Great podcast episode recommendation thread

[CorpRaider]

21 hours ago, gfp said:

 

Now's your chance!  A few lucky folks managed to get in at $270 per share ($222 Billion market cap before they do their first roll-up).  

https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=QXO&insttype=Stock

https://www.bloomberg.com/opinion/articles/2024-06-17/qxo-doesn-t-have-enough-stock

 

I missed it.  Bid $9.

[Spooky]

Thought the latest Odd Lots was pretty interesting:

 

MMT's Godfather Says the US Government Is Spending Like a Drunken Sailor

 

https://podcasts.apple.com/us/podcast/mmts-godfather-says-the-us-government-is-spending/id1056200096?i=1000661504184

[Xerxes]

On 7/3/2024 at 6:47 PM, CorpRaider said:

Most recent Odd Lots has a good interview with Brad Jacobs.  I swear to god I blew investing in his stuff like three times now.  It's like passing on Buffett in 1995.  

 

QXO Doesn’t Have Enough Stock - Bloomberg

[gfp]

12 hours ago, Spooky said:

Thought the latest Odd Lots was pretty interesting:

 

MMT's Godfather Says the US Government Is Spending Like a Drunken Sailor

 

https://podcasts.apple.com/us/podcast/mmts-godfather-says-the-us-government-is-spending/id1056200096?i=1000661504184

 

I'm just listening to this one now.  Mosler isn't usually a great podcast guest but he sure is correct about fiscal reality.  Wabuffo directed me to Mosler years ago as the best way to get my head around the macro plumbing of the actual financial system we have - not some hypothetical one that people wish we had or some flawed federal-government-as-household model.

 

Warren has it right - the current Fed policy rate is inflationary on balance.  Powell has it backwards for all of the reasons Mosler has been harping on for years.  The CPI or PCE or whatever tends to gravitate towards the effective interest rate on government debt and Warren likens this to a stock dividend (not a cash dividend but a dividend of additional shares).

 

When Mosler talks about how insanely regressive the stimulus of the current t-bill rates are - just picture Buffett at Berkshire as exhibit number 1.  

[Spooky]

2 hours ago, gfp said:

 

I'm just listening to this one now.  Mosler isn't usually a great podcast guest but he sure is correct about fiscal reality.  Wabuffo directed me to Mosler years ago as the best way to get my head around the macro plumbing of the actual financial system we have - not some hypothetical one that people wish we had or some flawed federal-government-as-household model.

 

Warren has it right - the current Fed policy rate is inflationary on balance.  Powell has it backwards for all of the reasons Mosler has been harping on for years.  The CPI or PCE or whatever tends to gravitate towards the effective interest rate on government debt and Warren likens this to a stock dividend (not a cash dividend but a dividend of additional shares).

 

When Mosler talks about how insanely regressive the stimulus of the current t-bill rates are - just picture Buffett at Berkshire as exhibit number 1.  

 

Indeed, his commentary made me think of a number of themes discussed on this board. Some of his points just make perfect logical sense - of course given the magnitude of the debt now the rise in interest rates is stimulative, interest expense is about 4% of GDP which is flowing into private parties' hands. I just hope that Mosler is wrong and the natural rate of interest is not 0%. This seems to cause too many financial distortions and asset inflation.

[Xerxes]

Listen to this episode.
 

Does Motley Fool does not understand what is Yen Carry Trade …. Or maybe it is me not understanding

 

[gfp]

5 minutes ago, Xerxes said:

Listen to this episode.
 

Does Motley Fool does not understand what is Yen Carry Trade …. Or maybe it is me not understanding

 

 

 

To save us all 28 minutes, what is the Motley Fool saying about the yen carry trade that doesn't square with your understanding of it?

[Xerxes]

3 hours ago, gfp said:

 

 

To save us all 28 minutes, what is the Motley Fool saying about the yen carry trade that doesn't square with your understanding of it?

 

i just learned that I can get the transcript, from the Podcast App. 
 

I am ok with the first paragraph. I am just not sure the consequence of it (lower Yen, therefore a boon for exporters) has anything to do with its sudden demise.  

From what I know, the unwind has always happened (caused) because of a crash in Wall Street. 

[nwoodman]

The latest We Study Billionaires with Scott Barbee is worth a listen.  some interesting comments on Indexing that I need to dig into some more.  transcript attached
 

https://podcasts.apple.com/au/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000664914692
 

Summary:

 

In this episode of "The Investor's Podcast," Scott Barbee, the manager of Aegis Value Fund, shares insights into value investing, his experiences navigating market cycles, and his concerns about current market trends. The conversation highlights Barbee's disciplined approach to investing and the challenges of maintaining a value-oriented strategy in a market increasingly driven by momentum and speculation.

