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Recent Insights


October 2, 2024

Stock Price Performance in Review We begin our Q3 2024 memo with a look back over the last ten years. The chart below plots both the standard S&P 500 index, which is value-weighted, and the equal weighted S&P 500 index over the last decade. The major difference between the two indexes is that large companies in

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September 24, 2024

The combination of P/E multiples and earnings determines stock prices – its basic math. In our last episode of Reflections on Investing we looked at earnings, now we add in the role of the multiple. Hello! Welcome back to Reflections on Investing with the Cornell Capital Group. This week, we’re going to follow up on

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September 17, 2024

The ultimate source of value for common stocks is the earnings of corporations. In the last four and a half years the S&P 500 has risen 124%. How is that increase related to earnings and what does it imply for the future of the market?  Hello, and welcome back to Reflections on Investing with the

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July 15, 2024

Download PDF Aswath Damodaran writes about what he calls the corporate life cycle.[1] He illustrates the life cycle with the graphic as shown below. From a valuation perspective, Damodaran’s corporate life cycle can be broken down as follows. In the first part, Stage 1 and Stage 2, the company has no meaningful earnings and limited

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July 9, 2024

The performance of the market was remarkable in the second quarter. Driven by the Magnificent 7 tech stocks, for which the total return was 16.5%, the total return for the S&P 500 was 4.3%. What was remarkable was not the gain per se, the returns were healthy but by no means unprecedented, but the valuation

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Featured Publication


With stock prices at near record highs relative to measures like earnings or cash flow, many leading analysts have predicted meager returns over the next decade. Some have even suggested the return on the S&P 500 could be negative over the upcoming decade. Others have raised the possibility of a short-term collapse of 20% or more. For instance, famed investor Jeremy Grantham said, “As for the U.S. market in general, there has never been a sustained rally starting from a 34 Shiller P/E. The only bull markets that continued up from levels like this were the last 18 months in Japan until 1989, and the U.S. tech bubble of 1998 and 1999, and we know how those ended.” But still others have taken the contrary view that the high prices represent a new normal and do not portend meager returns ahead. To shed light on the dispute, we take a deep dive into the underlying data.A good place to start is with data from Prof. Robert Shiller’s website. His work on the CAPE (Cyclically Adjusted Price-to-Earnings Ratio) is fundamental. Exhibit 1 presents a scatter plot of the level of the CAPE against the S&P 500 real total return (annualized) in

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