When you dig past the noise and look at the data, it’s clear that there’s no comparison between today and 1999. Valuations today are stretched, but not in bubble territory.
This report red flags the firms with the most underfunded pensions and the most aggressive assumptions for returns they expect to earn on the pension assets.
The good news is that the market’s valuation remains well below its pre-2008 levels. Barring any major negative news (e.g. an oil crisis), we expect to see a relatively flat market for the rest of 2018 as company fundamentals catch up to the gains of last year.
Sophisticated investors want metrics that go deeper than reported earnings so they can get a truer picture of cash flows and hold companies accountable for capital allocation.
Most public companies should benefit from the new tax law and some of the biggest winners will be companies with large deferred tax liabilities (DTLs).
Accounting earnings may have rebounded from 2015 lows, but economic earnings—which reverse accounting distortions and account for the weighted average cost of capital (WACC)—remain in a persistent downturn.
We appreciate Morningstar (MORN) taking the time to answer our article. Rather than go point by point through Morningstar’s rebuttal, we just want to follow up with a few unanswered questions.
Large incumbent financial firms will continue to control the bulk of the value in the industry, but the structure of the value chain and the way these firms compete will change drastically.
Our analysis of the latest 10-K and 10-Q filings for the S&P 500 shows that the GAAP earnings growth in the market has not translated to an increase in economic earnings.
Robo-advisors and Robo-Analysts are both important to enabling wealth management firms to cut costs without sacrificing quality of advice, but the importance of a Robo-Analyst to enhance the quality of investment advice shouldn’t be underestimated.
When the investment process makes no effort to differentiate winners from losers, there is no diligence, no intelligent capital allocation, and, eventually, no efficient market.
We think today’s market is the best in many years for value investors, the real value investors, that is. The real value investors analyze footnotes and balance sheets in addition to income statements.
Even with inflation running below target, the Fed chose to raise interest rates again. The Fed’s influence is overstated, but it’s still troubling that major policymakers are acting on such an outdated view of the economy.
In the same way online trading disrupted the distribution of investment advice, big-data analytics and machine learning will disrupt how financial advice and the research behind it is created.
Our analysis of the latest 10-K filings for the 2,600 largest and most actively-traded companies shows that the much-hyped end to the earnings recession is an accounting illusion.
Uncertainty defined 2016. In the midst of all the uncertainty, investors grew more and more aware of the need for real diligence. Market conditions, changing investor behavior, and new technologies all come together to make diligent research matter more than ever.
Investors agonizing over the Fed should focus their efforts elsewhere. Instead of guessing where interest rates will go, read some of the thousands of annual 10-K reports that have come out in the past month.