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Recent Insights

August 8, 2022

As former US Secretary of Treasury Larry Summers has stressed, the real interest is an important indicator of the impact of Federal Reserve policy. In this short video we take a look at real interest rates through history.

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August 1, 2022

Relative price changes, changes in the price of one good or service relative to others, are often confused with inflation but are fundamentally different. This difference can lead to a misunderstanding of the causes of inflation. In this video, we explain the difference and what it implies for policies to control inflation. 

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July 24, 2022

The Shiller CAPE Ratio is often referenced yet at times not fully understood. In this latest installment, Prof. Bradford Cornell starts at the source and breaks down this popular metric in detail.

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July 18, 2022

From the pandemic lows of March 2020 to the end of 2021, stocks had an incredible run. Earnings were up but so too were P/E ratios. As the market climbed many warned that valuations had become unjustifiably high.  With the S&P 500 down nearly 20%, P/E ratios have returned to their historic average leaving many

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July 5, 2022

Download Memo as PDF Looking Back Too often financial market analysis is focused on the issue de jour – jumping from hot topic to hot topic with little reference to what was said in the past. Breaking from this tradition, this quarterly memo takes stock of what we have said in the past to provide perspective

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Featured Publication

By Bradford Cornell, Shaun Cornell, Andrew Cornell Introduction An investor would have to have been living under a rock not to have noticed the appreciation in the value of automobile companies in the last two years. Tesla, of course, is the premier example. In less than two years, its market capitalization has soared from less than $100 billion to over $1.2 trillion at one point. But Tesla is hardly alone. Recent electric entrants like Xpeng, Nio, Rivian, and Lucid have all seen their valuations jump. Even traditional automakers like Ford, GM and Volkswagen saw their valuations rise when they announced electric vehicle plans. This across-the-board run-up is sufficiently unprecedented that it calls for a valuation analysis of the automotive industry. Are the price increases consistent with reasonable fundamental valuation – for all companies in the industry or just a small group? What are the investment implications? Before turning to the data and analysis, there is a key economic principle related to technological innovation and valuation that must be kept in mind. Specifically, a new technology does not translate into value creation for a company that adopts it unless it produces returns on invested capital (ROIC) in excess of the cost

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