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As a result, the ‘traditional’ valuation of an advisory firm wasn’t really 2X revenue; it was 6-8X profits, and when advisory firms can run 25% to 30% profit margins, 7X profits at 28% margins came out to almost exactly 2X revenue. (In When it comes to technology firms, revenue valuation multiples are often much higher.
The world is full of people who want to look nice but don’t have the kind of enthusiasm (or time) for retail commerce that would keep them hitting the malls. For that world of emerging high-style, low-energy, low-time shoppers, there is StichFix : an online fashion retailer that comes with a built-in personal shopper.
As it turns out, there are ways you can use data to your advantage, even if you’re not a math wizard. Barry Ritholtz : So let’s break that into two halves, starting with valuation. Explain why P/E isn’t the best way to measure valuation. People did whatever was working based more on gut feelings than data.
And Tom has helped with the introduction of GMO’s first retail product, the quality ETF stock symbol Q-L-T-Y-G-M-O has been institutional since they launched in 1977. This is the first time they’re putting out a product for retail. Just really, really interesting. Finance was the natural fit for GMO. So I was at Harvard.
And definitely, their retail market participation is significantly lower than you can see in the U.S. And I did the math, and I think at that point in time, roughly speaking, assets in ETS were roughly just 10 percent, 12 percent of assets in mutual funds and I was pretty convinced that that number was to increase significantly.
He has a very interesting approach to thinking about market valuations and strategies and when to deploy capital, when to go with the crowd, when to lean against the crowd, and has amassed and excellent track record. We have institutional clients, we have retail clients, we have, you know, pension funds, we have endowments.
00:03:14 [Mike Greene] So that was actually an outgrowth from my experience coming out of Wharton and you mentioned the, the, you know, the transition of people who tended to be skilled at math or physics into finance. We built a company that was focused on valuation, initially, actually targeting corporate strategic planning departments.
Few people are in a position to see what’s going on in the world of investing, whether it’s institutional or retail, better than Vanguard CIO. DAVIS: Where international equities, because of valuations, probably 7% to 7.5%. And Greg Davis just does an amazing job. I thought this was a really fascinating conversation.
Now if we only knew the denominator and could do the math to see what those numbers really look like. Knowing those two data points – retail price and what that consumer paid — is like a little reward to that consumer that they saved $25. Zenefits’ Valuation Cut. Next time, guys? SMB Working Capital. Sizzle or Fizzle?
And I was a math nerd as a kid. If you’ve got a undifferentiated, crappy retailer and you’re saying it’s going to have $5 of free cash flow in five years, and you’ve got Visa, MasterCard, most of the magnificent seven, and you say that’s $5, they’re not the same. You have so much more certainty.
But thankfully, the next decade, things really accelerated in terms of the growth of the company and growth in the valuation, things like that. But unfortunately, just as the product came to market, the whole Atari game market blew up, and retailers didn’t want any new products. The math never seems to work out.
Now, we’re shifting to more international places like China, Europe, et cetera, that are really growing, and that valuations are cheaper. You know, when you see retailers, the Targets, Walmarts, you know, they’re changing in terms of dropping price. How are we doing in literacy versus math versus science?
I’m assuming it’s primarily institutional and not retail. And we’ve automated the, the appraisal process for valuation, both intrinsic value, meaning like, where would we pay it, where would we buy it, and where is the fair market price that asset from that level, from price and from consumer behavior now.
And I, and I really like the application of math and statistics and computer science to markets. You learn the math that can help you with, with market making operations. It’s just not smart on a math basis to do that. 01:02:36 All the math tells us we should not buy high dividend yield stocks.
Literally the first check-in to Robinhood, which went public in 2021 at about a $34 billion valuation. LINDZON: So first year at ’01, ‘02, you have Apple and they blew out the store model, the retail model, which no one thought. You know, I’m just a retail Yahoo finance kind of guy. Is it about the valuation?
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