The commonWealth value index is surging! It’s up about double the S&P today, on a type of day I was worried I’d lag it pretty badly. Even have a little FB in there, it became a 6/10 on my criteria and one of the missing ones was dividends but buybacks work too so I bought it at 225 and change. The P/E was higher than I like but their earnings record and balance sheet are rock solid. May not try to hold that one for the full gain though.
So far, extremely small sample of course, but I’m beating the S&P on days when it’s down, lagging slightly some up days and doubling it up some up days.
Of the eight new purchases, I’m up in all eight. Three are up 7.5-7.9%, two are up 13%. With the possible exception of FB, I won’t look for the exits before at least a 50% gain in any of them.
The one I’ve had the longest, not included in that group, is now up 20.23% in a hair under a year, plus another 5.07% in dividends. The S&P in the same span is up 17% flat, plus about 1.27% in dividends. So that’s 25.3% against 18.27%. This one just crushed earnings in a quarter I was worried about, and has a significant stake in a digital bank that just turned profitable and may IPO this year, which could help people recognize its value on their consolidated balanced sheet.
We’ll see if it continues. I’ll at the very least update when I exit positions and compare the results of each trade to the S&P.
Sen. Tommy Tuberville on Wednesday rejected proposals to ban members of Congress from trading stocks, calling the idea “ridiculous.”
“I think it would really cut back on the amount of people that would want to come up here and serve, I really do,” Tuberville added. “We don’t need that.”
Unfortunately a lot of also have 2% pay checks (if that). But it will be interesting to see what happens to various interest rates if inflation persists. I still think most banks would expect that inflation is transitory and after a few years it’ll be back to 2% or so, so they won’t mind issuing longer term mortgages even if the interest rate is a negative real rate in the short term.
One thing that is going to result in craziness here is that the technocratic class is not at all ready to deal with inflation. Literally none of them were there for the late 70s / early 80s inflation surge and what they know about inflation is that it is basically always between 0% and 5% and even then it is rarely very different than 2%. There will be some chaos as the central banks and market participants continue to be shocked about every successive bit of inflation news because they don’t think it can happen. Housing prices always go up and inflation never goes about 5%. The model doesn’t even let us punch in inflation over 5%!
Speaking of inflation, I checked on my hedge bet of FSRRX, and it is approximately even since I bought it in mid-October, and also about even since the beginning of the year.
Very few banks hold mortgages on their balance sheets. The rates will only go up if bond investors demand higher rates, which seems unlikely since most of the bonds are effectively guaranteed by the Federal government.