In a new white paper released today, we identify a stock market anomaly. The Knowledge Effect is the tendency of highly innovative companies to deliver excess returns for investors. Academic researchers first discovered an association between a firm’s knowledge capital and its stock performance. Our research and index results suggest there is an opportunity for […]
With Apple’s (ticker: AAPL) announcement that are selling more debt in order to buy back more shares and pay out dividends, a client posed an interesting question to us: Do you think Amazon (ticker: AMZN) will announce something similar soon? Our short answer is most likely no since Amazon tends to reinvest earnings, especially in intangible investments, […]
The most innovative companies in the world tend to exhibit two highly desirable characteristics: high return on invested capital (ROIC) and low long-term debt as a percentage of total capital. There are fundamental reasons for these characteristics. First, innovative companies are very profitable because they invest heavily in an knowledge, or intangible, investments such as […]
The 30-year treasury bond has experienced a rather large selloff by historical standards over the last three months. Yields have risen from roughly 2.2% to almost 2.9% in just over three months – a nearly 25% increase in yield – putting it on par with the most significant selloffs we’ve experienced since 1981. The important […]
Profitability and investment are inextricably linked through time. A company’s investment decisions today will ultimately drive its profitability level tomorrow. The fruits of a company’s investment decisions eventually show up in profitability metrics such as free cash flow margin, operating cash flow margin, and return on equity. Finally. a company’s ability to improve these metrics, […]
The quiet, subtle decline in the Federal Reserve’s balance sheet continued in April. As of May 1st, the Fed’s balance was at $4.47 trillion. While undoubtedly still incredibly large, the Fed’s balance sheet is about $45 billion less than its peak level on January 16, 2015.
The US and China are not hitting their economic numbers of late according to the Citi Economic Surprise Index. The economic surprise index in China has recently fallen to 10-month lows. In the US, more economic releases are coming in below expectations than are beating expectations over the past few months.
With April in the rearview mirror, it’s a good time to look back on which factors had the strongest relationship to market over the past month. USD correlation had the tightest relationship to the market.