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Denis Ouellet, CFA  

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  • When To Buy: Digging Into The Value Of Coach [View article]
    Tks for setting the record straight. Vevers' impact is crucial for COH and all investors. Given the importance of Europe and Japan in Loewe's sales, we should perhaps give a more positive rating to Vevers' results during the 2008-2011 period. Both regions economies were very very weak. Maintaining sales in such poor environment is pretty good. FYI, total Spanish retail sales collapsed nearly 30% in real terms between 2007 and 2012.
    Jul 30, 2014. 08:20 AM | 1 Like Like |Link to Comment
  • When To Buy: Digging Into The Value Of Coach [View article]
    Also researching COH, your numbers on Loewe under Vevers were as worrisome as they we surprising given that LMVH has never released such numbers. Leah Capitan, my co-researcher ( dug a little to find this pdf ( and wrote me that "it does outline a drop in sales in those figures. EXCEPT, this is about Loewe AG, a company out of Berlin that produces entertainment systems. Coincidence?"
    If this is a coincidence, it is the mother of all coincidences.
    Could you pls verify and confirm or refute this important info.
    Jul 28, 2014. 02:48 PM | Likes Like |Link to Comment
  • The Mid-Term Bust-Boom Pattern [View article]
    Because I did not find any recurring specific causation other than correcting excessive valuations. "To conclude, the mid-term bust risk is significant, dangerous and unforeseeable."

    My very point: don't wait for the trigger, you may never see it before the fact.
    Mar 26, 2014. 09:53 AM | Likes Like |Link to Comment
  • Hard Patch Coming? [View article]
    Very modest easing from very tight standards. WFC just recently said it will reach for lesser FICO scores (

    From said survey:
    ''Changes in standards and terms on, and demand for, loans to households were mixed. The survey results indicated that a modest fraction of large banks had eased standards on prime residential real estate loans, but a similar fraction of small banks had tightened standards on such loans. Respondents indicated that they had eased standards on credit card loans, auto loans, and other consumer loans. Most banks reported little change in most terms on consumer loans, with the exception of credit card limits and loan rate spreads on auto loans, which modest fractions of banks reported having eased on balance.
    Feb 18, 2014. 11:01 AM | 1 Like Like |Link to Comment
  • Hard Patch Coming? [View article]
    Better charts for this article can be seen on my blog post at
    Feb 18, 2014. 10:06 AM | Likes Like |Link to Comment
  • Why Everyone Should Own Wells Fargo [View article]
    See also NORTH AMERICAN BANKS RANKING (March 2013) at
    Mar 4, 2013. 12:05 PM | Likes Like |Link to Comment
  • The Shiller P/E: Alas, A Useless Friend [View article]
    The blog ( has an "Archive" widget in the sidebar just above the SA logo. As far as I am aware, all 5311 posts are there by date.
    Dec 6, 2012. 04:35 PM | Likes Like |Link to Comment
  • The Shiller P/E: Alas, A Useless Friend [View article]

    The "good, well proven data" that I am "ignoring" is just not good enough for me if it uses data from companies no longer in the index and thus giving us inaccurate P/Es for 10 years.

    As to my track record that you want to audit here are a few links that will save you from going through all 5311 posts in my blog:

    You may also want to read my March 9, 2009 SA post "S&P 500 Valuation Analysis: Near Bottom"(, giving you the opportunity to read your comment to my analysis.
    Dec 4, 2012. 04:43 PM | 1 Like Like |Link to Comment
  • U.S. Employment: No Clear Upturn Yet [View article]
    Please see P/Es, QEs & SAUDIS at

    That's my blog where I post daily and write on equity markets valuation.
    Oct 10, 2012. 04:16 PM | Likes Like |Link to Comment
  • Second Quarter 2012: The Beginning Of An Earnings Collapse [View article]
    On June 6, I posted on the coming EPS decline (BANKING (BETTING) ON BANKERS? at Here`s the part on equity trends when EPS decline:

    What about the earnings risk? Can equities rise if earnings decline? Yes they can:

