Like Warren Buffett half a century ago, a quantitative company admits to being “out of step” with today’s sparkling conditions


In 1967, Warren Buffett told investors he was “out of sync with current conditions,” an admission that he could not understand the market climate at the time.
“I will not abandon an earlier approach that I understand the logic of (although I find it difficult to apply),” Buffett explained, “although it may mean giving up large and seemingly easy profits to adopt an approach that I do. am not fully understanding, have not practiced successfully, and that could potentially result in a substantial permanent loss of capital. “

Kailish Concepts, a quantitative analysis company, used these same words from Berkshire Hathaway BRK.B,
+ 1,77%
boss in a deeply dipping note about the ‘valuation death’ in today’s market, as seen in this revealing chart showing the dominance of growth stocks:

“Kailash thinks that the idea that things are different this time around is a very old and very flawed story,” the analysts wrote, adding that they believe that “a lot of the manic Nasdaq run is just a wall of money chasing what was already running higher. ”

Joining the likes of big Wall Street names like Jeremy Grantham, David Tepper, Stanley Druckenmiller, Cliff Asness and Howard Marks, to name a few, Kailish explained that, as the chart suggests, the stock market is clearly in bubble territory.
And we’ve seen that play out before.
“The most expensive companies in the market today, like in August 2000, generate no FCF, are loss making and carry the associated negative ROE and ROA, and dilute shareholders to fund operations,” Kailish wrote. “With value-growth spreads at record levels and an explosion in speculative listings via ongoing IPOs and PSPCs, the current market environment shares many characteristics with earlier peaks in 2000 and 2007. “
No sign of a bubble burst as stocks got a little more expensive on Monday. The Dow Jones Industrial Average DJIA,
+ 0,89%
, Nasdaq Composite COMP, heavy on technology,
+ 1,46%
et S&P 500 SPX,
+ 0,71%
it all started the week firmly in green territory.


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