Insights
When Growth Stops
NBR Articles, Published 8th February 2022
Investors sometimes figure that if they can foresee a certain amount of growth in a company's earnings per share then it should be reasonable to anticipate a similar amount of…
Read MoreElectric Vehicles, and the Perils of Too Much Investment
NBR Articles, Published 14th December 2021
One of the key ways in which equity markets serve both entrepreneurs and society is by facilitating the flow of capital into promising new ideas and technologies.
Read MoreStock-based compensation and the Mismeasurement of Earnings
NBR Articles, Published 9th November 2021
Price-to-Earnings ratios can be calculated in slightly different ways, using different measures of profits, and can be calculated off either backward looking earnings, estimates of the current year’s earnings, or…
Read MoreIf The Market Falls, What Will Fall Hardest?
NBR Articles, Published 5th October 2021
Global markets are trading at elevated levels, inflation has risen. These facts indicate that there is a greater than normal risk that the equity market could take a big tumble in the next few years. In this article we discuss which sorts of stocks are likely to fall hardest if the market tumbles. We highlight some types of equities that could fall hard, including companies exposed...
Read MoreThe Curse Of September
NBR Articles, Published 31st August 2021
September has historically been lousy for global equities. Although there is high probability that the poor historical returns in September were just bad luck, there is merit in being slightly cautious about investing ahead of September if this can be done without adding to risk or costs...
Read MoreThe Half-Life Of Growth
NBR Articles, Published 27th July 2021
Growth is an important determinant of long term investment returns, but superior growth rates inevitably fade down to average. Shares in rapidly growing companies tend to be priced at a premium to other companies, so they will only provide superior returns if their growth rates fade gently enough to compensate for a lower yield and a gradual loss of this valuation premium...
Read MoreThe Trend Can Be A Fickle Friend
NBR Articles, Published 22nd June 2021
Some investors like to buy stocks that have already been rising, while others like to buy stocks that have come back in price. In this article, we discuss how the evidence indicates that going with the trend has worked slightly better on average over time, but care is needed. In particular, trend-following strategies don’t work all the time nor for all types of stocks, so trend is best interpreted in a proper context, and could produce volatile investment results if used in isolation...
Read MoreClear Market Inefficiencies vs Differences Of Opinion
NBR Articles, Published 18th May 2021
There are many examples where the equity market has clearly done a poor job at pricing particular equities. If fund managers could exploit these examples of “inefficient” market pricing, they should be able to beat the market. However, the evidence suggests that most fund managers fail to beat the market. This article discusses why...
Read MoreThe Future May Not Be As Rosy As Equity Investors Assume
NBR Articles, Published 9th March 2021
Many investors and fund managers seem to expect long-term local-currency returns from equity markets of 7% to 9% per annum. In this article, we argue that long-term local currency returns from global equities are more likely to be 5% to 6% per annum, and even that level of growth is dependent on a significant growth in renewable electricity generation. Higher electricity prices may be needed to encourage the required investment in renewable generation...
Read MoreWhy Higher-Risk Doesn't Pay Off In Equity Investing
NBR Articles, Published 9th March 2021
Historically, higher-risk equities have not produced any incremental return to compensate for their incremental risk. The behaviours that have contributed to this "anomaly" continue to this day. This creates opportunities for investors...
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