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Barron's on Annuities

There is piece in the current Barron's on annuities by @LewisBraham.

Summary from LINK1
Secure Act, 2019 made several favorable provisions for ANNUITIES within 401k/403b such as annuities within the framework of target-date funds (TDFs) (but the commercial movement on these has been slow). There are many types of annuities: Basic and cheap immediate-income annuities, fixed-annuities, variable-annuities, deferred-income annuities (buy now for income later), QLACs (from tax-deferred accounts), annuities with inflation riders and GMWB/GLWB riders (very expensive but limited flexibility for access to principal). Mentioned are sample products from AIG, AlliancBernstein, BlackRock, Brighthouse, Fidelity, Income America (supported by a consortium), J.P Morgan, Lincoln, Nationwide, State Street, TIAA. (In general, annuities are complex insurance products and more bells and whistles one gets, more one pays. Insurance companies can sell you almost any coverage for a price.)

Original article LINK2 (may require subscription)


  • edited April 16
    @yogibearbull, Unrelated to the OP.

    From your weekly summaries today -

    "By keeping things simple, Costco/COST is even challenging Amazon/AMZN. For fwd P/E, COST 46, AMZN 43 (and that includes Amazon web AWS); for P/EBITDA, COST 22, AMZN 16. Most of COST profits are from membership fees; membership growth is healthy and that just flows into its profits."

    IMO, that is an inflated valuation for COST, an indication that the general market valuations need to come down. As a very happy customer for the past 25 yrs, I can say that they can not sustain the recent price increases across the board. It is true that their annual membership fees (approx $4B) is a massive part of their net income (approx $6B). They probably have more room to increase net income if they can get their online store to be robust. As an aside, I am waiting for the day financial journalists stop using the misleading EBITDA as a metric.
  • edited April 16
    Interesting comments by @BaluBalu above on Costco.

    Just read the Barron’s article. Costco has a lot less “shrinkage” than its competitors (the nice word for theft). Reasons given: Items are larger and bulkier, receipts are checked at the door, stores have just 1 exit, and only paying members are allowed in.

    Not much, including Costco or the other retailers mentioned in the article, appear cheap to me.
  • @BaluBalu, I do like the original idea of EV/EBITDA as a business valuation measure with the aspects financing, taxes, accounting (depreciation, amortization) removed. It is really relevant to a cash-buyer of the entire business but to me it provides an alternate view of valuation from P/E and less used P/B (B is mostly meaningless now due to financial engineering but still OK for financials although even Warren Buffett has given up on it). Mario Gabelli and others use EV/EBITDA it a lot but there are critics too. IMO, the new age P/S will cause lot of harm to investors.

    But I agree that P/EBITDA used in COST article is neither here nor there - but in my Summaries, I "report" with as little editorialization as possible (although there is some).
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