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Miss the daily videos. Great video
Thanks!
Thanks for the update Sven, I always appreciate your input.
My pleasure!
Hi Sven, one topic I think it has not been commented in this channel is about which level of importance has to be given to the management team, as well as what to look for in a good management team. Just an idea.
Thanks for your great content!
as Buffett says, find a business an idiot can run because sooner or later one will! Mangement is romantic, hard to evaluate… Better to focus on margin of safety, risk and reward, assuming ok management. Fraudsters can be smelled from far…
I think one good way to judge management is based on their past decisions. The management decides how to allocate capital: projects to expand the business, pay down debt, issue dividends, do share buybacks, or keep cash. If they’ve made bad decisions in the past when choosing between these 5, consider how it will likely impact the business in the future if they keep doing so.
Sven, I understand your point about inflation adjusted return: are you really earning money if you’re not even beating inflation?
My question: But wouldn’t be owning stocks which on real terms didn’t go anywhere for 20 years be better than owning bonds which went negative, or cash which didn’t return anything on a nominal basis. What is the alternative? (Except value investing ;))
that is true, but we always strive for better!
Great video and insights Sven! The only certain thing that we can say about the future is that it is uncertain. Fed might keep raising interest in an unpredicted rates or China will invade Taiwan and and everything will turn the other way immediatly.
Well said!
Hi Sven.
This is such an important video that you’ve made.
Let me try add some food for thought.
– when you invest you always need to ask yourself, what is your risk-reward at this levels (S&P 4.300). EPS for S&P is forecasted to be 225 for 2022 and 235 for 2023 (by Morgan Stanley). The risk-reward at this entry point is pretty poor. If historically the mean for S&P is 16, we’re talking about 3.760 as a fair value making it a poor risk-reward proposition at this entry point.At the moment, there is absolutely no fundemantal reason to be more bullish and say that 16 is too low, too bearish -don’t forget that FED will still tighten into a slowing economy and that the FED rates might stay elevated for longer as inflation might be sticky (see next point below).
Don’t chase stocks at these levels, it’s never clever to chase stocks after a huge run up.
Margin of safety cannot be attained at this levels. If I had bought stocks with S&P 3.460, then the risk-reward would be somewhat acceptable with another 8,5% of potential growth to the “fair” value (if nothing else breaks in the meantime-see below).
– inflation: the story is not over. In a recent article, The Economist (I will share the article with you in the Email) argues that investors should prepare for “repeat inflation shocks in the future months with inflation being incredibly sticky”. The reason why the bulls beat the bears in the last 7 weeks was that they assumed that we’re done with inflation and that FED will pivot. But the FED is adamant to kill inflation, their dual mandate is not to take care of economic growth but pursuing the economic goals of maximum employment and price stability. They have the employment but not a desired inflation rate so they won’t stop. They will still further ramp up interest rates though at a slower rate, say 50 basis points instead of 75, till they fullfill their mandate. Like any normal person, they need to pause to see if their measures bring effect or not.
– why did the inflation rate slightly come down recently: mostly because of energy prices.
But what’s gonna happen with crude and nat gas in the next months?
Crude is expected to be at 120-125 a barrel by the end of the year again. The main reason is that by the end of the October the SPR effects will fade away and by January 1st the first real EU oil sanctions will kick in , making the supply even tighter. For all investors, let’s also not forget that important chunks of China are still under zero Covid tolerance and in lockdowns, easing the current oil tightness significantly. Let’s not fool ourselves that the Chinese economy and normal life won’t come back online at some point.
This is one of the aspects why we shall be prepared to see “repeat inflation shocks”.
– geopolitics: I always am amazed how this aspect is overlooked by everybody. We could see further escalations of the Chine-Taiwan conflict and Putin switching off natural gas completely to the Eu. If we get a “perfect storm” and the winter in Europe is harsh, Germany could start rationing supplies to its industries, causing severe recession in the EU, people could be dying in their homes.
– switching: if Russia further shuts off its nat gas supplies, we could see yet again switching to oil for heating, making the oil even tighter,
– downtrends and bear market rallies. In every longterm downtrend market (or a bear market) we’ve had these rallies in a bear market, throughout the history. Someone recently published an analysis, showing all past bear markets on the chart and how big the bear market rallies were, only to see the stocks pull back even more after each bear market really has ended. Only saying that do not be surprised if we have another big leg down after this rally.
So guys, having said all this, what is the S&P risk-reward at this current entry point?
good description, as for the risk reward, I think we are still in the highest quartile of low reward and high risk
@Value Investing with Sven Carlin, Ph.D. pozdrav Sven. Yes, especially risk-reward at this entry point is poor. One should stay on the sidelines, and if they buy, let’s buy defensives (utilities and pharma).
