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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]

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]

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]

Many traditional value advocates are publishing material that points out the potential future benefit of value investing.  It makes sense; they certainly cannot use recent performance when selling their investment process.  This claim that “value […more]