Investing in value assets

This. Pension fund buy ins seem to make most sense when you are in your 50s.

I guess I will spread between some mid cap value fund, some fixed income (EU corp bonds) and maybe some commodity ETF.

I can’t remember who told me that their pension fund was gave them 5-6% over the last few years, but I was jealous I was getting just 1-2%.

I guess if you go for a company with few retirees and plenty of young workers, then the returns can go to you instead of paying the pensions of already retired folks.

Probably, but for me, I think it is also good to spread the contributions out a bit and get tax relief at the highest marginal rates. Now that I find that assets are all at very high valuations, I don’t mind diversifying a bit and getting fixed return even if it is just 1-2%.

I can easily see a scenario where the economy goes bad and am glad I got 2% instead of -40%.

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Warren Buffet has sold half his AAPL holdings.

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And apparently bought US treasuries. Disappointing tech earnings paired with very high P/E ratios are not a great indicator.

Big in Japan!

Very interesting publication about long-term yields on US equities.

This report describes compound return outcomes for the 29,078 publicly-listed common stocks contained in the CRSP database from December 1925 to December 2023. The majority (51.6%) of these stocks had negative cumulative returns. However, the investment performance of some stocks was remarkable. Seventeen stocks delivered cumulative returns greater than five million percent (or $50,000 per dollar initially invested), with the highest cumulative return of 265 million percent (or $2.65 million per dollar initially invested) accruing to long-term investors in Altria Group. Annualized compound returns to these top performers relatively were modest, averaging 13.47% across the top seventeen stocks, thereby affirming the importance of ā€œtime in the market.ā€ The highest annualized compound return for any stock with at least 20 years of return data was 33.38%, earned by Nvidia shareholders.

Who had tobacco on the checklist? Not me. It’s not sexy, it’s not tech.

Of course, Philip Morris was a diverse conglomerate. At some point, they owned Toblerone (and the company behind it) and then resold for a nice gain.

Tobacco was my biggest holding and currently my top holding is a tobacco company (BTI). I’d like to hold more Altria, but they have value-destroying management - a testament to how good the underlying business is that they can destroy billions year over year in value and still be profitable and cash-flowing.

I’m hoping for a recession so I can buy more tobacco companies at good valuations, but I do wonder about their longevity, as anecdotally, it seems that generations are becoming more healthy and smoke less and population may soon peak anyway.

I actually prefer boring companies: tobacco, defence, mining, utilities, energy. The difficulty is that energy and mining are very cyclical so you have to be careful when you buy and sell. tobacco and utilities are subject to risk-on/risk-off flows and are very low growth so if you buy at the wrong price, you will pay dearly for it.

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I got an ad from UBS selling me Barrier Reverse Convertibles - for Tesla. At 18%.

Can’t remember the due date. But it seems to me that someone is trying to find a bag holder…

I am not a UBS customer. Nor do I own structured products of any kind.

Still holding? Tobacco doing great YTD. SP500 -8.2%.

Yes, but I split BTI between BTI and MO. My tobacco, utilities and insurance stocks have held up pretty well.

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