 

Value Investing's Resilience:

Barbee emphasizes the enduring relevance of value investing, even as it has fallen out of favor in recent years. He argues that purchasing stocks below their intrinsic value provides a margin of safety that is crucial, especially during periods of market turbulence. Despite the dominance of high-growth tech stocks, Barbee has stayed true to his value investing roots, which has allowed his fund to outperform over the long term.

Key Quote: "When you buy things that are under intrinsic value and you're waiting for the prices to get up to intrinsic value, it's more of an investing kind of orientation... I’ve always had the value philosophy."

 

Navigating Market Crises:

Barbee recounts the challenges of managing his fund during the financial crisis of 2007-2009, when the Aegis Value Fund saw a significant drawdown. Despite the market's volatility, he remained confident in his investments, which were trading at deeply discounted valuations. His experience highlights the importance of staying disciplined and focused on fundamentals, even when the market is in turmoil.

 

Key Quote: "That was a tough time... The fund went down about 72% during that period... But these companies were trading at valuation levels... They were absurdly cheap."

The Risk of Indexing and Market Distortion:

One of Barbee's most striking insights is his concern that the rise of passive investing and indexing may be distorting the market. He suggests that the massive inflows into index funds have led to the overvaluation of certain stocks, particularly those in the S&P 500's "Magnificent 7." This could be creating a market where prices are less reflective of fundamental value and more driven by the mechanics of index investing.

Key Quote: "I think a lot about the work of Michael Green and Einhorn... Horizon Kinetics has done some great work on the impacts of this immense fund flow that's been going into passive... There's this belief that, oh, we can just set it and forget it... But now you have these stocks having ripped higher."

 

Concerns About Tech Stock Valuations:

Barbee expresses significant concern about the sustainability of the high valuations in the tech sector, particularly with regard to companies like NVIDIA. He points out that while these companies have shown strong earnings growth, the massive energy consumption and infrastructural demands they create could pose serious risks in the future.

 

Key Quote: "I find clearly within NVIDIA... there's been strong earnings growth. But the sustainability of that, I would put in some question... Each chip requires as much energy as one household... There's going to be the emergence of bottlenecks to the ability of these companies to continue to grow."

Opportunities in Underpriced Assets:

Despite his concerns about the current market environment, Barbee sees opportunities for those with the mental agility to pivot away from overvalued stocks and into sectors or companies that are currently undervalued. He suggests that these areas may offer better long-term returns, particularly if the market corrects.

 

Key Quote: "There's a real opportunity here for somebody that has that mental agility to switch into things that are much, much cheaper and perhaps get a double run... They could be pretty nasty, I would think."

 

 

We Study billionaires - Scott barbee (1).pdf

Edited August 11 by nwoodman

[SafetyinNumbers]

2 hours ago, nwoodman said:

The latest We Study Billionaires with Scott Barbee is worth a listen.  some interesting comments on Indexing that I need to dig into some more.  transcript attached
 

https://podcasts.apple.com/au/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000664914692
 

Summary:

 

In this episode of "The Investor's Podcast," Scott Barbee, the manager of Aegis Value Fund, shares insights into value investing, his experiences navigating market cycles, and his concerns about current market trends. The conversation highlights Barbee's disciplined approach to investing and the challenges of maintaining a value-oriented strategy in a market increasingly driven by momentum and speculation.

 

Value Investing's Resilience:

Barbee emphasizes the enduring relevance of value investing, even as it has fallen out of favor in recent years. He argues that purchasing stocks below their intrinsic value provides a margin of safety that is crucial, especially during periods of market turbulence. Despite the dominance of high-growth tech stocks, Barbee has stayed true to his value investing roots, which has allowed his fund to outperform over the long term.

Key Quote: "When you buy things that are under intrinsic value and you're waiting for the prices to get up to intrinsic value, it's more of an investing kind of orientation... I’ve always had the value philosophy."

 

Navigating Market Crises:

Barbee recounts the challenges of managing his fund during the financial crisis of 2007-2009, when the Aegis Value Fund saw a significant drawdown. Despite the market's volatility, he remained confident in his investments, which were trading at deeply discounted valuations. His experience highlights the importance of staying disciplined and focused on fundamentals, even when the market is in turmoil.

 

Key Quote: "That was a tough time... The fund went down about 72% during that period... But these companies were trading at valuation levels... They were absurdly cheap."

The Risk of Indexing and Market Distortion:

One of Barbee's most striking insights is his concern that the rise of passive investing and indexing may be distorting the market. He suggests that the massive inflows into index funds have led to the overvaluation of certain stocks, particularly those in the S&P 500's "Magnificent 7." This could be creating a market where prices are less reflective of fundamental value and more driven by the mechanics of index investing.

