The Best Way to Follow the Developing EV Mega Trend

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The Best Way to Follow the Developing EV Mega Trend

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Matt Clark,
Research Analyst

When I was in the market for a new car three years ago, I looked hard at an electric vehicle (EV).

I wanted to get out of the gas-guzzling sports car I was driving and into something more fuel-efficient.

Naturally, EVs were part of the equation.

The problems I found were:

  1. Charging locations around me were few and far between at the time.

  2. But the bigger problem was that the cost of EVs was just too high … even with tax credits.

I went another route and found something that wasn’t quite as efficient, but it suited my needs.

Now the EV market is surging. And automakers are slashing prices on new vehicles to entice customers amid high inflation.

As an investor, you want to know if this mega trend is one to buy into.

I’m going to share what I found out about investing in EV-related companies using our Stock Power Ratings system in a bit.

But first…

Click here to see why EVs will soon dominate the auto market.

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From our Partners at Banyan Hill Publishing.

Is This the Computing Giant EV's New Power Plant?

It has a code name within the walls of Apple’s Cupertino headquarters — “Project Titan.” Supposedly one of Steve Jobs’ final projects … a new electric vehicle (EV) that would do for the automotive world what the iPhone did for personal devices. The next generation of EVs, including Project Titan, will get their power from a battery the size of your iPhone.

Click HERE for the full story.

The Bad Thing About Value

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Michael Carr,
Editor, The Banyan Edge

Yesterday, I told you about how value investing delivers strong long-term returns — and that’s a good thing.

But today, I want to highlight the other side of the strategy. That’s the fact that there are large, long-term drawdowns associated with this investing style.

Tomorrow, I will look at the ugliest aspect of value investing, which is the reason I don’t think it’s the best approach for most investors.

Drawdowns are a euphemism for losses. It’s the amount your account loses, or draws down, from a high. And I believe it’s the most important measure of risk.

Drawdowns measure the percentage loss from an account high. We can easily convert this to dollars. A 50% drawdown in your $100,000 retirement nest egg is a loss of $50,000.

The reason I believe it’s the most important risk metric is because it allows you to see how much your life could change in a bear market.

That 50% loss, no matter what your account balance is, would adversely impact your life if it occurs within a few years of retirement.

I’m using “adversely impact” as a euphemism for “devastate” since it sounds better. The truth is a large loss near retirement will change your life.

You may not retire on time.

You may not get a long-planned vacation.

You may not have money to help your children or grandchildren.

The risks are too high for me to consider. That’s why I look at drawdown. And the chart of value drawdowns is bad. You can see that, over the last three years, value investing experienced its worst loss since the 1930s.

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(Click here to view larger image.)

This is based on data from Dr. Ken French. He co-authored many articles with Nobel Prize-winning economist Dr. Eugene Fama (you may recognize this name from my colleague Adam O’Dell’s own research).

It’s the longest and most accurate data available for analyzing value.

Since 2000, value has experienced frequent large drawdowns. You might have just half or three-quarters of the money you planned on for retirement if you stuck to value investing throughout that stretch.

While that’s bad, tomorrow, I’ll show why value is ugly.

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