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Why "Tobins Q" Ratio Should Have You Concerned

After writing “Here’s The Perfect Metaphor For Recent Fed Policy,” I had to pick up a copy of The Dao of Capital. Mark Spitznagel just has a unique way of looking at the markets that really resonates with me.

One thing that really jumped out at me while reading it was Spitznagel’s research regarding Tobin’s Q, (though he calls it, “The Misesian Stationarity Index”). It struck me for two reasons. First, I haven’t seen much research like this elsewhere and second, the opinions I have seen regarding it are all of a dismissive nature.

Just Google “Tobin’s Q” and you’ll find all sorts of pieces proclaiming, ‘Don’t worry about Tobin’s Q,’ and,…

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Stock Buybacks. Should You Buy These Companies?

At their worst, stock buybacks can be a form of corporate cannibalism. Often the unspoken motive is to use extra cash to boost earnings per share by reducing the number of shares among which the company's profits are divided. But that can be a slippery slope says Kevin Beech, an Analyst at Behind The Numbers.  "If they don't keep repurchasing stock, their earnings will take a hit. So it can turn into a sort of an addiction."

Another question is how prudent will they be in their repurchase?  Will they do so at a high p/e (flashback to NFLX Reed Hastings buying back @ $300/share in 2011) or will they do so on weakness and during dips? 

Still others actually…

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