Stocks of companies that improve their ROI perform better — Up until 2022, it seemed like we were in an endless bull market. And in bull markets companies’ share prices start getting rewarded for things well beyond fundamentals such as narratives, hype (e.g. connections to hot themes), the possibility of significant profits far in the future, meme status, etc. It…

And why do they keep pushing for layoffs? — A phrase you will hear a lot more of in the coming months is activist hedge fund. These are funds that buy up significant amounts of a public company’s stock and then agitate for change. Some examples are Starboard Value with Salesforce and TCI (which ironically stands for The Children’s…

And it wants to pay you less — With Google and Microsoft announcing layoffs this week, Silicon Valley has gone from anxious nervousness to a full-on panic. Of the tech giants, only Apple has yet to announce substantial cuts. Yet a quick examination of these companies’ financial statements reveals hundreds of billions in profits and hundreds of billions…

Reflecting on John Lewis Gaddis’ book, On Grand Strategy — At Yale, there used to be a fairly prestigious course called Seminars in Grand Strategy. Students who aspired to be statesmen or business leaders competed for admission. And once admitted, they spent the course reading and dissecting history and the classics, working through simulations of geopolitical crises, and hobnobbing with…

Look back for clues on how to move forward — (Not intended to be investment advice. Opinions are my own.) In order to guess at where markets are headed, it helps to look back. Over longer periods of time stock markets, are driven by narratives and changing expectations around those narratives. Thinking about which narratives make sense and more importantly…

It’s another way to increase start up costs for new entrants — Lots of people are getting laid off right now, especially in tech. The broader labor market might not feel it yet. But in Silicon Valley, which over-hired coming out of the pandemic, the mood feels very recessionary at the moment. Tech workers, including engineers are being let go in droves…

You can’t buy or growth hack into truly sustainable growth — I hope that one enduring lesson from last year’s bubble burst is — access to capital is not a competitive advantage. Just because SoftBank is willing to lob a billion dollars at you does not mean your firm is no longer subject to the laws of competition. And the fact…

Taking a look at a company whose shares are down 96% from its high — (I do not own any Stitch Fix shares. This article is for educational purposes only, and is not intended to be investment advice.) Stitch Fix is an interesting company. I first wrote about it more than 2 years ago here. Back then the stock was a pandemic darling thanks to…