This excellent post from Eric Cinnamond at Palm Valley Capital sums up the challenges facing value investors in our post-QE world:
Last week my son and I went for a bike ride. Before departing, I noticed the chain on my bike was a little rusty, so I sprayed it with WD-40. My instinctive response can be traced back to my childhood and growing up in a WD-40 family. We put it on everything. In addition to our bikes, we sprayed it on window tracks, saws, locks, nuts and bolts, lawnmowers, and anything else that squeaked, rusted, or was stuck. If it was edible, we’d probably have put it on our pancakes!
When I became a small cap analyst in 1996, I was thrilled to learn WD-40 (symbol: WDFC) was a publicly traded company. In fact, it was one of the first stocks I followed and recommended. WD-40 is a classic high-quality small cap that possesses many of the attributes we seek…..