[11/09/20 NEW] President Donald Trump’s Economic Scorecard (Podcast)

Who the U.S. president will be for the next four years is dominating the headlines right now, but what of the previous four? In the wake of the Nov. 3 election, host Stephanie Flanders discusses with some of the nation’s leading economists just how Donald Trump’s administration has changed America’s economy and how it interacts…

[08/24/20] Academics Attack ESG for Failure to Outperform During Crisis

By Amy Whyte In the aftermath of March’s coronavirus crash, numerous fund managers and data providers determined that companies with high ESG scores outperformed during the rapid sell-off — and a surge of money followed into funds focused on environmental, social, and governance issues. A new academic study, however, raises questions about the link between…

[08/09/20] Opinion: The nightmare continues for ‘value’ investors. Here’s why

By Brett Arends It’s the multi-trillion dollar question plaguing the markets and long-term investors everywhere. Why are so-called “value” funds sucking so badly? Value’ investing, which means buying stocks that are cheap in relation to today’s assets, income and dividends, was supposed to be a better, long-term strategy than the alternative, which is investing in…

[07/30/20] Value Investing Is Still Moribund

Summary There are still die-hards claiming that value investing will return to its former glory and that it’s a safeguard in times of crisis. We examined this claim for both the current crisis and the 2007-2009 financial crisis. The facts continue to disappoint. By Baruch Lev and Anup Srivastava In our widely debated paper (“Explaining…

[07/20/20] Should ESG Guide Investors In Crisis? The Evidence Says No

ESG—corporate environmental, social, and governance actions—is all the rage these days. Pundits, politicians, certain academics, and particularly vendors of ESG measures and corporate ratings claim that in addition to “doing good,” the stocks of companies with high ESG ratings outperform those with low ratings. Corporate ESG activities, they say, are both good for society and…

[05/14/20] Going Concern Warnings: Should You Pay Attention?

Summary Doubts about the accuracy and reliability of going-concern warnings have lingered for years. A going-concern warning is, in fact, a prediction of future failure. But while such a warning should be an input to investment decisions, it’s not a deal-breaker. • On May 11, 2020, Chesapeake Energy (NYSE:CHK) issued a warning: “Management has concluded…

[04/17/20] In This Corona Quarter, Take Earnings Reports With A Grain Of Salt

Summary In the pre-coronavirus economic boom of 2012-2018, 50%-70% of all U.S. public companies reported regular annual losses. Obviously this loss frequency is a fiction that indicates a broken accounting measurement of earnings. If accounting estimates in normal periods are suspect, how tenuous are they in the current heightened uncertainty? Don’t take seriously the earnings…

[03/27/20] Value Investing In The Time Of COVID-19

Summary We have examined whether value investing tends to work during a crisis. In our study, we looked at both the 2007-2009 financial crisis and the recent stock market collapse. The results don’t bode well for value investing right now.   Co-authored by Anup Srivastava Many investors, institutional and individuals, are dumping stocks these days….

[02/06/20] How to Distinguish Between GAAP Losers and Real Losers

Summary To get an idea of the impact on corporate earnings of the massive expensing of intangibles, we added back to annual reported earnings R&D expenses, and one-third of SG&A. The results are quite surprising.   By Feng Gu and Baruch Lev* Would you believe that roughly 45% of U.S. public companies are reporting annual…