Finance is in a funny place now. Corporate finance operates under the guidance of the NPV Rule. NPV Rule provides the following guidance to corporate executives: To the extent a corporation sources investment opportunities with […more]
This article first appeared on The Market, April 17th, 2022 To invest successfully, we have to get a differentiated understanding of a company’s valuation. With this premise in mind, finance students at the University of […more]
First released 4-6-2022 Recapping the quarter: Looking back at the first quarter of 2022, January was largely a traditional risk-off month when the SP500 index lost nearly 10% of its value by January 27, driven […more]
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]
Looking back: both the US economy and corporate America earnings were much stronger in 2021 than initial expectations.
Looking forward: Equities will likely face volatility in the months ahead, however, higher interest rates are not a death spell to the equity market. Higher interest rates are good for the US economy right now, and what is good for the economy will eventually be good for corporate America.
Having worked with hundreds of investment managers, analysts and advisors over the past 25 years, I know valuation is an interesting topic. Virtually every investment manager and analyst acknowledges its significance, but almost instantaneously begins justifying why they don’t give it much importance in their process. I’ll note that rarely do investment professionals offer as the reason an admission that they have not really devoted the immense time and study required to deeply understand valuation. I’ll provide my perspective on what I will call common myths/misunderstandings, then I’ll turn to a few insights from our Intrinsic Value Database™ and provide our perspective to current market conditions. […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]
We originally wrote this note in December, 2020, but it serves as a timeless reminder that understanding intrinsic value and wealth creation is critical to successful investing. From the Applied Finance Team – Happy Holidays. […more]
Forward interest rates and the long-term inflation expectations they contain is the critical rate watched by Federal Reserve policymakers. The Federal Reserve will view itself as “failing” if it cannot help inducing sustained long-term inflation of 2%. […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]