trials and errors
Want to read more?
Subscribe to davidwoounbound.com to keep reading this exclusive post.
top of page
16 Comments
Subscribers please log in to view the content
bottom of page
Subscribe to davidwoounbound.com to keep reading this exclusive post.
John,
Great work. I am curious if you do any factor work and can share thoughts on how to tilt equity books go forward in this unique stagflationary environment that we are in.
Play book of the recent past would have said tilt risk towards tech and growth- this was the form of defense for equity investors (growth/recession scare punishing cyclicals and more "value" leaning names). Indeed, as of late, as real yields have come crashing down, the "tech and growth"/long duration themes have been the relative winners. However, when I think about access to capital in this new environment, my intuition says to more heavily favor strong current underlying free cash flow, and businesses pegged to more realistic earning…
Loved "pharmaceuticals should be treated like cigarettes". This bill, if passed, may produce some interesting investment opportunities. The question is where? Pharma does not part well with lower profits.
David, I wouldn't get too hard on the medical guys. It is the financial guys who sell the dream - quote potential markets and discount the profits back to an absolutely accurate target share price. I wrote a paper 40 years ago on the misuse of discount rates in accounting for risk and uncertainty in financial evaluations but discounting remains the standard process for accounting for "risk". In short, discount rates assume we are dealing only with risk and that that risk increases with time. In reality we are primarily dealing with uncertainty and primarily in the very early stages of the project (medical or other) - for example the technology proves to not be scalable, the plant/software costs o…
Good stuff, John.