Key Quote: "I think a lot about the work of Michael Green and Einhorn... Horizon Kinetics has done some great work on the impacts of this immense fund flow that's been going into passive... There's this belief that, oh, we can just set it and forget it... But now you have these stocks having ripped higher."

 

Concerns About Tech Stock Valuations:

Barbee expresses significant concern about the sustainability of the high valuations in the tech sector, particularly with regard to companies like NVIDIA. He points out that while these companies have shown strong earnings growth, the massive energy consumption and infrastructural demands they create could pose serious risks in the future.

 

Key Quote: "I find clearly within NVIDIA... there's been strong earnings growth. But the sustainability of that, I would put in some question... Each chip requires as much energy as one household... There's going to be the emergence of bottlenecks to the ability of these companies to continue to grow."

Opportunities in Underpriced Assets:

Despite his concerns about the current market environment, Barbee sees opportunities for those with the mental agility to pivot away from overvalued stocks and into sectors or companies that are currently undervalued. He suggests that these areas may offer better long-term returns, particularly if the market corrects.

 

Key Quote: "There's a real opportunity here for somebody that has that mental agility to switch into things that are much, much cheaper and perhaps get a double run... They could be pretty nasty, I would think."

 

 

We Study billionaires - Scott barbee (1).pdf 130.72 kB · 0 downloads

Thanks for sharing. Did quants come up in the interview? I think they are the real price setters and passive just amplifies the move. There are lots of stocks in the index that don’t screen well for quality that seem cheap and stocks that do screen well that are not tech stocks that seem more than fully priced.

[nwoodman]

59 minutes ago, SafetyinNumbers said:

Thanks for sharing. Did quants come up in the interview? I think they are the real price setters and passive just amplifies the move. There are lots of stocks in the index that don’t screen well for quality that seem cheap and stocks that do screen well that are not tech stocks that seem more than fully priced.

Not specifically. What strikes me about Algos, Quants, and Indexing is that they tend to converge on the crowded trade. The discussion made me think about how, in investing, it can never truly be ‘set and forget.’ Indexing, in particular, reminds me of an AI training data set that works well in the early days but becomes corrupted as more of the data becomes self-referential. If there are no rational price setters, what is there to index? The same applies to algos unless they are programmed as rational actors rather than mere positioning exploiters. There’s a potential outcome here not unlike portfolio insurance in 1987.

[nwoodman]

Some notes on Green et al attached.  Nothing new to those who have thought a bit harder about the pros and cons of Indexing than I have

The_Passive_Investing_Debate-2.pdf

[jfan]

Thanks @nwoodman for the summary. This got me thinking about the whole paradox of skill and the distillation of the best of the best investors surviving in this globalized hypercompetitive market with all this fee compression from passive fund flows. The questions in my mind are:

1) with more skillful active investors out there, will it require fewer and fewer % of active mangers needed for long-term value discovery?

2) with democratization of investing, social media, will this counterbalance/offset the challenge of creating alpha?

3) will reversions to intrinsic value be faster for large cap/well followed companies and slower for those underfollowed (small cap)?

 

If Mauboussian is right about luck playing a more contributory role in investing outcomes, how do investors maximize this?

- being a generalist (cross-industry model thinking)

- willingness to tolerate larger cash balances

- ability to wait longer without pressures to investing from LPs

- creating a lucky network (see attached link) (5 Ways to Create Luck in Investing and Life - Safal Niveshak)

[nwoodman]

1 hour ago, jfan said:

Thanks @nwoodman for the summary. This got me thinking about the whole paradox of skill and the distillation of the best of the best investors surviving in this globalized hypercompetitive market with all this fee compression from passive fund flows. The questions in my mind are:

1) with more skillful active investors out there, will it require fewer and fewer % of active mangers needed for long-term value discovery?

2) with democratization of investing, social media, will this counterbalance/offset the challenge of creating alpha?

3) will reversions to intrinsic value be faster for large cap/well followed companies and slower for those underfollowed (small cap)?

 

If Mauboussian is right about luck playing a more contributory role in investing outcomes, how do investors maximize this?

- being a generalist (cross-industry model thinking)

- willingness to tolerate larger cash balances

- ability to wait longer without pressures to investing from LPs

- creating a lucky network (see attached link) (5 Ways to Create Luck in Investing and Life - Safal Niveshak)

All good questions and unfortunately I don’t have an answer. Thanks for laying them out they are definitely thought provoking.  A couple of observations 

 

1) I can’t recall any time in the last 10 years when I have encountered so many value investors contemplating indexing

2) Old metrics like debt/gdp are at all time highs but there seems to be complete ambivalence

3)There seems to be a new generation “experimenting with margin”

4)We have our “market darlings” the Mag 7. 
5)We have a narrative in AI, that is exciting but is a little hard to pin down in terms of real productivity gains.

