The “Luck” and “Randomness” of Index Funds
Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.
KORS
Hasbro, Boeing Pop as Market Bounces Back
Image Source: US Missile Defense Agency. June 22, 2014 – The Missile Defense Agency’s Flight Test 06b Ground-Based Interceptor launches from Vandenberg Air Force Base, Calif. on June 22, 2014. The markets have finally been getting the volatility that we’ve all been waiting for, and we don’t like the idea that the market is now trading more like a cryptocurrency. Granted, it’s important to stay focused over a long-term time horizon, which irons out the ups and downs, but there’s just something about 1,000+ daily swings on the Dow Jones Industrial Average that really doesn’t sit well with us, regardless of what that implies with respect to the percentage change. Can you imagine — All of this over just a … Read more
Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value
President of Investment Research Brian Nelson defines the concept of universal value and shows how quantitative statistical methods are inextricably linked to those of fundamental, financial, business-model related analysis. Value does not exist in respective process vacuums! Value is universal. Find out why. Running time: ~10 minutes. Tickerized for Valuentum’s stock and ETF coverage universe. Transcript Hi this is Brian Nelson from Valuentum Securities, and this is the tenth edition of a series that I call “Off the Cuff,” where I get in front of the camera and I talk for ten minutes. This is what we have to talk about today. We have to talk about this concept: The Theory of Universal Value. Value does not exist in vacuums … Read more
Strategy Versus Tactics in the Best Ideas Newsletter Portfolio
Image Source: Anna & Michal We made a few tactical tweaks to the Best Ideas Newsletter portfolio during 2017. Let’s walk through them, and how we’re out to win the war, not win every battle. By Brian Nelson, CFA I’m not going to reference The Art of War written by Chinese military strategist Sun Tzu some time in the 5th century, nor am I going to use any quotes from the military treatise (I think it’s too well-traveled of a topic), but I do believe the approach to portfolio management is much like that of a general on a path to win the war. Now, don’t get me confused: I’m not saying that portfolio management is actually like being in … Read more
How Have Our “Best Ideas” Performed During 2017?
The top-weighted ideas are getting the job done, while we avoided one of the biggest missteps in all of 2017. We’ve had better years, but 2017 was still a great one. Key takeaways: 1) “The top-weighted ideas in the Best Ideas Newsletter portfolio, Apple and Visa, performed wonderfully from the release of the December 2016 newsletter through November 13, 2017, averaging more than an increase of 45%, excluding dividends, versus a mid-teens percentage advance for the S&P 500, excluding dividends.” 2) “The weighting concept within a portfolio context is an important one because, as a portfolio manager adds more and more ideas to the portfolio, the next best idea is just that–the next best one–so the probability of diluting portfolio … Read more
North Korea and the Bomb
Tensions between the United States and North Korea have heightened, and we may look to August 2017 as the dawn of yet another Cold War. The news has little impact on our thesis, however. Stocks generally remain overvalued, and some of them considerably. Let’s cover a few stocks in the news and reiterate our generally positive stance on defense contractors, two of our favorites recently highlighted in the Nelson Exclusive publication. Learn more about the Nelson Exclusive here. “North Korea best not make any more threats to the United States,” Trump said, arms crossed, from his golf resort in Bedminster, New Jersey, on Tuesday. “They will be met with fire and fury like the world has never seen.” – CNN, … Read more
I CARE
Image Shown: The S&P 500 from early 2009 through today, June 15, 2017. By Brian Nelson, CFA There it is — the upward-sloping chart of the S&P 500 (SPY) since the March 2009 panic bottom. What a sight to see… The past 8 years have marked an incredible bull market in US equities and one for the record books in many instances. The drivers behind the multi-year rally have been many — ultra-low interest rates and their magnifying impact on equity valuations, strong earnings growth from the doldrums of the Financial Crisis, and the proliferation of passive and dividend-growth strategies de-emphasizing the price-versus-value equation. “Money,” it seems, is chasing stocks at any price, and most of the trading on exchanges … Read more
Alerts – Spring Cleaning in the Newsletter Portfolios
We’re making a number of changes to the newsletter portfolios. By Brian Nelson, CFA Changes in Dividend Growth Newsletter portfolio We’re removing Medtronic. Medtronic (MDT) reported decent fiscal fourth-quarter results May 25 that showed revenue advancing ~5% and bottom-line earnings-per-share beating consensus by a couple pennies. We’re not messing around in this frothy market though, and we’ve learned from our miscue with Teva Pharma (TEVA). Medtronic has too much debt this late into the credit cycle for our comfort, and frankly, we’re starting to question more and more why it might have changed how it measures free cash flow. We’re letting shares go from the Dividend Growth Newsletter portfolio. The company was added to the Dividend Growth Newsletter portfolio under … Read more
Not Worried About Priceline, Boeing; Yes Worried About Fickle Retail
Image Source: Mike Mozart Priceline and Boeing have been here before. Fickle retail continues to succumb to the Amazon effect. By Brian Nelson, CFA The Dow Jones Industrial Average (DIA) closed just shy of the 21,000 mark on May 11, while the S&P 500 (SPY) ended the session at ~2,395. We continue to ride the wave in the equity markets higher, even as we exercise caution almost across the board. First-quarter earnings season has actually been quite good, however, with the “blended earnings growth rate for S&P 500 companies north of 10% (it was 13.5% with more than 80% of S&P 500 companies reporting). FactSet noted in its May 5 report that this pace of growth is the highest since … Read more
Valuentum’s 3 Breakthroughs in the Field of Finance and More
Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more