Posts Categorized: Finance

The Value Convergence

The valuation difference between the market’s cheapest stocks and its most expensive has always fascinated me. Here are the EBITDA yields (EBITDA/EV, higher=cheaper) at different break points since the early 1960s. At the market extremes (99th and 1st percentiles), things have converged a great deal. The cheapest percentile (25 or so stocks) are much more…

Get Poor Quickly!

One of the best ways to measure how much luck is involved in the outcome of any competitive event is to ask how easy it would be to lose that event on purpose[i]. It would be very easy, for example, to lose a round of golf or a tennis match on purpose—implying that skill determines…

The Worst Time To Start In Finance

Getting started in finance and investing is hard if you never took a class on either topic in your life. That’s where I sat in the summer of 2007—fresh off a degree in philosophy and starting as an intern at O’Shaughnessy Asset Management. Full disclosure here: my start in the business was as classic a…

The years teach much which the days never know

Here are the monthly returns for the S&P 500 since 1871. Chaotic. Sometimes terrifying. Sometimes very exciting. This is the market in which we live. These are the sometimes great and sometimes awful returns that make us greedy, euphoric, panicked, and fearful. These returns do not matter.  Here is what happens when you take these…

The Millennial Way Forward

If nothing changed about your current retirement plan, would you be able to easily support yourself and your loved ones come age 65? For many of my fellow millennials this is a sobering question. On the one hand, it is hard to think and plan four decades ahead. We are still young — scraping our way to…

Resources For Aspiring Writers

Let me get this out of the way: I am not some great expert on this topic. You aren’t supposed to say that before you try to give advice, but I’ve only been writing here for about 6 months so I felt a disclaimer was necessary. That said, I feel as though I’ve learned a…

Building The Perfect Investor

The idea for this post came from Nas and Charles Murray. That’s got to be the only time those two have been mentioned together in a sentence, so let me explain. Nas has a song (you can listen here, not safe for work at all and may offend) where he—how can I put this nicely—…

15 Truths That Few Believe

What important truths do very few people agree with you on? This is the penetrating first question Peter Thiel asks readers in his great book Zero to One. The question is designed to promote deep and creative thinking, to uncover ideas that move us from “zero to one.” Moving from zero to one happens when…

More Stocks That Are Much Cheaper Than Usual

I had fun with a recent post highlighting some of the larger U.S. stocks which are trading at much cheaper valuation multiples than they have over the prior ten years (on average). In that post, Apple rose to the top of the heap in terms of cheapness relative to its own past.  Below, I have…

Buyback Yield in the U.S. Market

Buybacks are the hot topic. I’ve written before that buybacks can be very good under certain conditions (cheap valuations, high earnings quality, not funded by new debt issuance), but they can be very bad too (especially when the stock is expensive).  Many are saying buybacks are evil because spending on buybacks is stifling spending on…