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Our team believes in inefficient markets, behavioral finance, empirical evidence, and common sense. Having penned brutally simple pieces explaining the risks large cap, large-cap, and small cap index fund owners are taking, our recent exchange with an advocate of index funds was inevitable. The caller was upset.

How the Rotation from Risk On to Risk Off is…Creating Risk - The Oxford University Press tells us that the principal meaning of being “flush with cash” is having a lot of money, usually for a short period of time. The last part of the definition is interesting considering investors’ newfound interest in holding abundant piles of cash. A recent article headlined with “Retail money market funds inflows are the highest in 30 years as investors seek safety.”

A Quick Peek at the Russell Large Cap Growth Index - Understandably smitten with low fees and a long bull market, index fund promoters appear to have the data on their side. A collection of financial heretics, the authors of this investment newsletter have highlighted what we believe are the defects endemic to index funds today. In the interest of simplicity, we have used single factors to highlight just how these...

This Tool Can Bring Calm to Chaos - Reverse inquiries looking for our Buffett 10-Year Returns Estimation Tool suggested another post was in order. We’ll explain where the tool came from, how to use it and why it is so important.

The Case for Investing in What you Need vs. What you Want Made Simple - Since 2020, this newsletter has used historical data to explain the case for investing in companies that make what you need while shelling overpriced companies that make what you want. KCR’s research has demonstrated that the market’s valuation structure has, and continues to, favor firms that provide popular discretionary goods and novelty technologies over companies that make essentials to human life.

Tap Dancing with TINA & a Moment to Remember in US Monetary Policy - Macro Investing: The Rising Pressure of a Decade of Fiscal Profligacy - KCR’s investment process does not use macro inputs or engage in macro trading. We use historical security-level data around valuation, profitability, quality, and other metrics to identify opportunities for short sellers and long investors alike. Macro investing can be a challenging endeavor.

What Short Sellers, the Voting and Weighing Machine are Offering Investors Today - KCR’s data-driven and historically informed process helps us avoid bubbles, find mispriced quality, and identify stocks that are simply too cheap.

KCR’s work leans heavily on sentiment for good reason. The presence of our in-house academic and co-founder does not mean we are advocates of efficient markets. Much of the research in behavioral finance that our systematic approach to fundamental research leans on is dedicated to finding undue pessimism and optimism. These are often a critical ingredient in...

Profiting from the Reckoning with Reality - KCR readers know we have been long-term bulls on energy stocks and have relentlessly panned the high-priced promises of so-called clean-tech energy stocks. While others read the IEAs’ path to net-zero emissions and forecasted the end of oil, we read the work and wrote our piece, Net Zero Emissions: The Possible vs. the Plausible, which explained how their...

The High Price of Cool Stuff: An Update on Stocks Valued Over 10x P/S. Lucid Motors Logo: A Symbol of the Future? It’s been a hot stretch of summer for the KCR equity research team. We have, at times, been accused of writing dry and dense material with an intermittently academic tone. Not today. First Friday in August. Let’s talk cars.

Mean Reversion Made Simple - This paper provides simple context to what are often difficult and highly emotional decisions around money. KCR spent much of 2020 and 2021 producing evidence that the valuations of popular fast growth stocks would lead to their demise. Since the peak in 2021, stock speculation has gone from popular to perilous.