ReSolve's Riffs on Value Investing

I do think I've now let's get familiar with this paper yeah let's get it we'll get them on here so your are like we are lovable Cheers so I wanted first thing I wanted to chat about was who's got one and I'm gonna throw this out to the audience because now we turned on comments but I want to know who you think's got the better hair is it Toby or Corey or Westlaw Wes in there - where's gonna see you gonna show you density and luster of that hair you know it's it does it's got the same kind of waviness as Corey's yeah think you've got better beard density than Corey so it's a bit patchy that's that's that's that's man bun ask there you can do a bun in the top and the mid-back yeah you're you're solid you're so thinking about these are gonna have a light like that I cannot fight well enough to put a man bun okay we'll get your broadsword this yield and we go this is what happy hours like cheers gentlemen it's been two years I'm going the margarita today with the tequila shaumbra and what else we got on the call here yeah well Moscow Mule thanks Mike in the proper moment on topper involving to a cop and I got it and your suggestion mother I'm a little little bar in the background so it sounds like worth them made by my mother-in-law classic I didn't hear you never know yeah mother loves baseman right now my father-in-law's like workroom right now my what brought you there bra me here was hundred mile an hour winds and oak trees that destroyed everything around my house including the power so I could hang out in Jersey now is if you don't have enough going on down there so before we go further we have to record this locally I know we've forgotten so we're gonna have to start everyone press the board on some sort of local I'm recording yeah yeah I'm recording I see the pro is look at you guys that's we got distracted so weak I didn't record it you the drinking stuff I'm starting now I blame the fact that I've been so right so so you guys listening later have missed the hair to be so which is probably gonna be the best part of this discussion so that's the lesson you guys need to turn tune in live next time or you missed the best parts air though I'm drinking a local brew flying monkeys 12 minutes to destiny it's a raspberry hibiscus lager that my wife bought and it's actually fantastic it's a bit of a departure from my usual but it's good its average alright it's twelve Monkeys I'm impressed you're prepared to say that out loud say that time you baited it I got an even worse one this is a virgin gunfire which means that it's it's just coffee gunfire now I used to drink it too literally it's just rum in coffee I drink it every year in celebration I do I'm not painting back there and no on your bottom shorter I have that I think the same pain my grant my late grandmother had that what what is that that is a tie rubbing nope no pun intended yes so it's but you're short when you get a painting yes it's uh so yes when the monks rub this on a special kind of paper with charcoal and creates the design and I don't know if you knew this but I my wife and I lived in Thailand for a couple of years and so we brought back a bunch of this stuff but this actually isn't for me it's my father-in-law got this on his pilgrimage to Thailand when he was a younger man and didn't have room for it so so give it to me and nice reminder of time spent in Asia which is was a really great time in my life so you yours was do you have it did you inherit it or is it silly agreement it's hanging in my house and I'm gonna take a picture of incentive to it like I'm very like I'm not in my house right now but I'm thinking like wow like did Adam steal that when he was you know sleeping here last time or what a freak on dinner time it's loving design got one of those yeah yeah exactly I'll tell you what would really blow your mind is in my living room I've got a painting and I learned later that this is like the you know animal cruelty on steroids so now I'm all ashamed of it but but yeah you know notwithstanding that in my living room I've got a painting that was done by an elephant and it's a painting of an elephant like in the sunset and this elephant actually painted this from this Thai elephant shelter in northern Thailand how much you know so Oh like I don't know 400 baht which is like 50 bucks or something so not a lot but dude dressed up as a as an Li blossom painted I literally watch the elephant painted it was it was I've never seen anything like it was crazy but anyways then apparently their elephants are really not treated well and so now I'm speaking about value purchases why don't we get to the topic the topic now well I actually I want to make sure we start with that well we're sort of off topic a little bit I want to make sure we get the March of the fall and update because I do not want to miss that or have that delayed so so what do you got for us Wes what's happening in that realm yeah so I talked to the general the other day general gronski who's actually gonna be on Jacko's podcast you guys in who Jocko is Cora yeah and he's going to he's gonna promote off to the March for us as well so this thing could get big so that that's good news the the bad news is it's pretty frankly that obvious we're gonna have to you know figure out our vulture a virtual version of the March this year unless something dramatic happens that that's my it's not a hundred percent but I'd say that's probably likely because it's in late September you know arguably if this thing is real at all it'll come back a little bit and they probably don't want a thousand people hanging out together so unlike we're going to do it live but but we're scheming on some other ideas on how to make it a virtual event all but once we get some things fleshed out I'll uh I'll ask you guys what you think so it's going there's no excuse to not stay in shape but you may not have to do it in the middle nowhere in Pennsylvania well just good event like it's a great excuse to get together or not we do draw to it every year and so that's a shame and we'll have to figure out how to make the most of the remote experience I should render mine you should remember half an hour you randomized for people to do face time with with each other well hi locally you guys are good at building apps in our architecture and build that app they'll be awesome tech solution rockin but there is a chance it could go but like I said it's not looking great at this point but oh my god for now we're mark shaming Toby here you know he doesn't come Matt