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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]

Market in Pictures – Issue #7

March 12, 2021

Tesla and Forced Opinions The market can be a cruel arbiter, eventually compelling all to have an opinion, kicking and screaming they might complain, but everyone is forced to place a bet. For much of […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]

S&P 500 Expectations – Place Your Bets

January 25, 2021

Professional Investors do not like to compare investing and the casino, yet they are constantly making forecasts and evaluating their odds when making buy and sell decisions. Whether you are a sports bettor placing a […more]

Market in Pictures – Issue #5

January 25, 2021

A market-beating investor on Charles Schwab’s exclusive list of top-tier mutual funds explains why he believes traditional value investing never really worked — and shares his strategy for identifying the best cheap stocks https://t.co/KqVP0FbjpA — […more]

Concentration of Top 5 Market Cap Stocks in S&P 500 (Update Jan. 2021)

January 19, 2021

The five largest stocks in the US (AAPL, MSFT, AMZN, GOOGL, FB) dominated S&P 500 performance in 2020, returning 56.0% over the course of the year on a capweighted basis, while all other US stocks returned 15.0% in aggregate. We can further examine implied expectations with VE models to the right. Since the end of 2020, TSLA has passed FB to claim the fifth largest market cap; we have also included insight into TSLA’s valuation characteristics following their recent inclusion and large allocation in the S&P 500. […more]

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