The reign of Tim Cook at apple has been extraordinary with the company’s valuation growing 5x larger on his watch. Deservedly, there has been little criticism of the cash returned through stock buybacks (~$340 Billion […more]
Recent reports attribute the market’s recent melt-up to option buying activity from Japanese institutional giant SoftBank and unsophisticated American traders using the new commission free platform, Robinhood. Without divining on whether these explanations are clever, […more]
For August 2020, we highlight the importance to productivity of waking up properly, the plight and pain of traditional value managers, a must-read white paper on value investing and technology and several other trending topics […more]
The S&P 500 recently crossed into new all time highs as the market shrugs off the coronavirus threat. Applied Finance’s database processes forecast data for over 20,000 companies worldwide. We decided to take a look […more]
Is the S&P 500 a Value, Core, or Growth strategy? It depends.
The push in megacap stocks has caused index concentration to be at the highest levels since the 1970’s. Additionally, the Covid-19 pandemic and drop in interest rates has led investors to favor Growth stocks so far this year, exacerbating the trend. […more]
While we rarely make huge market calls and remain reluctant to do so at this point, its worth noting that growth stocks are trading at below -1.5 StdDev from historical normal levels signaling a significant move outside of normal range. This is especially noteworthy, as the growth relationship in the Russell 1000 is now at levels last observed in the peak of the tech bubble. […more]
“High risk” stocks, based on smaller market caps and higher levels of leverage, outperformed the overall US market by nearly 11.4% on a cap-weighted basis in Q2. This is attributable to improving investor expectations regarding a “v-shaped” recovery following significant underperformance of “high risk” stocks in 2020 Q1 by -22.0%. […more]
Tracking Valuation Hazards: How risky are markets today? During the Covid-19 pandemic, tech and other internet companies have routinely seen good performance as consumers have been forced to work from home, isolate and disregard certain […more]
Big 5 companies surge in index concentration… what will be the effect on style boxes and cap-weighted portfolios?
The recent surge has notable impacts on commonly-used style index construction methodologies. Due to the increased reliance on passive allocations, investors should be aware of the significant distortions regarding style index diversification and skews in the classification assigned to individual stocks. […more]
Today the irony continues, as the intellectual foundations in financial economics that underpinned Bogle’s incredible success are much less robust than they appeared in the early 70’s, yet the push for passive investing is stronger and more fervent than ever. For proactive, process-oriented, intelligent advisors this will create a great opportunity to distinguish yourself from the growing herd of “commodity” advisors who preach little more than fee minimization, rather than alpha generation or negative alpha avoidance. […more]