Mast Investment Letter May 2020

Persistent government monetary and fiscal stimulus guaranteed boom-time deficits, profitless start-ups and private-equity loss-making companies. The Fed and Congress panicked at the sudden acknowledgement of credit insolvency exposed by the cessation of economic demand available to maintain unsupportable levels of debt. Venture capital and private-equity funds are collapsing. The Fed is now the commercial bank of last resort for the entire economy. Financial product distributors are at a loss for themes and stories to embellish their products while product asset values are distressed. Mast provides investment decision criteria which are particularly useful when appealing stories and themes have lost all relevance in time and space. The performance of corporate earnings over time is a critical component of equity valuation and investment decision. Our normalized earnings graph is updated and posted at the website and presented in this letter. How have corporate earnings performed in previous recessions and what are the implications for normalized earnings? Based on normalized earnings, at what equity prices are expected returns and risk premiums attractive to add (or subtract) from equity allocations? During this recession use Mast framework and context for identifying opportunity in financial asset prices, yields and returns. Stories, including virus stories, are inadequate and exogenous for superior investment decision-making.

 

 

 

 

 


 

Mast Market Analysis Data Report 05/22/20

Market Analysis Data. This includes price behavior trading range position, trending price direction and degree of change, trend and trailing earnings, dividends, comparative interest rates and trends, expected returns, risk premiums and historical (generally back to 1959) averages. We maintain all the data and models which are summarized on Market Analysis Data. This is a source of Mast investment allocation decisions and regular reports and studies which consider current conditions and factors of recent and notable change or exception.