Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Dec 26, 2021

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum's President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds.

Nov 17, 2021

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually
Image: Most asset allocators can’t even keep pace with the underperforming 60/40 stock/bond portfolio. Highlight added by author. Image Source: Wealth Management. Let’s get this industry back on track. This isn’t about going all-in on cryptoassets or being reckless with one’s capital the past 10 years, but merely picking stocks as a risk/wealth management strategy that approximated the S&P 500 for the past 10 years, and how that has crushed not only the best that quant has had to offer in small cap value but also indexing and asset allocation. One hundred and seventy percentage points of difference relative to the 60/40 stock/bond portfolio, which itself beat many of the “best” asset allocators out there!!! This isn’t about taking on more risk, but rather that active stock selection should be viewed in the same vein as asset allocation. Why do we continue to publish the obviously-biased research in favor of indexing and asset allocation when stock selection could have delivered so much more for investors while saving them billions in annual fees from ETFs, etc. Today, the SEC has a lot on its plate regarding SPACs, cryptocurrency, new issues, ETF approvals and beyond, but in our view, the SEC shouldn’t necessarily be prioritizing 2 and 20 fees more than the index-fund fee chain, and it shouldn’t necessarily be trying to eliminate payment for order flow (PFOF) any more than it should seek to eliminate low-cost index funds. Let us not kid ourselves: It's clear why index funds and passive is winning -- the fees are tremendous! All things considered, if investors want to believe risk is volatility and suffer with indexing and asset allocators, that is their prerogative, but what worked in the past (deviations from equity selection as in the 60/40 stock/bond portfolio) bolstered by high interest rates in the 1980s is far from relevant today (and making up alternative assets isn't going to help). We don’t need more indexing and asset allocation books these days. We need more common sense. Stop selling index funds and start trying to help investors.

Nov 12, 2021

Hard Work and the Trust That Binds
Image: Terry Johnson. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April 29, 2020, “ALERT: Going to “Fully Invested” – The Fed and Treasury Have Your Back,” when we saw the writing was on the wall for this blow off top. If nothing else, these three moves alone during the past couple years have paid for a lifetime of subscriptions.

Jul 29, 2021

Microsoft’s Dividend Is Rock Solid But Why?
Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company's balance sheet and future free cash flow generation, relative to the denominator, or a company's cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft's numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many of its components are forward-looking, our dividend evaluation may change upon subsequent updates as future forecasts are altered to reflect new information. We estimate the efficacy of the Dividend Cushion ratio in warning against dividend cuts at about 90%. We measure this efficacy by looking at the Dividend Cushion ratios of companies that have cut their payouts in our coverage. If the company had a Dividend Cushion ratio below 1, we’d view the Dividend Cushion ratio as doing its job. Not all companies with high Dividend Cushion ratios are insulated from dividend cuts, and not all companies with low Dividend Cushion ratios will cut their dividend, but the Dividend Cushion ratio is yet another Valuentum-driven tool for your investor tool kit.

Jul 14, 2021

10 YEARS OF EXCELLENCE AT VALUENTUM
Join Valuentum as it celebrates its 10th anniversary of putting investors first!

Jun 27, 2021

Two Alerts and Bull Market On!
Image Source: Mike Cohen. "We like stocks in an inflationary environment, and we love big cap tech and large cap growth in any environment." -- Brian Nelson, CFA

Jun 18, 2021

ICYMI: Watch Valuentum's November 2019 Presentation on 'Value Trap' Now!
YOU WILL LEARN  ---  * The pitfalls of valuation multiple analysis and the risks of extrapolating some empirical quantitative conclusions.  * A critical framework to view and interpret stock price movements and stock valuation.  * The universal nature of enterprise valuation to all things finance from competitive advantage analysis to dividend-growth investing and beyond.

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

Apr 8, 2021

The Best Years Are Ahead
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 to remain overpriced for some time). Bond yields are paltry and will likely stay that way for some time, requiring advisors to rethink their asset mixes. The stock market looks to be the place to be long term, as it has always been. With all the tools at the disposal of government officials, economic collapse (as in the Great Depression) may no longer be even a minor probability in the decades to come--unlike in the past with the capitalistic mindset that governed the Federal Reserve before the “Lehman collapse."

Jan 29, 2021

Repub from March 5, 2018: The Tragedy of Quantitative Finance
-- Okay – it’s not 2038, but just imagine if this could happen…