LMT

Has the Stock Market Crash Begun?

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Image: CDC. Transmission electron microscopic image of an isolate from the first U.S. case of COVID-19, formerly known as 2019-nCoV. The spherical viral particles, colorized blue, contain cross-section through the viral genome, seen as black dots. Dear members: This article is our fourth update on COVID-19. The previous three installments can be found here (Feb 22), here (Feb 7) and here (Jan 31). We trust you and yours are well during this global crisis. It’s hard to turn on the television these days without hearing about COVID-19, a novel coronavirus and respiratory illness that continues to spread from person to person around the world. COVID-19 is deadly, and particularly deadly among those 60 years of age and older and those … Read more

ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG

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Image source: Centers for Disease Control and Prevention.  ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today.  — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a … Read more

Is a Stock Market Crash Coming? — Coronavirus Update and P/E Ratios

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Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report — 32 We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates–estimates that are likely too high given the evidence we are seeing with respect to a slowdown due … Read more

Why *NOW* Do You Care About Boeing’s Stock?

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Image Source: Robert Sullivan In no, way shape or form should you *now* be interested in Boeing’s stock. Let’s explain. By Brian Nelson, CFA I used to cover Boeing (BA) full-time when I worked as a senior equity analyst at Morningstar many moons ago. I remember pounding the table on the name to many a buyside shop in Chicago when it must have been trading well under $100 at the time (now more than 10 years ago). I remember posting an old video of me with Pat Dorsey, who now runs his own shop in Chicago, Dorsey Asset Management. That video used to be here, but as in what usually happens on the Internet, the darn thing doesn’t exist anymore. … Read more

Resetting Your Mental Model

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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

ALERTS: Big Changes to the Portfolios; Goodbye Apple!

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Image Source: GDS-Productions Summary Best Ideas Newsletter portfolio Remove: AAPL (7%-12%), GM (2.5%-4%) = 9.5%-16% Add to PYPL (increase weighting by 3%, to the range of 5.5%-7%), add DIS (2.5%-4%), add XAR (4%-5.5%) = 9.5%-14% Dividend Growth Newsletter portfolio Remove: AAPL (5.5%-7.5%), GM (3.5%-5.5%) = 9%-13% Add: BAC (2.5%-3.5%), NEM (2.5%-3.5%), RSG (2.5%-3.5%), LMT (2.5%-3.5%) = 10%-14% —– By Callum Turcan and Brian Nelson, CFA We are making a number of changes to the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio as this market continues full steam ahead. We remain near fully invested in both newsletter portfolios, but we are positioning them more defensively as we enter 2020. The following changes will be reflected in the newsletter portfolios … Read more

Update: US and Iran Now De-escalating Tensions

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By Callum Turcan On January 7, Iran retaliated against the US for the killing of Iranian major general Qasem Soleimani (leader of a group that the US has deemed a terror threat under the Trump administration) less than a week earlier by firing missiles from Iranian soil at bases in Iraq that contain US, Iraqi, and coalition troops. The Iranian government aggressively publicized the attack by providing Iranian media outlets with footage of missiles leaving Iran that were targeted towards Iraq. Fortunately, no US, Iraqi, or coalition casualties were reported. We are very thankful that nobody was hurt as a result of the Iranian missile strike. For our first article covering recent events regarding Middle East tensions, click here. In … Read more

Middle East Tensions on the Rise

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By Callum Turcan Early Friday (Arabian Standard Time) on January 3 (the strike was carried out late Thursday evening Eastern Standard Time), under the orders of President Trump, the US took out major general Qasem Soleimani who was the leader of Iran’s Quds military group within the Islamic Revolutionary Guard Corps (‘IRGC’). Please note the US designated the IRGC as a Foreign Terrorist Organization in April 2019, and that the justification for the strike was due to there being an immediate threat to US lives (namely soldiers and contractors stationed in the Middle East), according to the Pentagon. It’s important to note that the strike occurred on Iraqi soil. The Quds force is known to be Iran’s extraterritorial military outfit, … Read more

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds

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Image: President of Investment Research Brian Nelson, CFA By Brian Nelson, CFA A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception. Though the book focuses more on the life and times of founder Jim Simons and dedicated only a page or two to the fall of Long-Term Capital Management (LTCM), another quant fund that went belly-up during the late 1990s, it was nonetheless a thoroughly interesting and enjoyable read. But why I am bringing up one of the most successful quant … Read more

FLIR Systems Repositions Itself

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Image Source: FLIR Systems Inc – November 2019 IR Presentation By Callum Turcan An appealing aspect of the defense industry is that it’s largely counter-cyclical, especially for companies that do a lot of business with the US Department of Defense (‘DoD’). The National Defense Authorization Act (‘NDAA’) that covers fiscal 2020 allows for a base budget level of $658.4 billion and an additional $71.5 billion has been allocated to overseas contingency operations. Noteworthy aspects of the NDAA covering fiscal 2020, which was signed into law by President Trump in December 2019, include the creation of a Space Force, a 3.1% pay increase for troops, and paid family leave for all federal workers. With a budget of $738 billion, up $21 … Read more