Earnings Quality and Stock Returns with Value as a Tailwind
In April last year, KCR penned What is Accounting Quality and Why it Matters. The work discussed the abysmal state of financial reporting and used our earnings quality score to demonstrate that high-quality firms trounced low-quality firms’ performance.
Electric Vehicles Are Bringing Out the Worst In Us
A(nother) Rant About America’s Blossoming Love for Battery Powered Vehicles In November last year we published Tesla Gas Mileage & The Philanthropic Rush to Ruin. The rant tried to explain how the all-or-nothing approach to ditching gas-powered cars for battery electric vehicles was a mistake. Citing research from environmentalists, we highlighted the impending economic, social and environmental crisis from lithium. Subscribers recently sent us articles from The Guardian and The Atlantic published in January of this year. While taking different approaches, both explain that battery electric vehicles
Rank Speculation Returns: A Crisis of Concentration
At the start of the year, KCR penned ARKK vs. QQQ in the Dot.Com Bust and Specious vs. Spurious Correlation. The point of both papers was to warn readers that after speculative peaks, stock prices drop swiftly but then rally violently. Post-bubble price patterns were impossible to predict but precise in their message: speculative counter-rallies among the “fallen generals” of speculative cycles were the rule, not the exception...
Equity Valuation Methods Matter
Happy Friday everyone! This piece is going to be brief, brutal, and to the point. Over the past two years, some readers have complained that the cheapest stocks that dotted our top-ranked companies “were at the peak” and destined to collapse. Counter to intuition, some have come to believe expensive stocks are safer than cheap stocks. For many of these names, earnings did not peak, the world did not end, and many of these stocks ran higher...
Common Stocks and Uncommon Profits
In 1958 Philip A. Fisher published Common Stocks and Uncommon Profits in the hope of giving investors a systematic process to follow when seeking out great companies. Widely respected and admired, the book creates a process for an investing philosophy focused on growth. Our team shares some variant of Buffett’s quip that Berkshire Hathaway is “85% Graham and 15% Fisher.” 85% of Buffett’s investment process comes from...
Ways Innovation is Aiding the Food Insecure
All too often, discussions of new and next-gen tech focus on effects on consumers and markets in more developed parts of the world. We thought it worth highlighting examples of cutting-edge tech being created and implemented to deliver immediate aid to communities and populations that need the most help.
The Art of Stock Picking Returns
“We’ve had 40+ years where all the money went into broadband, or internet, or Netflix or the cloud and no money went into basic productive capacity…” -Robert Friedland, CEO, Ivanhoe group of companies “During the latter stage of the bull market in 1929, the public acquired a completely different attitude towards
Specious vs Spurious Correlation
Spurious vs. Specious: The Merriam-Webster dictionary tells us that despite both terms featuring deceptive or deceitful in their respective definitions, there is a surprising difference between “specious” and “spurious.” Spurious, of “spurious correlation” fame, is explained as outwardly similar or corresponding to something without having genuine qualities. Specious adds an element of appeal or allure.
Out with the Old In with the New: What Chat GPT Means for You
Definitions and Generally Accepted Interpretations: 1. Something new is replacing something that is old or out of date , 2. Life improves by replacing old things with new things. 3. To discard older, legacy technologies or ideas, with new and improved technologies or ideas Out With Old In With New: Good for You The history books are quite clear on the matter: over the long arc of human history, life has improved. Generally speaking “out with old, in with new” has helped human beings live longer, healthier and safer lives. As recently as 1900, average life expectancy in the US was barely 48 years. By 2020 the number had jumped to 79 years. Progress.
Market Froth Abates: Lessons from a Historical Speculation
KCR is not surprised at the amount of Wall Street shills claiming they can predict the Federal Reserve Chairman’s next moves. Equally unsurprising is the market’s overwhelming interest in how market conditions might shift based on a leveling off or outright reduction in interest rates. The thinking goes like this: the stock market bubble that drove low-quality stocks to unsustainable levels could come roaring back to life if only the Fed would...
KCR Equity’s Best Charts from 2022: All Charts Updated!
We recently posted a year end piece summarizing KCR’s work from 2022. There were so many blistering charts that we broke the recap into two parts. The first, Short Term Stock Speculators Beat a Hasty Retreat, and A Basic Industries Boom & the Return of the Real Economy as the follow-up. When we posted our 2022 year-in-review we highlighted the charts as they were...
The DAV
As anyone with a wallet and an email inbox can attest, we live in an age of unprecedented crowding in the philanthropy and charitable giving space. Americans donated $485 Billion in 2021, and with charitable organizations jockeying for the biggest slice of that pie, many folks seek out the organizations that are delivering the most benefit. This is why we want to take a moment to highlight the charity Disabled American Veterans (DAV).