XLF

Strategy Versus Tactics in the Best Ideas Newsletter Portfolio

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Image Source: Anna & Michal We made a few tactical tweaks to the Best Ideas Newsletter portfolio during 2017. Let’s walk through them, and how we’re out to win the war, not win every battle. By Brian Nelson, CFA I’m not going to reference The Art of War written by Chinese military strategist Sun Tzu some time in the 5th century, nor am I going to use any quotes from the military treatise (I think it’s too well-traveled of a topic), but I do believe the approach to portfolio management is much like that of a general on a path to win the war. Now, don’t get me confused: I’m not saying that portfolio management is actually like being in … Read more

The Wisdom of Oaktree’s Howard Marks

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Image Source: emmolos The latest memo from Oaktree’s Howard Marks here should be read and then read again. The section on passive investing is an absolute treasure. “Passive investing is done in vehicles that make no judgments about the soundness of companies and the fairness of prices.  More than $1 billion is flowing daily to “passive managers” (there’s an oxymoron for you) who buy regardless of price.  I’ve always viewed index funds as “freeloaders” who make use of the consensus decisions of active investors for free.  How comfortable can investors be these days, now that fewer and fewer active decisions are being made?” — Howard Marks, Oaktree Capital Financial Tech Services: ACIW, EPAY, FDC, FIS, FISV, FLT, GPN, MA, MELI, … Read more

Adviser Fees on Indexed Assets Can Eat Up Your Nest Egg?

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Indexing sounds like an easy way to track the market’s performance, but if your indexed assets are held in financial advisors’ accounts, it can come with a big cost: significant underperformance. Over 20 years, we estimate in this hypothetical example that the cumulative cost as a result of a 1% annual financial advisor fee on indexed assets can amount to as much as 66% of a saver’s initial investment — just for holding an index fund. Please be careful out there!

ETF Analysis: Banks and Financials

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Please select the image below to download the report. Tickerized for ETFs under coverage and stocks included in the XLF.

Systemic Risk in These Frothy Times

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Let’s talk about index investing, market valuations, and mention how a few ideas in the Best Ideas Newsletter are doing. By Brian Nelson, CFA For most investors during most parts of the economic cycle, index investing (VOO), or holding a broad basket of stocks that approximate the returns of a large market index may make a lot of sense. I have always said this from the very beginning: Individual stock selection is not for everyone. What may not be well-known, however, is that index funds have experienced multi-year periods of both outperformance and underperformance relative to actively-managed funds since the dawning of the very first index fund many decades ago. I’m worried that some investors today may not have this … Read more

Malkiel Balks, Yellen Talks

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Let’s first address how research in the financial industry is becoming more and more open to combining value and momentum considerations. We’ll also cover a few takeaways from the stress tests and some ‘strong’ talk from Fed Chair Janet Yellen. By Brian Nelson, CFA It was 1973, and a Princeton economist by the name of Burton Gordon Malkiel had just published A Random Walk Down Wall Street, a book that would turn into one of the most influential studies in support of the efficient markets hypothesis. The book would suggest that asset prices typically exhibit signs of a “random walk,” and as a result, an investor could not consistently outperform market averages in part due to powerful reversion-to-the-mean tendencies. Three … Read more

I CARE

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Image Shown: The S&P 500 from early 2009 through today, June 15, 2017. By Brian Nelson, CFA There it is — the upward-sloping chart of the S&P 500 (SPY) since the March 2009 panic bottom. What a sight to see… The past 8 years have marked an incredible bull market in US equities and one for the record books in many instances. The drivers behind the multi-year rally have been many — ultra-low interest rates and their magnifying impact on equity valuations, strong earnings growth from the doldrums of the Financial Crisis, and the proliferation of passive and dividend-growth strategies de-emphasizing the price-versus-value equation. “Money,” it seems, is chasing stocks at any price, and most of the trading on exchanges … Read more

Alexion’s Executive Departures and an Update from Regeneron Pharma

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Image shown above: Performance of Regeneron since the summer of 2013. An executive scandal continues to mar the performance of Alexion Pharmaceuticals. The CFO has resigned his position effective the end of August, but there is more to this story. Let’s also talk Regeneron. By Alexander J. Poulos We continue to admire innovative companies in industries that can have a meaningful impact on our everyday lives. Valuentum’s Best Ideas Newsletter portfolio, for example, houses a number of technology firms that have become ubiquitous in our daily lives. We admire such companies, but while also innovative, entities in the mid- to large-cap biotech industry (IBB, XLF) can be considered much more risky on a fundamental basis than any newsletter portfolio holding, … Read more

Alerts – Spring Cleaning in the Newsletter Portfolios

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We’re making a number of changes to the newsletter portfolios. By Brian Nelson, CFA Changes in Dividend Growth Newsletter portfolio We’re removing Medtronic. Medtronic (MDT) reported decent fiscal fourth-quarter results May 25 that showed revenue advancing ~5% and bottom-line earnings-per-share beating consensus by a couple pennies. We’re not messing around in this frothy market though, and we’ve learned from our miscue with Teva Pharma (TEVA). Medtronic has too much debt this late into the credit cycle for our comfort, and frankly, we’re starting to question more and more why it might have changed how it measures free cash flow. We’re letting shares go from the Dividend Growth Newsletter portfolio. The company was added to the Dividend Growth Newsletter portfolio under … Read more

The Coming “Goldman Sachs Era”

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Valuentum covers recent developments in the financials sector, including hopes for a relaxation of certain prohibitive Dodd-Frank rules that, if repealed, could pave the way for improved economic returns across the banking sector during the Trump administration. A look back at the month of September 2008, and how Goldman Sachs may very well shape the financial markets during the next few years are two other areas in the piece. Financials stocks have come roaring back since Trump was elected the 45th President of the United States. We’ve participated. By Brian Nelson, CFA It’s been more than 8 years now. The month of September 2008 shaped my view of the financials and banking sector more than any other month possibly could–The … Read more