and northeast for anything yeah you know I saw hafsteinn did David Goggins I think it was four by four by 24 he had to do four miles every four hours for 24 hours which meant you know yeah I think I'll still have to it's how did it go and he said well you got to do a little laundry cuz he just ran out of ahead of marching and ran and ran out of clothes but he got through it what an animal yeah and God forbid he'd have to wear the same piece of clothing why would we know working out in sleeping same clothes all the way through that just throw them away at the end so so so value Renaissance guys oh yeah the time you learn better the bottoms in boys wear but up from here I'm so proud of you guys for making it through contrast and today to how you were feeling even two weeks ago yeah somebody's tie pink is this the value anonymous support group the beatdown has been so long and so painful at this point like I'm just kind of numb to anything so like this is exciting I guess in theory but you know I just I know I just know it's gotta be fake it's a risk it's too much I just gave up on value but still stick with it because at this point I'm all-in so you know last year we ran from August 27 there was that big move where it was it's like the six standard deviation it's not normally distributed so it's not I know I don't don't tell me that afterwards there was a gigantic move to Valley gigantic move away from momentum August 27 followed up so I August 27 was the bottom it was September night September 10 was like a five standard deviation they ran like a scalded cat all the way through to December 17 just hit a brick wall just drifted sideways and down which I think was the sell-off pre the covered shut down and then shut the bed through everybody knows that it got got shot first and then didn't recover at the other side so anybody who's been trading value for last decade has got scar tissue all over them so there's no way in the world you trust two weeks of a little bit of a run that's that's noise are you guy and a couple I scream value stocks I bought Jets I don't know if you've heard it but deep deep value like almost broke that the values pay off quite nicely how is it like a 80% of something in two weeks I think Robin Robin Hood owns basically the whole thing like Oh Robin you got to give it to the Robin restaurant because they have there either I've been saying this a few times there's there's very little difference if you're a dip buyer you're either a value guy or a bag holder and you don't really know until about a year after the event but those Robin Hood guys they're good dip buyers at least it was astounding but now they're I mean they're doing better than Buffett you think because because I know Toby you've been kind of on the on the Berkshire bandwagon a little bit it showed up in some of your screens you were excited about about sort of getting an allocation to that and then and then you know so all the all the war and wannabes you know leaping ahead of Warren saying hey this has got to be the buying opportunity of a lifetime by the time he reports he's sold some banks sold all his Airlines and no more dope not bought a single yeah not bought a sort of few billion but that's like lunch net net a net seller and so what are your what are your thoughts on there how do you how do you sort of encourage the the value zeitgeist to continue to stay true but you know what's Warren doing how do you handle that whole discussion yes so on March 23rd which was the bottom for the market but much 20 through that sort of week beforehand on a on a prior q basis the book valley price to book value for Berkshire was as cheap as it was March 5th 2009 and then you got to go way back I don't know that it was ever that cheap on a book value basis before that's a very rare opportunity to buy it and it got down so I think 160 $2 163 and it wrote it like it's a hundred and eighty something today it's not not much higher like it rallied a little bit and then it kind of fell over I think part of it was that but if it's always very very optimistic and then they did he had that annum which was spooky as hell because it was in the gigantic auditorium with nobody there and he was somber yeah and probably appropriately so because it was right in the middle of the coronavirus shutdown you don't want him come up you look pale predict and not well we just had long you got him in the seam should work out together but I just yeah this I think having this you know he sold into it and then I think that there had been a little bit of a meme beforehand that maybe Berkshire had lost that value investing over buffets buffets to aisle didn't pull the trigger all that seemed to reinforce it there's really been no signs of light yet out of it I I kind of like probably for sentimental reasons it's like it did come into my screen I'm not gonna buy it for sentimental reasons it's in my screen because I think it's cheap and good but you know for sentimental reasons I would like to see the best to ever do it go in one more time with cashed up to kind of do something big and I hope he gets another opportunity I just don't know like I'm not not a market predictor guy but I hope he does it was rude to me it was reminiscent this whole sort of vitriol from the Pajero public was very reminiscent of 2000 of 99 2000 Warren's lost it you know he is eighty percent behind you know the Berkshire down 35 SP up 50 that that that dispersion and performance and he again this is this is what value and and Warren Buffett maybe is a type of value so obviously there are different types of value investing so a little bit more quality and moats and whatnot but at the end of the day he was willing to stay the course keep his discipline and from 98 to 2003 you know it it he gains it all back and then goes on to outperform by a spectacular amount over over the general market which just goes to the you know the fact that value is tough it's it's tough the value of value is is tough and if you're going to garner any return from any factor it means when it's tough you got it you got to absorb this risk you got absorb these periods because there will be brighter days you got ass in a little is how you saying yeah I was gonna ask you guys what is the what is the character of value I know that that for example train forward which obviously we've spent a lot of time on has this character where like the simpler versions of it have a lot more losing trades losing weeks losing months than in positive months the positive months are so much larger than the losing