valueplays – Page 2 – ValueWalk Premium

Data vs Perception

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Investing is the task of separating misperception from fact and market psychology from business and economic fundamentals. The goal is to ascertain when the market psychology of a misinformed consensus differs enough from economic and business trends to provide investment opportunity. The...

Rate Cut? History suggests no cut!

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc A rate cut from the Fed is widely expected. Many believe the US has entered a recession and that rate action by the Fed is required. History suggests no cut!. The first observation one can make is that the Fed’s history of rate...

PMI (Sentiment) vs CAB (Data): The Impact Of Market Psychology

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Many take the PMI as a measure of manufacturing activity when it is in fact a survey of manufacturer psychology. The CAB is mostly hard data measures of economic activity but does include chemical producer equity prices which shift with market psychology....

Employment, Vehicle Sales, Real Personal Income & The S&P Value Index

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Household Survey Employment grew 590,000, far above the 130,000 reported by the Establishment Survey. The Household report, a statistical survey, covers self-employed while the Establishment report, from established payrolls, does not. What matters most is the trend. The Establishment reports are routinely...

Higher Oil = Higher Equity Prices

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Highlights: US Crude Inventories 25.7mil BBL below 5yr mov avg. Tied to algorithms and believed to be a sign of economic strength/weakness, current trend suggest a marked shift to positive market psychology. Economic strength has continued on trend since 2009 with the...

Recession Caterwauling Increases

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc You may have noticed that it seems that every pundit is forecasting recession claiming to see all the signs of economic weakness. It seems they have ignored record employment, record retail sales and record personal income with no changes in trends from...

E&P Activity At A High, E&P Efficiency Slows

The new pipeline capacity will cause WTI to rise as shipping costs are lowered materially. Q2 hedge fund letters, conference, scoops etc Davidson submits: E&P Activity at a high, E&P Efficiency stalls a little. The data for these indices have a 2mo lag. Key to this data is the recent stall in...

Wealth Shaming

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Maklay62 / Pixabay These are some thoughts on a topic I have been learning the past couple of years. We have developed a political class in this country that has acted to give away wealth and in the process made themselves wealthy. The...

Job Openings Have Stalled… Warning?

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Job Openings and Temp Help indices are good indicators of the demand for labor. There are multiple drivers behind employment trends with shifts in industry demand across every economic cycle which do not repeat cycle-to-cycle. Each cycle has its own themes which...

Low Inflation & High Employment… Tariff Impacts?

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc Tariffs and Inflation. The Inflation Bogyman that is not there: The consensus interpretation of tariffs is that higher tariffs are inflationary for the country imposing them. In the current market, US tariffs on imported Chinese goods should be inflationary because the tariffs are...

US Dollar vs Global Currencies

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc The impact of autocratic/socialistic and basically corrupt governments taking value from its citizens has always resulted in capital fleeing those countries to safer havens, i.e. gold or assets priced in safer currencies. Recent US$ strength  beginning with Russia’s invasion of Ukraine and ...

The Fed Could Do Nothing

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc The interest rate chart of 10yr, 3mo Treas, Rate Spread & Fed Funds Daily shows the current Fed policy of raising FFunds rate to equal T-Bill rates after T-Bill rates rose about 25bps(0.25%). This deviated from 70yrs of Fed history of keeping FFund rates...

Why Oil Is Going Higher

The numbers below do not take into account Exxon restarting Baytown very soon that will take another 600,000bbl/day off the market. Q2 hedge fund letters, conference, scoops etc “Davidson” submits: US Crude Inv falls 9.5mil BBL &  Gasoline Inv fall 1.5mil BBL With this report, US Crude Inv sits ~13mil BBL above...

Again, Central Banks Do Not Set Rates… They Follow Them

“Davidson” submits: Q2 hedge fund letters, conference, scoops etc 3844328 / Pixabay Rates are like anything else in markets. They are set by market psychology. Central banks think they control rates but they do not. Rates everywhere are set by investor shifts of capital as they seek the best rates of return...

Hindsight: The Most Valuable Investment Tool

“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Hindsight is the most valuable investment tool in the toolbox Market psychology hindsight is ignored as an investment tool. Many will argue that it is routinely incorporated in MPT. Based on prices, MPT’s mathematical analysis on data the basis of which changes with...

Value Isn’t Dead…It’s Misunderstood & Oversimplified

So, you’ve heard it a lot lately.  “Value Investing” is dead: Q2 hedge fund letters, conference, scoops etc Is value investing dead? It might be and here’s what killed it Is Value Investing Dead? Value investing: is the age-old strategy dead? Just google it and you’ll get pages and pages of articles. You’ll repeatedly hear...

S&P 500 Intrinsic Value Update

If your gonna compare the current market to the last two bubble we had (internet and housing), you’re gonna have to wait until the S&P 500 hits 4700 (and earnings stay flat) before we can start having that conversation. Q1 hedge fund letters, conference, scoops etc “Davidson” submits: The Dallas Fed reported...

An Investing Process Using CVS As An Example

“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Enhanced analysis occurs whenever one has identified an information-quality difference between data sources which lets one allocate higher reliance to one data set over another. This occurs whenever one can successfully relate data series the rest of the investment community does not....

Fed History Suggests Rate Cut Coming

“Davidson” submits: Q1 hedge fund letters, conference, scoops etc Panic has driven the 3mo/10yr Treasury spread to -0.18% (negative 18bps). The talk is about the Fed cutting rates, when and how much. Despite this becoming the dominant topic history indicates that the Fed follows 3mo Treasury rates(T-Bill rates) by lagging shifts...

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