Drew's Views

There is no holy grail of investing, but there is a recipe for getting close...

Why have US markets become more expensive than European ones? The answer will surprise you.

In our view, Porsche SE, with a recent 14 billion euro market cap (and trading over €40 billion a day), is one of the most underpriced, liquid, listed assets available to investors.

The impact of flows on security pricing, and investment opportunities.

I’ve been keeping a graphic of the long-term performance of the US stock market for many years now, and I’ve been sharing this information in the histogram below. I think it does a reasonable job of revealing how long-term returns are manufactured and the tilts over time. I’ve color-chunked the data by decade to highlight decades of historical weakness as well as periods of strength. I’ve also added additional tables and charts which I think are interesting, and in some cases, stunning.

It's very possible, if not likely, that the move in growth stocks from 2017 through 2020 probably wasn’t caused or justified by a move in interest rates, but that people believed, and acted like, it was.

Just as the public markets can be affected by short term flows, is it possible that private market valuations, and the periodic marks of particular private investments, have been affected by increasing allocation tilts toward private equity?

In an op-ed for Marketwatch, Drew explodes the myth about European companies, and reveals where he thinks the opportunities are today.

Some year-end charts and tables asking some big questions about what comes next.

I’d like to think that prices can get out of whack for some period of time, and in that window, the nimble, unbiased, fundamental stock picker can take advantage of overreactions and underreactions. If they don't, then the M&M propositions truly hold, and I don’t have a meaningful job. However, if this paper is right, and it is only flows that matter, then while the M&M theorems are overturned, I don't have a meaningful job either. If it is all about flows, then I shouldn't play the game.

As it turns out, it isn’t that the people are paying a bigger growth premium for US Growth over European Growth; but instead it is that people are paying a (much) bigger multiple for US Value than for European Value.

“What sort of sorcery is this?” Is this financial alchemy powering a perpetual motion engine that will result in higher and higher share prices?

It wasn’t passive flows that mattered. It wasn’t interest rates that mattered. It wasn’t the multiple that mattered. It wasn’t an ever-expanding infectious narrative that mattered. No analyst on the buy or sell side came remotely close to understand the market opportunity, the share, the profitability. It was about better vision, modelling. and analysis. It was all about the fundies.

I know, these are weird and trying times. It all makes you wonder what the point of stock-picking is. What is the purpose of kicking the tires, looking under the hood, and doing our jobs?

In 1861, at the outset of the Civil War in the United States, Union Pacific issued 20 shares in its IPO.

On first principles, there is one way to generate excess stock market returns over the long term, and it isn’t to “own winners at any price.”

I’ll spend $3 at the 7-11 for a bag of ice, and drop it in a cooler. I really like ice.

There are young companies out there that are exciting, growing quickly, and very clearly have the world in front of them.

We’re all for debunking myths, and given the performance of growth stocks recently, we’re making a pre-emptive strike in defense of the father of value investing.

I’m not very well-rounded. I studied finance in college, and finance in business school.

October unleashed a storm upon financial markets.

These are our two cents on whether you, or we, or anyone else can pick the perfect time.

Imagine every adult has 10% of their savings invested in “the global stock market”,

Imagine two scenarios.

Mr. Market has been increasingly attracted to and enamoured by the concept of “quality” investing. So, let’s explore it.

Evidently, the closest thing we in financial markets have to Albert Einstein or Winston Churchill, is Warren Buffett.

I have immense respect for Bob Shiller.

The notion that the PEG is a linear tool for valuation is a myth, and a deeper analysis of its function reveals that the difference in outperformance of growth stocks over value stocks accelerates as interest rates drop toward zero.

There are very few growth investors that stayed in business long enough to become a household name in the investment community, and even less of them that ended up writing books about their lifetime experiences.