Market Efficiency, Sahm’s Insights, $PRKS Potential, Inflation Trends, and More
Welcome back to the BBAE Blog, your trusted source for the latest investment insights and analyses from the BBAE team. This week, we’re excited to share some highlights that will keep you informed and ahead of the market. Don’t forget, some of our most valuable insights are available exclusively in the BBAE Pro app—download it now to unlock full access!
- Are Markets Becoming Less Efficient?
- Claudia Sahm (of the Sahm Rule) Speaks Out
- Voss Capital: United Parks & Resorts ($PRKS) Investment Case – Q2 2024
- Weekly Roundup: Good Inflation News, WSJ Likes Small Caps Now, Recession Update
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Are Markets Becoming Less Efficient?
BBAE CIO James Early analyzes Cliff Asness’s recent paper on declining market efficiency. James examines Asness’s claim and potential causes, including indexing, prolonged low interest rates, and social media influence. The article explores the difference between market efficiency and rationality, using the GameStop case to highlight modern market complexities. James considers Asness’s advice for investors in this environment, stressing the importance of long-term thinking. Read the full article here.
Claudia Sahm (of the Sahm Rule) Speaks Out
Claudia Sahm, creator of the Sahm Rule, discusses her concerns about the U.S. labor market in a conversation with James Early. She notes that while she doesn’t foresee an immediate recession, the economy is starting to show signs of weakness. Sahm, famous for her recession-indicating Sahm Rule, points out that it’s simply a heuristic that doesn’t always apply, especially as more workers re-enter the labor market. In their chat, they explore her thoughts on the economy, the logic behind the Sahm Rule, and the need for greater female representation in economics. Watch the full video here.
Voss Capital: United Parks & Resorts ($PRKS) Investment Case – Q2 2024
In this week’s Pro Investor Letter, we highlight Voss Capital’s in-depth analysis of $PRKS (formerly SeaWorld), a new core long position in their portfolio.
Despite the current negative sentiment surrounding theme park operators and concerns about consumer spending, Voss sees $PRKS as a compelling opportunity with significant upside potential. Voss argues that the market is misinterpreting the company’s prospects, creating an attractive entry point for investors. They believe $PRKS offers a combination of operational resilience, strategic opportunities, and potential for multiple expansion that could lead to substantial returns. Read the full article here.
Weekly Roundup: Good Inflation News, WSJ Likes Small Caps Now, Recession Update
This week’s news roundup covers several key topics:
- Positive Inflation Data: The Consumer Price Index (CPI) rose by just 2.5% annualized through August, the lowest increase since early 2021. This improvement is largely due to falling energy prices, though service inflation remains stubborn.
- Wall Street Journal Bullish on Small Caps: With interest rates expected to drop, the WSJ highlights the potential for small-cap stocks to outperform. Analysts predict stronger earnings growth for small caps in 2025 compared to large-cap stocks.
- Recession Indicators Mixed: The yield curve has uninverted, which some analysts interpret as a potential recession signal. However, consumer spending remains steady despite income not yet recovering to pre-COVID levels, making the economic outlook uncertain.
Read the full Weekly Roundup post here.
Happy Investing,
Barry Freeman
CEO @ BBAE
This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.
