Lowell's Take: Shiller CAPE Ratio

Written by Lowell Pratt on .

In our blog post Don't Panic Over CAPE, we reference a strong rebuttal to the notion that stocks are signficantly overpriced relative to historic norms by Philosophical Economics.

Particularly interesting to me were "The Big Three" drivers of Bull and Bear markets. War, High Inflation and Financial Panics are the triggers of sudden valuation collapses. Peace, Low Inflation and Economic Stability are the foundations of Bull markets.  Clearly, "The Big Three" favor equities ahead. 

Don't Panic Over CAPE

Written by Alex Shen on .

A popular topic of conversation amongst equity investors is the Shiller Cyclically-Adjusted Price-Earnings, or CAPE ratio. Specifically, investors are concerned by the elevated level of CAPE in relation to its ‘historical mean’. CAPE is a valuation measure calculated by dividing an inflation-adjusted index with the average of its inflation-adjusted annual earnings over the past 10 years. High valuation periods are taken to predict lower expected future returns and increased risks of significant drawdowns. Before we validate or dismiss this fear there are two material questions to ask: is CAPE a perfect measure of valuation and is it accurate in signaling market tops and bottoms?

Applying a Size and Style Responsive Strategy for Equity Returns

Written by Andy Pratt on .

Lowell Pratt was recently interviewed by The Wall Street Transcript to discuss the Burney Company's history and investment strategies.

Lowell D. Pratt Jr. discusses the construction of and philosophy behind his firm’s Master Portfolio and SSR Strategy. The Master Portfolio has a consistent value influence with a tendency toward small and midcap stocks, while the SSR Strategy employs a customized process that moves from large to small and value to growth over time.

Find the full interview describing these strategies here.

Why the Dow is Underpeforming in 2014

Written by Andy Pratt & Alex Shen on .

Both the S&P 500 and the Dow Jones Industrial Average are indexes that measure large-cap stocks.  It would seem that they should track each other rather closely so it is interesting that the Dow has increased only 3.4% so far in 2014 while the S&P 500 increased 8.4%.

Financial Times Top 300 RIAs

Written by Andy Pratt on .

We are excited and honored to announce our inclusion in the inaugural Financial Times Top 300 RIA list.

We pride ourselves on providing competent, ethical portfolio management that allows our clients to be at ease with their investments.  From our founding in 1974, we have focused on providing long term investment management with a portfolio growth mandate.  We utilize equities in client accounts to achieve maximum growth because of their long term performance edge over other asset classes.  Our methodologies for selecting stocks - while largely similar to what we were doing in 1974 - have been refined over the decades with technology and understanding of finance.  We hope you enjoy our website redesign completed last year as well as this blog - we are always looking for ways to communicate with our clients clearly and transparently.  

We are incredibly honored to be on the FT Top 300 RIA list but not necessarily surprised because The Financial Times used a quantitative ranking methodology that took into account six areas of consideration we feel are immensely important for all RIAs: assets under management, asset growth, years in existence, compliance record, industry certifications, and online accessibility. 

Last year, we eclipsed the $1 billion dollar assets under management mark on a combination of asset growth and new client sign ups but as our numbers grow, we never forget our true focus - you the client.  We know we could not have made this list without you and thank you for the trust and opportunity to manage your accounts.