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National Western Life Insurance Company Message Board

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  • bbarberayr bbarberayr Mar 23, 2012 8:27 AM Flag

    10 Year Total Return

    I think the crux of the argument re lifeco's is has something fundamentally changed so that their valuations should be permanently less than half of what it was 10 years ago or is this just a cyclical trough.

    You look at MSFT and it's gone from a 30 P/E 10 years ago to a 10 now and no-one is saying it should go back to 30 and its valuation HAS permanently been lowered.

    In the case of Lifeco's, I don't think it is the case and that valuations continually move from cyclical lows to highs over broad periods (you can see this BenGrahamMan's reports), so there is every expectation the valuations should move up over time.

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    • Yes. Ten years forward is my interest, and this lifeco has no particular hindrances (including mgmt) to the law of averages taking effect eventually. To me, the fully valid argument that it has underperformed in the stock market for a decade while continuing to grow the business, makes a good case for adding to my long position (which I did Weds, established over the past year or so). During the 'financial crisis' NWLI has closely tracked interest rates, beginning to depart from that relationship during Operation Twist. In my albeit amateur view, there is a decent chance that as rates gradually return to being market driven (and rise) that NWLI will rise with the restoration of the ability to earn a better return from its relatively conservative portfolio. My opinion only, FWIW, not a recommendation.

 
NWLI
254.00-0.45(-0.18%)Aug 29 4:00 PMEDT

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