Below is our “Top Podcast” episode with our curator, Colby Donovan!
Today we have rational reminders on how to think about investing from both Cliff Asness and James Montier, and Meb Faber as both a guest and host.
- ***Must Listen*** The Rational Reminder Podcast: Cliff Asness from AQR: The Impact of Stories, Behaviour and Risk (EP.93). Asness is the well known founder of AQR Capital Management, a global investment firm with $143 billion in assets. A lot of the episode focuses on value — he discusses how to think about value’s underperformance, explains why value works historically (people pay too much for the darlings and too little for the laggards), says that although style timing is hard to do, you can “sin a little,” and he compares the underperformance of value now to the 2000 tech bubble. He also touches on the 60/40 portfolio (which has done great lately) and his famous paper on when hockey teams should pull goalies when they are losing, which he says has given him more attention than every finance paper he’s written combined. [April 9, 2020–52 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
- ***Must Listen*** Masters in Business: James Montier on Fear and Investment. Montier is a member of the asset allocation team at GMO and has authored several market-leading books, including The Little Book of Behavioral Investing. He talks about the current market volatility and how investors should be thinking and acting. He emphasizes investors need to think long-term even when we have times like this, and explains why we are all hard-wired to be bad investors (see the quote below). He addresses the underperformance in both value and emerging markets but he addresses the idea of long term mean reversion. He also says the fact that this time is never different — while asset classes and circumstances may change cycle to cycle, human nature is immutable. He finishes with thoughts on why negative interest rates don’t make sense, why modern monetary theory may work, and what he’s learned about the relationship between wealth and happiness. [April 17, 2020–58 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Our minds are suited to solving problems related to our survival rather than being optimized for investing decisions.
- The Meb Faber Show: #212 — Eric Satz — I Want Everybody To Be Able To Invest In Alternative Assets. This was a fascinating episode — you may have heard about Peter Thiel making his Facebook investment in his IRA and Mitt Romney having a hundred million dollar IRA — and this company is trying to democratize that process for all investors. Satz is the founder and CEO of AltoIRA, which helps people make private investments in their retirement accounts. He explains the benefit of doing so, how it works, and what the future of the company is. [April 15, 2020–54 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
- The Derivative: Exchanging Intellectual Assets with $TAIL, $SYLD $GVAL ETF-icionado Meb Faber. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. In this episode, he discusses why he tilts towards trend following, shareholder yield, and value. He addresses the fact that people love dividend investing but could do better by taking a shareholder yield strategy (and discusses the hatred towards share repurchases). He also talks about his $TAIL fund, which is a hedge for market participants that has performed well over the last couple of months. He finishes the episode explaining how he invests his own money — both public, private, and even farmland. [April 17, 1 hour, 29 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
If you put the stock market history in four quadrants with cheap, expensive, uptrend and downtrend, the second best-performing quadrant is expensive in an uptrend.
- The Long View: Chris Davis: Banking on Boring, Reliable Franchises. This is a great episode with stock picker Chris Davis, the manager of the Davis NY Venture fund, who provides his view on the market and where he sees value. He says the two industries he loves the most are industrials and financials — he likes high quality industrial companies for the long-term (United Technologies especially) and well capitalized banks (Wells Fargo and Capital One the most). He also discusses the biases that are impacting investors right now, why he thinks people are trying to focus on the economy recovering when it’s really difficult to do, and why investing in energy stocks is really difficult even though it’s been a place he and his firm have made a lot of money over the years (especially in EOG).[April 15, 2020–54 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
When investors are afraid they overweight certainty, they overweight the short-term, and they get unsettled by uncertainty.
- The Meb Faber Show: #211 — Julie Novack — We Know Who Works Together…We Can Amplify Those Real World Relationships. Novack is the CEO and co-founder of PartySlate, a marketplace that connects people planning events with leading event professionals and venues. This is one of those companies that is a “why didn’t I think of this?” She explains she struggled in planning a big gala and then decided to launch the company, which is a platform to match people who want to have events with companies to plan and execute them. She talks about how the platform works, the company’s social and visual part of the platform to encourage engagement, the process of going through the Techstars incubator, and what their growth strategy is going forward. [April 13, 2020–50 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link
Ben Hunt (Co-founder and CIO, Epsilon Theory):
- The Three Body Problem Trilogy — The best set of books he’s read in the last 20 years. It was so helpful for understanding into China today.
Peter Attia (Physician and Podcast Host):
- Tribe: On Homecoming and Belonging by Sebastian Junger — Talks about the idea that certain externalities that are very difficult can actually be uniting.
Jason Calacanis (Angel Investor):
- Winner Takes All: The Elite Charade of Changing the World by Anand Giridharadas — The book makes good points about late stage capitalism.
James Montier (Asset Allocator, GMO):
- Reminiscences of a Stock Operator by Edwin Lefevre — The book that had a profound impact on him, made him understand the psyche of speculation and attracted him to the financial markets. Completely changed his life.
Preston Pysh (Founder, Pylon Holding Company):
Early on, he didn’t realize how profound it was to master your habits. Both of those books will give you insights on how to condition your mind.
- The Power of Habit: Why We Do What We Do In Life and Business by Charles Duhigg
- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones