Even after a mini-correction in the S&P 500, most stocks still aren’t cheap. So what should you buy? In 1991 I wrote that utilities offered outstanding relative value compared to other securities. Utilities Offer Outstanding Relative Value Three industry groups should be emphasized for new purchases in your portfolio over the next few quarters: electric, gas and telephone utilities. My number one mutual fund portfolio manager (this month’s spotlight), Vanguard Equity Income Fund’s Roger Newell told me recently that electric utilities are now his top industry choice with 18% of his … [Read more...]
Archives for March 2018
Digital Ads a Waste Says P&G
Despite projections that the market for digital advertising will grow to $120 billion by 2021, the world's biggest advertiser, P&G is opting for different ways to reach customers. Writing in the Wall Street Journal, Suzanne Vranica reports that P&G cut its digital advertising budget by $100 million in the second half of 2017. With new data, P&G discovered it wasn't getting what it wanted out of its ads. Vranica writes: Once armed with more measurement data, P&G discovered that the average view time for a mobile ad appearing in a news feed, on platforms such … [Read more...]
New Fiduciary Rules Force Annuity Sales Plunge
It turns out, when brokers are forced to look out for your interests instead of their own, they end up selling you fewer annuities. I've been a critic of annuities for years (decades?). Loaded with fees and backed by guarantees that are only as good as the banks behind them, annuities are hawked like a snake-oil retirement solution to unsuspecting investors. I wrote back in 2014 that: The issue is that annuities are sold with a full-court press on those that don’t invest for a living. They’re promised rates of return that sound good on paper but will be wiped out if the insurer goes … [Read more...]
Could this Be the Vanguard GNMA Winning Edge?
Update: 7.1.2020: From Wellington: “Effective at the close of business on June 30, 2020, Michael F. Garrett has retired from Wellington Management Company LLP and no longer serves as a portfolio manager for Vanguard GNMA Fund. Brian Conroy and Joseph F. Marvan remain as the portfolio managers of the Fund.” Originally posted June 7, 2017. Do you know Michael F. Garrett? There’s no reason that you should, but to me, the Senior Managing Director at Wellington Management Company LLP in Boston, Massachusetts might be one of the most important names in the fixed-income world today. He’s the … [Read more...]
Where’s the Value in this Market?
Value may be difficult to spot if you load your portfolio with market capitalization weighted exchange traded funds like those that track the S&P 500. Apple, Amazon, Facebook, Microsoft, and Google, the top five components of the S&P 500, trade at an average P/E of 84X and a median P/E of 29X earnings. One way to think about P/E is the number of years it would take to earn back your investment at the current rate of profit. Worse than the elevated P/E of the S&P 500 and its top constituents is the average dividend yield of the top five. America’s five biggest companies pay an … [Read more...]
Forbes: Weakening Dollar Trend Isn’t Good
“Everyone understands the basic need for fixed weights and measures in daily life: the amount of liquid in a gallon, the number of ounces in a pound, the number of minutes in an hour. None of these amounts fluctuate; they are unchanging,” writes Steve Forbes. Here’s his latest Fact & Comment on the greenback. The dollar. Markets are finally waking up to the implications of the weak dollar, which has been declining for months. The greenback’s slide has been nowhere as bad as it was in the early 2000s, but the trend isn’t good. Treasury secretary Steven Mnuchin let the cat out of the bag a … [Read more...]
The World’s Fastest Growing Major Economy is…India
India has ousted China as the world's fastest growing major economy. The South Asian country posted 7.2% growth in the last quarter of 2017, beating China's GDP growth of 6.8%. The two countries, both with populations well over 1 billion, have been trading places back and forth at the top of the rankings for fastest growth among major economies. Despite the rapid growth, India's population growth demand even faster expansion by its economy to soak up all the new members of the workforce entering each year. Despite Prime Minister Narendra Modi's successes so far, some are wondering if his … [Read more...]
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