Reflections on Investing

We explain the approach to valuing the S&P 500 developed by NYU Professor Aswath Damodaran, a co-author with our senior advisor Professor Bradford Cornell, and explain its relevance to current market conditions.

There is an inverse relationship between current investment performance and expected future performance. Understanding why is a key to maximizing long-run risk adjusted returns.

Building off our previous episode, we dig into the relationship between current price ratios, future expected earnings growth, and future stock market returns. It turns out there are important practical implications for investment management.

Finance theory in recent years has stressed the importance of changes in the discount rate for explaining movements in stock prices. In this video, we describe how this works using data provided by Prof. Aswath Damodaran.

As Larry Summers has stressed the real interest is an important indicator of the impact of Federal Reserve policy. In this episode we take a look at real interest rates through history.

Relative price changes, changes in the price of one good or service relative to others, are often confused with inflation but are fundamentally different. This difference can lead to a misunderstanding of the causes of inflation. In this video, we explain the difference and what it implies for policies to control inflation.

The Shiller CAPE Ratio is often referenced yet at times not fully understood. In this latest installment, Prof. Bradford Cornell starts at the source and breaks down this popular metric in detail.

From the pandemic lows of March 2020 to the end of 2021, stocks had an incredible run.  Earnings were up but so too were P/E ratios.  As the market climbed, many warned that valuations had become unjustifiably high.  With the S&P 500 down nearly 20% , P/E ratios have returned to their historic average leaving many investors wondering, is the worst behind us?  Before taking...

There has been an explosion of interest in ESG investing, in part because many investors believe it leads to superior investment returns. Unfortunately, that belief does not stand up to careful scrutiny as we explain in this latest episode.

Elon Musk recently proposed a buyout of Twitter at 54.20 per share.  Twitter stock traded over 50 following the news but in recent weeks the stock has dwindled.  What can we infer from Twitter's stock price about the possibility of Musk's completing his acquisition of Twitter?

Recent times have been dreadful for investors especially for holders of growth and tech stocks.  Many are waiting for signs of an upturn. Do a few big up days mean the carnage is over?

Growth in earnings doesn't necessarily equate to growth in a stock's price.  A company's growth must meet or exceed the expectations of its investors to increase the stock price.  When they fall short of these lofty expectations the results generally spell trouble for shareholders.

Until recently fixed income has offered high risk and low return.  It seems like things are beginning to change. We take another look.

The market's incredible performance post Covid was driven largely by growth and tech.  Some of these companies were up 300, 400 even 700 perecent, companies such as Wayfair, Peloton, Zoom and Cathie Wood's ARK Invest ETF's, most notably ARKK.  Unfortunately for ARK and many other tech investors 2022 hasn't been kind and these "High Fliers" have returned to earth.

We've had a lot of volatility in the market recently.  What exactly is volatility and how is it measured?

For many investors options are associated with high leverage and high risk. However, options can be used to manage and reduce risk.

The Price to Earnings ratio is one of the most frequently figures for comparing valuation.  We explore the relationship between P/E, investor expectations and sentiment.

Volatility in the market is up once again but what does that mean for your investments?

We discuss how the book value, forecast value and speculative value contribute to the market price of a stock.

How does a company like Tesla create so much value compared to competitors like Ford and General Motors?  Is Tesla doing more with less?  We take a closer look at the relationship between a company's enterprise value and its invested capital.

Tesla has become just the sixth company to reach a market cap of one trillion, joining tech giants Apple, Google, Microsoft, Amazon and Facebook.  We compare each of these companies at the 500 billion and one trillion dollar level.

The market is cyclical, but what part of the cycle are we in?  To better understand where we are in the market cycle we review a checklist from Oak Tree Capital founder Howard Marks.

Since the outbreak of Covid 19 a lot of things have changed.  With many new retail traders and interest in the stock market, has investing changed?

Do investment manager track records matter?  It would be logical to assume that past record of success would be a good indication of future success but that isn't often the case.

Do investment manager track records matter?  It would be logical to assume that past record of success would be a good indication of future success but that isn't often the case.