MTH

Zillow Continues to Disrupt Real Estate Market

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Image Source: Zillow Group Inc – May 2020 IR Presentation By Callum Turcan Record low interest rates for mortgages in the US, largely a product of the Fed’s monetary stimulus measures (quantitative easing and near-zero interest rates), has gone a long way in stimulating demand for homes. According to the US Census Bureau, the national homeownership rate stood at 67.4% in the second quarter of 2020, up ~260 basis points from the same period the prior year. For reference, the domestic homeownership rate has been steadily climbing higher since 2015-2016 (when homeownership rates were in the low-60s% range) according to data provided by the US Census Bureau. Homeownership rates peaked in 2005-2006 at the high-60s% level before sliding significantly lower … 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

News Roundup: Tesla’s Musk, Department Stores, Summit Midstream, Cracker Barrel, Home Depot, GE and More

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No changes to simulated newsletter portfolios By Brian Nelson, CFA There’s never a dull moment in the Tesla (TSLA) story. Just when we thought things were getting back to “normal,” Tesla’s CEO Elon Musk has been hit with a contempt charge for a tweet that allegedly violated his prior deal with the SEC. We don’t think the tweet was a big deal, by itself, and it may have included content from a prior conference call, but given Musk’s prior behavior, including being outspoken about not having any respect for the SEC, he doesn’t have much wiggle room with the authorities. From our perspective, Musk is in now in some serious hot water. We’ve always viewed Tesla as “uninvestable,” not necessarily … Read more

What’s Weighing on the Markets

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Renewed concerns over the severity of trade tensions, a flattening yield curve, negative news out of the homebuilding space and other geopolitical uncertainties have investors feeling anxious. December 4 marked the worst day for the Dow Jones Industrial Average since October 10. By Kris Rosemann What was once thought to be broad-based optimism related to potentially easing trade tensions between the US and China (FXI) and investors taking a liking to recent commentary from the Fed regarding an easing of the future trajectory of rate hikes came tumbling down during the trading session December 4. President Trump tweeted early in the session that people should remember he is “a Tariff Man” if a trade deal cannot be reached with China, … Read more

In the News: Housing Starts and Railroad Pricing

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Two highly-followed portions of the US economy are experiencing demand and pricing movements, and investors are taking note. Let’s take a quick look. By Kris Rosemann Homebuilders (XHB, ITB) faced selling pressure early in the October 17 trading session after concerns over slowing demand and affordability continue to be present. Housing starts for the month of September revealed a more significant than expected decline from the previous month as the measure fell 5.3% to 1.201 million compared to the 1.216 million expected. Building permits came in at 1.241 million in the month compared to 1.272 million expected. Meanwhile, mortgage applications dropped as interest rates continue to rise, and total mortgage applications fell 7.1% in the week ended October 12. The … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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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

Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value

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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

Homebuilder Optimism Rises to Decades-Long Highs; Valuations Similarly High

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The Housing Market Index, which is based on a monthly survey of National Association of Home Builders (NAHB) members, posted a higher than expected jump in the most recent release of the monthly survey-based index, and homebuilders are nearly as optimistic as they have been at any point in the past two decades. Image shown: The iShares US Home Construction ETF’s (ITB) share price performance since the beginning of 2017. Shares are up more than 55% year-to-date (2017). By Kris Rosemann The housing market continues its recovery from the Financial Crisis of late last decade, and homebuilders’ confidence has rarely been higher. The Housing Market Index (HMI), which is based on a monthly survey of National Association of Home Builders … Read more

Housing Market Very Strong But To “Face Two Contradicting Challenges”

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Image Shown: The iShares US Home Construction ETF (ITB) has advanced ~ 24% year-to-date, according to data from YahooFinance. “Housing indicators may be leveling off,” per S&P Corelogic, and the threat of rising interest rates looms (as it has for years), but we like the fundamental strength that we’re seeing from the homebuilders of late, which has translated into strong equity performance. By Brian Nelson, CFA We’ve been bullish on the US housing market recovery since early 2012, and we’ve pointed to several factors as to why–including improved affordability, investment by both individuals and investors, falling unemployment, improved household formation, limited inventory, and more recently, the wealth effect that a rising stock market provides. Things continue to be on the … Read more

Valuentum’s 3 Breakthroughs in the Field of Finance and More

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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