Footnote: Empirical Research Analysis, National Bureau of Economic Research. As of June 30, 2022. Cheapest quintile refers to the most undervalued 20% of stocks in an analysis of large-capitalization US stocks. Standard Deviation is a measure of dispersion of a data set from its mean. Prior to 1952, the spread is measured using the price-to-book data of the largest 1,500 stocks. Current Level refers to the valuation spread as of June 30, 2022 which is 0.4 standard deviations above the mean.
“Despite record 1Q 2022 results and continued capital discipline, the disconnect between the energy sector weighting in the MSCI Wold Index relative to the oil market value is at its widest level since 2000“.
Most investors, including me, have limited experience of inflationary risk.
This paper, from 2021, is an excellent guide – looking at passive/active strategies across asset classes over the past 95 years.
As we have seen it is tough – unexpected inflation is bad for traditional assets (bonds, equities). Commodities do well but depends which ones. Trend following and active equity are the best protection.
How did the model portfolios on which ETFs are built fare five years after launch when compared to three years before? measured relative to the benchmark selected by the managers themselves.
The results aren’t pretty.
Thematic strategies that added 3-5% a year pre-launch, lost 4-5% a year in the five years after.
It seems that hype in various areas, leads to a launch of ETFs which then don’t add any alpha.
So be careful when you invest in the next hot thing via ETF.
Note this is just the model portfolio performance (e.g. index) and NOT the ETF itself (though it should track very closely after costs).
Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
“Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide“
