S&P 500 – P/E Landscape (upd. October 2014)

Posted: October 13th, 2014 | Filed under: Indices

When studying the P/E ratio across time, it is quite instructive to decompose and visualize the relationship between earnings and price as a scatter plot. The following chart showcases the P/E landscape of the last 19 years segmented in 5 trajectories: tech bubble, dotcom aftermath, housing bubble, credit crunch, QE.

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Information Processing – Part I

Posted: October 8th, 2014 | Filed under: Process

This is the first in a series of posts about information processing applied to investing. As a heavy consumer of unstructured information, my main interest is to explore possible paths towards a scalable and efficient process.

Let’s assume you own a portfolio of companies, for which you have performed extensive due diligence, analysis and valuation. In other words, you have already assessed the situation as of now and came to a conclusion on how to allocate capital across your best ideas.

Being invested, you now have to closely monitor a continuous flow of information related to your portfolio and re-evaluate the situation going forward. As new information for each individual holding arrives (often piece-wise, ambiguous and unstructured), the goal is to provide reasonably accurate and reliable answers to the following two questions:

1) What is really going on here? (sense-making)
2) What is the appropriate action? (decision-making)

In order to perform the task at hand, you will need to select and track a set of observables directly related to your holdings (filings, price & volume, press releases, conference calls, 3rd party research, industry reports etc). Additionally, you might also want to track developments regarding each company’s competitors, customers, suppliers, claimholders and in some cases regulators as well.

On first sight, the above might look trivial and quite manageable given the right tools (e.g. rss feeds, spreadsheets, charts, note keeping apps, price & news alerts etc). However, if you consider a portfolio with 10 or 20 holdings (and their respective competitors, customers, suppliers etc), the amount of information you have to process quickly becomes a problem.

Time is a limited resource and the same is true for our mental capacity to synthesize a large flow of raw and sometimes contradicting information into a coherent picture. Given the constraints, how and to what extend can we scale-up the process of collecting, analyzing and evaluating information without a significant loss in quality?

To be continued.


S&P 500 – P/E Landscape (upd. June 2014)

Posted: June 10th, 2014 | Filed under: Indices

When studying the P/E ratio across time, it is quite instructive to decompose and visualize the relationship between earnings and price as a scatter plot. The following chart showcases the P/E landscape of the last 19 years segmented in 5 trajectories: tech bubble, dotcom aftermath, housing bubble, credit crunch, QE.

Read the rest of this entry »


Accumulating vs Returning Cash

Posted: May 5th, 2014 | Filed under: Capital Allocation

A quick look at two distinct capital allocation strategies: accumulating vs returning cash to shareholders.

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S&P 500 – P/E Landscape (update)

Posted: April 6th, 2014 | Filed under: Indices

When studying the P/E ratio across time, it is quite instructive to decompose and visualize the relationship between earnings and price as a scatter plot. In the following chart we present the P/E landscape of the last 19 years segmented in 5 trajectories: tech bubble, dotcom aftermath, housing bubble, credit crunch, QE.

Read the rest of this entry »


Marktfeld

Posted: March 12th, 2014 | Filed under: Website

Cash flow graphs of NYSE & NASDAQ listed companies: www.marktfeld.com


S&P 500 – P/E Landscape

Posted: May 28th, 2013 | Filed under: Indices

When studying the P/E ratio across time, it is quite instructive to decompose and visualize the relationship between earnings and price as a scatter plot. In the following chart we present the P/E landscape of the last 18 years segmented in 5 trajectories: tech bubble, dotcom aftermath, housing bubble, credit crunch, QE.

Read the rest of this entry »


On excess cash

Posted: May 9th, 2013 | Filed under: Corporate Finance

With so many companies having excess cash on their balance sheets, it is paramount to have a clear understanding of the implications and how they affect investors decisions.
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On buybacks

Posted: May 8th, 2013 | Filed under: Corporate Finance

Following up on a discussion about a specific type of buybacks with @CapitalObserver, here is an example: an investor is buying the stock of a company that has no debt and a pile of excess cash on its balance sheet. Will a buyback financed from this already available excess cash create value for such an investor?
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