Valuentum Exclusive Analysis for the Discerning Investor

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Sep 28, 2022

Things Are Bad Out There
The Bank of England’s intervention to stem what might have turned into a “run on the bank” dynamic for pension funds in the country amid a collapsing pound has given rise to the view that the Fed may start to slow its rate of increases amid global uncertainty. We think it’s too early to tell. From our perspective, the Fed remains committed to stomping out inflation, something that it may not truly be able to do, given that interest rate hikes may be too blunt of an instrument to stymie food cost inflation, which remains one of the the biggest inflationary headwinds that is hurting consumer budgets. What is happening on the global stage is quite concerning, and we remain bearish on the equity markets. The bull case may very well be a deep recession in the U.S., where dollar cost averaging in the U.S. markets could be had, followed by sharp interest rate cuts by the Fed, and a return to all-time highs. This is not a time to lose interest, but a time to pay even closer attention to your investments. What you do over the next couple years will have implications on your portfolio 5, 10, and 20 years forward. Let’s keep focused on preserving and building long-term wealth!

Sep 22, 2022

Realty Income’s Dividend Growth Track Record Is Stellar
Image Shown: We like exposure to shares of Realty Income Corporation in our Dividend Growth Newsletter portfolio. Image Source: Realty Income Corporation – Second Quarter of 2022 IR Earnings Presentation. We appreciate Realty Income’s improving outlook and its commitment to income seeking investors. Realty Income has a stellar dividend growth track record, one that we expect management will rigorously defend going forward. We like shares of Realty Income as an idea in the Dividend Growth Newsletter portfolio.

Sep 19, 2022

The Success Equation Book Review: Is the Skill Paradox a Myth in Investing? We Think So
Image: The game of baseball has changed during the past 100 years. While many point to a declining standard deviation and coefficient of variation in batting averages for evidence of a paradox of skill in baseball, it's more likely the game has changed. Players are hitting more homeruns, sacrificing batting average as a result. Note the red part of the line is when the game of baseball expanded to the current number of 30 teams. Data from the COVID-19 shortened 2020 season omitted. Source: Baseball Almanac. There's a lot of informational value in reading The Success Equation (and everyone should pick up a copy), but please be careful to come to your own conclusion. From where we stand, there is not a paradox of skill in investing (or baseball, for that matter). The games have simply changed based on new incentives. Some wise person may have written this before: Be careful not in what you read, but rather in the conclusions you draw from your reading. We wish Mauboussin could re-write The Success Equation considering some of the thoughts in this article. Maybe he will!

Sep 16, 2022

Dividend Increases/Decreases for the Week of September 16
Let's take a look at firms raising/lowering their dividends this week.

Sep 11, 2022

U.S. Housing Market Showing Signs of Weakness
Image Shown: The U.S. housing market is starting to show signs of weakness. Companies involved in the home building business in the U.S. are starting to feel the heat, with the iShares US Home Construction ETF down ~30% year-to-date as of early September 2022 on a price-only basis. The national U.S. housing market has been on fire during the past few years. Sharp increases in U.S. housing prices are now contending with rising mortgage rates, which is prompting the question, are U.S. housing prices heading for a crash? Affordability issues are rampant, with many households now priced out of the market, and signs of weakness are emerging in the U.S. housing market. We think the prospect for rising mortgage interest rates could send housing prices spiraling lower, but nothing like that of the housing crisis of 2007-2009.

Sep 7, 2022

Post-Mortem on Facebook (Meta Platforms): Apple Crushed Our Thesis
Image: Thesis creep kept us excited about Meta, but we've since trimmed the "weighting" in the simulated Best Ideas Newsletter portfolio. We still like Meta near these technical support levels, but only as a smaller "weighting" in the simulated Best Ideas Newsletter portfolio, as updated August 19. What more can we say--Apple is eating Facebook’s lunch, and the iPhone giant is now advancing with its advertising revenue, too. Apple blew up our thesis on Meta, and that's the long and short of it.

Sep 7, 2022

Korn Ferry’s Stock Helps Diversify Best Ideas Newsletter Portfolio
Image Shown: Within the realm of the global consulting industry, Korn Ferry’s revenues are well-diversified in terms of both the geographic markets and industries it caters to. We like shares of Korn Ferry as an idea in our Best Ideas Newsletter portfolio. Image Source: Korn Ferry – First Quarter of Fiscal 2023 IR Earnings Presentation. We continue to be big fans of Korn Ferry and view its growth outlook quite favorably. The company’s pivot towards digitally providing its services combined with its pristine balance sheet has resulted in a rock-solid business model that can withstand the various exogenous shocks seen of late, from inflationary pressures to supply chain hurdles to labor shortages to rising geopolitical tensions across the globe. Korn Ferry’s capital appreciation upside potential remains substantial, and while the stock is facing pressure following the report, we still like shares as an important diversifying presence in the simulated Best Ideas Newsletter portfolio.

Sep 5, 2022

Valuentum: Now Bearish, We’ve Been Here Every Step of the Way
It’s easy to lose sight of the tremendous value that a Valuentum subscription provides during down markets, but we’ve been here for you every step of the way. 2019, 2020, and 2021 were fantastic years, and the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio have delivered in 2022. The High Yield Dividend Newsletter portfolio is holding up nicely, and ideas within the Exclusive publication continue to boast impressive success rates. Members continue to receive options ideas to bet directionally on the stock market, and the book Value Trap has been true to its efforts, showcasing the ongoing benefits of forward-looking analysis. [Given the change in opinion following the publishing of the August edition of the Best Ideas Newsletter, please be sure to check www.Valuentum.com for Valuentum’s latest.]

Sep 4, 2022

Video: How Many Stocks Should You Own?
Valuentum's President of Investment Research, Brian Nelson, CFA, explains the importance of diversification, how to think about firm-specific and systematic risk, how many stocks one should own to achieve 90% of the diversification benefits, how to think about active asset allocation versus active equity management, and why diversification is a means to achieve goals, not the goal itself. A content-packed 14-minute video. Don't miss it!

Sep 1, 2022

Update on Newsletter Portfolio Idea Apple
Image Shown: Shares of Apple Inc have rebounded strongly from their recent lows as of late August 2022. Apple reported third quarter results for fiscal 2022 (period ended June 25, 2022) that beat both consensus top- and bottom-line estimates. Management also noted during Apple’s latest earnings update that supply chain constraints were beginning to ease a bit and that Apple’s near-term growth outlook was improving. We continue to like Apple as an idea in the newsletter portfolios. Shares of AAPL yield ~0.6% as of this writing, and there is an enormous amount of room for Apple to aggressively grow its per-share payout going forward given its financial strength.