In Plus episode 464, we review how floating rate U.S. Treasury bonds are structured and why the iShares Floating Rate Treasury Bond ETF (TFLO) has a tiny bit of volatility compared to a money market mutual fund. Why different preferred stock issues from the same issuer have different yields. We discuss actively managed preferred stock strategies. Can we use the same methodology to value income-producing and non-income-producing assets? Do we need to invest in individual country ETFs to … [Read more...]
463 Plus: Model Portfolios, UK versus US Valuations, MCI Premium, and MFD Proxy Battle
In Plus Episode 463, we answer member questions on model portfolio implementations. We discuss the valuations and return expectations for UK stocks versus the USA. We discuss why the Barings Corporate Investor Fund (MCI) sells at a premium to its net asset value. Finally, we analyze the proxy battle being led by Saba Capital regarding the potential merger involving the Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (MFD) … [Read more...]
233 Plus: Conflicting Investment Conditions, P/E Ratios, and a Member Portfolio Review
This week December 15, 2018, we answer a member's question regarding how to reconcile that as market internals deteriorate that market valuations improve. As part of that discussion, we explore business cycle investing. Then we analyze whether a higher or lower price-to-earnings ratio is better given a more expensive P/E could signal faster earnings growth. Finally, we discuss a member's asset allocation dilemma now that he has sold his business. … [Read more...]
216 Plus: Predictive Valuations, A Timing Rule, Equal Sectors and Stock Splits
This week August 11, 2018, we revisit valuation indicators in terms of their predictive ability for 10 year stock market returns. We review a simple rule for exiting the stock market when it falls 10% and reenter when it rises 15% from its bottom. We analyze the performance of equal weighted sector indexing. Finally, we look at stock splits and why companies do or don't split their stocks. … [Read more...]
194 Plus: Why Bonds, S&P forward P/E and KYN Merger
This week March 3, 2018 on Money For the Rest of Us Plus, we answer why an investor would ever own bonds if they are going to lag the stock market. We look at the impact of tax reform and a lower corporate tax rate on S&P 500 Index valuations. Finally, we look at the ramifications of the merger of two Kayne Anders closed end funds. … [Read more...]
191 Plus: Market Sell-Offs and Emotional Investors
This week February 10, 2018 on Money For the Rest of Us Plus, we look at how frequently market corrections occur. We analyze how the current sell-off has impacted market internals, such as trend, momentum and the level of fear. Then we look at fundamental data such as earnings and inflation to see if there has been any deterioration to justify further market declines. We look at data from Jack Bogle's expected stock market return model to see that over a 10-year period the stock market … [Read more...]
MNY140 Plus: YieldCos, Currencies and the Border Tax
This week January 14, 2016 on Money For the Rest of Us Plus we look at the potential impact of a border tax on the U.S. dollar and whether an absolute strengthening of the dollar is as certain as some experts think. We look at whether currency changes impact asset class valuations. Finally, we explore yieldcos, a relatively new investment vehicle for accessing renewable energy assets. … [Read more...]
Why Stock Valuations Are Important But Not Perfect Predictors of Stock Performance
This audio lesson discusses stock market valuations and why they are helpful for understanding base market conditions but not necessarily for timing the market. Items covered include: Why valuation works as a good estimate of long-term investment returns and why I use them in the monthly investment conditions report. What are cyclically adjusted price-to-earnings ratios. How have stock market returns varied based on the level of cyclically adjusted P/E ratios. How market … [Read more...]
New Video Added: Lesson 16 of Learn To Invest In 7 Steps
The most recent lesson in the video series Learn To Invest In 7 Steps explores why asset class valuations are critical to investment success. Specifically, it introduces the cyclically adjusted price-to-earnings ratio (or CAPE) and shows how subsequent stock returns are related to the beginning valuation. Lesson 16: Asset Class Valuations … [Read more...]
