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The “Hierarchy” of Valuentum Idea Generation
Let’s talk about this hierarchy of idea generation in this note. — A version of this article was sent to members previously. New content has been added. — Note: We continue to work to optimize the signal-to-noise ratio in our work, and we are evaluating expanding our update cycle to half-year periods to better bolster the signaling aspects of the Valuentum Buying Index (VBI). In our widely-read case study (see here), the VBI showed its ability to rank equity returns over a forward 12-month period, and we think a migration to less-frequent updating may make the most sense to better capture the forward-looking dynamics of the system. We think this will help weed out false breakouts and other noise that could be harmful. You shouldn’t think of … Read more
The Best Years Are Ahead
By Brian Nelson, CFA — The wind is at our backs. — The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. — The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets … Read more
Netflix’s Subscriber Growth Is Slowing Down, Competition Heating Up
Image Shown: Netflix Inc’s paid subscriber base is expected to grow at a slower pace in the near term compared to the performance seen in recent years. Image Source: Netflix Inc – Shareholder letter covering the fourth quarter of 2021 By Callum Turcan On January 20, Netflix Inc (NFLX) reported fourth-quarter 2021 earnings after the bell. The video streaming giant met consensus top-line estimates and beat consensus bottom-line estimates last quarter as original content such as the South Korean TV show Squid Game (released September 2021) proved to be quite popular in markets around the globe and helped Netflix retain interest in its service. During Netflix’s latest earnings call, management noted that the violent Squid Game TV show had been … Read more
VBI Ratings Not as Impressive As We Would Have Liked in 2022
Image: How the VBI rating system has ranked equities so far this year. By Brian Nelson, CFA At Valuentum, we use the Valuentum Buying Index (VBI) to source ideas into diversified simulated newsletter portfolios, and the VBI may be most applicable to the simulated Best Ideas Newsletter portfolio, where we generally like to include ideas when they register a high VBI rating and remove them when they register a low VBI rating. We always use the VBI in a portfolio setting and never by itself. But what about the Valuentum Buying Index ratings, themselves? How did they “perform” during 2022 in one of the worst years for stock market investors in history? Well, not as spectacular as we would have … Read more
Dividend Increases/Decreases for the Week of September 8
Below we provide a list of firms that raised their dividends during the week ending September 8. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week AIA Group (AAGIY): now HK 0.42 per share interim dividend. Air New Zealand (ANZLY): now NZD 0.013 per share final dividend. The Bank of East Asia, Limited (BKEAY): now $0.0459 per share semi-annual dividend, was $0.0191. bebe stores (BEBE): now $0.04 per share quarterly dividend, was $0.02. Brady (BRC): now $0.235 per share quarterly dividend, was $0.230. BW Offshore (BWOFY): now $0.07 per share … Read more
Valuentum’s Economic Roundtable: Trade War, Factors and Beyond
Tickerized for holdings in the DIA. The markets rallied hard September 5 on relief that the US and China (FXI, MCHI) will go back to the negotiations table next month. This back-and-forth news cycle is enough to give any investor whiplash. Let’s catch up with the Valuentum Team on the latest developments, not only with the trade war but also with respect to factor investing, possible bubbles and beyond. Let’s kick things off with the following prompt from ForeignPolicy.com, released August 2: Trump Hired Robert Lighthizer to Win a Trade War. He Lost. Robert Lighthizer, the U.S. trade representative, agreed to serve in President Donald Trump’s cabinet in order to test his theory: that if the United States freed itself … Read more
The Price-to-Earnings Ratio Demystified
By Brian Nelson, CFA The Price-to-Earnings Ratio Demystified The price-to-earnings (P/E) ratio seems so easy, right? The trailing P/E is just the price per share of the stock divided by the annual net diluted earnings per share the firm generated in its last fiscal (calendar) year. The forward P/E is the price per share of the stock divided by next fiscal (calendar) year’s annual net diluted earnings per share of the firm (or the forward 12-month period). The P/E ratio is probably the most well-known measure to help investors compare how cheap or expensive a firm’s shares are, as stock prices, for lack of a better term, are arbitrary. For example, stocks such as Warren Buffett’s Berkshire Hathaway (BRK.A), which … Read more