In a series of articles we published in 2016,1 we show that relative valuations predict
subsequent returns for both factors and smart beta strategies in exactly the same way price matters in stock selection and asset allocation.
Not exact matches
Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including the risk that we may not obtain sufficient orders to achieve our targeted revenues; price competition in key markets; the risk that we or our channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders as we experience wide fluctuations in supply and demand; the risk that our commercial Lighting Products results will continue to suffer if new issues arise regarding issues related to product quality
for this business; the risk that we may experience production difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; our ability to lower costs; the risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand; the risk that longer manufacturing lead times may cause customers to fulfill their orders with a competitor's products instead; the risk that the economic and political uncertainty caused by the proposed tariffs by the United States on Chinese goods, and any corresponding Chinese tariffs in response, may negatively impact demand
for our products; product mix; risks associated with the ramp - up of production of our new products, and our entry into new business channels different from those in which we have historically operated; the risk that customers do not maintain their favorable perception of our brand and products, resulting in lower demand
for our products; the risk that our products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs, including costs associated with warranty
returns or the potential recall of our products; ongoing uncertainty in global economic conditions, infrastructure development or customer demand that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the risk that we are not able to enter into acceptable contractual arrangements with the significant customers of the acquired Infineon RF Power business or otherwise not fully realize anticipated benefits of the transaction; the risk that retail customers may alter promotional pricing, increase promotion of a competitor's products over our products or reduce their inventory levels, all of which could negatively affect product demand; the risk that our investments may experience periods of significant stock price volatility causing us to recognize fair value losses on our investment; the risk posed by managing an increasingly complex supply chain that has the ability to supply a sufficient quantity of raw materials, subsystems and finished products with the required specifications and quality; the risk we may be required to record a significant charge to earnings if our goodwill or amortizable assets become impaired; risks relating to confidential information theft or misuse, including through cyber-attacks or cyber intrusion; our ability to complete development and commercialization of products under development, such as our pipeline of Wolfspeed products, improved LED chips, LED components, and LED lighting products risks related to our multi-year warranty periods
for LED lighting products; risks associated with acquisitions, divestitures, joint ventures or investments generally; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance
for our products; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10 - K
for the fiscal year ended June 25, 2017, and
subsequent reports filed with the SEC.
The report estimates that
for each 1 percent of shoppers who
return for a
subsequent visit, overall revenue will increase by approximately 10 percent.
Since 1999 the US financial world has had two 30 % + drops in the stock market (the «risk») and
for those who did not panic and sell, a
subsequent market recovery has generated an 8 % annualized
return on equities even including the two spectacular drops.
While there is a general tendency
for high interest rates to be associated with depressed valuations and above - average
subsequent market
returns, and
for low interest rates to be associated with elevated valuations and below - average
subsequent market
returns, the relationship isn't extremely reliable or linear.
As we've demonstrated repeatedly, the valuation measures most strongly correlated with actual
subsequent returns, particularly over a 7 - 15 year horizon, are those that normalize
for profit margin variability in some way.
For our part, we don't follow the Coppock indicator per se, but the broad range of technical measures we follow include our own variant that is associated with stronger and more reliable
subsequent returns (this variant has not even gone to negative levels yet, much less turned favorable).
This adjustment has historically been important, as adjusting
for that embedded profit margin significantly improves the relationship between the CAPE and actual
subsequent market
returns (something we can demonstrate both with algebraic
return estimates and regression models — see Margins, Multiples, and the Iron Law of Valuation).
At present, the valuation measures we find most strongly correlated with actual
subsequent S&P 500 total
returns suggest zero total
returns for the S&P 500 over the coming 10 years, and total
returns averaging only about 1 % annually over the coming 12 - year period.
The red line shows the actual total
returns for this portfolio mix over the
subsequent 12 - year period.
-LSB-...] table below is from Ben Carlson's A Wealth of Common Sense and it is a summary of the
subsequent average, median, high, and low 10 - year
returns for the -LSB-...]
Indeed, even Robert Shiller's cyclically - adjusted P / E (CAPE) is much better correlated with actual
subsequent market
returns, across a century of market cycles, when we account
for the profit margin embedded in the 10 - year average of earnings.
Notably, the relationship between the Margin - Adjusted CAPE and actual
subsequent market
returns is more reliable than
for the raw Shiller CAPE.
And there have been
subsequent bubbles — acquisition bubbles, the secondary market, etc. — which have continued to generate excellent
returns for VCs lucky enough to tap into them.
