Finally, Some Good News for Conservative Investors
Finally, some good news for conservative investors... Value stocks are suddenly leading the market again... A 'golden age' of value investing could be here now...
Finally, some good news for conservative investors...
It's no secret that the last few years have been tough on folks who prefer to buy value stocks. In fact, even the world's best value investors – legends like Baupost Group's Seth Klarman and ValueAct Capital's Jeffrey Ubben – are struggling.
And for good reason... High-flying growth stocks – like the so-called "FANG" stocks – have rocketed higher since
But if our colleague Dan Ferris – editor of our Extreme Value advisory – is correct, that may not be the case much longer.
You see, history shows the market consistently cycles between growth and value...
Periods
Growth stocks have dominated for nearly 10 years now, one of the longest rallies in history. This suggests value stocks are setting up for an equally impressive run. And as Dan noted in the December issue of Extreme Value, we're seeing signs that it may already be underway...
I told a few hundred investors at the 2017 Stansberry Conference & Alliance Meeting in Las Vegas on September 28 that "the equities of stodgy, slower-growing businesses will outperform fast-growing, flashy technology businesses starting very soon."
The tide may be turning even sooner than I'd hoped...
A JPMorgan Chase U.S. equity strategy report shows that value stocks have recently performed better than growth stocks, and should continue to outperform through 2018.
As Dan explained, this is a significant and sudden shift in the stock market...
So far this year, the iShares S&P 500 Growth Fund (IVW) is up 23% versus just 10% for the iShares S&P 500 Value Fund (IVE)...
But over the last month, value has outpaced growth...
But that's not the only reason Dan is getting bullish again...
He also noted that another portion of the JPMorgan Chase report caught his attention. More from Dan...
Analysts say the spread between forward price-to-earnings (P/E) ratios has "become stretched." It looks like investors have pushed growth stocks to historical highs relative to value stocks. At an extreme value of around seven, the spread isn't as high as early 2000 when it exceeded 10. But it is outside the normal range between about two and six.
In short, history says value stocks are due for a significant rally...
And they are suddenly outperforming for the first time in years. As Dan noted, it's too early to be sure, but it's possible a "golden age" of value investing is about to begin. If you're a conservative investor who has missed out on the big rally in stocks over the past few years, Dan urges you to remain patient a little longer...
My research partner Mike Barrett and I have yet to find many high-quality businesses trading at attractive prices. We remain cautious about U.S. stocks overall. As our colleague Dr. Steve Sjuggerud says, we could still be in for a "Melt Up" before stocks complete the final stage of this overextended bull market.
Still, we're actively looking among the traditional value-oriented names in the value indexes and other less popular places right now, which ought to perform well if the Golden Age of Value Investing has indeed arrived.
Human nature is perverse. Following the herd into expensive stocks gets more attractive as it gets more risky. Don't let the mania tempt you to overpay for stocks to make a quick buck. But also, don't let it deter you from investing in attractive securities and assets whenever and wherever you find them.
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New 52-week highs (as of 12/19/17): Altius Minerals (ALS.TO), Arch Coal (ARCH), Boeing (BA), Eaton Vance Enhanced Equity Income Fund (EOI), and Steel Dynamics (STLD).
In today's mailbag, more on bitcoin and gold... and several readers weigh in on the "controversy" surrounding the Stansberry Terminal. What's on your mind? Let us know at feedback@stansberryresearch.com.
"Bitcoin vs gold... A tough choice, unless you think about both as assets. If both are assets, then you sell some of your bitcoin (half or more) and buy gold or gold mining stocks. That helps you sell high and buy low; the key to success." – Paid-up subscriber Mitchell F.
"[My resource stocks] aren't doing too bad. I'll stick with commodities rather than the bitcoin Ponzi scheme." – Paid-up subscriber Earl H.
"To everyone at Stansberry Research: Thank you to all for your passion and diligence in all that you do. May the Christmas season bring rest, refreshment, and renewal to you and your families.
"One of the three tech businesses I own is a bitcoin mining operation. We also configure and sell bitcoin mining rigs. We are pretty low-profile due to security concerns, but are expanding rapidly through referral only. The reason I am writing is it would seem we are probably at a near term top for bitcoin valuation...
"Our HVAC guy is no longer excited about his HVAC business that took him a decade to build up. He is now buying bitcoin mining rigs and reselling them. Our electrician is no longer passionate about his trade either. He is spending his evenings arb trading differentials between altcoins on different exchanges. He would like to quit his job and go full time day trading. Will send you an update on the janitor, plumber, and window washer when I find out where they are on the bitcoin bandwagon." – Paid-up subscriber Robert R.
"Hi Porter, Well, I'm sorry but I'm not all that excited about the Stansberry Terminal. You see, I'm not at all interested in researching my own stocks, bonds, options, etc.
"That is what I pay YOU to do for me through my Alliance membership. Typically, I scroll through all the neat stories and facts and more facts and just look for the bold-face type print near the end of the novellas to see what I'm supposed to buy (or sell). (I do sometimes read the whole thing but not often.)