months that it's profitable over the long term value seems to me to have that a similar kind of profile a bit different reason than at different times but you've got if you miss those periods where value runs it runs for like a few weeks or a few months but if you miss them then it's it's game over you've missed all of the potential returns from missing that narrow window so it has to be one of those things unless you've got extremely high accuracy in your ability to forecast when value is going to do well I've never seen anything that does a good job with that but if not then you've just really just got to stick with it which is painful and it you know like you West so he says embraces suck but it's got this character right so if you're not there when it runs then you're out of luck so is that the character value like is it I always wonder whether it's you got to be there at the worst time that's when that's when you make all the money my review Aaron just grabbed all of the famine of the French library data and just have a look at how those the value decile of each of those factors each of those metrics just like relative to growth how often are they underperforming and by how far behind do they get at any given time just cuz I was like this crazy how far behind we've got so far and I summed all the times that it's underperformed so over the data set they've underperform like 70 to 80 percent of the time but the app performance is massive over the full data set it's really hard to your head around why it works the way that it does it's if anything it confused me more it just made me realize that you can't predict it you just got to stay in it it's gonna rip sometimes and it's gonna lag sometimes and just you just got to ignore it even though and the times when it's like underperforming the most like now it's really it's the best opportunity in it but it's there's no it doesn't have very many friends there are many people out there believing it right now you've got to be right pretty buddy Montana right what you wanted right I mean west when you just going back to your to your roots when you first started look at this done yeah there was so many areas that you could have explored and this is it this is true for almost anybody that I talked to that likes the markets like everybody starts off as a value investor it's so painful why is it the most loved factor on the planet right what was it that attracted you to initially I mean for me it was just it was just intuitive and I got I got schooled up my my grandmother was like a huge Warren Buffett then Graham fan forever um and I mean I grew up on a cattle ranch and used to buck hay and was broke as so I want to get rich so I talked to my grandma and and I don't know it just made sense to me like hey if I can buy you know stuff that everyone hates and it's cheap and I'm willing to sit there and deal with the pain like I'm just naturally that like well that makes sense to me um so I don't know it's been great Toby probably knows better but I think Ben Graham said it's like inoculation you either either get it or you don't if for me I was like this is common sense dude like what wouldn't you do this so my system one was definitely just I was you know I was in tune with the force the value and then then for me because I became my religion you know it actually took actually deliberate thinking to move into like momentum and Tran and you know stuff you guys talked about but because I was not intuitive or a good idea at all in my monkey brain sense but I don't know man just bad genes I guess I just questioned like what to what extent should personality you're just sort of natural you know inclination like just how you're wired in form how you should invest you know like to what extent is is it more about just investing in alignment with your with your faith and with your your personality with your belief systems relative to investing in alignment with where there's maximum evidence like there's got to be a Venn diagram there but how do you weight those attributes I mean honestly like more more as idea of more more people I think it's it like the wreath the wonderful thing about Warren Buffett has nothing to do with the fact that he's underperform for the past 15 years it's the fact that the people that own that stock stick with it through thick and thin no matter what so in many respects he's done such a great service to people not because he underperformed outperformed or whatever it's just he made people stick to the program no matter what so so I'm just a huge fan where I don't give a what you do you want to do like Ouija board investing whatever your process is I think you don't care I just want to know what is your ability to stick to that process and I will gauge your your capability to be a good successful investor what are the optimal parameters for the Ouija board strategy blessed that you kidding me I wrote that up I'll sing you the code I was wondering okay that's what you remember Mike doesn't know how to code so this is that's right but hey if you stick to the evidence-based Ouija board you're probably all right because if we G board will randomly hit like different risk premia you'll get a capture and enjoy over the long haul even if you didn't know that one thing that I always find it to be a bit of a mystery actually maybe you guys can answer this because when you look at the data it seems like the value premium is is really strong in in small-cap and also in really weak in large-cap but yeah you know like obviously just from a market capacity standpoint everyone can't be a small cap value investor or what do you guys see is it like a cross-section of like we're actual capital is allocated do people still allocates a large cap value is that a thing it depends on how you measuring a little bit run if you look if you're using price-to-book then basically 94% of the market it doesn't work for the six percent of the market that it does work for is probably a bit ask spread measuring problem and you can't reallocate any capital to it anyway but if you use those flow metrics like this if you're using EBE but I ve bet price to cash or evey cash flow price to earnings any of those I think they scale pretty well if you divide a bigger universe by there so of those things you definitely get some out performance by you know long short or just long the undervalued stuff I think I think it I think it does work in that stuff the reasons why I mean I think that intuitively buying something for less than it's worth as we're says like the the