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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insights 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.
insights 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.
insights 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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Written by Benjamin Graham, 'The Intelligent Investor' is a seminal work on value investing that has inspired millions since its original publication in 1949. The book emphasizes the importance of distinguishing between investing and speculation, calculating the intrinsic value of companies, and maintaining a margin of safety. The revised edition includes updated commentary by Jason Zweig, who provides modern examples and insights to help readers apply Graham's principles in today's market. Warren Buffett, a disciple of Graham, has praised the book as 'the best book about investing ever written'.