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Stocks
  I came across a very interesting article written by value investor and market historian Richard Pzena.  As you know, the closest comparison to the current market environment is the Tech Bubble, as the most expensive companies have seen P/E multiple expansion, while value stocks have seen multiple compression.  As you can see on the...
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I’ve talked a lot about how the current market environment has a lot of similarities to the Tech Bubble.  I just wanted to share an interesting chart I found.  September has been a pretty good month for value so far, as it has outperformed growth by over 5%.  Obviously that isn’t a big deal given...
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Over the long-term, the best performing stock strategy has been owning the cheapest companies from a valuation perspective.  Enterprise/value/EBIT, divides the (market cap+debt-cash by pretax operating income.)  An EV/EBIT of 5, means that if you buy a business for $1 million dollars, you are generating a 20% pretax return, or $200K.  That sounds pretty good...
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I hope everyone is holding up okay.  We’ve seen some encouraging employment numbers coming off those massive layoffs, but clearly the economy still has a lot of work to do to get close to recovering from where it was.  This month we should see a new stimulus bill negotiated, which will surely be very contentious. ...
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I stumbled on a fantastic article today that is right on target with what we discussed in our previous article from 6/25/20 related to value investing and mean reversion.  There is a link below, which I think you’ll enjoy but I’ll cover some of the key aspects. These might be redundant if you read the...
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I’d like to draw your attention to the images above.  The graph on the left highlights the sharp divergence between momentum growth stocks and value stocks.  That is a 55% divergence and is one of the most shocking divides between growth and momentum in history, if not the most.  The only comparable is during the...
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Volatility is picking up once again, which we should expect given the extreme conditions the world is seeing.  Yesterday, the Federal Reserve chair said that interest rates were likely to stay near zero through at least the next year or so.  I don’t see that as surprising whatsoever, given the focus will be on reducing...
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The news about Coronavirus continues to get substantially better.  The CDC updated its infection fatality rate (IFR) estimate to 0.26%.  This means that, if one is infected, they have a 0.26% chance of dying.  Initial estimates hovered around 1.5-3%, which shows how drastically wrong they were.  Now clearly one has a higher chance of death...
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2020 has certainly been a tragedy of epic proportions on just about any level imaginable.  There is no sugarcoating that.  When you have tens of thousands of people dying from a new virus, and economies shut down across the world, it is tough to feel cheery, especially when you sprinkle in record unemployment.  The stock...
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This year has been wild in many terrible ways.  One extremely painful phenomenon (for a value investor) has been the massive growth outperformance relative to value.  Coming into the year, we were at the widest relative spread between growth and value since 2000.  After the pandemic tanked stocks more closely related to the economy, the...
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