inoculation comment by Buffett I think it was I think there's two kind of mindsets of people who I've come across in the market there are people who yeah I want to buy a bargain and there are people who are like that's that's ridiculous you buy stuff that's going up like it you buy there are guys who just congenitally trend momentum kind of guys and they should be momentum guys but if you're if you want to buy bargains you should be a value go if that makes sense T and like where's like I I can read the data on momentum I fully believe that it's a more robust strategy than value but it just doesn't it just personality was it doesn't appeal to me whereas value goes well I've never read an adviser yeah I've never been an advisor that doesn't when you tell them the value store they're like yeah but have you seen the chart know where everybody's at chart is which basically ends up being a trend some sort of trend momentum manager right bro it's it's the do no homework approach for a lot of people dancer and question on on the mega cat versus micro-cap and value on kind of Toby's point out hi it's highly depend on what metric you use right because like book to market kind of sucks but it sucks in a sharp ratio sense right like like if you buy just mega cap cheap stocks they earn higher expected returns it's just their volatile is so you know if you believe you can eat Sharpe ratios maybe it's a bad idea but if you're just got a 30 year horizon you want to you know compound your face off if I have honest between like large-cap cheap versus S&P and I don't really care about the Sharpe ratio kind of like well that's not a bad bet right so it kind of depends on what you're trying to achieve there and then to Toby's point if you use like EBIT yields or earnings yields or anything else that's a little bit more high-frequency measure it's going to work better and large-cap but I've guys listened to Ken French he was recently on a podcast with Ben Felix and those guys and he just admitted that book the market is not the best value metric but it's the metric that has the lowest turnover ie hint hint wink wink we could Jam 500 billion dollars into it right if I'm thinking about a scale asset management firm I'm not going for the best value metric I'm going to anything any names here yeah yeah not name any names here and God bless you know people that start with the a beggar you have to make a trade-off in in the capital markets you go for scale or do you go for you know boutique I think yeah that's a massively underappreciated point and that that allocators investors financial intermediaries over look like they're not and I think you've got some great tools on on your site West that that sort of show that what are you going for you on for scale as an asset company yeah or are you going for pure factor exposure as maybe maybe a mid tier or a boutique I mean even some of the large guys are lining up and starting to offer the more sort of factor concentrated portfolios which then then begs the question of okay so once you do get massive pools of capital chasing that does that are out a way yeah but a salt under performance like we've had recently will certainly help seem like there's a there's a steady flow of large sources of capital into those portfolios without much evidence of that yeah there is now yeah I think also the thing that you point out is you know Buffett Buffett's ability just talk about Buffett let's say as a as an example to educate investor slash consumers on the concept of alright the idea that in the in what's that what's the code in the short term the the market is a voting machine in the long term it's a weighing machine which is a very sort of folksy way to say hey listen you know it's not the Sharpe ratio it's actually the excess return and you should ignore or use the short term volatility as an opportunity not as a measurement as to what your long-term outcomes might be okay you're in the metaphor penalty box filbrick okay Dyslexic that no I just think the weighing voting machine is just like it's a it's a more of a sentiment engine in the short term but it's it's an equilibrium engine in the long term right and so if you're by if you're if you're legitimately buying dollars for as we'd say loonies for you know fifty cents or dollars for fifty cents then eventually the market is going to recognize the value and trade to equilibrium and I think that's the Buffett's been really great at making that clear clear point I mean is there anyone who wouldn't want to buy a strategy where you can bring your buying companies for 50 Cent's that have worth the dollar I mean well the point is its worlds the downside of all it's the it's the vol of the strategy that creates the the dispersion of outcomes in value which allows you to take advantage of mr. market in the short term to reach equilibrium in the long term so I will push back on your judgment of my I see so you're saying that by virtue of volatility that randomness eventually can't and push the push prices lower and give opportunities by a short term but in the long term that volatility is dampened by the nature of the long term versus short term actually brings up a question from Brian Moriarty says I want you to talk about talk about how value suddenly too expensive maybe especially after being touted as cheap just a few weeks months ago also hegets know it's not too expensive yet it'll get there hopefully with any luck it'll get too expensive but I think that's like 2027 2030 is the the time that's gonna get there the thing the other thing worth pointing out is that nobody's just buying on price ratios front wears doesn't buy on price ratios I don't buy on price ratios AQR doesn't buy on price ratios there's not a single there's this like pervasive view among the discretionary value guys that what what quantitative value guys are doing is like buying like buying on price to book value and that's it like you just run a screen find all the cheaper stuff and price to book value and head to the beach nobody's doing that everybody's trying to mimic what discretionary value guys do which is dig into the book like how high quality is that balance sheet how good's that business how far those margins right you know what's the chance this thing goes into bankruptcy what's the chance that this is a fraud there's earnings manipulation like everybody's throwing every single thing they can think of at it looking at what the discretionary guys are doing that binding that back into the model like working it all the time to try and recreate but