TLT

Hanesbrands Leaps, IBM Falters and More

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We were pleased to see the recent performance of Hanesbrands, and we continue to think IBM is not yet out of the woods, despite some life with respect to revenue trends. Let’s cover this and more. By Kris Rosemann There are a lot of things happening in the markets these days. For starters, growth in the world’s second-largest economy accelerated for the first time in seven years as China’s reported growth of 6.9% in 2017 was slightly higher than the 6.7% it achieved in 2016 and the projected growth rate for 2017 of ~6.5%. However, many observers are anticipating a return to the slowing trends of years past as the Chinese government works to reduce risky lending in areas such … Read more

2018 Starts Out with a Bang!

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Image Shown: An ETF that measures momentum (MTUM) has done considerably better than the S&P 500 since the beginning of 2017. Among its top 5 holdings are Microsoft (MSFT), Apple (AAPL), Boeing (BA)—newsletter holdings that have had excellent value characteristics along the way. Visa (V) is also included in its top 10 holdings.

Even some the most bullish and optimistic investors have been surprised by the resiliency of today’s market environment. Why does it seem appropriate to remind members that the stock market doesn’t always go straight up with almost no volatility?

Tweaking the Newsletter Portfolios for a Rising Interest-Rate Environment

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Image Source: CreditCafe.com. 

Many market observers are anticipating the Fed to accelerate the pace of interest-rate hikes in 2018. We’re making a number of changes to the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio as we consider what a higher interest-rate environment might look like. We’re also cognizant of the impact that higher interest rates may have on the High Yield Dividend Newsletter and its simulated portfolio, the first edition to be released January 1, 2018.

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

Random Musings: Retail, REITs, BlackBerry, and More

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Image shown: Best Buy’s resiliency in the face of competition from Amazon. Let’s cover some recent news. By Brian Nelson, CFA The markets have been relatively flattish the past week or so, but that may not mean much. They could still be digesting some of the big gains thus far in 2017 before potentially staging their next move. At the close June 26, the SPDR S&P 500 Trust ETF (SPY), a proxy for the S&P 500 stood at $243.29. For some reason, I felt it important to make note of this level, as if it were an important one. Things have been very quiet for a long time now, and I get the feeling that an inflection point may be … Read more

Labor and the Economic Cycle

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As we arguably near the “peak” in the business cycle, labor is starting to demand more, a dynamic that we believe is emblematic of the period of aging economic expansion. Let’s have a look at what’s happening in the fight for higher wages. By Brian Nelson, CFA Each business cycle is different in both magnitude and duration, but there are some common qualities that define where an economy might be within the cycle. First, it has been more than 8 years since the March 2009 stock-market panic bottom, a period that witnessed firms such as Lehman Brothers, Bear Stearns, and AIG (AIG) flounder. The unemployment rate peaked at 10% during that difficult time. Since then, the US economy has emerged … Read more

Valuentum Strives To Be the Gold Standard in Equity Research

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This article was originally published July 17, 2013. Valuentum’s Best Ideas portfolio and Dividend Growth portfolio continue to exceed their respective goals, but the firm’s research on the mortgage REIT industry has put it in a class by itself. In this article, please find a graphic portrayal of its call on the mREIT industry. Maxim, KBW, RBC, Edward Jones, Seeking Alpha, Wunderlich, Citi, Evercore, and JP Morgan were all behind the curve. Will still more research shops come around? 1)    September 13, 2012. 2)    May 6, 2013. 3)    May 6, 2013. http://blogs.barrons.com/focusonfunds/2013/05/06/mortgage-reit-funds-in-focus-jefferies-says-investors-underestimate-mreit-risks/ 4)    May 26, 2013. /20130526_1 5)    May 30, 2013. http://www.thestreet.com/story/11937184/1/mortgage-reit-sell-off-overdone-on-rate-fears-kbw-rbc.html?puc=yahoo&cm_ven=YAHOO 6)    June 7, 2013. http://seekingalpha.com/symbol/agnc/currents/2 7)    June 24, 2013. http://seekingalpha.com/article/1515952-american-capital-agency-corp-book-value-resilience-in-the-face-of-rates-back-up 8)    July 8, 2013. http://www.analystratings.net/ratings/Downgrades/7-8-2013/ 9)    July 9, … Read more

Understanding the Market Melt Up

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Image Source: Martin Thomas A previous version of this article appeared on our website April 15, 2016, “The Bubble Is Still Inflating.” No – things are not getting better. The discount rate is shrinking – and that means rising equity values. The laws of finance continue to be bent. NIRP (negative interest rate policy) has changed everything. The world is upside down, and it seems as though every week, we hear of another country or yet another long-er duration bond that has breached below the 0% threshold, “Japan’s 20-Year Government Bond Yield Goes Negative for First Time (July 2016).” The 10-year Treasury yield hit all-time lows just last week. We wrote extensively on the NIRP topic in the February 1, … Read more

Brexit: Secession Bells Are Ringing!

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First Baptist Church in Columbia, S.C., where the first secession convention in the United States opened on Dec. 17, 1860. Source: Library of Congress, Washington, DC. Photo. Encyclopædia Britannica Online. Web. 24 Jun. 2016. Global markets are plunging, and the implosion may still be in the early innings. Market valuations remain stretched among stagnant global economic growth, and “Brexit” may be the catalyst for a correction. In the paraphrased words of the well-known The Day of the Jackal author, Frederick Forsyth: the peasants have spoken. On June 23, the UK (EWU) held a referendum, in which anyone of voting age could take part, to decide whether the country should leave the European Union. The turnout was incredible at nearly 72%, and … Read more

Why The Fed Matters

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By Brian Nelson, CFA I tread very lightly in how I communicate broad macroeconomic information. There are investors that are purely macro-focused asset-allocators, there are eternal optimists that believe the sky is the limit regardless of any economic considerations (perhaps like the Oracle of Omaha these days?) and then there are legends like Peter Lynch who is attributed with saying that “if you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes,” and that “if all the economists in the world were laid end to end, it wouldn’t be a bad thing.” Peter Lynch was the manager of the Fidelity Magellan Fund that averaged a near-30% annual return during the 13-year period ending 1990, “You … Read more