Valuentum Exclusive Analysis for the Discerning Investor

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Dec 20, 2022

Stock Market Locked in Technical Downtrend; Millionaires Expect More Pain in 2023
Image: The stock market has been locked in a downtrend through all of 2022, and the latest bull trap has spoiled the Santa Claus rally. 2023 may be an equally rough year. This market just doesn’t want to go higher in the near term, and the latest bull trap wasn’t encouraging at all. We think long term investors should stay the course, but it is looking more and more like we won’t see a stock market bottom until sometime in 2023. Santa brought coal this year.

Nov 10, 2022

Market Whipsaw: Crypto Collapse and a Lower-than-Expected Inflation Print
Image: Uncertainty in the cryptocurrency markets has surged with concerns over the liquidity of a key exchange. Investors are weighing the spillover effects of crypto with the view that the pace of inflation may have peaked. The U.S. equity market continues to be highly volatile as it whipsaws between concerns over the health and sustainability of cryptocurrency and optimism over lower-than-feared inflation readings. We maintain our bearish/defensive stance on equities, but at the same time, we continue to be “fully-invested” across the simulated newsletter portfolios in part because we don’t want to miss out on days like today, November 10, when the markets are soaring ~2.5%-5.5% depending on which index you are monitoring. We’re also not ruling out a Santa Claus rally through the end of the year. Merry Dow Jones, as they say!

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 21, 2022

Fed Raises 75 Basis Points; Food Price Inflation Continues to Wreak Havoc on Consumer Budgets
Image Source: Federal Reserve. The Fed upped its key benchmark rate to the range of 3%-3.25% on September 21, but it may not be enough to stem the rise in inflation. We think the market has further room to fall.

Aug 14, 2022

Stocks Surge: Strong S&P 500 Earnings Growth Expected, Headline Scares With Inflation Tamed, Interest Rates Still Low
Image Source: BLS. The pace of inflation looks like it may slow down considerably in 2023 as sequential monthly increases pause their advance. Everybody seems to be looking to compare this market to another market sometime in the past, but regardless of which analog you read about, there is one thing that every pullback, crises, or calamity has had in common: The markets eventually returned to all-time highs. That’s what we’re betting on. Some say we could see new highs by the end of the year, but for us, we’re okay if it takes some time longer than that. The past few years have simply been awesome for equity returns, to say the least! Regardless, those higher nominal input prices that everyone is talking about today will eventually act as a launchpad for nominal earnings and nominal equity prices in the future, pushing them ever higher, in our view. What more can we say, we continue to like stocks for the long haul!

Jun 14, 2022

Stocks Up 70%+ Since COVID-19 Pandemic Bottom, Best Ideas Outperforming So Far in 2022
Image Source: Mike Cohen. Investors should be looking for opportunities today, while others around them are panicking, especially those that leveraged into crypto many months ago near the peak. We continue to be huge fans of the areas of large cap growth and big cap tech as these areas not only are flush with entities that have strong cash-based sources of intrinsic value but also have been beaten down unfairly in recent months, in our view. It may be hard to believe, but we’re staying the course. We like stocks for the long haul, and we don’t expect anything like what happened during the COVID-19 meltdown or the Great Financial Crisis. This is but a "normal" bear market in our view, and we still believe stocks could make a huge rebound in the near term.

May 19, 2022

Cisco Systems Reduces Guidance After Noisy Quarter, Remains Free Cash Flow Giant Backed By Pristine Balance Sheet
Image Source: Cisco Systems Inc – Third Quarter of Fiscal 2022 IR Earnings Presentation. On May 18, Cisco Systems reported third quarter earnings for fiscal 2022 (period ended April 30, 2022) that missed consensus top-line estimates but beat consensus bottom-line estimates (specifically for its non-GAAP performance). One of the biggest updates from this earnings report was that Cisco Systems reduced its full year guidance for fiscal 2022. The news initially sent shares of CSCO sharply lower, though Cisco Systems remains a free cash flow cow with a pristine balance sheet. It was an incredibly noisy earnings report for the firm for reasons we will cover in this article. We include Cisco Systems as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios and continue to like the name.

May 9, 2022

Interview with SDM Investments' Kevin Truitt -- ESG in a Few Words: "Good Ethics, Honesty, Respect, and Dignity"
Image: SDM Investments' Kevin Truitt (left) and Valuentum's Brian Nelson (right) pause for a picture at the Chicago Chapter of the American Association of Individual Investors (December 2016).We talked with SDM Investments' Kevin Truitt recently, and we’d like to share our conversation with you! Learn about the critical nature of value investing and thinking about stocks as businesses, how investors should approach macro indicators, the importance of using a margin of safety, how to think about ESG investing, and why cash-based investing helps to safeguard against downside risk. Kevin also shares five of his favorite ideas!

Apr 26, 2022

Dividend Growth Idea Lockheed Martin Doing Its Best to Arm Western Allies
Image Shown: Dividend growth idea Lockheed Martin Corporation is very shareholder friendly. The defense contractor is doing its best to arm Ukraine and other Western allies during these difficult times. Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2022 IR Earnings Presentation. The Russian invasion of Ukraine in February 2022 and simmering geopolitical tensions in East Asia between Western aligned nations and China over Taiwan and other issues have created a backdrop that is conducive to significant increases in national defense spending. Though we hope peace prevails soon, the realities on the ground in Ukraine and elsewhere call for North Atlantic Treaty Organization (‘NATO’) member nations and other Western aligned nations to ramp up their military budgets to deter future threats and to prepare for worst case scenarios.

Mar 14, 2022

Valuentum Weekly: Yields on New Series I Savings Bonds Have Soared!
The Dow Jones, S&P 500 and NASDAQ futures are all indicated up Sunday night (March 13), but that may not mean much when trading kicks off tomorrow. The start to 2022 has been one of the worst stretches during the past decade, but broader market indexes still aren't down much, even after factoring in several expected rate hikes by the Fed and economic sanctions on Russia due to the war in Ukraine. According to data from Seeking Alpha, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Nasdaq (QQQ) are off ~12%, ~10%, and ~19% so far this year, respectively. However, this weakness compares to (and is inclusive of) incredible 5-year price-only returns on the SPY, DIA, and QQQ of ~77%, ~58%, ~146%, respectively, so it's hard for stock investors to be disappointed in much of anything, even if all they were able to do was match the returns of the S&P 500 the past 5 years. Many, however, unfortunately, diluted those 5-year returns with hefty bond and international exposure and sometimes large AUM fees, so the weakness in 2022 is probably more painful for some than perhaps it should be. In any case, we remain bullish on stocks for the long run, with a heavy bent toward large cap growth and big cap tech with tactical overweight "positions" in big cap energy.