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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’s “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 that 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.

Value vs Cheap Replay

Please download any files you would like to keep as this page will only be available until the end of Q3 2019

Valuation 50 Factsheet

Valuation Dividend Factsheet

VALUE VERSUS CHEAPNESS

Differentiate Your Practice and Performance:

  • Stand out as an advisor and attract new clients
  • Enhance interactions and communication with existing clients
  • Gain a deeper understanding and insight into the Applied Finance portfolio construction process

Introduction Topics:

• Why Most Active Managers Fail
It is accepted that most active managers fail to add value.  We will review how common accounting disclosures and market volatility are culprits for this behavior.

• Value vs Cheapness
The traditional approaches to finding undervalued stocks use a simple ratio such as P/E or P/B, or a mix of them. These widely available “commodity factors” of identifying cheap stocks come with many shortcomings and have no link to Intrinsic Value.

• Differentiate yourself through the use of our Valuation Equity Strategies.
The Valuation 50 and the Valuation Dividend are both in the top 5% of their category.   We will review the process behind the performance and how the resources these strategies provide can help you stand out as an advisor to attract new clients.

  • The Gross Profitability Trap

    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]
  • Intrinsic Value Factor®

    February 4, 2019 Applied Finance

    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]

  • Then and Now: Buyers Remorse Versus Sellers Loss

    October 31, 2008 Applied Finance
    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]
  • Economic Margin®

    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]