When attempting to explain movements in stock prices the media often overlook the key facts that for every buyer there is a seller and every outstanding share must be held continuously. As we record this, the S&P 500 has surpassed 5,000, and it leads a lot of people to ask, ‘How could the market be
Economic Insights
CORNELL CAPITAL GROUP
The decade ending in 2023 was a great one for common stocks. Is the next decade likely to be as good? We provide an analysis using Damodaran’s equity risk premium (ERP) and a framework developed by Jordan Brooks of AQR. Hello and welcome back to ‘Reflections on Investing’ with the Cornell Capital Group. This is
A market crash is nothing more than a low risk premium meeting risk aversion. —– John P. Hussman, Ph.D., November 8, 2021, When Bubble Meets Trouble Risk Premiums and Stock Prices In our third quarter memo, we stressed the importance of the equity risk premium (ERP) for understanding the level of stock prices and their relation to expected future
Real Interest Rates have an immense impact on the stock market as well as the bond market. Nonetheless, they are widely misunderstood. Hello and welcome back to Reflections on Investing with the Cornell Capital Group. And today we’re going to talk about the real interest rate. I use the word “the real interest rate” as
Would you believe, that long-term US Treasury securities, historically considered one of the safest investments, have now dropped more than the stock market did during the great recession of 2008? What are the implications for fixed income investments going forward? Hello and welcome back to Reflections on Investing with the Cornell Capital Group. It’s been
Discount rate variation (equivalently expected returns, risk premiums) is now at the center of asset pricing questions, from bubbles to the nature of the crash.—– John Cochrane, Presidential address to the American Finance Association.As John Cochrane notes, it is hard to understand stock price movements and related risks without taking account of variation in discount
Is a large daily drop in the market a buying opportunity? We used 60 years of daily data to see what happens after the market drops. Hello and welcome back to Reflections on Investing with the Cornell Capital Group. It’s been a while since we’ve done a Reflections, but I think we have an interesting one
One of the most difficult problems for fundamental value investors is reconcliling value and momemtum. Welcome back to Reflections on Investing with the Cornell Capital Group. As we sit here now, the first half of the year is over, and the stock market has been far stronger than anyone expected. And that leads to a problem
Download Memo as PDF Stock Market Review for the First Half Year The market performance in the first half of 2023 was a surprise, to say the least. Whereas the year began with concerns about an impending recession, the market shrugged off those fears and moved dramatically upward as shown in chart below. The first half
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