Like Warren Buffett half a century ago, the Quant Firm admits to being ‘out of step’ with today’s bubbly conditions


In 1967, Warren Buffett told investors that he was “out of step with the current circumstances,” an admission that he could not wrap his head around the market climate at the time.

Buffett explained, “I won’t understand the previous approach, the logic of which I understand (although I find it difficult to implement),” even though it means it is running on a large scale, and is apparently easy, Profits to embrace an approach. Understand, has not practiced successfully, and which could possibly result in substantial permanent loss of capital. “

Kailish Concepts, a quant analysis firm, used those very words from Berkshire Hathaway BRK.B,
+ 1.77%
In a note the boss is taking a deep plunge into the “valuation death” in today’s market, which can be seen by this sharing chart: the dominance of growth stocks.

Analysts wrote, “Kailash takes the view that this time things are a very old and very flawed story. “

To join the likes of high-profile Wall Street names such as Jeremy Grantham, David Taper, Stanley Drakenmiller, Cliff Asness and Howard Marks, Kailash explained that as the chart suggests, the stock market is clearly in a bubble zone .

And we’ve seen this drama before.

Kailash wrote, “The most expensive firms in the market, such as in August of 2000, do not generate FCFs, running into losses and taking associated negative ROEs and ROASs, and funding shareholders for operations. ” “With the proliferation between price and growth at record levels and the explosion of speculative listings via IPOs and SPACs, today’s market environment shares many features with earlier peaks in 2000 and 2007.”

No signs of a popping bubble as stock was found on Monday. Dow Jones Industrial Average DJIA,
+ 0.89%
, Tech-heavy Nasdaq Composite,
+ 1.46%
And the S&P 500 SPX,
+ 0.71%
The week started strongly in the green zone.

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