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Old School Value Nugget Fest (September 26th Edition)

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  • We’ve got several articles this week which are essentially about market timing.
  • Value investing is getting a lot of press these days, with Value sharply outperforming Growth in the last week or two.
  • The second article, provocatively titled “ Value Investing’s Heady Days Aren’t Coming Back ” is really just arguing that book value is not a great measure of value anymore.

Easy In, Hard Out (IV)

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  • We don’t care much about the Fed’s balance sheet until the Fed wants to raise rates, which is mainly a problem in Scenario 2.
  • By removing risk from the repo markets, it incents players there to get more aggressive, because they know the Fed has their backs.
  • Monetary policy accommodation is “easy going in, but hard going out.” The financial markets now think of low rates and ample liquidity as a birthright, not a temporary accomodation, partially because servicing the debt in a low interest rate environment is a lot easier.

US Equities: Resilient Force or Case Study in Denial?

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  • Bubble argument 1: Markets have gone up too much, in too short a period, and a correction is due
  • Counter Argument 1: It is not just stock prices that have gone up...
  • Unlike PE ratios that focus just on stock prices or treasury bond rates that focus just on the alternative to stocks, the implied equity risk premium is a composite number that is a function of how stocks are priced, given cash flows and expected growth in earnings, as well as treasury bond rates.

Looking at the Hanover Foods Corporation Annual Results for 2019

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  • The market capitalization is now about $60 million, compared with net current assets of $127 million and common shareholders' equity of $229 million.
  • This is up from the $250 per share when the idea was first written about on Oddball Stocks.
  • From 2000-2004, Hanover earned an average net income of almost $9 million: higher absolute profits on revenues that were only three-quarters of the current levels.

Looking at the Hanover Foods Corporation Annual Results for 2019

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Robert Shiller: What People Say About the Economy Can Set Off a Recession

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  • We are beginning to develop a new economics, one that studies these changing economic stories and metaphors systematically.
  • Roosevelt’s memorable words, “The only thing we have to fear is fear itself,” became, in Mr. Bush’s Rose Garden speech, “Anxiety can feed anxiety.” The New York Times noted that parallel then.
  • It seemed to many people, in real time, that the Great Depression might be repeating itself.

Maybe It Really Is Different This Time! (Part 2)

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  • Joshua Brown: You’ve said this before.
  • Joshua Brown: I don’t know about that.
  • Joshua Brown: Now if you’re one of these people though that’s like, “Well the data going back 40 years says that you sell stocks when the dividend falls below the 10 Year…” You’re still fucking waiting to buy back in.

Maybe It Really Is Different This Time! (Part 1)

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  • Joshua Brown: So I don’t know if that’s actionable as an investor but, I just feel like it’s hard for me to understand why somebody would buy Macy’s stock right now, knowing what I know about what Amazon wants to do with apparel.
  • Joshua Brown: But fine, but a lot of them made it into the NASDAQ.
  • But then when the music stopped for all the equity financing and the IPOs went away, because the NASDAQ started to crash, all of these companies where people were like, “Oh well I’m investing in a real business, like Lucent.

7 Stocks Enticing Investors With Higher Dividends

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The goals of an income portfolio are much different than those of a capital appreciation portfolio. The good news is an income portfolio consisting of quality dividend growth stocks can not only succeed, but excel during a market downturn. Dividend investors are focused on building a stream of steadily rising income from solid companies. While some panic when their portfolios decline, income investors see a downturn as an incredible buying opportunity as they are look for sustainable growing dividends.

(Ep.30) The Acquirers Podcast: Joshua Brown – Reformed Broker, Backstage Wall Street With Ritholtz CEO

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  • Joshua Brown: You’ve said this before.
  • I have all these people that believe in me, they like me.
  • Joshua Brown: Let’s do it one more time Tobias, I just want to make sure we get this whole thing.

Some links

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  • An update from the Stock Spin-off Investing blog

What if I Need Something More Important Later?

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  • Some people find it difficult to save.
  • Why not spend it?
  • There is some amount of borrowing that could be done that could allow you spend more.

Recipe for Successful Long-Term Investing, Biggest Financial Regrets, and Applying Stop Loss in Life

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  • Anyways, here is some stuff I am reading and thinking about this weekend… Book I’m Reading – A More Beautiful Question Since early childhood, most of us learned that our parents did not like us asking many questions and that only authority figures – most grown-ups – had the right to ask them.
  • So, what questions are you asking?
  • Well, Stop Loss works in life too.

Bubble Yet?

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  • The above forward P/E chart shows a normal range, nothing alarming.
  • What if we do get a blowoff that has happened in most other bubble tops (2007 top was not really a bubble in terms of valuations, so bear markets can happen from normal valuations too).
  • This sort of thing worries me too a little.

This Week’s Best Investing Articles, Research, Podcasts 9/27/2019

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  • Here’s a list of this week’s best investing reads:
  • This week’s best investing research reads:
  • This week’s best investing podcasts:

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