Correcting a Poor Valuation

 https://on.ft.com/3RHadAr

Correcting Poor Investor Decisions: Another way to view this decline in valuation is as a correction of the overvaluation that led to the overinflated valuation in the first place, a common occurrence with internet-based technology. The fact that we have seen this before in the dot.com bubble does not speak well of the decision-making process of venture capital firms and other investors. #fintech #valuation #internet #investments #decisionmaking #investmentdecisions #financialbubbles

FinTech Haphazard Valuations

 FinTech Haphazard Valuations

​https://on.ft.com/3RHadAr
The immense decline in the valuation of FinTech companies, pegged at around 50%, reflects the overly optimistic assessment of the firms' future profitability, especially in the outlook for future revenues.  This is a chronic problem in the valuation of newer high-tech companies where little or no performance data exists.  The same problem occurred during the dot-com period in the late 1990s.

Investment Strategies for a New Era

 ​https://www.ft.com/content/05d0324f-e216-47ff-973e-c22f660edf22​

The era of the Great Exasperation arrives for investors
This article lays out the changes in the investment climate brought out by recent changes in economics, economic policy, and the difficulty of finding investment strategies that work in the new environment. Many of the trends he identifies are sure to be with us for the medium term.  One result is to undermine the tools that investment managers have used for decades and that generated acceptable risk/reward returns. The end of this era undermines many of these tools as well as the underlying premises. Investment professionals may be better off changing investors' expectations than attempting to use old tools in the new environment.

Is the Fed Causing a Recession?

 

https://www.nytimes.com/2022/07/07/opinion/inflation-recession-the-fed.html?smid=li-share

Krugman argues that inflation fears have been overblown and that there is evidence that inflation is subsiding. His argument is that the Fed is overreacting by signalling that it intends to continue to aggressively raise interest rates raising the prospect of an unnecessary recession. However, this mornings U.S. jobs report shows gain of 372,000 in non-farm payrolls, exceeding economists’ estimates for a 275,000 increase. The unemployment rate remains unchanged at 3.6%. This report may undermine Krugman's analysis and give a green light to the Fed's view that the economy is overheated and inflation may be incorporated into people's expectations, triggering a self-sustaining inflation. The bottom line is a likely hefty rise in interest rates later this week (0.50% and possibly 0.75%). The risk will then shift to to a recessionary outlook. With all the political and economic problems facing the world, a recession in the world's largest economy would be pouring gas on afire. #ezrazask #inflation #economicpolicy #federalreserve #employment #politicaleconomy #recession #stagflation

Will Central Banks Keep Their Resolve to Raise Interest

 ​https://www.ft.com/content/23c3a3a7-b2da-412c-8050-bdad986fde21

​Central Banks and the Fight to Curb Inflation
European and US central banks have jointly stated that fighting inflation is their top priority and they will follow a high-interest rate and tight monetary policy, partly in recognition that they overshot their long-lasting easy money policy. However, it is easy to state a policy but may be difficult to follow, especially if the economies go into a dive. Based on their past record of accomplishment it is possible that the banks will cave and compromise on their strategy

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EZRA -- Ezra Zask Research Advisors - Ezra Zask Research Associates

EZRA -- Ezra Zask Research Advisors - Ezra Zask Research Associates

https://www.ezrazask.com/

Hyped drives High Tech Stocks

 https://www.ft.com/content/75f3ed84-62ae-4cb4-947f-bd7e75591481

It turns out that Hype is the missing factor in factor investing. With all the hype given to factor investing is turns out that "Hype" may be the most important overlooked factor. The factors that have received the most attention include Value, Small Size, Low Volatility, High Yield, Quality , and Momentum. However, as this article makes clear, hype, in the form of inclusion in a hyped up acronym (the current unfavorite being FAANG) may explain more of the difference between stocks than these factors combined. It is also noteworthy that Hype is a "behavioral" factor, having no role to play in "rational" economic actor models, giving a clear leg-up for behavioral finance model of economic decision-making. thumb_up Recommend reply Reply share Share flag Report remove cthwaites1 3 HOURS AGO