Archive | April, 2016

The Market Has Been Favoring High P/E Stocks

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Over the past one and three months, the factor with the highest correlation to developed world stocks (out of 24 total factors) has been price to earnings. It has had an 93% correlation over the past month, an 85% correlation over the past three months and and a 90% correlation over the past year (good […]

Knowledge Leader Spotlight: Microchip Technology

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One of the most innovative group of companies in the stock market are semiconductor companies. On average, semiconductor companies invest 16.9% of its sales on research and development as well as another 3.5% of its sales on firm specific resources. From an R&D perspective, semiconductors invests the third most if its sales on innovation behind just […]

Only 1 Industry Group Is Trading Below 1x Book Value

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Financials have been pretty beaten up in 2016. The worst performing developed world industry group YTD have been the banks. Banks have fallen by over 16% (in USD) YTD. Of the five worst performing industry groups, three are from the financial sector. Surprisingly, the best performing industry group is also from the financial sector: real […]

Another Macro Reason To Expect More Cyclical Underperformance

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Yesterday, Bryce correctly pointed out the tight relationship between interest rates and stock market leadership that has persisted for the past decade. As interest rates fall, cyclical stocks have tended to underperform while counter-cyclical stocks have tended to outperform. We would like to add another macro data point that has had a very close correlation to stock market […]