Assessing profitability lies at the core of valuation and investment analysis, but it is far from straightforward.
On rare occasions individual observations of stock price movements are sufficiently informative that interesting insight can be gained even from single observations. The response of the market to Tesla’s earnings announcement on August 1, 2018 and the Elon Musk tweet on August 7 are prime examples.
By Brad Cornell, Andrew Cornell, Shaun Cornell
On repeated occasions, Eugene Fama has claimed that critics have failed to offer a complete alternative to the efficient market hypothesis (EMH). More specifically, in his Noble speech, Fama said, “Most important, the behavioral literature has not put forth a full blown model for prices and returns that can be tested and potentially rejected – the acid test for any model proposed as a replacement for another model.” Here I argue that Fama’s complaint is too strong.
By Brad Cornell
With sky-high valuations in the US stock market, and what we believe is a tech bubble that has dangerous implications for other areas of the market, we suggest four actions investors can take now to avoid the inevitable bursting of the bubble, and which will likely benefit their portfolios’ long-term performance potential.
By Rob Arnott Bradford Cornell Shane Shepherd