What Does That Say About Future Returns? — A basic premise of investing is that the price you pay has a major influence on the ultimate return of that investment. From this notion comes the fabled “buy low sell high” philosophy. The chart below illustrates that as forward S&P 500 P/E ratios reach the high teens’ future returns…

Why Volatility Must Rise Substantially — The events of 2022 thus far have provided ample fodder for market volatility. The ongoing effects of the COVID pandemic created supply disruptions that sparked a resurgence of inflation. Fuel was added to the inflationary fires by the Russian invasion of Ukraine, which has roiled energy and grain markets. …

A Tale Of Two Markets — The future course of inflation is a central consideration for investors, for it will exert a major influence on the interest rate policies of central banks, which will strongly influence the direction of capital markets. The commodity markets have long been looked at as a barometer of inflationary pressures. However…

Lessons From History — The collapse in the value of Netflix shares is but one example of the weakness by the FAANG stocks, who (along with a small number of other companies) led the last bull market. Indeed, the leadership of the bull market of recent years was perhaps the narrowest in history, with…

The Continued Enthusiasm For Stock Market Exposure Sends A Signal — Is there a single greatest predictor of stock market returns? No, markets are much too complicated for one calculation to be reliably relied on. However, the chart below draws inferences that are worth consideration. The obvious conclusion to draw from the chart is that future investment returns tend to be…

It Pays To Pay Attention — Identifying extremes of investor sentiment (and then taking a contrary position) has proven to be one of the most reliable techniques to generate superior long-term investment returns. A useful gauge of sentiment has proven to be the subject of popular magazine covers, as they tend to reflect consensus opinion. Magazine…

Has The Bullish Euphoria Completely Gone? — One of the defining characteristics of the investment climate since the appearance of COVID in March 2020 has been the return of the influence of retail investors on markets to levels last seen in the 1960s. The seemingly unbridled optimism of retail investors drove leaders of the past bull market…

Lessons From The Experience Of An Award-Winning Money Manager — 11 RULES FOR BETTER INVESTING AND TRADING Successful investing is an enormously complex task, which makes it both very difficult and intellectually engaging. It was this challenge that attracted me to a career as a money manager and to now publish the Global Investment Letter. I thought it might be helpful to others to offer some observations…

The Growing Role Of “Intangible” Assets On Stock Market Valuation And Its Effect On Risk — The ratio of tangible to intangible (e.g., goodwill) has changed substantially over the years. In 1975 fully 83% of the S&P 500’s total assets were classed as tangible. That number has now fallen to 10% versus 90% that are intangible. The trend to a higher ratio of intangible assets on…