VGK

Dow Fell 9.99%, Worst Point Drop in History, More Nibbling?

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Dow Fell 9.99%, Worst Point Drop in History, More Nibbling? — Image: On March 12, 2020, the Dow Jones Industrial Average fell 2,353 points, the most in its history, and the most in percentage terms since Black Monday in 1987. The Dow Jones Industrial Average fell 9.99% March 12, 2020, to 21,200.62. — From Value Trap: During the dark days of 2008 and 2009…where widespread and indiscriminate selling was prevalent, correlations among stock sectors rose considerably. According to data from Morningstar, average daily correlation over the trailing six months between individual stocks increased to 0.66 at the end of 2011 from just 0.10 in 1994. The average sector correlation for monthly returns on the S&P 500 index was 0.84 during the Financial Crisis … Read more

Closing ‘Crash Protection’ Again, Circuit Breakers Tripped Again, Too

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Closing ‘Crash Protection’ Again, Circuit Breakers Tripped Again, Too — By Brian Nelson, CFA — On February 24, 2020, we “added” put option “crash” protection, a 1% “weighting” in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio, a position that was closed March 2 for a “solid double.”  — On March 6, 2020, we “re-established” put option “crash” protection, a 0.5%-1% weighting (June 30, 2020 with strike price of $250). During the trading range March 6, that put option’s daily price range was $9.25-$9.91, according to YahooFinance.  — Today, in this notification, we are “closing” crash protection yet again, with the June 30, 2020 puts with strike price of $250 trading at $25.00, for another solid double. Please … Read more

Coronavirus May Trigger Long-Anticipated Global Recession

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Image: Wuhan New Coronavirus This was the catalyst that nobody was expecting, a novel coronavirus that nobody had in their economic models. We think global economic activity is slowing as we speak, and the spread of the virus may only accelerate in mainland China and elsewhere. Investors should keep a level head and perhaps think about adding protection to their portfolios before it becomes too expensive. By Brian Nelson, CFA How to Use Valuentum’s Investment Research Services >> We’ve walked through a number of scenarios that could trip the global economy into recession–global deflation that tips over the weakest European banks and causes contagion, global military conflict with North Korea or Iran that disrupts economic activity, increased volatility driven by … Read more

ICYMI: Interview with Valuentum’s Callum Turcan

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Callum Turcan helps head up Valuentum’s research product and is co-editor of the company’s newsletters. We sat down with Callum to get his thoughts on new developments in the market and economy. Let’s kick things off with his thoughts on Brexit. Callum Turcan: Looks like the Brexit debate is coming to a close with a large Tory majority coming into the UK Parliament (EWU) after the December 12 general election, a large enough majority to provide Prime Minister Boris Johnson with more than enough room to maneuver the likely political obstacles ahead (over the next couple of months). By early 2020, it seems the UK will no longer be a member of the EU given that the incoming Parliament, in … Read more

Economic Commentary: Marks, Dalio, and the Discount Rate

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Image Source: Mike Cohen We sat down with the Valuentum team to discuss their latest thoughts on recent economic developments. To kick off the conversation, let’s start with the team’s views on the latest memo from Oaktree’s Howard Marks: Mysterious. For those that don’t know Howard, he is the Director and Co-Chairman of Oaktree, which managed about $122 billion in AUM, as of September 2019. The memo goes into depth on the reasons for negative interest rates, the impact of negative interest rates, and opines on whether the US will ever see negative interest rates. Then, we’ll go from there! Brian Nelson: The concept of negative interest rates is not merely academic, but they have far-reaching implications across the global … Read more

Join the Conversation on the Market Plunge

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The Valuentum team shares its thoughts on the recent surge in volatility and collapse in interest rates amid a trade and currency war between two of the largest economies in the world, the US and China. No changes to the newsletter portfolios at this time. During the past few days, the US (SPY, DIA) and China (FXI, MCHI) have escalated a trade war, turning it into a currency war, the latter allowing its yuan to drop to lower levels against the U.S. dollar. The US has now labeled China a “currency manipulator,” and China has responded by suspending U.S. agricultural purchases. China is one of the largest buyers of U.S. agricultural goods. The Valuentum team builds on its previous conversation … Read more

Hasbro’s Tough 2018 Comes to an End

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Image Source: Mike Mozart Hasbro battled a number of challenges in 2018, but it anticipates a return to profitable growth in 2019. By Kris Rosemann 2018 brought a number of challenges for simulated Dividend Growth Newsletter portfolio idea Hasbro (HAS), not the least of which was the bankruptcy and liquidation of Toys ‘R’ Us and the shifting retail and consumer landscape. The impact of the Toys ‘R’ Us’ struggles were greater than Hasbro expected during the year, and it was not able to recapture as much of the lost business during the holiday period as anticipated due to the impact of the retailer’s liquidated inventory being available. Prior to the bankruptcy filing, Toys ‘R’ Us was Hasbro’s third largest customer … Read more

General Motors Rallies, Tesla and Toyota Improve, Auto Parts Suppliers Getting Squeezed

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Image shown: General Motors may very well be on its way to $50+ per share. We continue to like General Motors, and we think Tesla is getting back on the right track with its financials. Auto parts suppliers have faced their fair share of pressure in recent months as the potential for a slowdown in global light vehicle production rises and input cost inflation also makes its presence felt. By Kris Rosemann and Brian Nelson, CFA On February 6, General Motors (GM) reported fourth-quarter 2018 earnings, and they were quite good. We continue to believe shares of GM are ultra-cheap, as we wrote in: “We Think General Motors Is Poised for New Highs.” The automaker is included as an idea … Read more

In the News: Geopolitical Uncertainty Rules the Day

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Let’s take a look at some of the recent top stories and their implications on the market. By Kris Rosemann Brexit negotiations continue to be a messy ordeal for British Prime Minister Theresa May and her countrymen. The EU (VGK) rejected her most recent proposal without proposing counteroffers, and if there is no agreement, there will be no transition to keep the UK (EWU) and its businesses from being stuck in a sort of trade policy purgatory. May has been quoted as saying, “No deal is better than a bad deal,” as well as, “No one wants a good deal more than me.” A good deal would assure frictionless trade in goods and would not disrupt any intertwined supply chains multinational businesses … Read more

Uncertainty of Italy’s Political Future Weighing on Global Investors’ Minds

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Italy holds ~$2.7 trillion in public debt, and global investors are worried that a new government could implement policies that would weaken the country’s credit status. Though a sovereign debt crisis does not seem probable at this point, bond markets are suggesting that risks are rising. By Brian Nelson, CFA We do not want investors to be worried by events unfolding in Italy (EWI) of late, as they may not be any more significant than the impact of Brexit (EWU) on equity market returns during the past few years. We can’t cast a blind eye to developments either, however, as Italy’s sovereign debt is not-at-all small by any country’s standards (it’s the third-largest in the world), and the political uncertainty … Read more