“Investors tend to demand more performance consistency than is feasible in competitive markets, often resulting in ill-timed capitulations.”
– Antti Ilmanen
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Global Private Equity Report 2022 (84 pages): Bain & Company’s 13th Global Private Equity Report that gets into PE and the road ahead.
Private Markets Rally to New Heights (70 pages): McKinsey & Company on private markets.
Investing in Innovation (17 pages): Sparkline Capital on technology, innovation, and disruption.
Drobny is the Founder and Managing Partner of Clocktower Group, an alternative asset management platform. He discusses:
• Why global macro can serve as a great diversifier
• The benefit of firms providing information & access to their investors
• His contrarian opinion of the endowment model
Bryan Lawrence is the founder of Oakcliff Capital. He discusses:
• His investment in Charter Communications as a way to explain his investment process
• How outperforming the market in the long-run still requires you to underperform the market over shorter periods
• Why he holds 16% cash (on average)
From The Episode:
“During a calm year like 2019, the average US stock price goes up and down by 50%, 5–0%. And in a crisis year, like the dot-com crash, we had in 2000 or the 08/09 financial crisis or the pandemic we just had in 2020, by up to 200%. There’s no way that the intrinsic value of the average business is going up and down by so much each year, and this is a big advantage for a stock picker who’s done the work.”
Van Den Berg has run a renowned investment firm, Century Management, for almost half a century. He discusses:
• Lessons from surviving the Holocaust as a child
• How he taught himself how to invest with no degree or training
• Why visualization and harnessing his unconscious mind help him as an investor
From The Episode:
“If your principles are more important than your life, you sacrifice your life. If your life is more important than your principles, you sacrifice your principles.”
Cliff Asness on global value spreads today. Link
Dan Loeb on adapting over time. Link
“Since I started Third Point 27 years ago, I have seen many investors (including myself) stumble after years of success because they did not adapt their models and frameworks quickly enough as conditions shifted. I have said before that they don’t ring a bell when the rules of the game are changing, but if you listen closely, you can hear a dog whistle. This seems to be such a time to listen for that high-pitched sound.”
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Name: Verdad Weekly Research
Frequency: Every Monday
Cost: Free (must be accredited)
Author(s): Dan Rasmussen & the Verdad research team
Topics: Global macro
Overview: Verdad Advisers is a global asset management firm driven by an unwavering commitment to intellectual integrity through rigorous research and its practical application. This email service is their flagship research product. Each week, Verdad provides a compelling analysis on a topic relevant to their clients.
Recent topics include:
Recent Highlight: Inflation & Lost Decades: Avoiding the Busts in Boom-and-Bust Periods – This piece looked at how equities perform during periods of extreme inflation hikes like we’re seeing today. They highlight the ‘lost decades’ as shown below, which are defined as a decade when the S&P 500 had negative real returns.
Source: Capital IQ, FRED, Verdad
What the research said: S&P 500 returns were meager in periods of high inflation. Most importantly, the “lost” decades (1965–1975 and 2000–2010) are characterized not only by high inflation but also by rising inflation compared to previous periods. This is in line with research showing that asset performance is driven by the change in inflation (i.e., is it accelerating or slowing down), rather than its absolute levels, and that equities tend to do poorly in such environments.
Their takeaway: Investors may be currently facing the risk of a “boom-and-bust” decade. Since its beginning, inflation has been rising in 70% of the months and has now reached its highest levels in the past 40 years…We believe now is a good time for investors to consider drawdown-reduction strategies and their implementation in a broader portfolio context.
If you’re interested in receiving Verdad’s research each week, subscribe for free here.
The Idea Farm Team