Timely investment themes informed by deep historical research
There is one trend in particular that I have been watching—the relationship between bond yields and equity valuations. Traditionally, there is a somewhat positive relationship between the two, but massive monetary policy intervention has thrown everything out of whack.
Read MoreQuite often, investors get mired in the particulars of individual stocks. Sometime its best to take a step back to observe broad trends. Looking at corporate uses of cash over the last two decades, with a focus on the last few years, findings suggest that it is more important than ever for equity investors to evaluate quality metrics like balance sheet strength, quality of earnings, and corporate allocation policies.
Read MoreDoes the economic cycle have any bearing on investment success? Macro investment houses have constructed intricate frameworks to understand the “economic machine,” but economic data are notoriously prone to revisions, lags, and adjustments in measurement through time—none of which are suitable for timely and reliable investment signals. Certain fundamental characteristics—not economic variables—drive stock returns. This piece identifies investment themes that deliver persistent outperformance in multiple different economic environments.
Read MoreWe know from an untold number of academic papers that small stocks are supposed to outperform large stocks. Yet, the last five years have proven to be very different as the largest stocks have dramatically outperformed. Reversion to the mean and improved relative valuations argue for a look at the small cap space.
Read MoreIn my last two posts, I explored a fad which has washed over the investment community--low volatility investing. In my first post, I looked at the historical performance oflow volatility stocks and found outperformance to be inconsistent. I then established in my last post that Low Volatility investing is likely just value investing in re-packaged, and expertly marketed, form. In this final post, I relate the finding to the popular USMV ETF.
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