The Danger of Single-Digit Returns at 22x MultiplesAt 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…
The Market Does Not Care If You Are RightYou 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)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…
Why Stocks Rise While Consumers Feel WorseThe 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 500Howard 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 CycleThere 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…
Why Stock Valuation Multiples Matter More Than GrowthThose who have been reading my blog over the past ~15 years will have heard me say “buying the best company in the world can still be a terrible investment”. This is one of the most uncomfortable truths in investing and…
Why Capital is Finding its Way Back to StaplesThe investment landscape has spent the better part of the last two years intoxicated by the potential returns of hyper-scalers, software, artificial intelligence, and similar assets. And you can understand why… These asset-light businesses offered massive free cash flows, unmatched…
