Quick Takes for the Curious2023-01-18T04:08:07+00:00

QUICK TAKES FOR THE CURIOUS

A monthly, wide ranging, and informal note based on discussions and readings.

ARKK vs. QQQ in the Dot.Com Bust

January 20, 2023|

2020 was a brutal year for KCR. US bonds rose to offensive levels, offering investors a 0.50% yield, while equities soared to valuations above the dot.com peak. Our evidence-based investment process is driven by historical data, algebra, and common sense. By the end of 2020, there was nothing less common than common sense. Basic maths were tossed out the window and replaced by empirically impossible narratives spouted by promotional fund managers and CEOs. The two years that followed this peak in financial insanity made KCR look intelligent.

Flush With Cash & the Quick Swing in Sentiment

November 11, 2022|

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.”

Macro Research: Will Math Ever Matter in the US?

October 7, 2022|

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.

Equity Positioning, Sentiment, and the Disposition Effect

September 9, 2022|

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 generating outsized returns.

A Lucid Stock Discussion on an Amazing Car Company

August 5, 2022|

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, Market Prices & Common Sense

July 8, 2022|

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.

Is it Too Late to Buy Oil Stocks?

June 3, 2022|

We get asked this question. A lot. Investors, scorched by multiple expansion in speculative stocks, are understandably concerned about the movement of prices in oil and gas. We believe the reason to invest in oil stocks stems from a fundamental backdrop for the sector, unlike anything we have seen in our careers.

Growth Investing Gone Wrong: Avoiding the Double Bogeys

April 1, 2022|

In Fast Growth Stocks, we explained the risks to “growth investors” seeking quick profits in some of the market’s most speculative firms. That rant laid the groundwork for our paper explaining the obvious opportunity to invest in growth companies at reasonable prices. A once in 20-year opportunity, in our view.

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