat the virus. To read our previous US fiscal stimulus article, click here. By Callum Turcan After a failed vote on the U.S. fiscal stimulus bill (specifically, a shell bill to speed the legislative process along) in the Senate on Sunday, March 22, a program that’s worth around $1.5-$2.0 trillion (negotiations are ongoing), the legislative body picked up where it left off on Monday, March 23. After initially proposing to hold a vote in … Read more

Op-Ed: Bail Out Boeing, No Other Publicly Traded Companies

by

Image: Boeing B-17E Fortress 41-2599 “Tugboat Annie”; took part in the Battle of Midway in Jun ’42; later ditched at sea on 16 Jan 43. Source. Dear Uncle Sam: Please stop bailing out the competition of small business. We need a changing of the guard. Let capitalism work. By Brian Nelson, CFA Let’s get this out of the way first: The U.S. government is going to bail out everybody, and that’s just how it’s going to be. It’s what we’ve become, a Bailout Nation. However, let me give you a perspective from a business owner in the financial industry. Valuentum is an investment research publisher, and while we’re not a financial advisor or broker, our team competes indirectly with many … Read more

Extreme Volatility and Crisis Economics

by

Image: The Dow Jones has now registered 8 consecutive trading days with a 4% move in either direction, from March 9 through March 18. This is the most volatile time in history, a streak that is longer than the 5 consecutive days registered in November 1929 (Great Depression), 4 consecutive days in 1987 (Crash of 1987), and 4 consecutive days in 2008 (Great Financial Crisis). From Value Trap: “There may be just one other period in history that had more price-agnostic trading than today, and that may be the period pre-dating the publication of John Burr Williams’ work The Theory of Investment Value, or roughly 1928-1940. This was the most sustainably volatile period in stock market history, as measured by … Read more

Banking Entities: The Technicals Tell the Story

by

Image: The Financial Select Sector SPDR ETF has experienced a tremendous amount of pain in recent weeks. From Value Trap: “It’s likely we will have another financial crisis at some point in the future, the magnitude and duration of which are the only questions. My primary reason for this view is not to be a doomsayer, but rests on the human emotions of greed and fear and the nature of a banking entity’s business model, which does not hold a 100% reserve against deposits. Our good friend George Bailey, played by actor Jimmy Stewart, in the movie It’s a Wonderful Life knew this very well when he tried to discourage Bedford Falls residents from making a “run” on the beloved … Read more

Resetting Your Mental Model

by

Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Asset Light, Free-Cash-Flow Generating Powerhouse Bookings Holding (Priceline) Remains One of Our Favorite Ideas

by

Image shown: Booking Holdings’ equity has been a strong performer the past few years. By Brian Nelson, CFA Booking Holdings (BKNG), formerly Priceline, has been an idea for consideration in the Best Ideas Newsletter portfolio for some time. A number of our best ideas have a few things in common. For starters, they are asset light, meaning that they generally don’t require lots of reinvested capital to keep their businesses growing. A byproduct of this feature is that they generate considerable free cash flow, and by extension, they have strong cash-rich balance sheets. Booking Holdings fits the bill, and the company has been a strong performer the past few years, as the chart above shows. For those that may not … Read more

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

by

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

Study: Valuentum’s Best Ideas Newsletter Portfolio

by

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

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

by

Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … Read more