what we're trying to avoid is just all the systematic errors that people tend to make when their discretionary because they get scared out on March 23 which is the best time or you look at the rally from the bottom and you say well Valley's not doing it values dead I'm getting out and I can see it in the volume in my in my funds like the volume dries up then then the fun goes on a little run all the volume comes back in and then it quietens out and the volume stays it's a it's that you can see it in the underlying shares you can see it in the in the in the fund you can see it you can see it everywhere it's just the only way you can take advantage of it is just to ignore it and just to stay in it and think about it like once every year or so so what does that look like in terms of systematizing as like you said the process of how would a discretionary manager look at it but you want to systematize it what does that look like I know Wes you guys have a bit of a koala I don't want to put words your method I think it's a quality scream before you sort on valuation metrics I don't know it's a great book here that's yeah yeah yeah yeah well we get the Ouija board out see no but but actually before we go there Brian actually has a great question there and because we've noticed there's a lot of confusion because cuz you know cliff has his his piece on like oh my god value is so cheap it is like mind-blowing but what people might forget is he's talking about long short value like people that long stocks that are expensive or cheap and short shots that are expensive and no that is the biggest spread that you know you could drive a truck through um but when you when you're a long only value investor which most of us actually are you have an embedded beta bet in like so right now like I can't say with a straight face that value is a long only investor is super cheap because like you know there's like an evening filled of ten but hey historically that's actually not so cheap because all stocks are expensive and because you have the embedded beta bet in there you might relatively outperform Ness and P but you know if you're down you know 50 and the markets down 55 like okay that still sucks right cuz it wears the long short bet it is I would argue is probably pretty compelling right now but that doesn't mean that long only funds are like some magical sauce because there's such a big beta bet that one needs to consider as well that's what's slightly disagree with it and I probably I pulled the data off alpha architects side now off your off your things and I put together this it's not reliable well you you can use the French data - it doesn't matter you good and so all I do is I run back I run back the yield of each of those price ratios against average over the full data set make it roll so it's updated on they're all they're all fat to their long-term like they're all rich to their long-term mean it's a varying degree so price to cash flow is only about 5% rich but it's still better than it is two thirds of the time it's the worst if you look at something like book to market it is in there like that it's been cheaper in like three other occasions and there's a month in tests and so the three other occasions are like March this year and like so there's one balance across all them I think that sheep like it's it's I don't actually disagree on that point and I Ryan actually wrote a blog post about that relative to the market values cheapest relative to expensive stocks it's really cheap as but value when you have embedded beta bad in there like if you just look like just the raw even you Phil don't like like you know QV index right it's like 10 percent but historically you've been able to buy that at 20 so I'm just the absolute value like on what's the earnings yield or Evo or whatever on a portfolio that right now is just not cheap because overall the markets not cheap what's the data on your son is it excess you tour is it is it no absolute yes we put everything we put we put the ratio of the value portfolio relative to market we do the raw the raw yields on value and glamour or growth like we just if you look there's a table below that where it's all it's all eyes of the beholder but that the argument right now is value as a factors cheap but beta is a factors expense suspense you unfortunately have the cheap fat on value the expensive bet on beta so on net it's kind of like you know on your side later on your site has those are absolute yields and if you just run those absolute yields back you know this is it's as cheap it's like that if the the rebuttal for that might be well that data only goes back to like 99 to say go and pull up here pull the French data which is like price to cash flow priced at earnings you can run that back to fifty two or three I think fifty one two three something like that in any case it's like it's absolutely cheap it's absolutely higher than its long-run mean if you believe that the yield in the value portfolio eventually drives your Returns which I do it takes a little while but when the yields are fatter you get better returns when the other thing you get worse returns like I think it's a pretty good it's a good time to be making a bet that's not to say that I can't get the yields can't get high you know which is you're underperforming while that's happening but I think that NASA that's a pretty good time I got a little long short component to my book but I liked a long side of that bit too and that's something that cliff looked at he looked at the long side versus the middle and the middle versus thought that the the other stuff and he said is this is this being driven by expensive stocks relative to the mill or is this being driven by short stocks relative to the middle and he said it's actually not just expensive stuff on the one on the on the short side it's actually cheap stuff on the on the long side as well what's driving the spread is unusually wide I liked a bit either way here it's not there are angles you can look at it where it's it's marginally compelling but it's not like the pitch that as this game that's like holy cow this is incredible because that's their sell market neutral value which I agree is pretty damn compelling but God bless you for being a little stick to that one the other thing I think can you guys hear me okay yes year ago about a year ago I think I looked at your site and looked at your index and found that there's because this is this is important for the audience to understand right you have the sp500 beta which is around 1:00 and