Market Cap vs. Revenue: The Implications of 20x P/S Ratios
The Chart Below Shows: • the market cap of just software stocks valued at over 10x price to sales is over $6 trillion • that means that software stocks priced at preposterous levels are now worth ~30% of US GDP • KCR thanks Scott McNealy for making investment decisions on stocks valued like this simple
Russell 2500 Growth Index vs Russell 2500 Value Index
Past Performance Does Not Guarantee Future Results…. Particularly the RECENT Past. This paper makes the following three points: 1) The mean reversion in the 2500 benchmarks will continue, with growth falling sharply relative to value, 2) The reason for this is painfully simple in our view and 3) Allocators should move from index funds to active managers in the R2500G sector
A Good Price to Sales Ratio is Tough to Find in Software Stocks
The Chart Below Shows: • the market cap of just software stocks valued at over 10x price to sales is over $6 trillion • that means that software stocks priced at preposterous levels are now worth ~30% of US GDP • KCR thanks Scott McNealy for making investment decisions on stocks valued like this simple
Growth at a Reasonable Price: Is GARP Investing a Forgotten Asset Class?
The Case for GARP Investing: Summary & Key Points...
Quantamental Investing: A Brief Primer on KCR’s Toolkits
In our Chart for the Curious about Apple Computer, we document the challenges faced by investors who follow forecasters. For those seeking compelling evidence based on robust quantitative methods, please see our White Paper The Persistence of Profits. That piece builds on work done by a legendary professor of behavioral finance...
Apple II Flashback: The Fantasy of Predicting the Future
Why is it that some of the most influential CEOs and Fund Managers only predict “exponential returns” and bright futures for some of the market’s most expensive stocks?
AAP Stock Chart: Did You Miss a Profitable Secular Grower?
• The chart shows the performance of aftermarket automotive products supply and distribution firm Advanced Auto Parts, over the last 3 years • Since 2018 the stock has risen over 50% • We have been proponents of investing in companies that make what you need, not what you want, particularly in times like today, as explained in our...
Stocks Most like Enron Today, Free Enron Hat & Summary of Disaster
Remembering the Risks of “The Smartest Guys in the Room”. We recently put out a two-part summary of Bethany McLean and Peter Elkind’s brilliant book The Smartest Guys in the Room. In an earlier piece, we quoted legendary financial historian John Kenneth Galbraith, who quipped that investors’ memories last “...at a maximum, no more than 20 years.” The KCR team agrees.
Summary of Enron The Smartest Guys in the Room Part II
This continues our piece yesterday covering the first 9 chapters of Bethany McLean and Peter Elkinds’ luminous book on Enron. While we believe our take-aways from Chapters 10 - 22 of the book below are helpful reminders...
Enron Scandal Explained by Peter Elkind and Bethany McLeans’ The Smartest Guys in the Room
Summary of Enron Smartest Guys in the Room: Bethany McLean and Peter Elkind wrote the national bestseller “The Smartest Guys in the Room.” The book catalogues the rise of Enron, the financial crisis that would eventually consume it and exposes the subsequent accounting scandal. We do not write this missive to celebrate the devastating losses created by Enron Corporation...
Glamour Stocks: Investing vs Gambling – 2021 Speculation in Review
2021 has been a terrific year for KCR. For like-minded investors who believe in buying high-quality companies at reasonable prices, 2021 was a much-needed reprieve. We would like to offer our deepest thanks to all of our subscribers and wish you a happy and healthy New Year!
ARKF Dividend vs. XLF Dividend: To Pay or Be Paid
Bloomberg’s Lu Wang wrote a piece on the 7th noting that “....risk-taking traders roared back to life….where frenzied selling eventually gives way to a bounce whose size defies logical expectations.”