Actual results may vary materially from those expressed or implied by forward - looking statements based on a number of factors, including, without limitation: (1) risks related to the consummation of the Merger, including the risks that (a) the Merger may not be consummated within the anticipated time period, or at all, (b) the parties may fail to obtain shareholder approval of the Merger Agreement, (c) the parties may fail to secure the termination or expiration of any waiting period applicable under the HSR Act, (d) other conditions to the consummation of the Merger under the Merger Agreement may not be satisfied, (e) all or part of Arby's financing may not become available, and (f) the significant limitations on remedies contained in the Merger Agreement may limit or entirely prevent BWW from specifically enforcing Arby's obligations under the Merger Agreement or recovering damages
for any breach by Arby's; (2) the effects that any termination of the Merger Agreement may have on BWW or its business, including the risks that (a) BWW's stock price may decline significantly if the Merger is not completed, (b) the Merger Agreement may be terminated in circumstances requiring BWW to pay Arby's a termination fee of $ 74 million, or (c) the circumstances of the termination, including the possible imposition of a 12 - month tail period during which the termination fee could be payable upon certain
subsequent transactions, may have a chilling effect on alternatives to the Merger; (3) the effects that the announcement or pendency of the Merger may have on BWW and its business, including the risks that as a result (a) BWW's business, operating results or stock price may suffer, (b) BWW's current plans and operations may be disrupted, (c) BWW's ability to retain or recruit key employees may be adversely affected, (d) BWW's business relationships (including, customers, franchisees and suppliers) may be adversely affected, or (e) BWW's management's or employees» attention may be diverted from other important matters; (4) the effect of limitations that the Merger Agreement places on BWW's ability to operate its business,
return capital to shareholders or engage in alternative transactions; (5) the nature, cost and outcome of pending and future litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against BWW and others; (6) the risk that the Merger and related transactions may involve unexpected costs, liabilities or delays; (7) other economic, business, competitive, legal, regulatory, and / or tax factors; and (8) other factors described under the heading «Risk Factors» in Part I, Item 1A of BWW's Annual Report on Form 10 - K
for the fiscal year ended December 25, 2016, as updated or supplemented by
subsequent reports that BWW has filed or files with the SEC.
Valuations in 1949 and 1982 were like paying $ 13.70
for the future $ 100 cash flow, as valuations were consistent with
subsequent annual S&P 500 total
returns averaging 18 % over the following 12 - year period.
The strong one - to - one relationship between these estimates and actual
subsequent market
returns is presented in numerous prior weekly comments (see
for example Too Little to Lock In).
For example, grocers almost always stay in the very low price / revenue deciles because they operate in a low - margin business, yet fluctuations in their price / revenue ratios over time are still very informative about
subsequent returns.
For example, our effort to carefully account for the impact of foreign revenues, and to create an apples - to - apples measure of general equity valuation led us to introduce MarketCap / GVA, which is better correlated with actual subsequent 10 - 12 year market returns than any of scores of measures we've studi
For example, our effort to carefully account
for the impact of foreign revenues, and to create an apples - to - apples measure of general equity valuation led us to introduce MarketCap / GVA, which is better correlated with actual subsequent 10 - 12 year market returns than any of scores of measures we've studi
for the impact of foreign revenues, and to create an apples - to - apples measure of general equity valuation led us to introduce MarketCap / GVA, which is better correlated with actual
subsequent 10 - 12 year market
returns than any of scores of measures we've studied.
Indeed, adjusting
for that embedded profit margin boosts the correlation with
subsequent 10 - 12 year
returns to nearly 90 %.
In fact, one can show that valuations tend to be best correlated with
subsequent market
returns over periods representing roughly 0.5, 1.5 or 2.5 typical market cycles (see my 2014 Wine Country Conference presentation, A Very Mean Reversion,
for details).
Here's a chart from a recent Weekly Market Comment showing the projections
for 10 - year annual total
returns on the S&P 500 versus actual
subsequent 10 - year total
returns:
For historical evidence and mathematical formalization of this, see Rarefied Air: Valuations and
Subsequent Market
Returns.
On valuation measures most strongly correlated with actual
subsequent S&P 500 nominal total
returns, we presently expect negative total
returns for the S&P 500 on a 10 - year horizon, and total
returns averaging only about 1 % annually over the coming 12 - year period (chart).
U.K. February mortgage data also showed an annual decline of 5.6 percent
for approvals with analysts at Jefferies saying they anticipate a further fall in March given difficult to match comparable figures from last year before an improvement in trends
returns in
subsequent quarters.
The CFPB sets the maximum rate that can be charged
for a
returned payment — which is $ 27 the first time and $ 38
for each
subsequent offense within six months.
Similarly to
returned and late payment fees, the limit
for overcharge fees is set at $ 27 the first time and $ 38
for each
subsequent offense within six months.
In case one wishes to discard the record before 1980 from the analysis, it's worth noting that since 1980, the correlation of the FedModel with
subsequent S&P 500 total
returns has been just 27 %, compared with an average correlation of 90 %
for the other models since 1980.
