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2021: The Year of Rebalancing

April 14, 2021

In just 12 short months, $8.3T flooded into the US Economy and the country is spending much more than current tax revenues allow. The bill will come due, and it will begin to come due soon. 2022 now appears to be the most likely start for tighter policies. […more]

Looking Backward and Forward – Q1 2021 Review

April 9, 2021

We stressed in our 20Q4 newsletter that over longer time horizons, since the mid-90s, Large and Growth factors have not consistently generated alpha. This observation was quickly proven true YTD, as Large and Growth significantly lagged Small and Value. While those traditionally defined style factors are helpful in explaining short-term performance, we believe in the long term, it is valuation that delivers alpha. […more]

Does Inflation Actually Benefit Value Stocks?

March 29, 2021

With massive stimulus and deficit spending, rising inflation concerns have become a concern for investors. It is often assumed that higher levels of inflation bode well for the relative performance of value stocks. We explore the relationship between inflation and value stocks and why this link may not be as strong as investors might think.

Navigating allocation decisions in the face of rising inflation requires more careful stock selection than the current set of passive investment vehicles or factor-based alternatives are equipped to deliver. […more]

Valuation vs. Cheapness in Tactical Allocation

March 10, 2021

Many investors have abandoned their security analysis discipline in the search for low-cost investment products, and most academic research has applauded that decision for decades. Applied Finance has established an extensive out-of-sample systematic track record to confidently defy these trends with a disciplined valuation approach. Because of this, we believe investors benefit from valuation-based investment decisions, not only at the individual stock level, but also by aggregating data across entire investment landscapes. While notable regime shifts between value and growth preferences can be studied with an intrinsic value framework, we encourage investors to consider a comprehensive valuation metric in all of their stock selection, portfolio construction, and asset allocation decisions. […more]

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]

Market in Pictures – Issue #6

February 16, 2021

Jeff Bezos to Quant “value” investors- I’m thinking of expanding $amzn beyond books – should I invest in my business? They all say – No Don’t!!! Our models show companies that invest in their business […more]

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