Below is our first “Top Podcast” episode with our new curator, Colby Donovan! Holler with any feedback!
Today we have the return of AQR’s podcast with an episode on the momentum factor, interviews with two popular investors (Jim O’Shaughnessy and Michael Mauboussin) and a summary of David Epsteins’ new book, Range.
- The Acquirer’s Podcast: What Works: Investor, Entrepreneur and Author Jim O’Shaughnessy. O’Shaughnessy is the founder, Chairman, and Chief Investment Officer of O’Shaughnessy Asset Management, LLC, an asset management firm headquartered in Stamford, Connecticut. The episode begins with his background and a discussion around his first book, Invest Like The Best, which explained how one can replicate the investment strategies of professional managers using factors. This strategy actually outperformed the managers themselves because the managers intervened and hurt performance. This idea led him to become a factor based investor and write his second book, What Works on Wall Street (you can watch his Talk at Google on the topic here). He emphasizes that the worst thing an investor can do is override the investing model. He finishes with explaining some behavioral biases, including the information cascade phenomenon with the example of the 2008 housing crisis. [May 31, 2019–1 hour, 11 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- Value Investing with Legends: Overcoming Biases for Effective Decision-Making. This episode’s guest is Michael Mauboussin, who is currently the Director of Research at BlueMountain Capital Management and was previously the Head of Global Financial Strategies at Credit Suisse and Chief Investment Strategist at Legg Mason Capital Management. He covers a variety of topics, including why value and strategy should be analyzed in unison, the importance of cognitive diversity within a team, and the difference between experience and expertise (experience means you’ve been doing something a long time, expertise means you have a predictive model that works). He also discusses the idea that O’Shaughnessy discussed in the podcast above: we are now at a point in time where we can take investor’s mental models and create factor portfolios based on them. He finishes the episode by emphasizing the importance of focusing on process over outcome (what Annie Duke describes as resulting), applying base rates to your decision making process, and conducting a post-mortem to identify what could go wrong before making an decision. [May 31, 2019–56 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
- The Curious Investor: Momentum. The second season of AQR’s podcast is out and it’s as good as the first season. It kicks off with an episode all about the momentum factor featuring both Cliff Asness and Wes Gray. They explain how academics and practitioners think differently about momentum (relative strength vs. trend following/time series) and while the momentum factor can be applied to a variety of asset classes, it’s difficult to explain why the factor works. Even though momentum may be harder for investors to get their heads around, it is great to be paired with the value factor for the purpose of diversification (-0.6 correlation between the two factors). [May 29, 2019–24 minutes] iTunes Podcast | Spotify | Overcast | Stitcher | Website Link
- Invest Like The Best: David Epstein — Wide or Deep? Epstein is the author of The Sports Gene and his newest book, Range: Why Generalists Triumph in a Specialized World. The first 18 minutes of the episode review some of the topics covered in “The Sports Gene,” including the nature vs. nurture debate and the now famous 10,000 hour rule. Epstein’s explanation of not taking scientific papers and research as gospel is fascinating and that process has led him to write about most of the topics he discusses in both books. The conversation then turns to his newest book and he provides a lot of data on why being a generalist is important — whether it’s getting promoted faster at work or being drafted in the NFL (29/32 of 1st rounders in 2017 played multiple sports in high school). He explains why we need to tighten feedback loops with what he describes as kind environments (clear feedback and goals), argues that children should not specialize in one sport at a young age, and finishes by sharing some learning hacks (chunking, spacing your studying, and doing a lot of practice questions and tests). [May 28, 2019–1 hour, 23 minutes] iTunes Podcast | Spotify | Overcast | Stitcher | Website Link
Episode #158: Tobias Carlisle, “The Way To Get The Best Performance Is To Concentrate Into Industries When They Get Cheap”