Sven, poslao sam ti na Email dodatno. Puno pozdrava
Nice video as always! Thanks Sven. I got some random question : High inflation never came down without interest rates being higher than the inflation number, right? If so wouldn’t this mean we need (a lot) more rate hikes? Also is it possible that CPI only came down because oil did? I wonder what you think. Also it seems to me you are slightly more bullish than bearish right now on the overall market, correct? And if so why so? I know you are always prepared for both scenarios and that you focus on doing well no matter the market conditions but I still wonder if you see more positive than negative signals at this moment in time. Thanks again for everything you do! 🙂
I am agnostic to the market 🙂
I also don’t think much about what can happen with inflation, I have to find ways so that whatever happens I am ok!
@Value Investing with Sven Carlin, Ph.D. You are a clever teacher, thanks for the reply 🙂
If you started in 1920 on SP500, the first gain inflation adjusted would have materialized in 1985 😮
ok, keep in mind dividends too!
but yes, as we discussed, 99.7% of returns come from dividends and inflation! https://www.youtube.com/watch?v=gUCXSmB0FlQ
PE and Shiller PE ratios are both significantly lower for the US stock market than a year ago, so can the investment fundamentals really be all that bad for investors looking forwards with inflation numbers now less than a month ago? IMF’s latest global economic report does predict growth for next year. Bear markets do come to an end, after all, so the stock markets rallying is likely an inevitable outcome.
yep!
Once per moth almost 15 years I close my eyes and buy and buy. ☺️
that is the strategy!
You always look at the low dividend yield of the sp500. But if Apple, Amazon, alphabet etc. do buybacks the dividend yield is misleading and doesn’t show the whole picture. A little bit like the hidden earnings of Berkshire.
that should grow the dividend, correct!!
This is a great point. It’s been made before to Sven, but it’s inconvenient for the way he makes videos, so he casually ignores it.
@Value Investing with Sven Carlin, Ph.D. Berkshire never pays dividend. Their dividend never grows. The same Amazon.
Nice video. Thanks Sven!
I am cautious with the US market and trying to focus more on Asian stocks. It all started with your videos about Alibaba.. 🙂
I would be curious to know if your opinion about China stocks & Alibaba has changed, and also to hear what you think about the Japanese market.
I am not a specialist on Japan, Chinese stocks are covered on my platform, so I can’t share that publicly! 🙁
Makes sense, no worries, I already value a lot what you share on Youtube! Your videos pushed me to read & learn more, & to realise there is so much to discover and analyse.
When I see so many companies having bad earnings but their stock price keeps going up I have a bad feeling. For examples, NVIDA said their revenue will drop 16% yoy but their stock kept going up, something is wrong
NVDA is a cool stock, stonk! so it goes up. Will look deeper!
Is this the start of a stagflation where the market goes up 20%, down 20%, and up and down so that average over the next 5 years will be about 0%…….
Steven “You Never Know” Sven is my favorite financial YouTuber by a long shot. The most important financial knowledge no one wants to hear lol
Hey my countryman, let me ask you a few questions.
Would you sell your stocks in a situation of a new war (China-US-Taiwan)?
What is the % of China stocks in your portfolio? Did this change recently?
Thanks! Cheers
Recessions are where millionaires are created. I feel for the older generation, but if you are young or middle age, you should do everything possible to double and triple your investments.
Market slumps are one of the worst times to withdraw your money from the market. hence i advise getting the guidance of an expert to make this downturn count.
@John carvill Very true! I’ve been able to scale from $350K to $570K this red season because my FA figured out Defensive strategies to protect my portfolio and profit from this roller coaster market.
@Gregory Coyle who is this individual guiding you? I lost over $9000 just last week, so I’m in dire need for a financial-planner.
@Vladmir Rick You can do your research and be on the lookout for one with intelligent strategies who’ll help your portfolio maintain an unwavering and a progressive growth. Jessica Meador Jones is my FA. She has the Flexibility & Expertise to Meet Your Needs. Verify her yourself
Hey Sven, Could you do an overview of Loblaws? It’s the largest supermarket chain in Canada and has stores in the Us and is expanding its Joe fresh clothing line overseas. It would be awesome to hear your insight:)
Technically, isnt the US population growing and will continue growing for the foreseeable future by all estimates because of big immigration numbers? Despite fertility decline? That would theoretically make US attractive long-term if we look at that alone, in this it would be similar to emerging markets. Doesn’t apply to Europe though, unless Europe gets climate refugees or smth like that.
No disrespect intended – one of your paid subscribers mentioned in another video that you’d sold off your portfolio for uncited reasons. I feel like your thought process in making that decision would be valuable to your followers; both paid and unpaid.
I enjoy your videos and am a committed follower – I watch every video you put out. I also appreciate transparency and want to know when people I trust see dark skies ahead