"There's A Lot Of Room For Stocks To Fall" As Profit Margins Are Unsustainable | Eric Cinnamond

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Jun 17, 2025

Eric Cinnamond, founder and co-CEO of Palm Valley Capital Management, shares insights on the disparity between growth and value stocks, advocating for a patient investment strategy focused on small caps. He discusses the unsustainable profit margins and the risk of a market correction, pondering the ethics of corporate buybacks. Cinnamond highlights the implications of wealth inequality and explores future market outlooks, emphasizing the importance of financial wisdom in navigating uncertain times. Tune in for a fascinating financial deep dive!

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INSIGHT

Stocks Overvalued Due to Fiscal Spending

Current market earnings are inflated by unsustainable fiscal spending exceeding $6 trillion.
This unsustainability implies a significant risk of stock price declines to realistic valuations.

INSIGHT

Value Investing and Cash Strategy

Value investing, especially in small caps, remains viable despite underperformance.
Absolute return focus means holding cash when valuations are high to protect capital.

INSIGHT

Normalize Earnings for Valuations

Normalizing earnings to long-term margins shows current stock valuations are unrealistic.
Current margin peaks should not be used for valuing companies today.

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Growth stocks have far out-performed value stocks in recent years.Similarly, large cap stocks have trounced small caps.Will that dichotomy continue? Or will the pendulum finally swing back to give value & small cap investors their day in the sun?For perspective, we welcome Eric Cinnamond to the program today. Eric is founder and co-CEO of Palm Valley Capital Management.WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money's endorsed financial advisors at https://www.thoughtfulmoney.com#earnings #valueinvesting #growthstocks 0:00 - Acknowledgment of Dave Collum2:20 - Economy and financial markets assessment4:20 - Palm Valley’s value investing approach10:02 - Stock market overvaluation and cash strategy15:37 - Potential triggers for valuation correction22:21 - Corporate buybacks’ market impact28:01 - Opinion on buybacks’ legitimacy31:40 - Defense of value investing35:01 - Affordability crisis and corporate trends41:05 - Wealth inequality and market risks48:18 - Market outlook for 202554:11 - Where to follow Cinnamond’s work55:07 - Closing and viewer guidance_____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter.We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor registered with the U.S. Securities and Exchange Commission (SEC) or state securities regulators who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.IMPORTANT NOTE: There are risks associated with investing in securities.Investing in stocks, bonds, exchange traded funds, mutual funds, money market funds, and other types of securities involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.Thoughtful Money and the Thoughtful Money logo are trademarks of Thoughtful Money LLC.Copyright © 2025 Thoughtful Money LLC. All rights reserved.