Economics and finance largely come down to how people measure the value of things. Value is always a difficult concept to pin down because it is really about what people can agree upon at a given moment in time. Money is the epitome of agreed-upon value. Dollar bills have no inherent or use value. The … Continue reading How we measure value and why this matters
Historically, stock valuations have been an important predictive factor of future returns. A standard practice is to measure value by comparing stock prices to fundamental measures such as trailing earnings, projected earnings, dividends, and book value. I am increasingly questioning the usefulness of these measures however. While an enormous body of research has shown that … Continue reading Do stock valuations matter anymore?
Research Affiliates, a large money manager and research firm, has recently reaffirmed it's faith in value investing, the discipline of investing more heavily in stocks which appear cheap relative to their earnings or book value. Back in April of 2019, I wrote a blog post that explored the under-performance of value over the last fifteen … Continue reading Is it finally time to bet on value again?