Every generation of investors falls in love with a new metric. In the 1990s it was earnings per share. In the 2000s it was EBITDA. In the 2010s it was revenue growth. Each one had its moment in the spotlight, and each one eventually revealed itself to be an unreliable narrator. Not because the numbers […]
There is a particular kind of frustration that value investors know well. You pull up the financials of Hermès or Ferrari, you see the price to earnings ratio, and you close the tab. Forty times earnings. Fifty. Sometimes more. The numbers look like a typo. Surely the market has lost its mind. Surely this will
The P/E of Luxury: Why Hermès and Ferrari Never Look “Cheap” Read More »
Most people see a price to earnings ratio of 100 and assume someone has lost their mind. A hundred years of earnings baked into a single share price. It sounds absurd. It sounds like the kind of math that only works if you close one eye and squint with the other. But here is the
Why the Simplest Line on a Chart Might Be the Most Truthful Thing in Finance There is a line on almost every stock chart that nobody wants to talk about when things are going well. It sits there quietly, moving with the patience of geological time while prices dart around it like nervous birds. It
The Brutal Honesty of the 200 Day Moving Average Read More »
There is a particular magic trick in finance that hides in plain sight. It involves no sleight of hand, no back room dealings, and no regulatory violations. It sits right there in the quarterly earnings reports of Business Development Companies, printed in clean black ink, fully disclosed. And yet most investors walk right past it
PIK Income: The Hidden Accounting Trap in Your Favorite BDC Read More »
In biology, there is a concept called apoptosis. It is the programmed death of a cell. The cell receives a signal, and it quietly dismantles itself from within. No drama. No inflammation. Just an orderly exit so the organism can keep functioning. It is one of the most elegant processes in nature, and it happens
From Cannibals to Zombies: Shorting Companies That Shouldn’t Exist Read More »
Most investors treat the price to earnings ratio like a thermometer, checking it compulsively to diagnose market fevers. But what if you’ve been reading the wrong instrument all along? The P/E ratio tells you what the market thinks about profits, but it whispers nothing about the debt strangling those profits or the cash sitting idle
Beyond P/E: How to Use EV/EBITDA to Spot Undervalued Gems Read More »
The Problem with Labels Language shapes reality in peculiar ways. We call certain stocks “small cap” and assume we’re talking about small companies. But language is a lazy shorthand, and finance is full of shortcuts that stop making sense the moment you look closer. The market capitalization of a company tells you what investors think
Why “Small Cap” Doesn’t Always Mean “Small Company” Read More »
There’s a peculiar ritual that plays out in conference rooms across the financial world. An analyst presents a valuation model, and somewhere in the deck sits a page titled “Comparable Company Analysis.” The companies listed there read like a guest list to an exclusive party: Apple, Google, Microsoft. Everyone nods. The analysis feels solid, defensible,
The Prestige Bias: Why We Overvalue Brands We Recognize in Comparable Company Analysis Read More »
The finance industry loves to present itself as a bastion of mathematical certainty. Walk into any investment bank and you’ll find analysts hunched over spreadsheets, their screens glowing with numbers that stretch into the future. They’re building discounted cash flow models, or DCFs, which are supposed to tell us what a company is truly worth.
Valuation as Art: Why Two Analysts Get Two Different Answers (DCF) Read More »