Innovation was the market darling thematic for many years leading up to COVID. The pandemic turbo-charged returns for innovation as the stay-at-home beneficiaries did phenomenally well. However, since the first quarter of 2021 innovation has struggled as a thematic strategy. It appears to us that...
With the falling Euro and the recent launch of QE in Europe, European equity markets have come into the spotlight for many investors. Today, we wanted to take a look at European equity valuations in an absolute sense as well as on a relative basis...
Surprising as it may seem, only 12% of stocks in the MSCI World Index trade for less than 1x book value. This is compared to more than 30% in 2012 and nearly 50% in 2009. How the times have changed!...
It’s no secret that we think stocks are expensive. Indeed, over the last few months we’ve written extensively about what we think are high valuations for stocks everywhere....
We suspect pegging short-term interest rates at zero for years has something to do with the fact that, for as far back as we have data, there have never been fewer stocks selling at a discount to book value. Importantly, this is a global phenomenon....
As we highlighted yesterday, stock valuations jumped again in December to another cycle high. As the first two charts show, the cyclically adjusted P/E multiple has only been higher on several occasions and the median stock is trading at a record price to cash flow...
By almost any measure stocks are pricey relative to history. We’ll save the theoretical debate about whether such high valuations are justified for another post, and will instead illustrate with charts just how far valuations have come over the last five years. The Shiller P/E...
An unconventional way of looking at valuations is to place companies into different ”buckets” based on their absolutely valuation level....
We focus a lot of our time on stock valuation because we believe that valuations are one of the best long-term indicators for future returns. When valuations are high, future returns tend to be lower and when valuations are low, future returns tend to be...
Given the non-correction-correction that took place in October it should be no surprise that valuations didn’t exactly correct either....
Even as stock prices have corrected in recent weeks with only 36% of stocks having positive performance over the last 200 days and the average stock 19% from its one year high, we are reminded that stock valuations are still stretched pretty much everywhere....
When it comes to stock valuation, it makes sense that the fastest growing industries should command the highest valuations. And as we will show, in general this holds true. However, there are always exceptions and this is where one can find interesting mispricings. Let’s set...
Back in December we wrote a piece entitled, ”Decomposing the S&P 500 PE Ratio: How Can the Market PE be ”Low” and Stocks be Expensive at the Same Time?” in which we showed how the market capitalization of the S&P 500, and many other indexes...
Last week we took a look at how much price to book multiples have expanded since 2008. Today, we are undergoing the same exercise but this time we are looking at price to cash flow multiples....
It is easy to forget just how low valuations were in 2008 and how much they have expanded in the past six years....
