Value Investing: Strategy, Picks And Thoughts

5-earnings yield-treasury

The analyst agrees that it is entirely possible that equities will feel the pain of rising yields at some time, but suggests that this common concern should be viewed in the context of inflation. Encouragingly, inflation appears to be non-existent given the soft labor markets such as in Europe and the U.S. Secondly, in the context of the new levels of national indebtedness ($17T), all bets are really off on the assessment of the likely tipping point of yields versus equities. The massive national debt apart, other factors make it difficult to set up a set of rules for playing equities in a rising yield scenario. Earlier thumb rules such as linkages of the commodities super cycle to a voracious appetite from emerging markets no longer apply. The shale gas revolution has changed forever the long-standing equations in the energy space. Financial institutions can no longer play the markets being hamstrung as they are by the new regulatory strictures. A likely scenario However, and this is significant, using a normalized earnings yield gap approach, it appears likely (>90%probability) that the markets could move higher over the coming year.

Steffen Jørgensen picture

Income comes from the dividends that are paid quarterly, semi annually or annually to you through the company’s profits. browse Elevation Group I choose to elaborate on this point because of its chief importance. Companies in rapid growth usually do not pay dividends since the management prefer to use the profits to further strengthen the business. This will hopefully create long-term shareholder value. Since I am a conservative and also a quite contrarian investor, I prefer companies that thrives in mature and perhaps also more boring industries.

What’s Your Investment Strategy Now?

Markets close in 29 mins. What’s Your Investment Strategy Now? By Neena Mishra | Zacks Thu, Sep 19, 2013 1:56 PM EDT 105.68 +0.290 The Federal Reserve surprised the markets yesterday by keeping its $85 billion asset purchase program in place and investors greeted the news, sending stocks to record highs and bond yields sharply lower. While the rally has paused today, most investors are confused about the future direction of the Feds policy. Has the QE decision affected your short-term investment strategy? What is your plan after the no-taper surprise? A) The stock market rally will be short-lived as no tapering apparently means that the economy is not strong enough. It is time to take advantage of the rally and book some profits. B) The stock market is back in bad news is good news mode with QE-infinity in place and stocks will continue to be the best game in town.


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