Wide Spreads & Good Days Ahead?

Financials vs. the Index:

  • FACT: BAC earns 30x the profits of ZM, but BAC is only ~3x bigger
  • Sometimes the greatest investment ideas can come from a simple chart
  • The dashed line below highlights periods when financials are in the 95th percentile of cheapness relative to the index like today

THESE PERIODS HAVE HISTORICALLY BEEN FANTASTIC ENTRY POINTS VS. THE INDEX OVER THE ENSUING YEARS. 

 

As always a rigorous fundamental review is a critical precursor to any investment. The chart below shows that, historically, if you just bought Financials when they were as cheap relative to the S&P500 as they are today your odds of outperforming were very high.  Specifically:

  • 68% of the time you beat the market with average excess returns of 11% over the next 12 months
  • 60% of the time you beat the market with average excess returns of 14.9% over the next 24 months
  • While there are no guarantees it is worth remembering that “all of Las Vegas was built on a ~2% advantage”

If you would like to see the Financials favored by Kailash’s Investment Tools, click here.

 

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Disclaimer

The information, data, analyses and opinions presented herein (a) do not constitute investment advice, (b) are provided solely for informational purposes and therefore are not, individually or collectively, an offer to buy or sell a security, (c) are not warranted to be correct, complete or accurate, and (d) are subject to change without notice. Kailash Capital, LLC and its affiliates (collectively, “Kailash Capital”) shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information herein may not be reproduced or retransmitted in any manner without the prior written consent of Kailash Capital. 

Kailash Capital, in preparing the information, data, analyses and opinions presented herein, has obtained data, statistics and information from sources it believes to be reliable. Kailash Capital, however, does not perform an audit or seeks independent verification of any of the data, statistics, and information it receives. 

Kailash Capital and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.