    April to November 1938: EPS -30%, S&P 500 Index +33%. (Recession May ‘37-June ‘38)
    March 1951 to June 1952: -17%, +13%.
    March 1956 to October 1958: -22%, -17% (trough in December 1957). (Recession Aug. ‘57- Apr. ‘58)
    September 1959 to June 1961: -12%, +14%. (Recession Apr. ‘60-Feb. ‘61).
    December 1966 to September 1967: -4.5%, +21%.
    August 1969 to December 1970: -12.6%, -24% (trough in June 1970). (Recession Dec. ‘69-Nov. ‘70).
    September 1974 to September 1975: -14.8%, +31%. (Recession Nov.’73-Mar.’75)
    March to September 1980: -4.3%, +23%. (Recession Jan–July 1980).
    November 1981 to December 1982: -16%, -15% (trough in July 1982). (Recession July ‘81 – Nov ‘82)
    December 1984 to December 1985: -4.9%, +26%.
    June 1989 to December 1991: -24.4%, +12% in first 12 months, -15% during following 4 months, total -4% for period). (Recession Jul ’90-Mar ‘91)
    September 2000 to December 2001: -32%, -26% (trough in September 2001). Recession Mar ‘01-Nov ‘01)
    June 2007 to November 2008: -37% (normalized), -40%. (recession Dec ‘07- June ‘09).
    Of course, sometimes the market had already declined in anticipation of a recession, but not always. The point here is that markets can rise while earnings are in a declining trend. It happened in 7 of the last 13 times. Importantly, in all 7 cases, inflation declined along with EPS. Remember the Rule of 20: Fair Value = trailing EPS x (20 minus inflation). A 1.0 decline in the inflation rate offsets a 5% drop in trailing earnings.

    Total and core CPI are both +2.3% YoY in April. Core has been rising at a 2.1% rate in the past 4 months but total CPI was unchanged in April and May-June will likely benefit from lower energy prices. Recent U.S. PMI reports indicate that there is little pricing power among manufacturers at this time while costs pressures are subdued by the global economic weakness. In addition, the U.S. dollar has been rising smartly in the past year. In all, the outlook is for the CPI to trend lower in coming months.
    Jul 2, 2012. 12:50 PM | 2 Likes Like |Link to Comment
  • Equities: Yellow Flag Waved High [View article]
    Very kind. Thanks.
    May 1, 2012. 05:12 PM | Likes Like |Link to Comment
  • Equity Multiples And Interest Rates: Is The Current Risk Premium Sufficient? [View article]
    In March 2009, I got involved into the raging equity valuation debate by publishing S&P 500 P/E Ratio at Troughs: A Detailed Analysis of the Past 80 Years. I showed that the conventional absolute PE ratio approach widely used by the bears to recommend continued selling of equities was inadequate for the circumstances as it failed to take into account the significant decline in inflation rates (and interest rates). I explained, backed with 80 years of history, that equity valuations were then at a true historical low and that barring deflation, equities were at or near their lows and could advance 20-40% during 2009 with little downside risk. Since then, I have continued to successfully use The Rule of 20 to support my equity valuation work. This post explains why it is the superior valuation tool for the US equity market.
    Mar 2, 2012. 01:39 PM | 2 Likes Like |Link to Comment
  • Apple's P/E Calculation: Subtract The Cash? [View article]
    If you subtract the cash from the stock price, you also have to subtract the income from that cash from the EPS. With interest rates so low, this is a mute point since net after tax income on $81 of cash is max $0.40, only 1.5% of total EPS.

    It means that if Apple tomorrow distributed all its cash to shareholders, its EPS would only decline to $24.87. If cash has no real impact on the PE, the stock price would decline to $373 (15.0x $24.87) but shareholders would also receive $81.21 in cash for total value of $454.26, which is $74.26 higher than the current stock price.

    Apple’s EV/EBITDA of 8.4x = $297 + cash received of $81.21 = $378.74 (rounding errors).

    The reason that cash is so valuable today is that interest rates are so low, almost nil. Effectively, the cash has little impact on EPS. If you do not take it into account, you reduce the true value of the stock by nearly the amount of the cash.

    EV/EBITDA is useful when interest rates are higher and have a greater impact on earnings and cash flows. The concept effectively “neutralizes” the impact of net debt and taxation on valuation.
    Aug 17, 2011. 12:42 PM | 1 Like Like |Link to Comment
  • The Great Earnings Yield Spread Divergence: The Bullish Case [View article]
    It is the fixed income market that has changed significantly as emotional investors seek calmer waters with herd-like instinct. The clear move in real yields below the 2% level and the acceptance of occasional negative real yields since 2002 is a reflection of the substantial increase in the preference for safety on the part of individual and many pension fund investors as a result of their terrible experiences with equity and housing investments since 2000.

    Given the fast aging of the population, the huge loss in confidence towards politicians and the alarming rise in sovereign debt levels across the world, it seems safe to assume that this is the new paradigm for a pretty long period.

    Aug 16, 2011. 01:11 PM | 1 Like Like |Link to Comment
  • The key to Warren Buffett's success is he doesn't invest like a man, according to a new book penned by Louann Lofton. Warren Buffett Invests Like a Girl: And Why You Should Too takes the argument women are superior decision makers and runs with it - concluding more estrogen would help tamp down emotions raging through the markets.  [View news story]
    See LADIES`TURN at
    Jul 13, 2011. 05:54 PM | Likes Like |Link to Comment