XLU

Performance of the Valuentum Buying Index

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Note: A more recent analysis of the Valuentum Buying Index rating system can be accessed at the following link: /Value_and_Momentum_Within_Stocks_Too Two separate studies have reinforced the efficacy of the Valuentum Buying Index, both as a portfolio optimization tool and as an idea generator. If you cannot view the video, please consult the transcript that follows. To view Valuentum’s updated YouTube page, please see here.  The studies referred to in this video can be accessed as follows: Why Valuentum Buying Index Ratings Matter: /20141003_1 Valuentum’s Performance on Seeking Alpha: /20141009 Please be sure to read the studies closely in addition to watching the video or consulting the transcript below. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I’d like to talk … Read more

Markets Collapse: Economic Sanctions on Russia, Argentina Defaults…Again

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Dow Jones falls over 300 points Thursday on Argentina default and economic sanctions on Russia. The very idea that we don’t know which hedge funds will be hurt by recent global economic activity, how leveraged these hedge funds are to global currencies and equities, and whether Russian president Vladimir Putin will respond in kind to economic sanctions means conservative investors are taking money off the table. Is it finally time to lock in profits after one of the best stock-market runs of all time from the March 2009 lows? First, the EU and US impose economic sanctions on Russia. Next, Argentina defaults on its debt for the second time in 12 years, bringing back memories of the infamous collapse of … Read more

PPL Beats Expectations and Raises Guidance

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We recently wrote up a relatively extensive piece on ‘Utilities Are Safe Income Vehicles…Most of the Time,” that we think is worth reading before diving into PPL’s (PPL) solid second quarter results, released Thursday. For many income investors, dividends aren’t everything, they are the only thing, and we understand how important it is for us to focus on sustainable dividend growth in any idea that we present within the Dividend Growth portfolio, a collection of equities that we think will continue raising their dividends long into the future. We think PPL is one such company. The company’s second-quarter and first-half earnings from ongoing operations increased 15% over the corresponding periods from 2013. Management couldn’t have said it better: “Strong performance … Read more

Utilities Are Safe Income Vehicles…Most of the Time

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Many dividend growth investors have capital invested in steady-eddy utilities firms, and there is nothing wrong with that. In fact, we also have exposure to the Utilities Select SPDR ETF (XLU) in the Best Ideas portfolio and to PPL (PPL) in the Dividend Growth portfolio. Though the regulated ‘returns’ and steady performance of utility-entities are quite attractive, especially when they pay annual dividend yields of 3%-4% per annum or more, we think it is very important for investors of all types to understand that the dividends of utilities are not without risks. In fact, the nature of their capital structure sometimes exposes utilities to more risks than other entities, especially with respect to the dividend. Before we get started, it’s … Read more

Use a Margin of Safety in This High-Risk Market Environment

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“One major criticism that we always hear about value investing is “what’s your risk management, how do you know when you’re wrong”? Well, a great value investor gives himself a margin of safety, in other words you don’t have to know how much a fat person weighs to realize they’re overweight. Like John Keynes said “It is better to be roughly right than precisely wrong.” If you come to a conclusion that a $100 stock is trading at $65, even if you’re overestimating the stock’s value by 25%, at $81.25 there is still plenty of room for the stock to appreciate to $100.” — The Irrelevant Investor The markets faced some tough sledding this week, with the S&P 500 (SPY), … Read more

Valuentum Is Adding Sector Exposure…

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We wanted to provide a brief update of the Best Ideas portfolio. We don’t want to make too much of the update, as we know that the future is the only thing that matters for our new members. But since the team updated the graphics, we thought we’d share. The first picture is the outperformance of the Best Ideas portfolio relative to the S&P 500 (SPY) since inception. The second is a measurement of the reward of the portfolio per unit-of-risk taken. Any portfolio that plots above the capital market line (CML) has a superior Sharpe ratio and risk-adjusted performance versus the market benchmark. This tells us that the Valuentum process is adding considerable value, as the Best Ideas portfolio … Read more

Highlighting the Fed’s Statement Regarding Asset Purchases

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<< Board of Governors of the Federal Reserve System, Release Date December 18 Release Reproduced Below: Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, … Read more

Stock Market Euphoria Continues; Dow Surpasses 16,000, S&P Jumps Above 1,800

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Disclaimer: This article is for informational purposes only and should not be considered a solicitation to buy or sell any security or to engage in any asset allocation decisions. Please seek professional advice from your financial advisor who knows your individual needs and risk tolerances. Key Takeaways è Stock prices have become disconnected from current fundamentals, and euphoria in the stock market is running wild. è We encourage investors to assess their exposure to small caps (equities with market capitalizations under $2 billion) and determine whether a price fall of 25% or more in coming years would be tolerable. Still, we’ll likely see higher prices for small caps before we see lower ones. è The current forward 12-month P/E ratio … Read more

How We’re Prepared for the Debt Ceiling Deadline

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Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.Mayor: What do you mean, “biblical”? Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff. Dr. Peter Venkman: Exactly.Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes… Winston Zeddemore: The dead rising from the grave! Dr. Peter Venkman: Human sacrifice, dogs and cats living together… mass hysteria!Mayor: All right, all right! I get the point!– Ghostbusters (1984) If you turned on the business channel today, you might have seen a certain network compare the potential repercussions of the ongoing debt-ceiling debate in Washington to a scene from … Read more

President Obama Tells Wall Street to Worry

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“I think this time is different. I think they (Wall Street) should be concerned.” — Barack Obama Wednesday afternoon, President Barack Obama sat down with CNBC’s John Harwood to discuss the government shutdown, the next debt ceiling debate, and other pertinent topics. Obama’s warnings are very real, and we’re taking notice. Government Shutdown The government shutdown remains top of mind since it occurred earlier this week, and it continues on with no clear end in sight. President Obama made a fiery speech Thursday morning blaming House Speaker John Boehner for not allowing a vote on the issue in the House of Representatives. Regardless, the primary issue remains that certain members of the Republican Party would like to repeal the Affordable … Read more