There is a reason you simply don’t just look for the cheapest doctor, unless results and service don’t matter to you. The same can be said about how your clients view your practice and the products you offer.
In today “low fee” environment, prospective clients need to understand what you offer is more about results than your fees. Similarly, finding stocks that are low in cost relative to last year’s earnings, book value or complex combination thereof (low price to something) is hunting for cheapness. From a portfolio construction perspective, cheapness has been an acceptable approach for decades, and likely will be again in the future. However, cheapness is not value. Cheapness works to the extent enough cheap stocks also happen to have value in excess of their market price at the same time. But there is no reason such overlap must exist.
Join us for an short 20 min introductory webinar to learn how you can increase the value you provide your clients and further differentiate yourself through the use of our Valuation Equity Strategies.
The Gross Profitability Trap “But this time, it’s different!” More foolish words are rarely spoken in the financial industry, but they always seem to find their way back into the stock market lexicon. A firm’s [...more]
Valuation Driven™ Investing begins and ends with calculating the intrinsic value of every stock in a benchmark against which a portfolio is constructed, and comparing those values against traded prices. All of Applied Finance’s portfolios are Intrinsic Value Driven™, which differs significantly from a “value” perspective. To gain a better understanding into Applied Finance’s Intrinsic Value Driven™ approach, let’s first review traditional approaches to “Value”.
The traditional approaches to finding undervalued stocks use a simple ratio such as P/E or P/B, or a mix of them. These common approaches to value come with many shortcomings: […more]
Over the past couple months, worsening macro economic conditions, declining corporate profitability and a bottomless stock market have investors longing for the good old days when the economy delivered steady increases in GDP growth with [...more]
A corporate performance metric should provide insights into what a firm is worth. Most money managers utilize common earnings-based measures of corporate performance and value, which are suspect and easy to manipulate. Applied Finance developed the Economic Margin (EM) framework to remove the noise inherent in accounting data.
Traditional accounting-based valuation methods provide an incomplete view of a company’s value by not accounting for the investment needed to generate the earnings, cost of capital, inflation or cash flow. […more]