Deciphering Valuation

Since DCF valuation and Applied Finance’s Economic Margin® Valuation Framework are often misunderstood, I thought I would address common errors and misunderstandings regarding how the investment community thinks about valuation.


Outperformance Through Valuation and Wealth Creation

Factor models are extremely popular for their objectivity. However, such models fail to properly incorporate Valuation and Wealth Creation. When properly defined - Valuation, Wealth Creation, and Leverage make the popular factors used in most quantitative models statistically insignificant.

This talk examines problems with traditional factors, accounting data, and popular valuation approaches. We present an empirically superior alternative approach to portfolio construction regardless of size or style.


Demystifying the False Choice of Value and Growth Investing

Value managers often use static point in time multiples such as Book to Price to identify attractive companies. P/B is a “cheapness” indicator rather than a measure of a company’s intrinsic value, as it does not include the essential components to value a company: profitability, growth, competition, and risk. On the other hand, growth managers focus on a companies ability to growth their business assuming it will lead to creating shareholder value.


Valuation DrivenĀ® Investing: Exploiting Value and Growth Investors for Long-Term Wealth Creation

For the past 10 years, “Growth” investing has dominated “Value” investing. Yet in the previous 10 years, “Value” investing dominated “Growth” investing. These “styles” tend to go in and out of favor, leading investors to chase returns to the detriment of their long-term wealth creation.

Valuation Driven Investing® breaks this paradigm by focusing on companies that trade below their intrinsic value, factoring in company specific:

  • Economic Profitability
  • Investment Growth
  • Competitive Reality
  • Risk

This webinar covers:

  • Why earnings are a poor proxy for economic performance
  • The unrealistic assumptions embedded in traditional DCF models
  • How “Value” investors confuse cheapness with true value to their client’s detriment
  • When “growth” investing destroys wealth
  • Applying Valuation Driven Investing® for “value”, “dividend”, and “growth” strategies

The False Bargain of Passive Investing

This review will explore why passive investing may not provide the bargain most advisors think they are getting for their clients. This is especially important as most managers have underperformed their benchmark YTD with such cyclical market performance. Although difficult to find, investors should still seek out skilled managers that stick to quality investment philosophy and process.


Leeching and Value Investing: Wrong Then, Wrong Now

Low Price to Something investing, or “value” investing as it has come to be known since Fama/French introduced the “value” factor has been a disaster for investors over the past 10 plus years.


Emotional Unease Creates Generational Wealth Opportunity

The stock market today is trading at valuation levels last seen in 2008, before an unprecedented wealth creation bull market swept away the fear of the Great Recession. Then as now, it’s always about the expectations built into market prices.


Coronavirus Disease 2019 (COVID-19) Outbreak and Investing

The US equity markets have fallen sharply the past week on concerns of coronavirus diseases 2019. This novel coronavirus affects the respiratory system, was first identified in Wuhan, China more than two months ago, and has now spread to all major economies globally.


Avoiding the Disrupted and Attractive Dividends

Overcomplicating things is seldom on the path to investment success. The stunning ascension of Tesla has confounded, in a manner no less than stupefying, the investment thesis of many.


The Us Continues to Look Attractive, Looking Backward and Forward

2019 was a triumphant year for the US large cap equity market, with the S&P500 index up 31% on a total return basis. The resolution of two major concerns in the year, namely the US Fed being too aggressive on rate hikes, and the US/China trade relationship hanging in a total impasse, drove the market higher, particularly in 1st and 4th quarter.