No. of Recommendations: 25
My suggestion is QQQE.
(the ETF that tracks the Nasdaq 100 equal weight index)
That's not a conventional suggestion for a "value" fund, but value is mainly a function of what you get for your money, not the style of business.
In this case, based on history, it's a collection of firms that seem to have earnings rising faster than most, meaning lots of future value.
Hence, a value fund.
Remember that this isn't trying to extrapolate the outrageous returns of a few outliers like Amazon or Apple or Google...each firm is forever only 1% of the fund.
The past indicates that the group as a whole tends to do well, measured in the old fashioned way as rising net earnings.
I redid my calculations of what a normal pricing level would be for this ETF.
Based on the average historical valuation based on the trend real earnings of this group, I'd peg the normal price today at about $65.50 to $71.50, with CPI at 303.363.
My best guess of "fair value" is $68, so today's QQQE price of $70.56 is not cheap, but quite reasonable.
Given the historically formidable rate of value growth (trend line about inflation + 8%/year, plus maybe 0.5% dividends), it seems a good pick.
The notion that today's price is reasonable includes the implicit assumption that future years will resemble past somewhat, both in valuation multiples and value growth rates.
Especially since around 2005.
The assumptions could be off by a fair bit and it might still be an above-average fund pick.
This sort of valuation exercise certainly won't have you putting your money into the S&P 500 these days, whether cap weight or equal weight.
Jim
