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Wed, Jan. 8, 10:34 AM
- "The Safety Bubble Deflates," goes the title of a new report from Bernstein's Seth Masters, adding his name to those voices suggesting "safe" assets have become otherwise.
- Even though utilities, telecom, and consumer staples have underperformed of late, says Masters, their relative valuations are still well above the average over the last 50 years. "In periods of stress, investors tend to prize stability and safety too much. But in time, investors discover that every investment carries with it some degree of risk: if not risk of loss, then risk of inadequate growth."
- Related ETFs: XLU, IDU, VPU, NLR, GRID, JXI, NUCL, DBU, IPU, RYU, PUI, UPW, FXU, SDP, PSCU, AXUT, FUTY, UTLT, XLP, VDC, FXG, RHS, FSTA, PSL, PSCC, IYZ, VOX, IXP, IST, XTL, LTL, FCOM, TLL, AXTE
- Barron's Jack Hough says the "low beta" approach is a flawed one: First, volatility can change quickly as companies' or industries' fortunes shift; Second, beta tells one nothing about whether a stock's valuation is high or low. In a similar warning over low volatility stocks, BAML suggests looking for companies with smooth earnings rather than smooth stock prices. Screening for such, Hough finds CSX Corp (CSX -0.6%), DuPont (DD +0.6%), Cisco (CSCO -0.6%), and Halliburton (HAL -0.8%).
- Low volatility ETFs: SPLV, USMV, ACWV
Nov. 21, 2013, 8:50 AM
- Multiple expansion was behind stock gains this year, but next year it'll have to be earnings and money flow rather than further valuation re-rating, says Goldman's David Kostin, reiterating his cautious 1,900 end-of-2014 target for the S&P 500 (SPY).
- Margins are key, and Goldman's forecast is the "greatest investable gap relative to consensus expectations.” The bank expects 8.9% in 2014 and 9% in 2015 vs. the Street at 9.5% and 10.1%, respectively. Every 50 basis point swing in margins translates into a swing of about $5 per share in EPS.
- Four recommended strategies: Pick growth (IWF) over value (IWD), firms investing in capex, companies with high buyback yields (seems contradictory with previous), and stocks with high operating leverage.
- As for sectors, Goldman is favoring IT (VGT), consumer discretionary (XLY), and industrials (XLI) vs. underweighting consumer staples (XLP), utilities (XLU, IDU), and telecom (IST).
- S&P 500 ETFs: SPY, SH, SSO, SDS, IVV, SPXU, UPRO, VOO, RSP, RWL, EPS, BXUB, TRND, SFLA, BXUC, BXDB
Jan. 16, 2013, 4:33 PMTech (XLK) is the new defensive sector, its 14.8 PE ratio continuing to trail traditional cautious plays like telecom (IST), consumer staples (XLP), and utilities (XLU). At a lofty 22 PE ratio, telecom leads all S&P sectors - it's a pretty fancy multiple for a slow-growth sector, but investors are attracted by the lofty yield. The S&P (SPY) as a whole has creeped up to a 14.8 ratio. | 2 Comments
Jan. 1, 2013, 11:40 AM
Oct. 29, 2012, 1:15 PMSome areas of the dividend universe (telecom, utilities) may be pricey, but dividend stocks are not in a bubble, says ClearBridge's Mike Clarfeld. He suggests looking not just at the upfront yield, but instead at the ability of the company to increase the payout over time. "The sweet spot ... attractive dividends, but really dividend growers - we don't think they are overvalued at all." | 1 Comment
Oct. 17, 2012, 9:13 PMCurrently weighting U.S. telecoms and utilities at zero in his dividend stock portfolio, Pimco's Brad Kinkelaar notes both sectors are trading at near off-the-chart premiums to their average relative multiple. Dividend investors would do better to look overseas, he says, where one can find companies that are growing, paying good dividends, and trading at better value. An excellent presentation. | 7 Comments
IST vs. ETF Alternatives
The SPDR® S&P® International Telecommunications Sector ETF seeks to provide investment results that, before fees and expenses, correspond generally to the S&P Developed Ex-U.S. BMI Telecommunication Services Sector Index, an index that tracks the telecommunications sector of developed global markets outside the United States. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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