Research

There’s Nothing Worse than a Wrong Consensus Bear Nothing is worse than being a consensus bear when the market keeps rallying. Most people know that September is typically a volatile month, and the average September returns are the worst of any month of the year. We flagged it, and so did everyone else. With it

There’s Nothing Worse than a Wrong Consensus Bear Nothing is worse than being a consensus bear when the market keeps rallying. Most people know that September is typically a volatile month, and the average September returns are the worst of any month of the year. We flagged it, and so did everyone else. With it

Another Arrow in the Quiver of the Bull Case The prospect of a Republican Sweep never rose above 50% on the Polymarket (the world’s largest betting market) prior to Election Day, but the “Red Sweep” caused a huge risk-on trading environment. The certainty of the political environment caused many assets to move, including a plummeting

Thinking About Small Cap Exposure? For months, investors have been asking us about small caps, aiming to understand the factors that might spark a lasting rally. Many cross-asset investors continue to make the case to overweight small caps, based on the contention that small caps appear attractively valued relative to history. Our general stance has

Costco (Ticker: COST) bottomed after it posted disappointing earnings in May 2022, but since then the stock has more than doubled. At the same time, its price-to-forward earnings has expanded from 31x to 50x. While we can certainly appreciate many merits of Costco’s unique business model, it strikes us as a lofty increase in valuation

What Is the Bear Case? Last week we wrote about the Bull Case for the US equity market (SEE HERE). We outlined that a combination of the average stock having gross margin expansion, the early phases of Fed accommodation, the US deficit essentially helping mega-cap US equities, the specter of incremental China stimulus, and some

Up 23% Year-to-Date The S&P500 and NASDAQ are up 23% year-to-date, and the majority of portfolio managers we speak with believe the market will end the year higher than current levels. There is a long list of concerns from a risk-taking perspective, including potentially over-optimistic estimates for 2025, geopolitical uncertainty, a polarized and difficult-to-forecast US

Most investors have exposure – either explicitly or through bottom-up stock selection – to the key themes that are likely to grow above GDP for the next couple of years or more. While it would be ideal if everything we liked went straight up, prudent risk management requires tracking the correlation of returns of these

We have a meeting every day where we are asked about small cap stocks. We have recently written about mega / large cap value (LCV) investing and compared large-to-small cap. value (SCV) investing for asset allocators. SCV stocks have cumulatively performed in line with (LCV) stocks since the Financial Crisis but have lagged the S&P500 materially since 2019. SCV

It Used to Be Easier for Value Investors For many years, value investors would buy dips in stock prices, believing in investment cycles, which translated to predictable mean-reverting profit margins and valuations for many value stocks. If a stock was in an industry where demand and supply are cyclical, investors could gauge changes in demand