The 10 Yr. US Treasury yield ended the quarter flat at around 0.66%, though dipped to nearly 0.51% in early August. In July, headlines about rising Covid-19 infection rates in the US crowded the outlook […more]
For September 2020, we have put together some visual highlights of the state of markets over the past month. We touch on energy stocks, European banks getting crushed, insights on value investing and a humorous […more]
Valuation Edge® Analyst Interview Series Dhaval Sanghavi CFA, CPA Senior Fundamental Analyst, Partner, Applied Finance Dual B.S. from the University of Illinois at Urbana-Champaign The Valuation Edge® Analyst Interview Series seeks to pick the brains […more]
The reign of Tim Cook at apple has been extraordinary with the company’s valuation growing 5x larger on his watch. Deservedly, there has been little criticism of the cash returned through stock buybacks (~$340 Billion […more]
Recent reports attribute the market’s recent melt-up to option buying activity from Japanese institutional giant SoftBank and unsophisticated American traders using the new commission free platform, Robinhood. Without divining on whether these explanations are clever, […more]
For August 2020, we highlight the importance to productivity of waking up properly, the plight and pain of traditional value managers, a must-read white paper on value investing and technology and several other trending topics […more]
While we rarely make huge market calls and remain reluctant to do so at this point, its worth noting that growth stocks are trading at below -1.5 StdDev from historical normal levels signaling a significant move outside of normal range. This is especially noteworthy, as the growth relationship in the Russell 1000 is now at levels last observed in the peak of the tech bubble. […more]
Big 5 companies surge in index concentration… what will be the effect on style boxes and cap-weighted portfolios?
The recent surge has notable impacts on commonly-used style index construction methodologies. Due to the increased reliance on passive allocations, investors should be aware of the significant distortions regarding style index diversification and skews in the classification assigned to individual stocks. […more]
Are the Big 5 stocks in S&P500 (FAAMG) overvalued?
Despite concentration levels unseen since the early 1970s, this group of 5 stocks currently offers reasonable valuation characteristics. The valuation characteristics of these five stocks warrants ongoing monitoring to ensure valuation does not deteriorate. […more]
It is important to remember that markets attempt to see through temporarily good or bad times to estimate future cash flows and set current valuations. The global health and economic crisis resulting from COVID19 has created one of the greatest periods of uncertainty for market participants to see through, therefore, the fastest plunge of the US stock market ever recorded took place last month. Entering the 2nd week of April, we believe the market participants have likely concluded this is indeed a “temporary” situation, and have now started shifting focus to the recovery of the US economy and other developed regions, which will likely happen in the 2nd half of 2020 and 2021 […more]