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Another pointed question on their accuracy around the US stock market:You’ve recommended emerging market stocks since 2017. That hasn’t panned out. Why do you still like them?
The average emerging stock is trading at half the valuation of the average U.S. large-cap stock. We’ve seen in emerging the same thing we’ve seen in the developed world: A relatively small handful of growth stocks have outperformed the indexes hugely, and half of the universe or more has been left behind. As a result, you can put together a portfolio of decent companies trading at about one times book value and seven times trailing earnings, with a trailing dividend yield of over 6%. That’s pricing in a really bad outcome, which is comforting. If you think earnings are merely going to be stable, you have an earnings yield of 14%. You don’t need to imagine good things happening to get good returns out of companies trading at those valuations.
Does that cause you to wonder if you should tweak your model to take secular changes into account?
Over the course of those 20 years, we have done a lot of digging into our assumptions, to understand where things have played out differently than we expected. One of the striking [observations]: Profitability around most of the world has been stable. Profitability for U.S. small- and mid-cap stocks has been stable. The one place that was absolutely not the case is U.S. large- caps, which have seen profitability, and their apparent return on capital, move up in a way that is fairly unique.
"Joining the White Countries Club
It is extremely difficult to anticipate US security strategies from the outside. When the US Treasury Department published its whitelist in January 2020, Britain, Canada, and Australia were the only countries making the list. Japan was not included, and the government’s hope that its own legal revision would ease the way to its designation as a white country was not fulfilled at this time."
Good luck @Catch22. - While you’re waiting ... I can’t find any rules for attaining investing perfection. Did however, locate some rules for arriving at Moral Perfection . May be applicable to investing as well. Something to read over while you wait.Today would be a good starting point until the end of the year, to verify a portfolio return for @FD1000. Begin with.............. ---holdings today. And then follow with all account trades with loss/gain data going forward to December 31 for 2020. No dollar values required, just real data.
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