White Papers

KCR has written a blizzard of material on the increasingly dire investment implications of market capitalization weighted index funds due to the outsized performance of large stocks that now sit at brutally high multiples. This is hardly a new topic for us. In 2014, as “smart beta” strategies became wildly popular, we penned Indexing Dilemmas, which laid out the following facts:

Hello everyone. This is Matt from KCR. Today we will do what is effectively a tardy half-year update. The speed and tone will be quick and sharp as the year has been challenging for evidence-based investors like us. The summary is that the sharp speculative rally we have seen YTD

Our recent pieces, How to Value Tech Companies and External Obsolescence: Tech Investors’ Newest Nightmare?, discussed how AI algorithms, big data, and machine learning could be undermining the moats of tech stocks that now sport multiples last seen during the dot.com mania. We noted that our empirically

“Didn’t we just learn that pouring trillions of dollars into technologies with uncertain profit profiles we didn’t fully understand was a bad idea? Tech investors seem to be most aggressive when they have the least visibility on the IP and valuation provides them with no margin of safety.” -Zac M., KCR Subscriber...

This paper will demonstrate the following: 1. 60/40 Asset Allocation models have come under crushing stress over the last several months 2. Combined, popular alternatives like private equity, private credit & venture capital strategies are often merely leveraged, high-cost variants of “60/40” with lagged reporting, in our view

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.

“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

How the Crypto-FTX-Fraud Could be Masking Epic Capital MisallocationAccounting Tools states that cash flow to stockholders is the amount of money a firm pays its equity owners. They explain that “Investors routinely compare the cash flow to stockholders to the total amount of cash flow generated by a business…”

Have Policy-Makers Given Investors a Secular Growth Story for Cyclical Stocks? Our research is empirically based and tends towards places that are uncomfortable and out-of-favor. In 2020, as investors gorged on crypto, loss-making tech and growth stocks of dubious merit..

The Cash Crucible & the Acceleration of Financial Repression - “Cash is a Legitimate Asset Class for the First Time in Decades, Investors are piling into products that shield them from losses in a rising rate environment.” So said a recent article in Bloomberg. Any headline-hailing investors “piling” into anything should trigger instant paranoia.

KCR’s systematic, evidence-based analytical and investment process is driven by the historical record. Our financial faith resides in what the data shows. Human beings have made the same mistakes in slightly different forms again and again for centuries. Stick to a low-cost, tax efficient process and winning is inevitable.