US Small Cap indices currently allocate to overvalued, dilutive firms at elevated levels last observed in the tech bubble. This poor allocation of capital corresponds to a noticeable decline in market efficiency between prices and […more]
In preparation for the upcoming earnings releases for US megacap stocks over the next two weeks, Applied Finance would like to take inventory of the intrinsic value and implied expectations characteristics of the short list […more]
Excess Intrinsic Value Motivation Applied Finance’s Valuation Beta Research Paper studies the unique characteristics of the Intrinsic Value Factor™ in asset pricing. We believe this research is an important contribution to asset pricing literature, not only […more]
Given the impact that these stocks have on cap-weighted benchmarks, we want to continue to review their valuation prospects on a quarterly basis. […more]
In June, Applied Finance published an article that explored the role of intrinsic value in passive indexing where we studied various value-weighted approaches to form position sizes based on market value, book value and intrinsic […more]
The notable tactical valuation themes we observe in the current marketplace indicate that large cap stocks are slightly more attractive than their small cap peers. We also observe that investors can improve a portfolio’s intrinsic value characteristics by allocating towards highly profitable, growing stocks away from low profit, dilutive peers. […more]
US market returns in Q2 were once again dominated by the top 5 market cap stocks following blockbuster earnings reports in April. In 2020, AAPL, MSFT, AMZN, GOOGL and FB (FAAMG) combined to represent nearly […more]
While Applied Finance has long advocated for investors to consider the strategic advantages from incorporating a valuation-based discipline in portfolio construction and stock selection, this study provides compelling evidence that even passive allocations benefit when index weights are formed on intrinsic value characteristics instead of using market cap as a proxy. […more]
The market prices of practically all individual stocks have covered a lot of terrain since the start of 2020, accompanied by a deluge of new information for investors to consider. These considerations include new operating […more]
Applied Finance will continue to monitor and report aggregate market valuation characteristics to help our research partners allocate capital in the current US equity landscape. This update reflects aggregate valuation characteristics based on 4/30/21 closing […more]
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