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Semiconductor Stocks and Banks in (not of) America

January 22, 2020 Applied Finance Advisors

Pausing for a look down from Semiconductor Stocks

Technology stocks in general, and semiconductor stocks in particular had a stellar performance in 2019 with a particularly strong finish during the last quarter. What can one expect for 2020? While the old adage that forecasting is hard, particularly with respect to the future, seems true; we can say that standing here in the present there appears to be a lot of good fortune prices in a number of semiconductor stocks. […more]

Valuation vs. cheapness Investing

November 12, 2019 Applied Finance

Despite decades of academics and practitioners promoting the ”value factor”1, it generates marginal to no long-term alpha. We believe four reasons have contributed to slow the discovery process from the current accepted “value” regime (low price to something) towards a more robust and realistic true value regime (worth measured independent of market price and focused on the value of future cash flows).
1. No theory.  There is no clear link between commonly used “value” variables and true value.  Yet academics and practitioners have developed no viably accepted competing perspective to explain future returns […more]

Faster And Cheaper Aren’t Always Better

October 9, 2019 Applied Finance

100 mph pitchers are a rare and treasured commodity, simply because they have been among baseballs’ most effective players. The mention of Randy Johnson, Nolan Ryan, JR Richardson, Bob Feller, all elicit reverence for their amazing careers. Yet what of Steve Dalkowski who Ted Williams once faced off against and said – I could not see the ball […more]

Value Versus Cheapness: Same, Same, But Different

July 10, 2019 Applied Finance

Cheapness has existed as an investment concept forever, but it became institutionalized with the Fama/French’s 1993 three factor model. Cheapness has never been the same as hundreds of billions was poured into equity investment strategies focused on buying “low price to something” stocks supported by reams of back test data. In addition, thousands of small investment professionals and amateurs replicate much of the process the large firms employ via access to abundant datasets on Yahoo! Finance […more]

Valuation Dividend – Quarterly Report Q1 2019

April 24, 2019 Applied Finance

The memories are still fresh that the US large cap equity market lost more than 10% of its value in Q4 of 2018, with ~9% alone in December. Barely did investors have a chance to regroup, and the Russell 1000 index rose 8.4% in January and closed 19Q1 14% higher. The Fed that turned dovish was the prime catalyst behind the US equity market rally. On January 4, Fed Chairman Powell indicated inflation was muted and the central bank would be in no hurry to raise rates, leading the R1000 […more]

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