About two weeks ago we highlighted the washout in EM stocks and mentioned that they will be interesting soon, but not quite yet. Given the continued weakness in EM stocks, we thought we’d provide an update. In summary, EM stocks have continued to struggle with…
Read MoreChina has seen better days. Its economy, while far from falling off a cliff, is in the midst of a generational rebalancing act whereby it must simultaneously cut the rate of investment growth and raise the rate of consumption growth. If it fails to do…
Read MoreAmid the recent market turmoil we thought we’d provide readers an update on the performance of our Knowledge Leaders Indexes. YTD, both the DM and EM indexes continue to outperform their benchmarks. As of yesterday’s close, the Gavekal Knowledge Leaders Developed World Total Return Index…
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With the economic weakness in China permeating Asia and EMs generally, we should not be at all surprised to see copper making a new cycle low, and it is (chart 1). But Dr. Copper is hardly alone in providing a dis-inflationary signal. Indeed the broad-based weakness…
Read MoreWe’re pleased to present our first quarterly commentary on the Gavekal Knowledge Leaders Indexes, the intellectual property behind our new strategic beta products. As a data driven firm, we spend significant time working with data, from sourcing it to scrubbing it to identify Knowledge Leaders,…
Read MoreYesterday we highlighted the stealth correction that has taken place and also noted that from a technical perspective Knowledge Leaders - the world’s most innovative companies - have been more insulated than the rest. To further illustrate that last point we show below the most…
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The stealth correction that has taken place over the last few months has not affected stocks equally. Indeed, the whole point of the stealth correction is that the majority of stocks get hit hard while a few more resilient stocks just seem to deflect that negative…
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This last week has seen some volatility in markets thanks to China and Greece and as we noted earlier, 54% of EM stocks are in a bear market. Yet, despite heightened volatility in both the emerging and developed markets, Knowledge Leaders continue to perform well….
Read MoreA rich academic history suggests equity returns can be explained by risk exposures, or factors. In our first white paper, we identified the Knowledge Effect, the tendency of highly innovative companies to experience excess returns. In this second report, we detail how we create the…
Read MoreHighly innovative companies outperformed again in May, continuing a streak that has been going on for quite awhile now. Whether in the developed markets or emerging markets, Knowledge Leaders have outperformed the broad DM and EM benchmarks over the last month, quarter, YTD, 1-year and…
Read MoreIn our white paper “The Knowledge Effect: Excess Returns Of Highly Innovative Companies”, we identified a stock market pricing anomaly in highly innovative companies. The tendency of stocks of highly innovative companies to experience excess returns can be traced back to two main factors: A…
Read MoreIn a new white paper released today, we identify a stock market anomaly. The Knowledge Effect is the tendency of highly innovative companies to deliver excess returns for investors. Academic researchers first discovered an association between a firm’s knowledge capital and its stock performance. Our…
Read MoreThe most innovative companies in the world tend to exhibit two highly desirable characteristics: high return on invested capital (ROIC) and low long-term debt as a percentage of total capital. There are fundamental reasons for these characteristics. First, innovative companies are very profitable because they…
Read MoreThe trend toward knowledge investments and away from traditional investments in fixed assets such as equipment and structures continued in the 1Q in the US. Investment in intangible property products now account 4.1% of GDP.
Read MoreAfter our recent call, we received an insightful question about how we view research and development (R&D) because surely not all R&D is productive and profitable?
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