The Danger of Single-Digit Returns at 22x Multiples The Danger of Single-Digit Returns at 22x Multiples

The Danger of Single-Digit Returns at 22x Multiples

At the time of writing the S&P 500 trades 7674. Many leading analysts remain bullish – with some raising their forecasts for the S&P 500 to be north of 8,000 next year. For example, UBS lifted its S&P 500 earnings…

Stocks See Optionality. Credit Sees Risk Stocks See Optionality. Credit Sees Risk

Stocks See Optionality. Credit Sees Risk

When commentators say “the market expects interest rates to fall” or “the market is pricing in an AI boom,” they are usually looking at a single metric: the S&P 500. But what exactly is the market? Truth is there is…

The Market Does Not Care If You Are Right The Market Does Not Care If You Are Right

The Market Does Not Care If You Are Right

You can be completely right about the future and still make a terrible investment. That distinction took me ~30 years and a large financial scar to fully appreciate. In the late 1990s, I invested in Cisco. The thesis was logical:…

AI: Focus on Unit Economics (Not Innovation) AI: Focus on Unit Economics (Not Innovation)

AI: Focus on Unit Economics (Not Innovation)

Earlier this week, I wrote that every generation experiences its own technological revolution. Railroads, electricity, radio, and the internet all changed the world in ways that were almost impossible to appreciate while they were unfolding. Artificial Intelligence (AI) is in…

Headlines Change, But Human Nature Never Does Headlines Change, But Human Nature Never Does

Headlines Change, But Human Nature Never Does

Let”s set the scene with a story… In 1849, hundreds of thousands of people rushed to California chasing gold. They showed up with picks, shovels, and the quiet conviction that they were about to get rich. Newspapers ran front-page stories…

Why Stocks Rise While Consumers Feel Worse Why Stocks Rise While Consumers Feel Worse

Why Stocks Rise While Consumers Feel Worse

The financial markets currently present a striking paradox. On one hand, stocks are hovering near record highs. On the other, consumer sentiment has fallen to historic lows, as reflected in the University of Michigan sentiment index. This divergence between Wall…

Why the Equity Risk Premium Signals Danger for the S&P 500 Why the Equity Risk Premium Signals Danger for the S&P 500

Why the Equity Risk Premium Signals Danger for the S&P 500

Howard Marks of Oaktree Capital Management has long argued that markets are driven less by objective reality and more by the emotional pendulum of human psychology. Over the course of the past ~30 years investing – I”ve also come to…

Why Buffett’s Owner Earnings Matter in the AI Capex Cycle Why Buffett’s Owner Earnings Matter in the AI Capex Cycle

Why Buffett’s Owner Earnings Matter in the AI Capex Cycle

There is a classic joke often told in the halls of investment banks. A business owner is interviewing candidates for a senior role and asks each a simple question: “What is two plus two?” The mathematician answers instantly: “Four. Exactly…

Big Tech Fuels a Market Melt-Up Big Tech Fuels a Market Melt-Up

Big Tech Fuels a Market Melt-Up

Stocks continued their record run this week, fuelled by a series of impressive earnings beats from large-cap tech. The past six weeks have been breathtaking… the S&P 500 surging more than 13%. However, it is important to recognize that this…

Liquidity v Fundamentals: Lessons for Investors Liquidity v Fundamentals: Lessons for Investors

Liquidity v Fundamentals: Lessons for Investors

The S&P 500 continues to climb the “wall of worry,” defying gravity to print new all-time highs above 7,100. To the casual observer, the market appears not just resilient in the face of today”s geopolitical friction and fiscal debates, but…

S&P 500: Late-Cycle Rally or Start of a New Bull Market? S&P 500: Late-Cycle Rally or Start of a New Bull Market?

S&P 500: Late-Cycle Rally or Start of a New Bull Market?

Despite the ongoing war in Iran, equities are behaving as if little has changed. The S&P 500 has gained just over 10% in 12 trading days—a surge that has occurred only 23 times since 1962. Measured from the intra-day low…

Why Markets Ignore the “End of the World” Why Markets Ignore the “End of the World”

Why Markets Ignore the “End of the World”

There is an old adage on the floor: “The tape tells the truth, even when the news is lying.” We recently saw a perfect example of this. The week began with a perfect storm of headlines that should have sent…