Counter-Cyclical Underperformance is Overdone Says Copper, CNY and Rates

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Counter-cyclical stocks have underperformed cyclical stocks by about 9% since Brexit lows. That recent bout of underperformance has been enough to spur many to proclaim that the world is on the cusp of faster growth and the the reach for yield play has seen its end. A review of our charts, however, suggests this period of counter-cyclical underperformance/cyclical outperformance […]

Growth Estimates Have Been Tracking Higher YTD

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Next twelve months (NTM) earnings and sales growth estimates in the developed world have been modestly improving throughout the year. In January, average NTM sales growth estimates were 6%. The latest data point pegs NTM sales growth estimates at 8%. Median NTM sales estimates have gone from 4% to 6%. Similarly, average NTM earnings growth estimates have gone […]

Why Don’t More Investors Question ROE Figures?

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Return on equity (ROE) is one of the foundational measures of profitability in finance. It is taught in many first year finance courses in college, it’s a staple in the CFA curriculum, and is widely used as a “go-to” indicator of how profitable a firm or an industry is in the investment management profession. In many industry groups ROE […]

Knowledge has Outperformed by 6% Over the Past Year

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Over the past year the Gavekal Knowledge Leaders Developed World Index (KNGLX) has gained 5.62% while the MSCI World Index is down -0.46%. Cumulatively on a total return basis, KNLGX has almost quadrupled the performance of the MSCI World Index since 3/31/2000. Since 3/31/2000, KNLGX is up over 200% while the MSCI World Index is up just 55%. A […]

Nominal GDP Is What Really Matters

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We were fortunate enough to have Nancy Lazar, from Cornerstone Macro, in our office today and she emphasized a very important point: nominal GDP is ultimately what really matters. Nominal growth is what drives corporate revenue, and in turn, drives business spending. Because businesses are the backbone of any economy, trends in nominal GDP greatly impact […]