In recent years investors have become ever more sophisticated at predicting future company earnings.  Yet there hasn’t been any way to invest directly in company earnings streams, until now.

The invention of any new product is ultimately a response to latent demand or overt demand. Accordingly the latent demand for new markets in the financial sector typically follows a period of major structural economic change.

-Robert Shiller, Financial Innovation: Too Much or Too Little?

Here are 5 reasons why now is the time for earnings derivatives.

Democratization of Investment Research

It used to be that […]

Historically, PE ratios have varied widely for the broader market, and for individual stocks and sectors. For example, the trailing PE  ratio of the S&P 500 has ranged from 5.9 to 122, between 1927 and 2019.  Why do PE ratios fluctuate so much? In this article we summarize 5 main drivers influencing changes in PE ratios.

Expected Growth Rate

Changes in earnings expectations are the most direct drivers of PE multiples. When management reduces or eliminates future guidance, the stock will often react negatively. Similarly, PE ratios often react to analyst commentary […]

Most hedge fund analysts and investors working today have never experienced inflation.  It’s trended downwards over the past few decades.

Source: Horizon Kinetics, BLS

Yet the new global rise of populism has led to a dramatic reversal of key factors that kept inflation low for so long. The buildup of new inflationary pressures is being amplified by the policy response to Covid-19 around the world.   Although we are experiencing short term deflation, the greater risk as the world […]

Click here to download Earnings Power Indexing as a PDF. 

BLX Global Indexes provide pure exposure to the aggregate financial statement performance of select industries and sectors. Our patent pending methodology turns bottom line financial metrics into an investable asset, creating new opportunities for speculation and hedging.

The basic concepts are similar to traditional stock indexes: a list of companies and a normalized number to describe the aggregate performance. However, the methodology behind our indexes is different than traditional stock indexes. The calculation methods for our indexes are based on the […]

Corporate profits are near all time highs, and high earnings multiples indicate the market expects continued profit growth.  BlackRock’s 2020 Global Outlook identified two key trends that have underpinned high corporate profit margins in recent decades:

Profit margins of publicly listed companies have been on a decades-long march higher. This has been driven by two key trends: globalization (integrated supply chains and labor markets that have, along with technological innovation, reduced input costs) and rising market concentration (the advent of superstar firms that dominate […]