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
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
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 . After rallying earlier this year, small caps have gotten crushed over the last few weeks (figure 1). This is normal during the slowing phase of the economic cycle since small caps have more domestic and cyclical exposure and perhaps less certain financial stability (see Tactical Allocation Over the… Continue reading
Summary Technology stocks are on fire, as is normal at this stage of the economy Corporations are not underinvesting, as some people may lead you to believe Long-term investment growth is tied to productivity, but in the short-term it may be a contrary indicator The dominant tech companies may be… Continue reading
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Introduction . Over the past 30 years, numerous investing “anomalies” have been identified that cannot be explained if the markets are efficient. These factors, which provide the basis of value and growth investing, range from price multiples to momentum to financial variables that measure corporate performance. As passive investing and… Continue reading
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A diversified portfolio of reasonably price quality growth stocks outperforms over time. Specifically, a portfolio that avoids high debt and high P/E stocks and focuses on high ROE companies earns above average returns with below average risk. . Figure 1 shows that annual variation in returns of the S&P 500… Continue reading