In the November 2015 version of their paper entitled «Stock
Return Predictability and Investor Sentiment: A High - Frequency Perspective», Licheng Sun, Mohammad Najand and Jiancheng Shen measure the predictive power of half - hour changes in investor sentiment
for subsequent half - hour U.S. stock market
returns during the trading day.
President Donald Trump's trade representative racked up a hefty bill on the purchase and
subsequent return of a new desk
for his office, emails reviewed by ABC News show.
And when I write «the complete chain of events» I mean the complete chain, beginning with God eternal love
for humanity, including the creation of mankind and their
subsequent fall, and going through God's calling of Israel, His work through them during their checkered history, the birth, life, ministry, death, resurrection, and ascension of Jesus, and looking forward to the
return of Jesus and the new heavens, the new earth, and our eternal existence with God.
and then
returned again
for two
subsequent visits.
For Christians who follow this way of thinking, the formation of Israel in 1948 — and the
subsequent 750,000 Arabs who either left their homes or were expelled — was a result of divine prophecy, a rebooting of the prophetic time clock, triggering a series of events that will culminate in the
return of Christ.
The former PSV Eindhoven man missed eight months of 2014 with a knee injury and since
returning from that spell out the rangy midfielder has suffered
subsequent relapses and is set
for knee surgery.
Unremarkable season later viewed as laying the groundwork
for a
return to prominence in
subsequent seasons.
Lacazette's
return from injury will be a welcome boost
for Arsenal, who are now hoping to progress to the next round of the Europa League as they pursue victory in the tournament and
subsequent qualification
for the Champions League next season.
Information is given on what support is available, and how to find it
for all aspects of the postpartum experience, including the early weeks after giving birth, breastfeeding, postpartum depression,
returning to work, being a stay - at - home mom, and coping after
subsequent births.
Since his fall from grace and
subsequent return to the public stage — just as a commentator,
for now — Spitzer has hardly been shy about criticizing his successor.
Since the three main Westminster political parties all endorse the conclusions of Sir Ian Wood's recent review on how to maximise the economic recovery of oil and gas from the UK Continental Shelf (Search
for UKCS Maximising Recovery Review Final Report, here), and its tacit underlying fiscal premises (namely that there is a need
for a simplified fiscal regime to incentivise investment and drilling activity, as well as to ease the burden upon the new regulator of the upstream sector), it does not take the gift of prophecy to appreciate that the ultimate outcome of this
subsequent review on the shape of the UK fiscal regime seems foreordained; namely, a
return to the situation that prevailed before the introduction of SC, whereby the only levy on income from oil and gas fields is to be Corporation Income Tax at the standard rate levied on the likes of Starbucks and Amazon.
And Derek Draper and Damian McBride have been creating it in large quantities, and they're by no means the first or the most obvious examples, given the loans -
for - peerages scandal, various bits of chicanery around the Iraq war and
subsequent investigations (e.g. David Kelly), ministerial expense fraud (or at least it would be fraud if you or I tried the same thing on our tax
returns), pretty much anything to do with Peter Mandelson and the various leaks, briefings and spin cycles that have characterised the Labour party
for the last fifteen years.
Miner agreed to give up $ 10 million during the first year in
return for having the money restored in
subsequent years with an assurance the city eventually would get about 24 percent of total revenues.
In
return Mr. Crist should endorse Mr. Meeks
for the
subsequent Senatorial race.
Gary Martin, NASA's future technology architect, believes it is important to
return to the moon anyway, because the lunar surface is the perfect place to test the technologies and procedures needed
for subsequent visits to Mars and beyond.
He noted that neither the Copenhagen Accord nor a
subsequent agreement in Cancun, Mexico, promised finance in
return for meeting 2020 pledges.
Retention has been tricky: Fewer than half the fighters who sign up
for the study
return for a follow - up appointment the next year, and it drops off a bit more in
subsequent years.
WIth
subsequent small screen roles in Kingpin and OZ that same year, the up and coming actor would become a familiar face to television viewers before once again
returning to the silver screen
for supporting roles in Shall We Dance?
First, a brief remembrance before we get into the year's best movies: The film world said its heartbroken goodbyes to Mike Nichols in November, an occasion
for returning to the director's seismic The Graduate, along with four decades of
subsequent work, much of it brilliant.
It's been a decade since Cantet won the Palme D'Or
for his drama The Class; his accomplished and very promising early films (Time Out, Human Resources) now seem a lifetime away, while neither his English - language Joyce Carol Oates adaptation Foxfire nor the
subsequent Return To Ithaca ever actually opened in the United States.
WHAT: Feeling partially responsible
for the kidnapping and
subsequent death of a teenage girl, 911 dispatcher Jordan Turner (Halle Berry) takes a leave of absence, eventually
returning six months later in a new position as a training supervisor.
Approximately 20 percent of the teachers who received a score just above the effective threshold rating
for the 2010 - 11 school year did not
return for the
subsequent year.