then you have the value beta which is 0.6 right so in essence you're getting a levered portfolio a 60% in essence leave a portfolio of pure value but you do have that underlying 100 percent beta exposure that you're saying is expensive right now well beta the beta aspect of your index may be cheap the beta of the SP itself is expensive and that's where you're gonna you know when you're a long only manager you're gonna take into account that bigger part of the pot you make say is that is that what you're saying yeah that's what I'm saying for sure like there's just there's two bets you're taking there well there's a lot of them they're small so but but you know just take the simple bets of value and then the beta bet when you just do a long only value portfolio Toby stuffs obviously a little bit more compelling because its value long you know beta bet and a short bet on glamour so so he's got another element which is arguably more compelling based on cliffs argument but yeah you've got it just you want to think that you also on the beta bet so in a vacuum you know assuming you want to think about that as well when you buy a long only value on the other side of that is when you look at there there's different analogues for this market right there are lots of different analogues but one of them is mm where you had a very expensive market with very beaten-down value stocks and then you went through a period of time where the market did mean revert back down towards its mean I don't think it really ever got there but it kind of it's been trending down back up again recently on sort of like cyclically cyclical measures which I realize that they don't work that well but they they are predictive of your returns over extended time frames 10 20 30 years so probably the markets expensive at the moment the returns Ford returns are a little bit lower but value I think is absolutely cheap and I think it's cheap based on the data on your website and I maybe I misunderstood that later on your website but I'm just running it back against you know if the yields are fatter now that they have been through most of the data and some in some instances they're close to as fat as they have ever been yeah it's cheap but it's not like is I think we're even wrong I think you're sort of saying Asus said you're like you know at the hundredth percentile in terms of the in terms of historical data and I think Wes you're sort of saying it's more like the 60 65th 75th percentile and honest truth doesn't matter it's refreshing yeah what I understand is that if you're if you're long cheap short expensive on any metric that's in like the hundred percent tiles across the bright part even if you're looking at things like value against the market to maybe what Toby's talking about here it's also pretty damn cheap across the board someone range from like eighteen percent out of the harm versatile but what I'm talking about is if you just look at like literally let's just not do even those to earning yields right just earnings over price on the cheap 10% decile against itself like let's say it's like 10 percent right now that 10 percent measure ie basically a 10 PE on the cheapest 10 10 percent decile that is not that cheap relative to its history like the top decile you know turn stock portfolio you know it usually flux rates like tens like okay but it can't get up the 20 25 that's what I'm saying just on an absolute company going to use that one yeah it's not like hunter personal talent maybe you know maybe I'm misunderstanding dater on your website but right Ron : right Ryan : wrote a nice article using that data where he showed they're all pretty they were rich to their means and then I went and checked it using the same data just pulled it down I took an average of each of rolling average of each metric updated each day starting 1992 yeah up to I think I did it was like I had March or April daily on I did it sure that all of those metrics are currently rich to their long run to their own means over that period of data since 1992 the the one that is the least rich is price to free cash flow which is still in the 65th it's still cheaper than it has been two-thirds of the time walk to market price to earnings and some of it and something else in it like that are extremely cheap price to earnings is is getting close to the hundredth there so that's our 800 percent IRR it's like 97 something like that but they're not are they are they absolute or they relative maybe I'm just being too confusing because I'm an idiot right so so relative to the market so example like that let's say the earnings the price yield right like I'm just making this up because I kind of memorize data but not totally but let's say right now it's like 10 right so it's like earnings yield right now the S&P is like five right so so you've got a two times that's a big-ass spread that is compelling relative to history and that might mean what you're looking at like but what I'm talking about is just like let's say an earnings yield of 10 that on a standalone basis is not that compelling relative to like how the cheap the earnings you know the cheap stock bucket throughout time right and that's mainly driven by the fact that the problem is that just the markets so damn expensive right now right so and the whole ceiling has been dropped we're like in the old days yeah we yeah I mean I don't know what you're like when you're lucky not sure yeah so this is just something from Wolff research that I got yeah this week right so you sort trailing earnings yield this goes back to sorta 85 84 all these going back to 85 the cyclically adjusted p/e ratio but you know just to give it a sort of example this one I thought was I think this is sort of what you're referring to maybe Toby right the Abbott and applause value charts Karina yeah yeah if I make it fullscreen it may not it's better okay yeah I can actually pull up the datum I don't know find share stuff with you guys but this again yep okay candy yeah cool maybe I'll share my there's that chair screen button in the bottom so okay now you ready when you're ready pop it up before you describe what you're talking about as well for the listener well yeah I mean these these are just the where the current I think this is the long portfolio relative to the its historical yields and so it does look like we're sort of in the middle of the range on some of these guys but you know maybe they sort of skew a few of them skew cheap skew expensive I don't know I mean I I did I do think it's interesting that like I find all the time