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]
“We’re redefining what value is. The term has been tortured and confused with cheapness.” Mr. Resendes says. In our view, growth and value can coexist and regardless of what a price multiple/cheapness indicator might imply, high multiple companies can be undervalued in terms of their overall valuation. […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]
Looking at the most recent aggregate Valuation data, both the Russell 1000 and Russell 2000 look expensive relative to their long-term levels. On a sector basis, large and small cap Energy stocks, and large cap Utility stocks all seem attractive, while small cap Utilities appear expensive. […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]
Navigating the Current Equity Landscape with an Emphasis on High Profits and High Growth Reopening and inflationary themes conjure many competing narratives on the proper way to build portfolios or allocate capital in preparation for […more]
Given the significant volatility over the previous 12 months in overall market returns and style-based indices, we believe it is helpful to provide ongoing guidance related to the aggregate intrinsic value characteristics of popular indices […more]
In our Valuation Beta working paper, we emphasized the valuation vs cheapness contrast between intrinsic value and book to price (HML) classifications. This highlighted that “cheap” HML classifications unsupported by intrinsic value were a source […more]
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]
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