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Recent Insights

August 29, 2023

In August of 2020 Apple issued a 40 year, 2.55% bond, two years later that bond is down nearly 40%. Apple’s stock on the other hand is up over 50% in that same period. Why is that and what does it imply? 

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August 14, 2023

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.

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July 3, 2023

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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June 24, 2023

Download PDF Science advances one funeral at time – Max PlanckThe same can be said of the equity risk premium. Using fundamental valuation analysis to assess the level of the stock market, as measured for instance by the S&P 500 index, requires two inputs – forecasts of future cash flows and a discount rate. The

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Featured Publication

In this article, we assume that AI, which we recognize has many different forms, will be a major economic success in that it will lead to greater productivity and rising GDP in the United States. The question for investors is how will it affect stock prices? That depends on whether you are talking about the stock prices of selected individual companies or the value of the aggregate market. We start first with the aggregate market and then turn to individual stocks.Technological breakthroughs, of which we assume AI will be an example, increase social wealth by increasing the goods and services that can be produced from a given set of resources. This is measured by the growth rate in productivity. Productivity growth is a key determinant of real GDP growth per capita which determines the standard of living. The primary source of productivity growth is technological innovation.The chart below plots annual productivity growth from 1960 through 2022. The first thing to note is that the rate of increase is not large, averaging only 0.38% per year. The second thing to note is that the growth rate was variable, falling in recessions and rising in recoveries. Finally, it is difficult to tie

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