that the most heated debates and discussions are between people who are like you know agree on 99% of the things and then like on this most nuance point yes agreeable let me show you my screen yeah so there's a share screen thing because it's almost certainly a case that taupe and I will not disagree on anything if we know that we're talking about the same thing say data exactly yeah we're just having a miscommunication here I thought I was using your data that's what that's why I'm confused I'm saying like like Toby's just a smarter version of me and I kind of asked him so so if there's any disagreement here it's not like like we're disagreeing on ideas I think there's probably just miscommunication on the on data here so let me I don't can you guys see ah you press here screen there's a little button to the bottom okay so can you see this thing yes coming up yep yep cool so so let's just move away from the charts and so you guys see this data table down here yeah okay cool so what we do is imagine just an ad out of Canada recently if you click on columns oh did you do that for the call adding it for all the yes I love Canada so I'll try and hook you guys up but this is just something that I was trying to implement throughout the system but but long story short right now we've got US market you know develop mark international and then now I just recently added Canada specifically on EBIT yields and I'll do the other ones over time but in this table what you'll see is is there's the obviously the period and then then what this is is US value this is the the EBIT yield so there's a 15% operating income - Evi ratio for the cheapest decile of value stocks right and then glamour is zero so this is like the 10% decile 50% even yield the the timber sanics most expensive flat and there's the spread between the is actually between the the u.s. value in the market the universe so this would be like the S&P 500 right and then same thing with effets it's got the e fee what's the what's the yield on the the actual decile portfolio what's the yield on the decile of Glamour portfolio and then what is the spread where the spread is going to be equal to the e fever's okay um an MEP yeah yeah and the knees over here on the right these are the ratios so the u.s. value ratio is the even yield on US value relative to the US universe without the e feed a ratio is obviously fievel you relatives in the effets universe um if you look at let's say those verbally for the up for the those listening only so that's a 1.5 for us and one pure so so um so the value ratio all right Wes we lost you there for a bit you're about to tell us the numbers here so the e fievel ratio was 100 sorry I was gonna try to re-explain Chloe for the readers but with the rate goes represent um but can you guys see this chart right here yep okay cool and we can do these for all these about what it can just quickly visualize this so the book that was do international value first so what this shows this is the historical time series of the valuation of the top decile cheapest securities relative to the EP universe and if you see here it's definitely cheap right there's only two other periods where it's been cheaper and that and that's what why you would get the argument that hey right now values cheap which is what everyone's saying right great same thing u.s. so if you look at us u.s. is generally a rung down overall but the u.s. cheap Dessau portfolio relative to the market that spread kind of argument is that it's pretty damn cheap it's not the cheapest but it's pretty compelling Canada won't talk about just get what to Pitt Canada's not that compelling right now but you guys also have we're just using 150 stock universe here so the data is pretty noisy which is why this is an experimental well that's probably 95% of market cap yeah yeah well that's true it's just it's it's um it's noisy because it's just portfolios are uh you know concentrating on basically telling you it is not it's not a great deal in Canada right now but I always copy that with caveat that with you know the fact that it's just you know it's a smaller more concentrated market place so you take it for what it's worth was the original Street oh well I'm sorry say again do you have the averages for this and it's that absolute dealer is that spread of market this is literally the ratio of the of the yield so it's like taking like let's say that Willis do right here so yeah it's like so 15 percent is the e is literally that the it's actually the median to keep it cleaner it's the median EBIT yield on securities in the top decile cheapest bucket against the median EBIT yield on the universe the US universe seven point eight so if you take 15 point oh one divided by seven point eight you know you get one point nine two so it's just like the ratio kind of it's so you kind of visualize you know how are cheap stocks looking relative to the universe and to your point on all these different ways we calculate that it's pretty damn compelling what what I'm highlighting though is if you look over here on on US value let's just rank these on just absolute cheapness right so let me uh this is like a huge data table unfortunately if you guys if you guys got a big audience people go in here and Frank my server everyone starts to goodness there's there's 36 people watching at the moment I think 38 so so let me just sort this I just did it on min but but I'll sort it on on max and like right now we're probably you know it's probably like 10% is like the EBIT yield or like the operating income over evey and then any and you'll see here once I sort this damn thing it never works sorry it's slow but but long story short that's not cheap like there's plenty of times I'm gonna be lower than the average where we're usually you can buy just a straight-up evic yield but maybe like 15% on like the cheapest dirtball stocks and and so yes it's true that us your value is definitely cheap relative to the market it's not on an absolute just you know you put a gun to my head you because you got the beta bet in there and that's really expensive it's kind of smooshing down that the absolute kind of yield you can achieve even amongst the chief of Security's out there suggesting clarify what that so is that yield thee is that yield the yield it's the median yield of the stock in that cheap decile basket yeah and if you if you take the average of that column yeah I'll bet you that that is richer than it is like most of the time uh okay so I mean you yeah that that's possible but I don't I don't think