Hey Reader,

In a speech that left America with more relief and exuberance than Tom Brady's retirement tour, Fed chair Jerome Powell signaled a planned rate cut for September.

Stocks with atrocious financials have been saved, bears have been slaughtered, and the world is finally fair and just (obviously).

In all seriousness, I hope you have at least a few stocks that have benefited from the news.

Stocks that boom with the economy can unlock serious returns.

You can find them with a metric called beta.

High Beta and Value

High beta stocks don't usually get much love on the Street.

This is partly because beta is commonly used in the CAPM model to estimate a cost of capital, or discount rate. The higher the beta, the higher the discount rate, which lowers the valuation multiple on the stock.

But you shouldn't throw the baby out with the bath water. Just because a stock has a high beta, doesn't mean its future cash flows will be "high beta". That's where major value opportunities lie!

Look, I do dumb stuff as much as the next guy, but somehow I did recommend $PHM in Feb 2020, Jun 2020, and April 2022 despite its cyclicality. It's done quite well. (Cherry picker!)

It was not easy though, because the narrative for the industry was "bear market incoming."

So where's that "bear market" opportunity today?

Well, you gotta do the fundamental research to find it. Why not get the insights wherever you can get 'em, like in the research I publish for Value Spotlight.

Thanks,
Andrew Sather
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​einvestingforbeginners.com​
​Investing for Beginners Podcast​

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Parting Thoughts

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