The first half of 2018 comes to a close this week, so I wanted to share the five most popular articles from the first six months of the year:
1. Price Is What You Pay; Value Is What You Get – Nifty Fifty Edition Here is a discussion of the subsequent returns of the high-priced ‘Nifty Fifty’ growth stocks of the early 1970s, and how lofty valuations affected their intermediate- and long-term performance.
Related articles:
Professor Jeremy Siegel’s 1998 study of subsequent earnings growth for the Nifty Fifty:
https://www.aaii.com/journal/article/valuing-growth-stocks-revisiting-the-nifty-fifty
The FT’s Jamie Powell cites my article on the Nifty Fifty, and offers his own analysis, as well as what similarly lofty valuations mean for today’s growth darlings:
https://ftalphaville.ft.com/2018/05/29/1527609783000/The-not-so-Nifty-Fifty/
2. Capex Darlings and the Myth of Short-Termism This article busts the myth that companies that return capital to shareholders – think dividends and buybacks – are cannibalizing their futures by doing so, while demonstrating that companies that do the opposite – invest heavily in things like capex – often underperform.
Related articles:
Alpha Architect’s Jack Vogel, PhD, on how “empire builders” – companies that are capital-intensive and spend heavily on investment – are often poor investments relative to shareholder-friendly ones:
https://alphaarchitect.com/2018/03/20/buybacks-viewed-through-an-alternative-lens-investment/
3. The Enduring Appeal of Tobacco Stocks I make my case for why tobacco stocks will continue to be rewarding investments for the foreseeable future.
4. Exploring the Low-Volatility Phenomenon: An Interview with Pim van Pfliet, PhD One of the foremost experts on low-volatility stocks discusses why these have proven to be winners over the long-term, and why he thinks that should continue to be the case.
Related reading:
Pim’s book, High Returns from Low Risk, which I highly recommend:
https://www.amazon.com/High-Returns-Low-Risk-Remarkable/dp/1119351057
5. Your Focus Should Be On Risk, Not Reward Using the historical lessons from the naval battles of World War One, I argue that investors should contemplate adverse outcomes before making long-term investment decisions, and put potential rewards second behind possible risks.
Thanks for reading, and I hope you have a wonderful rest of 2018.
