My conversation with the Director of Research for Investment Management Associates and author of "Active Value Investing: Making Money in Range-bound Markets" includes the rationale why equities are in a range bound market, the "active value investing" approach to stock selection versus traditional value investing, and the process of identifying attractive stocks in a range-bound market climate.The length of the interview is 12 minutes 16 seconds.
If you are going to base all your observations about the over or under value of the market on P/E ratios, you are going to have to live with the conclusions you may reach by accepting the fact that while the market value of any company reflects the cash flow return on investment and rate of growth in that company, earnings are not cash flow and say nothing of the level of investment required to produce it. I must assume that Vitaliy has done research that shows that earnings and a % of cash flows and invested capital turnover and rates of growth don't change. Do you think that with globalization and outsourcing of production and service functions the amount of invested capital a multinational US company has tied up to produce a dollar of revenue stayed the same? I'm not saying that the Bull is not back in the barn for now, but attempting to make the point based on P/E ratios is spurious. The best take away seems to be that if investing based on intrinsic value was a good idea in a bull market, then it is even a btter idea in a range bound market.
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