Fundamental Analysis

27 Apr
The S&P 500 Only Has Sentiment To Thank For The Gains In The Last 5 Years
Positive sentiment alone has added 950 points to the S&P 500 in the last 5 years.

The S&P 500 has returned 12% in the last 5 years, but only 4.5% in the last 10 years and just 2.7% in the last 17 years. Don’t let current positive sentiment lead you to such terrible long term returns.

The opportunity cost might be significant, but the long term picture of not following the herd looks much better.

Introduction

I know that if I buy a stock with a price to earnings (P/E) ratio of 10 and stable future business prospects, my very long-term return should be around 10%, plus inflation and eventual growth. If I buy a stock at a P/E ratio of 5, my returns will be around 20%, while if I buy a stock with a P/E ratio of 20, my returns will be around 5%. It’s as simple as that, in the long term. More →
By Sven Carlin Fundamental Analysis Herd Behavior Index Funds Investing Strategy Investiv Daily S&P 500 Sentiment Stocks Valuations
26 Jan
The Only Way To Beat The Market In The Next 10 Years
Investment performance has to be assessed through a complete economic cycle in order to reach the highest possible long term value.

In this century, stocks have performed poorly from peak economic cycle to peak economic cycle.

Analyzing fundamental risk against the recent performance of the S&P 500 shows us that those who are long the S&P are practically accepting long term negative returns for momentum created short term positive returns.

Introduction

Recently, we analyzed Seth Klarman’s amazing performance and investing rationale. There were some pretty difficult things to digest, like the fact that he underperformed the S&P 500 by 50% in the late 1990s.

But this leads us to some very interesting questions: Do we properly measure investment success? Is the investment manager that invested in internet stocks in the period from 1996 to 1999 a good manager? Similarly, is the manager that created wonderful returns in the last 7 years by being long U.S. stocks a good manager? More →
By Sven Carlin Bonds Fundamental Analysis Investing Strategy Investiv Daily Stocks
04 Jan
Fundamentals & Sentiment: Sven Dissects 1,626 U.S. Stocks
It is possible to build a well-diversified portfolio with low PE ratio stocks that have equal the growth of high PE ratio stocks.

Short exposure and analysts’ targets indicate the market is in a very positive mode.

The market is extremely short term focused. We’ll identify where to look to find the opportunities.

Introduction

Using data from Quant, I’ve analyzed 1,626 U.S. stocks.

The factors I’ve analyzed are: market capitalization, current and forward PE ratios, price to book value, dividend yield, percentage short, analysts’ targets, 52-week highs and lows, and earnings per share growth.

The goal of this analysis is to provide insight into how to beat the market in 2017. I believe that research, thorough analysis, and patience will always outperform the market, especially because the distribution of the above-mentioned factors is all over the place as you will see below. More →
By Sven Carlin Fundamental Analysis Investiv Daily Market Forecast Sentiment
30 Dec
Why Big Pharma Isn’t A Good Investment Right Now
The pharmaceutical industry is facing regulatory headwinds amidst positive global trends.

Fundamentals show that all the positives are already priced in leaving more downside room than upside potential.

Introduction

The pharmaceutical sector has been one of the worst performers in 2016. It’s down 11.22% year-to-date while the S&P 500 is up 13.37%.

From a longer-term perspective, the pharma sector has largely outperformed the S&P 500. From the low point in the 2009 financial crisis, the iShares U.S. Pharmaceuticals ETF (IHE) has gained 291% while the S&P 500 has gained 233%.

Today, we’ll analyze sector trends, risks, and the fundamentals of potential pharmaceutical investments to see if the recent pullback is an investment opportunity. More →
By Sven Carlin Fundamental Analysis Investiv Daily Market Forecast Pharmaceutical Sector
17 Nov
What Buying Olive Oil In Italy Can Teach You About Value & Price
Everybody knows the price of a stock, but few know the actual value.

There are a few things that can help you when buying undervalued assets.

To determine if you’re investing in a good undervalued investment, consider the company’s probability of bankruptcy.

Introduction

This summer, I was in Italy and buying some olive oil. As we use mostly olive oil in our kitchen, I bought 10 liters of this special oil, enough to last for a few months. More →
By Sven Carlin Fundamental Analysis Investing Strategy Investiv Daily
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
11 Sep

Sunday Edition: Identifying Undervalued Stocks

The $64 million dollar question asked by every investor is, “when is the right time to make an investment and actually buy shares in the said company?”

One of the big advantages of value investing is the fact that the question of when you should invest, while never being irrelevant, is only a secondary concern.

The focus is on first determining whether a stock is available at a discount compared to how much the business is worth; if a discount exists, the value investor has an immediate advantage over the rest of the market (which has yet to recognize the stock should be priced higher than it is) and should take a position as quickly as possible. More →

By Thomas Moore Fundamental Analysis Investing Strategy Investiv Daily Sunday Edition Warren Buffett