VBINX

Don’t Let “Them” Spin the Narrative

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By Brian Nelson, CFA Let’s call it how it is: 2022 was an absolute nightmare for the 60/40 stock/bond portfolio. During the year, the 60/40 stock/bond portfolio was down 16.9%, according to data from the Vanguard Balanced Index Fund Shares (VBIAX). During 2022, the S&P 500 (SPY) index was down 18.2%, meaning that the 60/40 stock/bond portfolio, despite allocating to 40% bonds, captured over 90% of the downside risk. Modern portfolio theory is dead: Stocks have done far better than bonds during upswings, and only slightly worse during downturns. The risk/reward for the 60/40 stock/bond portfolio just doesn’t add up anymore. Bond prices did not move inversely to stock prices during the COVID-19 meltdown, and they did not move inversely … Read more

BIN Portfolio ALERT: Removing META, Adding to XLE, Adding MCD and PEP

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Image Source: Valuentum Summary Removed META Added to XLE: now 4%-6%, was 1%-2% Added MCD: 4%-6% Added PEP: 4%-6% By Brian Nelson, CFA As long-term investors, the hardest part is knowing when to get back into the market with “recently-raised” cash. We’ve done a good job year-to-date through the last “performance” measurement in August. [We’ll continue to update members periodically on simulated newsletter performance across all newsletter portfolios.] But with the markets being punished since August 19, when we “raised” cash, we’re going to go back to “fully invested.” Let’s explain what this means. First, we’re still bearish on the broader markets. We’ve carved out some “alpha” we would have missed had we not captured the latest downdraft, and we … Read more

Recent Fair Value Estimate Updates

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Image Source: Valuentum By Brian Nelson, CFA  Our work is always forward-looking in nature, consistent with the markets, which drive pricing and valuation on the basis of future expectations. 2022 has no doubt been a difficult year for many an investor across asset classes, not just equities. Perhaps the biggest insight provided by the Valuentum analyst team for this year came in the second edition of the book Value Trap, “Renowned Investor Brian Nelson Publishes Second Edition of Best Indie Book Award Winner Value Trap: Theory of Universal Valuation,” but such an insight has often been reiterated on our website and through the newsletters, too. To put it bluntly: We became significantly worried about the diversification benefits of the 60/40 stock/bond … Read more

Loving Stocks Here! Meta and Alphabet Setting Up Nicely for Long Term Investors!

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  Image: Nelson still remains bullish. We wouldn’t be surprised to see the markets make new highs as they have done time and time again over the stock market’s storied history of bull and bear markets, crashes and rip-your-face off rallies, and economic booms and recessions! There are myriad risks, but we’re not overthinking this market. We like stocks for the long haul. “The active versus passive over-benchmarking plague is hurting investor returns, and flawed measures of risk are disguising the underperformance.” — Brian Nelson, CFA Dear members: Latest thoughts on Meta Platforms >> Latest thoughts on Alphabet >>  One of the hardest parts of investing is keeping your head when others around you are running for the exits. That’s … Read more

The Stock Market Is Nearing Technical Support Levels

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Image: This year has been a difficult one for equity investors, but the selling pressure that has been common in the markets may start to slow as broader indices such as the S&P 500 begin to approach technical support levels. On the S&P 500, we think there is substantial technical support in the 3,200-3,500 range, which to us suggests that further near-term downside may be limited. The S&P 500 closed at 3,674.84 on Friday, June 17, and we think fair value is much higher. By Brian Nelson, CFA  It’s been difficult to watch the stock market give up much of the gains reaped over the past year or so during the selling barrage that has occurred thus far in 2022. … Read more

Bitcoin, U.S. Large Cap Growth, and Technology Continue to Dominate Returns

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Image source: Seeking Alpha, retrieved November 28 —– Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.  The Benefits of Premium Membership Sign Up Today. First 14 days FREE!  At Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m], we strive to stand out from the crowd. Most investment research publishers fall into a few camps, whether it be value, growth, income, momentum, chartist or some variant of the aforementioned. We think each in its own right holds merit, but the combination of these approaches is even more powerful. After all, stock price movements aren’t just driven by investors of the value or … Read more

Valuentum Weekly

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Image: Bitcoin, technology and large cap growth have led the pack the past 5 years while pipeline MLPs, crude oil and energy stocks have fallen way behind. Large cap growth > small cap value. Bonds, non-US stocks continue to lag. The Valuentum Weekly is a brand-new weekly market commentary from Valuentum Securities, released each weekend in digital form. The Valuentum Weekly offers members a weekly synopsis of the markets and major events. It will be straight and to-the-point. Our goal is to deliver to you the latest information and insights. We welcome your feedback on how we can make the Valuentum Weekly as useful and as relevant for you as ever! Takeaways The markets offer investors an asymmetric risk opportunity, … Read more

Top Ideas Doing Great

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Image Source: Aguayo Samuel By Brian Nelson, CFA Hi everyone: Hope you’re doing great. The S&P 500 (SPY) continues to roar higher. No longer is the market as easy of a call when we pounded the table near the bottom in April 2020, but we remain bullish on the backdrop. The economy remains very healthy, borrowing rates remain near all-time lows, and widespread interest in equities remains elevated given the paltry yields on alternatives such as investment-grade bonds. We continue to let our winners run, though we remain vigilant in protecting the downside. Quietly, the two top holdings in the Best Ideas Newsletter portfolio, Alphabet (GOOG) and Facebook (FB), have raced to outsized performance during 2021, advancing 43%+ and ~21% … Read more

Risk Management: Diversified Stock Selection or Modern Portfolio Theory?

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Image Shown: If one had concentrated in large cap growth the past 10 years (blue fill), or basically in undervalued stocks that had strong momentum, one would have outperformed the category of small cap value (IWN, second best in chart) and the 60/40 stock/bond portfolio (VBINX, orange) by an incredible 200+ percentage points. Image Source: Morningstar. By Brian Nelson, CFA I hosted a small estate sale late last week. Hours in the blistering sun brought a number of interested buyers and some small change, but that several people and families found use for my brother’s things has left a feeling in me that’s priceless. It’s been a while since one of our emails hit your inbox, but things have been slow … Read more

How to Navigate the Low Return Environment

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Image Shown: Investors continue to gamble on meme stocks and cryptocurrencies. Image Source: QuoteInspector.com.  Modern Finance Is Dead, Long Live Value Trap By Brian Nelson, CFA At Valuentum, we don’t believe in many of the quantitative theories out there. We like to operate within the stock component of market returns, as this has historically been the strongest place to focus one’s efforts. We don’t think it makes sense to add “bad” assets to a portfolio just for the sake of diversification. Can you imagine adding pipeline MLPs to your portfolio in June 2015? If we can find great ideas within the stronger relatively performing stock market, we think we’ll be far better off than any stock/bond mix that one may choose. … Read more