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Stories from Peter Lynch
The Idea Farm
October 01, 2023
Together With
"We are prisoners of the future because we will be ensnared by our past."
- Peter Bernstein
Research
AQR - Honey, the Fed Shrunk the Equity Premium (20 pages)
AQR looks at implications of higher interest rates for asset allocation. Their analysis shows when cash rates are higher, stocks and illiquid alternatives tend to underperform, bonds do a good job of passing the cash rate to investors, and liquid alternatives have done best of all.
Source: Global Financial Data, Federal Reserve, Bloomberg and AQR. Results shown are the average across the three rules described previously, and the average across 1-, 12- and 36-month horizons. Cash is U.S. 3-month T-Bill. For U.S. IG Credit, chart A shows excessof-Treasury return and chart B shows credit excess return plus corresponding Treasury return.
Bonus Content
Bill Gurley gave a great presentation about regulatory capture and its harm to society (25 minutes). Link
In this 1997 lecture, Peter Lynch shares some great old school stock stories on Dunkin' Donuts, CVS, Taco Bell, Walmart, Polaroid, Blockbuster, Home Depot, Microsoft, & more (47 minutes)! Link
A great read on the business of money management, risk mitigation, and wealth preservation. Link
The Consumer Financial Protection Bureau released a report on contactless and smartphone payments in the U.S. Link
Bloomberg’s Javier Blas wrote about Africa's lost decade and why the continent’s social and political malaise are symptoms of economic distress — not the causes. Link
Diversity your portfolio with high-yield private credit
Where can investors find yield and diversification outside of stocks and bonds? Look no further than private credit, a multi-trillion dollar industry that institutional investors have been loading up on for years. These loans — which are negotiated privately and are not originated by banks — can command much higher interest rates and offer largely uncorrelated risk profiles.
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Visit Percent to create a free account and see all current offerings available. Unlock the asset class that can deliver diversification and greater resistance to inflation and volatility.
Podcasts
9/15/23 - 49 minutes
Rob Arnott shares lessons from the tech bubble, how AI may impact the economy and markets, smart beta, and more.
9/22/23 - 110 minutes
GMO’s Jeremy Grantham discusses the evolution of bubbles in relation to the market today, the quality factor and GMO’s entrance into the ETF space, and why he’s concerned about global fertility rates.
9/20/23 - 84 minutes
Benchmark’s Sarah Tavel covers the state of venture capital, AI’s impact on startups & more.
WHAT ELSE IS HAPPENING
Meb Faber talked with John Davi about protecting against inflation, global investment opportunities, and diversifying beyond a 60/40 portfolio.
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