Author Topic: What if the cost of capital never rises again?  (Read 2816 times)

NoCalledStrikes

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Re: What if the cost of capital never rises again?
« Reply #10 on: June 16, 2019, 02:22:17 PM »
The answer is in Josh Brown’s newest article https://thereformedbroker.com/2019/06/13/when-everything-that-counts-cant-be-counted/?utm_source=dlvr.it&utm_medium=twitter.

There are no asset managers who represent their strategy to clients as “We buy the most expensive assets, and add to them as they rise in price and valuation.” That’s unfortunate, because this is the only strategy that could have possibly enabled an asset manager to outperform in the modern era. It’s one of those things you could never advertise, but had you done it, you’d have beaten everyone over the ten-year period since the market’s generational low.



Spoiler alert: This is ultimately unanswerable, but we will know more after the next recession.


coc

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Re: What if the cost of capital never rises again?
« Reply #11 on: June 16, 2019, 05:20:49 PM »
The answer is in Josh Brown’s newest article https://thereformedbroker.com/2019/06/13/when-everything-that-counts-cant-be-counted/?utm_source=dlvr.it&utm_medium=twitter.

There are no asset managers who represent their strategy to clients as “We buy the most expensive assets, and add to them as they rise in price and valuation.” That’s unfortunate, because this is the only strategy that could have possibly enabled an asset manager to outperform in the modern era. It’s one of those things you could never advertise, but had you done it, you’d have beaten everyone over the ten-year period since the market’s generational low.



Spoiler alert: This is ultimately unanswerable, but we will know more after the next recession.

That used to be called momentum investing and it was an acceptable strategy for a while. It’s still done by computers. The managers just don’t state it quite like that.

I read an interview with an investor lately who does arguably just this, but states it more like a value investor would — the companies will earn XX in five years and be worth YY so it’s undervalued — but strip away the verbiage, and he owns a group of unprofitable companies trading at massive valuations that are constantly increasing, in the hope that they’ll go higher. It’s just not saleable as momentum investing anymore.