Intangible value metrics outperform traditional value
The guest argued that incorporating intangible value metrics—such as brand equity, network effects, and intellectual property—helps investors avoid traditional value traps and identify true disruptors.
The argument
Traditional value metrics often misclassify disrupted companies as cheap and disruptors as expensive. Over a multi-year period, stocks that scored cheap on both traditional and intangible metrics performed best, while those that looked cheap only on traditional metrics tended to be value traps.
The thesis, stress-tested
✓ What validates it
- ✓Outperformance of high-intangible-value portfolios over traditional value benchmarks in upcoming quarters
▸ Risks discussed
- ▸Intangible value metrics can be difficult to quantify and standardize
- ▸Historical outperformance may not guarantee future results if market dynamics shift
Hear it yourself
"are trading currently at a 10% discount to the market, which has never happened before over the course of this sample. What you find is that when you apply the value factor in the insulated sectors, actually, the poor performance has been great, been been just fine. You almost see no difference between 2010 on and the beginning period. These companies survived and then ultimately thrived, despite, you know, being in the crossroads disruption. How did they do it? Two things. I think for many of these companies, say software stocks, I think the takeaway is that, look, the the code is not the most."
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