In our recent paper “High-Quality Midcap Value – The Case for Common Sense”, Kailash documented that many of the markets most profitable firms were trading at a discount to the market average valuations.
Figure 13 below shows:
- The number of firms that are in Cheap High-Quality has only been larger at the peak of the internet mania 
- There has only been one prior instance since 1963 where one could find so much “Porterhouse steak trading at hamburger prices”
Per the paper, Kailash believes that despite elevated valuations for buyers of index funds, this may be a generational opportunity to buy high quality firms at low prices for stock-pickers.
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