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24 Aug

FAANG bubble? Basic valuation analysis says YES!

This New Tesla Coil is the Future of Electricity

In 1891, Nikola Tesla stunned the scientific community by inventing a device that could transmit electricity through the air. This breakthrough device could power light bulbs and electric motors wirelessly, at a distance of a few feet.

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It’s not quite 20 years since the “dot-com boom” became the “dot-com bust,” but as the market extends itself into the longest bull market in history, it’s hard not to see some of the same characteristics between the stock market in the years leading up to that crash and this one. More →

By Thomas Moore Amazon Apple Facebook Google Investiv Daily Netflix Technology Valuations
29 Nov
The Best Business Out There Might Surprise You
Users spend 456 billion hours on Facebook per year. The time spent working in the U.S. per year is 246 billion hours.

Scientific research has shown that Facebook is addictive and it’s a habit that’s very hard to rid yourself of.

At a valuation of 36, addiction makes Facebook one of the best risk reward plays out there.

Introduction

In the book Barbarians at the Gate, Buffett said this: “I’ll tell you why I like the cigarette business, it costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.” More →
By Sven Carlin Facebook Investiv Daily
23 Jun
Does It Make Sense To Buy FAANG Stocks Now?
With the exception of AAPL, all FAANG stocks have beaten the S&P 500 in the last 5 years.

By using Graham’s growth stock formula, I’ve determined the real value of FAANG stocks in order to see whether they are still a good investment.

Surprise, surprise, only one stock is overvalued, while some are still bargains.

Introduction

FAANG stocks—Facebook (NASDAQ: FB), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Alphabet, i.e. Google (Nasdaq: GOOG, GOOGL)—have been the clear drivers of the current bull market. And all but AAPL have significantly outperformed the S&P 500 index.

The S&P 500 index is up 78% in the last 5 years, AAPL 73%, GOOG 228%, AMZN 334%, FB 389%, and NFLX a whopping 1,454%. More →
By Sven Carlin Amazon Apple Benjamin Graham Facebook Google Investiv Daily Netflix
27 Jan
What See’s Candy & WhatsApp Can Teach Us About Creating Shareholder Value
Stock option compensation rewards management if the market does well, business performance is almost irrelevant.

BlackRock and Vanguard are becoming more assertive in the implementation of better governance policies. However, it seems it’s only a rhetoric given that they own 9% of corporate America.

Two examples show how CEOs can have opposing attitudes toward shareholder value.

Introduction

Today, we’ll dig deeper into corporate governance as it’s essential for our long-term investment returns.

We’ve already discussed how buybacks mostly negatively affect long term shareholder value. But apart from buybacks, there are other interesting, more subtle issues that can help us lower our risks and increase returns.

We’ll analyze what Larry Fink and William McNabb have to say about corporate governance, and we’ll look at a few examples of how CEOs manage their companies in order to show examples of good and bad practices. More →
By Sven Carlin Berkshire Hathaway Facebook Investiv Daily Larry Fink M&A Mark Zuckerberg Warren Buffett William McNabb
10 Nov
Why You Should Switch To Active Investing Now
PE ratios in the S&P 500 are all over the place; 7 of the top 20 stocks have PE ratios below 15, 7 from 20 to 30, and 5 above 30.

You can buy stable, growing businesses at PE ratios below 15, so why would you stick to passive investing and buying riskier stocks at PE ratios of above 20?

Maybe you think passive investing meets the definition of “boring,” something investors such as Buffett advocated. I don’t wish you the excitement of watching your portfolio fall from a PE ratio of 24 to a PE ratio of 15. Therefore, think about rebalancing now before it’s too late.

Introduction

Yesterday we discussed how the economy is doing well but that the market isn’t responding accordingly. This is because of the high valuations where only exceptional catalysts can push the market higher while any kind of negative news easily brings it into negative territory. However, by analyzing recent earnings, we have found large discrepancies among sectors in revenue and earnings growth. We understand this is normal for a well-diversified portfolio, but do we have to own more of the overvalued stocks and less of the undervalued stocks as a market capitalization weighted index fund does? More →
By Sven Carlin Actively Managed Funds Amazon Berkshire Hathaway Facebook Investing Strategy Investiv Daily Passively Managed Funds Warren Buffett
23 Sep
A Gesture of Goodwill?
There is a difference between accounting and economic goodwill.

Facebook’s $18 billion goodwill acquisition of WhatsApp looks a lot like AOL Time Warner’s goodwill of $128 billion.

Economic goodwill not on balance sheets is what to look for. Unfortunately, you won’t see it anywhere.

Introduction

Accounting is an essential part of analyzing a company as different accounting regulations and principles bring about totally different analysis results.

In today’s article, I’m going to give you a small piece of insight on how I do research, how it differs from the usual screening processes that most use, and why it is important. I won’t elaborate on all the possible inconsistencies instance-by-instance as that analysis is better left to books on accounting. Instead, we will discuss one small line item on the balance sheet, goodwill, and how it can severely skew one’s perception of a company. More →
By Sven Carlin Facebook Fundamental Analysis Goodwill Investiv Daily Warren Buffett
09 Sep
How To Spot The Next Facebook, Amazon, Netflix or Google
Earnings aren’t that important but revenue and customer growth is essential.

The business has to have the capacity to grow without issuing stocks.

Timing is everything with growth stocks.

Introduction

“FANG” is the name that has been given to the elite group of technology stocks that includes Facebook, Amazon, Netflix and Google.

These magnificent 4 have delivered astonishing growth. Since its IPO, Amazon has returned 52,491% (yes, you read that correctly) to shareholders. The other three haven’t quite been that extreme, but have still seen incredible growth, with Netflix returning 9,198% since its IPO, Google returning 1,429%, and Facebook 338%. More →
By Sven Carlin Amazon Facebook Google Investiv Daily Netflix
11 Aug
Minimize Risk Without Sacrificing Returns? Sven Tells You How
By dissecting the S&P 500 per valuation quintiles we see that only parts of the market are overvalued.

Historically, buying the lowest PE quintile stocks has increased annual returns by 360 basis points.

High PE stocks have large market capitalizations which force you to own more of them through index funds, increasing your risks and lowering your returns.

Introduction

Beyond the top news stories about central banks increasing stimulus to fight the BREXIT or sluggish economic data with high hopes for the future, there is one recurrent theme that still flies under the radar. The recurring theme is that financial markets are overvalued. More →
By Sven Carlin Corporate Earnings Facebook Investing Strategy Investiv Daily S&P 500 Stocks
29 Jul
Corporate Earnings of the S&P 500’s Top 10: Why It Is Important for You
Corporate earnings and fundamentals are variable, pick the stocks that best suit you.

There are low PE ratio stocks, high growth stocks, and high dividend yielders – anything you might want.

But be aware: some companies engage in buybacks that are detrimental to shareholders’ value.

Introduction

When you add up the top ten companies by weight, they account for 17.7% of the total weight of the S&P 500. For investors who are heavily invested in the S&P 500, following the earnings of its top ten companies is essential in order to understand the risks and rewards of being invested in the index. In this article we are going to assess the current market situation by looking at what has been going on with the 10 biggest companies in the S&P 500 index. More →
By Sven Carlin Amazon Apple AT&T Berkshire Hathaway Corporate Earnings Exxon Mobil Facebook General Electric Investiv Daily Johnson & Johnson JP Morgan Chase Microsoft S&P 500 Stocks

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