Anthony Speciale Stock Market Analyst

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Which is better: volume, growth, or momentum?

Speaker 1 (00:00):
Hi guys. I’m Tim Melvin, welcome back to a better way to wealth. Not today. We’re going to talk about something that’s going to surprise you because after all my reputation is I’m, I’m kind of a deep value guy. That’s how I came up in the world. And so I’m going to just stick all the momentum investors are just ridiculous, right? Chasing trends and doing crazy stuff like that. See, this is the oldest and dumbest argument on wall street. Okay. What’s better value or growth or value or momentum. That’s a dumb argument. You know what the best investment strategy is? The one that works, we know value investing works. We talked about it in a previous video, how great some of these value strategies have been the deep value strategy of buying small banks. We’ve talked about, you know, ridiculous sums of money. Hang on.

Speaker 1 (00:48):
Ridiculous sums of money have been made. Usually these strategies, here’s the truth though. Guys, momentum actually works just as well. Now it works in a different timeframe. When we buy companies based on valuation, we tend to be thinking a year or two down the road. As far as that valuation being realized in momentum, we’re focusing in much tighter timeframes, usually a year or less, but here’s the truth. A trend in motion on wall street stays in motion. If institutional money is flowing into the stock, the thundering herds going to keep right on thundering and push that stock higher over time, properly executed a good momentum strategy is going to give you the same or higher Richards, higher returns than value investigates, certain periods of time. Now here’s the cool thing about momentum. Momentum works just as well as value. However, it tends to work at different points in time when momentum is hot and working well, value’s probably not working as well when value’s hot and working extremely well, Millennium’s working, but it’s not working as well in bad markets.

Speaker 1 (01:59):
Momentum will get crushed and value will hold up a much better. So here’s something that most people don’t consider. But if you were to take half of your portfolio and put it in value strategies and half in a solid momentum strategy, something that would seem to be intellectually opposed, but makes complete sense. You would get the same or higher returns as you would by taking just one, but you would reduce volatility substantially. So yes, I love value investing. I love momentum investing, why they both work and make me money. That’s the name of this game? I don’t need to be intellectually and rigorous about which style I use. I want to figure the strategies they’re going to make me the most money. So I’m going to love them both. So anyway, let me give you a couple of momentum ideas. So you could see what a momentum stock looks like.

Speaker 2 (02:51):
IDEXX lab is a

Speaker 1 (02:55):
Let they make veterinary diagnostic tests and they make software that allows to manage their practice better, including things like payments and scheduling and all that. But the big thing is the diagnostic tests for different conditions and diseases and problems that pets might have. Now, this is a massive market guys globally. It’s about a $37 billion total addressable market IDEXX as well on the way to being one of the biggest players in the market. Look, I’ve got two dogs and again, I am well aware of how much money Americans spend on their pets. I probably spend less than most pet owners and it’s still a pretty big number. So this is a massive growth opportunity. Wall street has kind of discovered it this extremely high return business, they’re earning a 30% return on assets and equity pretty much every year. I look for that to remain stable and continue to happen. Going down the road stock has been just getting pushed steadily higher, that stock going up into the right, in a very smooth fashion, which is what we love to see.

Speaker 1 (04:04):
Since 2015, the company has been growing. We have roughly check that 27% a year. It’s going to stay above 20% a year for the next five years. This is just a powerhouse of a stock earning high returns attack, attracting continual flows of institutional money. That’s just going to keep pushing the stock higher and higher and higher as momentum continues to build. Just kind of looking at this now, when you look at the institutions, how many are buying, this is a, a massive number that have been attracted to IDEXX in pouring money into it in the second quarter of the year alone, 315 institutions added to their port to their position and stock 123 new mutual funds, hedge funds and other money managers put money into the stock. That’s a massive wall of money. That’s just pushing the stock higher and it’s going to continue to do so for at least several more months.

Speaker 1 (05:03):
Okay. My next doc is a, this is a shocker Dillard’s department store. It’s kind of been a, the post COVID low superstar of the retail world. Everybody’s telling us department stores are dead. Somebody forgot to tell dealers the stock has been on a roll. They’ve been blowing away. The analysts, estimates, analysts, analysts are scrambling to raise their estimates on the stock that attracts institutional attention. And while it’s not as mindblowing as what we saw with IDEXX labs Dillard’s and had the symbol here as DDS, by the way, had 36 new ads and 43 new positions. So 43 new institutions open positions and 36 more added to the amount of Dillard shares that they own. And again, that’s just a wall of cash coming into the market to push the stock higher and create strong, positive momentum. They began as the analysts continue to recommend the stock.

Speaker 1 (06:00):
They’re raising their estimates, they’re raising their price targets and believe it or not, that really catches the eye of the big wall street trading desks and creates momentum. So Dillard’s should continue to move higher for some time. So that’s just the type of momentum that I look for. We’re looking, I use one year momentum and these longer term strategies we do 30 and 90 day momentum in the trends report, looking for shorter term situations that might turn in to something longer term. But for this example where it’s sticking with the classic one-year momentum that the academics love to talk about. Sorry guys, momentum. There are not enemies. If you put them together in your portfolio, you can legitimately are very high, right returns and lower the volatility of the overall portfolio. So I guess I’m to Melbourne, that’s a better way, better way to wealth. Thanks for watching.