5)You have Buffett sitting in cash, and the Fairfax team looking but not finding

 

I am no permabear but the set up sure feels a bit strange to me and maybe we have had the rap over the knuckles we needed last week.   I am sure I will get over it, especially if these companies continue to deliver.  In that case Indexing has picked the right horses. It was just interesting to learn that my sketchy thoughts weren’t unique and that others had developed the thinking further and applied some actual rigour and data.  I will keep an open mind as this is the system in which we are all playing.

[jfan]

@nwoodman @TwoCitiesCapital @rkbabang @SharperDingaan

Tagging a few people that might be interested in this video/podcast

A few key points:

1) passive indexing creates inelastic markets especially in well-follow large caps

2) passive indexing creates a situation where it becomes increasingly difficult for active managers to outperform

3) as % of market is invested in passive (70-80% threshold), exponential outcomes can occur

4) BTC is not the solution because it doesn't have a profit incentive because supply is fixed and ultimately the largest player will dominate BTC holdings

[nwoodman]

4 hours ago, jfan said:

@nwoodman @TwoCitiesCapital @rkbabang @SharperDingaan

Tagging a few people that might be interested in this video/podcast

A few key points:

1) passive indexing creates inelastic markets especially in well-follow large caps

2) passive indexing creates a situation where it becomes increasingly difficult for active managers to outperform

3) as % of market is invested in passive (70-80% threshold), exponential outcomes can occur

4) BTC is not the solution because it doesn't have a profit incentive because supply is fixed and ultimately the largest player will dominate BTC holdings

Great interview and top summary.  I have attached a transcript.  Building on your summary: 

 

1) That notion of inelasticity can result in fragility in both directions, e.g. China in 2015 -85%

2) His discussion on Alpha was fascinating:

 

“The solution sets that we use in finance, we’re all very good at math, but alpha is actually just the intercept on a linear equation. The behaviour of your portfolio is equal to its beta times the market return plus some idiosyncratic measure we call alpha. Alpha equals mx plus b. If you use a linear solution to a curved surface, over time, mechanically, your alphas get pushed lower. It’s just math, and it’s a function of the fact that we’re really not as good at math as we like to talk about being. We’re just using the wrong metrics.”

 

“The real issue is that we have effectively allowed a system to persist that mechanically inflates valuations, inures us to that process, allows us to create all sorts of narratives around both why it’s happening and what the degree of wealth that is being created is.”

 

3) On exponentially

“If you jump back to that slide that I showed you before, and I want to be very clear, I don’t think that this is ultimately going to happen because the volatility will become so extreme, but if you jump back to slide 11, it shows that exponential curve, that orange line going higher. The easiest way to think about that is as you get to somewhere in the neighborhood of 80% passive, and remember, we’re only about 45% right now, at around 80% passive, the Shiller PE would be somewhere around 400 to 500. But I don’t think that’s going to happen because I think we’re actually approaching the inflection point where the passive has become so large that it creates its own enemy."

 

 4) On bitcoin

“Bitcoin doesn’t have that capacity [for innovation]. You can work as hard as you want. It’s under a fixed release schedule. And as a result, there is no reward to human innovation.”

 

A couple of others

 

5) Regulatory Frameworks

Green criticizes the current regulatory environment, pointing out that index providers have been largely exempt from diversification requirements due to effective lobbying. He believes this lack of regulation contributes to the increased risk in markets.

 

“We allowed the markets to become far more risky while pursuing a theoretical ideal of complete markets. Candidly, I think that we’re ultimately going to pay a penalty for it.”

 

6) On Leverage

"So the answer is you invest passively, but that then exacerbates the societal risk that we face when ultimately we try to take that money out… Candidly, if you can, you want to actually leverage that exposure. Doing things like buying call options which historically had delivered significantly negative returns now actually largely offer positive returns because the market has shifted in that drift feature"

 

The key question is how actionable all this is. I think it is just another asymmetry to be aware of in terms of portfolio construction. One thing that is ringing in my ears, though, is how leverage becomes the heart of any alpha in an indexing world. That is where 6 sigma-type events are generated.

The Rational Reminder Podcast - Michael Green- Market Efficiency Is Not The Question.pdf

Edited August 15 by nwoodman

[Spekulatius]

I enjoyed this one (a Twitter spaces recording basically) of two fellows doing basically what Walter Schloss did decades ago.

https://podcasts.apple.com/us/podcast/value-hive-podcast/id1492171651?i=1000665614853

 

The handle @buycheapandpray says it all . I think that gal used to be Inatailhedged (or similar) and I followed here since the PBR buying days.