MLPs: Still in Early Innings
Since our market update on December 17, 2020, MLPs have performed well compared to the rest of the market. We believe that this is only the beginning and there are 4 major reasons to invest in MLPs today: 1) cheap; 2) great cash flow; 3) high current yield; and 4) inflation protection.
Active vs. Passive Investing
https://youtu.be/E76c31A2LiY The debate of active management vs. passive management has been around for a long time. We believe the answer depends on what strategy you are investing in and what area you are investing in. Actively managed US large company growth funds have a more difficult time outperforming passive index funds because the universe of […]
Time to Buy Non-US Stocks
https://youtu.be/54m_GVdj6W0 According to “The Buffet Indicator”, US stocks are selling at a 40% higher valuation then during the peak of 2000. Investing in foreign stocks (especially emerging markets) offers a better opportunity. Three main reasons to invest in emerging markets – they are selling for half the price of US stocks, the countries have better […]
History of CPI Numbers being Suppressed
https://youtu.be/ZlIHizzVXSA Since 1975 when the government first started making COLA adjustments for Social Security benefits, the government has had an incentive to keep inflation low. With lower inflation they pay out less money to Social Security recipients. One way to do that is by adjusting the CPI calculation. There were major adjustments in 1980 and […]
A Case For Active Management In Emerging Markets
https://youtu.be/WDxPigInoiE Emerging markets should outperform US stocks over the next several years due to a falling US dollar (https://youtu.be/U_wJ9mFkmc4) and because they are selling at a discount compared to US stocks (https://youtu.be/jzsJE9iPM38). Since most emerging markets have a larger retail investor base, professional management can take advantage of opportunities that arise from retail investors becoming […]
Falling Dollar – Good for Emerging Markets
https://youtu.be/U_wJ9mFkmc4 In recent market updates we have been talking about the falling US Dollar (Big Mac Index and U.S. Treasuries). When the US dollar falls in value, international stocks (especially emerging markets) outperform US stocks. From 2000-2010, emerging markets outperformed US stocks as the dollar was falling. Then in the next decade (2010-2020) US stocks […]
3 Strikes: High Yield Corporate Bonds
https://youtu.be/JgK44UF3XGM In 2020 there was a historic amount of corporate debt downgraded because of the pandemic and increased amount of issuance. Today we see 3 reasons to be cautious of high yield corporate bonds: Strike 1 – Investor protection has collapsed since 2014 and today over 85% of bonds are “covenant lite”. Strike 2 – […]
GameStop’s Price Madness
https://youtu.be/jhcwX2ubekU GameStop’s stock price has risen dramatically due to what is known as a “Short Squeeze”. The reason why some investors were shorting the stock is because GameStop’s business is going the way of Blockbuster – why go to GameStop when I can download my games directly. This thesis is shown in revenue dropping 30% […]
What are U.S. Treasuries and the Dollar Saying About Inflation?
https://youtu.be/SI4vyepCvuA The yield on the 10-Year Treasury has doubled since August with a big spike the first week of 2021. Higher inflation expectations is the main reason for the rise in bond yields. In addition, the US Dollar has been in an uptrend since 2011 which has been broken over the past few weeks. A […]
MLPs: Win Win Win Investment
https://youtu.be/qi3pOu0RogA Master Limited Partnerships (MLPs) in the midstream, pipeline space are in the early innings of what we think will be a 9-inning ball game. The reason to own them is threefold: 1) They are selling at a historically low price to discounted cash flow; 2) They have a sustainable current yield that is more […]