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Quantitative Value Investing is Broken

February 17, 2021

This article first appeared on RealClearMarkets.com February 17th 2021 “All truth passes through three stages.  First, it is ridiculed.  Second, it is violently opposed.  Third, it is accepted as being self-evident.”  Arthur Schopenhauer Our last […more]

Emotional Unease Creates Generational Wealth Opportunity

March 19, 2020

Only in 2008 have valuations been as attractive as now. Today, the market is essentially pricing in 0% sales growth over the next five years, not as harsh as the -15% priced in during the 2008 lows, but very harsh compared to the expected 20% to 30% growth these firms have typically delivered over a five year period. Unlike 2008 there will not be liquidity issues driving economic decisions and panicking investors. This is a confidence crisis similar to 9/11. As medical policy catches and surpasses the virus, confidence will return and economic activity will march forward. Already, in China, restaurants have reopened to crowds, and society is returning to business as usual.

The stock market today is trading at valuation levels last seen in 2008, before an unprecedented wealth creation bull market swept away the fear of the Great Recession. Then as now, it’s always about the expectations built into market prices.
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Then and Now: Buyers Remorse Versus Sellers Loss

October 31, 2008

Over the past couple months, worsening macro economic conditions, declining corporate profitability and a bottomless stock market have investors longing for the good old days when the economy delivered steady increases in GDP growth with […more]

Value Expectations™ Cisco Systems

August 8, 2000

Published on 8/8/2000 -8:30 am  Download PDF Version Overview: On Tuesday August 8, Cisco will announce its quarterly results. While Cisco has been a tremendous investment during the 90’s, the question facing portfolio managers today, […more]

Economic Margin®

July 1, 2000

A corporate performance metric should provide insights into what a firm is worth. Most money managers utilize common earnings-based measures of corporate performance and value, which are suspect and easy to manipulate. Applied Finance developed the Economic Margin (EM) framework to remove the noise inherent in accounting data.

Traditional accounting-based valuation methods provide an incomplete view of a company’s value by not accounting for the investment needed to generate the earnings, cost of capital, inflation or cash flow. […more]

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