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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

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

The Market Doesn’t Go Straight Up

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Key Takeaways: ·     Though we fall short of prognosticating on the immediate moves of the stock market, we think the near-term risk-reward of the broader market is growing more and more negative. Why? o    Market volatility is back due to Fed speak and poor data and pricing action from Asia. Typically, market hiccups signal that a change in price direction is near (we’re no longer going straight up). o    The significant out-numbering of poor scores on our stock-selection methodology, the Valuentum Buying Index, relative to good scores suggests to us that a higher degree of caution may be in order. o    According to Factset, the forward price-to-earnings ratio on S&P 500 constituents registers a 14.4x reading (as of last Thursday), above … Read more

Valuentum’s Economic Roundtable: Trade War, Factors and Beyond

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Tickerized for holdings in the DIA. The markets rallied hard September 5 on relief that the US and China (FXI, MCHI) will go back to the negotiations table next month. This back-and-forth news cycle is enough to give any investor whiplash. Let’s catch up with the Valuentum Team on the latest developments, not only with the trade war but also with respect to factor investing, possible bubbles and beyond. Let’s kick things off with the following prompt from ForeignPolicy.com, released August 2: Trump Hired Robert Lighthizer to Win a Trade War. He Lost. Robert Lighthizer, the U.S. trade representative, agreed to serve in President Donald Trump’s cabinet in order to test his theory: that if the United States freed itself … Read more