From MarketEdge:
“Until VPU can find a price level that supports the stock, further price depreciation is probable. Momentum is negative. Wait for accumulation indicators to turn positive as a sign that demand for the stock is improving.The stock has underperformed the market when compared to the S&P 500 over the last 50 trading days.”
They rate VPU as avoid, for the same reasons I rate it as attractive. I’m not a momentum trader. I seek value. Heaven help us all if utility stocks outperform the market over the long-term.
I do expect VPU to outperform the 30-year treasury over the next 30 years though. VPU’s dividend yield is about 3%. The 30-year treasury now yields just 1.64%. My expectations are set very low. Not feeling any exuberance.
I had similar expectations for the one long-term TIPS bond filling my retirement account. For years, it poked along exactly meeting my low expectations of 2% per year plus inflation. Was happy holding to maturity. This year, money flooded into bonds though. The market made me an offer I couldn’t refuse. In theory, the same thing could happen to utilities. All it would take is more safety seeking low expectation “savers” to someday make the same decision I have recently made. And if they never do, that’s fine too. As one who is reinvesting the dividends, I’m not going to complain much about cheaper share prices to keep buying.
Setting expectations below what is likely means life is often filled with pleasant surprises. It is ultimately more rewarding to me to invest in something mundane that turns exciting than something exciting that turns mundane.
Note that I chose to buy mundane utility stocks over shares in a very exciting $669 billion car company. Perhaps too exciting. That’s roughly equivalent to a $2000 stimulus check for every man, woman, and child in the United States. How many more times do Tesla investors realistically think it can double from here? Dare I ask?
Depends on whether Biden bans fracking as his base hopes, or leaves it alone as he promised to win election. If fracking continues, then the replacement of coal-fired power plants with natural gas will continue at pace, capping electricity costs and reducing carbon emissions east of the Rockies. Thanks to fracking, natural gas is a waste product for most of the nation. What can't you do with a bottomless supply of cheap power and chemical feedstock?
ReplyDeleteNote that the above does not apply to the west coast. Fracking is banned, and in Washington and Oregon much of the potential is probably buried under the Columbia River basalts anyway. California could do very well if they fracked, but instead will do their best to rival German power costs.
Welcome to Twenty Twenty Won. Next year is Twenty Twenty Too.
Hmmm. If it's an "avoid" in this market, that means it's less overpriced. :D
ReplyDeleteOne thing is certain. I cannot predict where utilities will be in 4 years, much less 30.
ReplyDeleteAt least my expectations are very low over the next 30 years.
My previously preferred safe investment (the 30-year TIPS, was great while it lasted) now has a real yield of -0.38%. Over 30 years, it will lose at least 11% of its purchasing power guaranteed. That doesn’t even count the fees of the funds that own it or taxes on its inflationary gains.
Just 30 years of rough patch and we’ll all be sipping champagne from diamond chalices on a terraformed Mars. You’ll know we’re getting close to living the dream once I rename my blog to something a bit more upbeat. ;)