Understanding factor rotations is paramount to managing a fund through good and bad times. This article presents the drivers of growth and value outperformance. The cycle of factor performance is impacted by four macro forces including economic growth, interest rates, market returns, and valuation dispersion. Continue reading
Introduction . At about 2,900, the S&P 500 is only 15% off its all-time high and down just 10% for the year, but the starting points were arguably lofty levels. At its low, the market fell 35% from its intraday peak of 3,394, which is slightly more than the median… Continue reading
Introduction . So much is happening, and quickly. The S&P 500 is down almost 30%, schools and businesses are closing, people are beginning to panic, and the financial markets are not functioning smoothly (stocks and safe assets are both declining). Monetary and fiscal policy are coming to the rescue, but… Continue reading
Introduction . The Federal Reserve lowered the federal funds rate by 50 bps yesterday in response to coronavirus risks. These risks have real impacts on lives, supply chains, productivity, etc., plus they have psychological impacts on buyer behaviors. Will the rate cuts save the economy? Probably not. Financial liquidity was… Continue reading
Interest in ESG – Environmental, Social, and Governance – issues is growing, and for good reason. This study finds that being good to the world is consistent with being good to shareholders. Highly-rated ESG firms tend to be more profitable through the economic value added (EVA) lens. Plus, high-ESG stocks that also have high EVA Margin have historically generated above-average returns with below-average risk. Continue reading
Profitability drives valuation multiples. A strategy that combines EVA with valuation produces significant alpha. Continue reading
Don’t fight the Fed. While the economic model is in a significant nose dive, the Fed is normally successful at reinvigorating growth when it expands monetary supply quicker than GDP growth. Continue reading
Introduction . The title of this paper has two questions that may have obvious affirmative answers to many or even most readers, but this paper questions common beliefs. Given media and policy attention on the US-China trade war and how the market seems to react to every bit of news,… Continue reading
Introduction . The rise of passive management, index funds and ETFs, has been breathtaking. Is this just a fad, or is it here to last? I suggest it is here to stay, but there are ramifications. Certain market environments, such as those over much of the last decade, favor passive… Continue reading
Introduction . I have seen several headlines to the tune, “Markets Deliver a Lump of Coal for Christmas.” However, if you have been following Coach Investing articles, you will have expected a sell off given the slowdown, overexcitement about technology stocks, high valuation, and the late cycle nature of the… Continue reading