"I don't know if that makes you uncomfortable but it shouldn't. I have a level of trust with Stansberry that I've never had with any other financial newsletter or person. You've given me, more or less, my independence into controlling my own financial future. I've also, believe it or not, have learned a ton. I regularly trade options and when I discuss it with my friends, they all look at me like I'm crazy to dabble in such reckless financial markets.
"They got even more squeamish now that I've dabbled in cryptos! I have a master's degree in electrical engineering so I have a reasonable modicum of understanding of the block-chain, but not enough to convince my friends that it is something worth getting involved with. All I can say is that with my initial investment INCLUDING the lifetime-membership fee [to Tama's Crypto Capital advisory] back when it launched mid-October, I am up about 3.5x. That is just crazy! I'm ready to double my initial investment now that a new suite of recommendations have been put forth!
"Keep up the good work and I wish you the best with your Terminal idea – I will certainly dabble in it and who knows, maybe I'll want more from it once I kick the tires a bit! Cheers." – Paid-up subscriber Chris Padilla
"I read the Friday Digest [on the Stansberry Terminal], and was neither excited nor dismayed. It had been a long, hard day and I was pretty tired. I still don't know how much it will mean to me and my portfolio. But, I never doubted that you would always live up the commitments you have made to all your customers, not just Alliance members.
"I have been a subscriber for many years and an Alliance member for maybe five. The amount of knowledge I have accumulated over this time has resulted in a dramatic improvement in my portfolio but more importantly, the serenity in my approach to investing is truly remarkable. I consider that gift priceless. Keep doing what you've been doing." – Paid-up subscriber Gary S.
"Hi Porter, I have been an Alliance member for almost three years. It is the best investment I ever made! Paid for itself several times over. Not only have I learned about investing using stocks, corporate bonds and selling put options but more important how to hedge my investments with shorting stocks, buying long dated put options, precious metals and commodities. No complaints here, and I am looking forward to seeing the 'basic' version of Stansberry Terminal. Keep up the excellent work and keep innovating Stansberry Research! Merry Christmas and have a prosperous New Year." – Paid-up subscriber Ross R.
"My experience is that people tend to evaluate other peoples' actions according to how they would behave if positions were reversed. It's sort of the dark side of the coin that you, Porter, are frequently stating — how you would like to be treated. What people say about you has more to do with them than it does with you. Read the second agreement in Miguel Ruiz's book, The Four Agreements.
"If anyone doubts your sincerity or your ethics, they should simply go back and read what you wrote about Ringo, and then ask themselves what kind of person would have written that. For me, it's the best thing you've ever written..." – Paid-up subscriber Joe B.
"I did not read your [Stansberry Terminal announcement] the way those angry subscribers did. Quite the opposite. I read it as a new benefit. It never ceases to amaze me how people see what they want to see. If I didn't trust you and Steve, I wouldn't be a subscriber. So, why are they? Plus, clearly, you're a 'dog person.' Always trust a dog person." – Paid-up subscriber Charles B.
"Hi Porter, can't wait to see the new Terminal. I have never regretted my decision to go Alliance. I love what you do and I trust you. My condolences for Ringo. God bless you and your family." – Paid-up subscriber Bob Lunder
"Porter & Team, I used to be shocked by people's actions – sadly, no more. I'm reading some of these emails written in regard to the Stansberry Terminal and I'm shaking my head in disgust. Hell – last week I read a subscriber question Porter's integrity of missing a webinar over a family tragedy, losing his beloved Ringo with his children having witnessed the incident (which was introducing yet another subscription Porter is giving away for free)?! I'm sure after spending a fortune on his research team and data. Have we no manners in this country anymore? Have we no tact or couth? Has the entitlement society engulfed us all?
"I, for one, am tremendously excited about the Stansberry Terminal – and while I don't know what the additional 'investment' (monthly or yearly) will be – I do know that a bulk will be coming to Alliance members for FREE. Our Alliance memberships have paid for themselves through Stansberry's teaching, guidance and being open to 'learning' (Porter may not believe in 'teaching' but there are some excellent mentors in this world to emulate)
"We, as Alliance members, signed up for newsletters – not a Terminal – seriously, though, a *%^*^**+¥ Terminal? Who does this? I can't think of another company that treats people as well as Stansberry Research does. Not a single one. I can't think of a luxury brand that treats their 'members' as well as we are treated as Alliance members for as little.
"I prefer to stay quiet and to myself, though there are those times when some people should be praised for a great job (Porter & team) and some should be ashamed and embarrassed with their actions. Sadly, it's doubtful those who wrote the 'hate mail' will ever look at themselves and find fault in their actions or words. To the Stansberry team, thank you for everything that you do. I question just about everything in this world (and yes, I did have a healthy dose of skepticism at the onset of my membership).
"But after years as an Alliance member and all that I've seen you do for us, questioning Porter's integrity is not something I will ever do. The man has delivered on every single promise he has made over the years. We need more in the investment community willing to stand up for what's right over money. Apologies for the long note. Thank you again for being an anomaly in the investing world. Can't wait to see the Terminal." – Paid-up Stansberry Alliance member Mitchel K.
Regards,
Justin Brill
Baltimore, Maryland
December 20, 2017