it's likely because I'll just show you can see how I got it sorted here on on Maxim in so for example in the depths of hell in 2008 that that Dessau portfolio I mean you lost him back into the matrix yeah I'll be back yeah in that what he was saying is in 2009 we're looking at here February of 2009 and the US value metric was 31% so that's why I'm saying I should I don't have that offhand I'm gonna build this in our studio so it has all these stats a lot easier but right now like a 10% even yelled relative to the history of what traditionally you can usually get because usually equity markets are so expensive is not that cheap like I'm strong you're like yes 15 made its 15 you should have a look at that you should go through that data and and like I I get the feeling that or maybe we're talking about different things cuz I'm talking about then on the number of occasions that are in there they're like only a handful of occasions that are richer than now maybe you're talking about like the spread so you're saying thirty percent is really really rich fifteen percent is not really rich what I'm saying if you look at the number so just just go can you just go back up again scroll to the top yeah so we're just we're twelve six right now as of April 30 yeah yeah okay so it's been it's been swear it wasn't March at the end of month it was like 15 something like that yeah oh yeah and March it was definitely good which is why I did a dumb decision of blown-out trend falling but but right now it's you know it's yeah that's that's the argument here that Lee's playing devil's I have a cake because it's easy for me to say go buy value right now does that be great if everyone did that but I'm just trying to create a discussion here keep it real yeah so so there you go see I sorted it back so we're twelve six right now and yeah you're right I guess you're talking about more like like cyclical periods is that what you're going for cuz like oh wait has a bunch of these totally crazy observations I think you'll find it there aren't very many observations that I mean I haven't seen that the data updated as at the end of April I think the last I had was much it was the end of March which was which was very very cheap no no I think it was the April data that I use yeah many of these like if you look at that peak there are only a handful of there are only a handful of data points that are above that line yeah and I mean you know I could buy your argument because a lot of these things are like overlapping it's it's like when you look like rolling your terms like it seems like you've got a hundred observations but you really got three so so if you kind of thought in that and it's like now you know versus you know the two thousand two thousand eight versus 2000's I can actually buy that then if you think I also think like if you think about it slightly differently which is you want to be an equity investor you want to be long stocks when is it when is it most advantageous to skew towards being long value stocks well the value premium over the market in terms of debit yield is is pretty good right and you know that's what the chart shows right like relevant at the market it's the value portfolio is relatively attractive you know on a historical basis relative to its own history there's some more ambiguity right but it's actually disagree with that that's the point that I disagree with I think if you pull that data and you ran it against it and you ran it against itself you'd find that it's cheap now on any of those metrics but particularly on price to earnings book to market the worst one is price to cash flow which is about 5% rich net yeah and it's it's still cheaper than it is on two-thirds of occasions and the other ones I like yeah really have to go and find you find there like a handful of months right at the very depths of the 2,000 valued under performance and like maybe 2009 March 2009 other than that yeah this is like about as good as the opportunity gets cleared is it is the third cheapest in the last however far back that one right and they were moment yeah regime that's right which is not to say they can't keep getting cheaper but if you're gonna make the bet you got to stop putting the bed on at a time like this because it doesn't necessarily have to get cheaper either it can start it can turn around here so well and there's a question in it so sort of how do you suggest retail investors implement a factor view like this which i think is relevant to our are you supposed to wait for the cheapest moment are you supposed to allocate the cheapest moment is always just preceded by one moment that gets a little bit cheaper of course and yeah agreed so this I think this is the point of the question right so knowing that this is one of your tweets Wes I mean of course you pick the bottom and then buy small cap value yeah in retrospect yeah I didn't I didn't get that second page of the note on how to know fact as the vine I spilled coffee on my dog ate it that's what's the same was what is my went down a second page there damn us motors I'm the bottom Newman so how should we do that how should we help the reco do it depends right I mean you just think about a loo so what you're trying to bet on is value and beta and you could buy this in mark a neutral form that would be the pure play bet if you want to do that then you know go use some your excess leverage or whatever it go by so make you our stuff right but most people can't do that because they don't understand how to deal with all this stuff right there's a retail question normal dude there's just you know Joe Blow hooking and Javan yeah they're not gonna deal with all a QR I would say hey you probably own beta in your portfolio anyways instead of on an SMP like replace it with some value fun because you're gonna basically get SMP back you know I bet you can't say it I can yeah yeah I've al Zig yeah yeah these are letters yeah you can use are letters that you if you type them into a Google search they will lead you somewhere that will have something to do with the names on this call ship from your equity bucket to the to the value bucket and then you're gonna get the equity beta bet still but now you're gonna get more of this value back we're if you really think ask some peat what is that it's just mega cap kind of high-quality us beta bet so if you if you kind of peel away the lens that there's just assets and everything is a factor portfolio which they are then you just you're just thinking okay what bets and my actually taken and let's place the bets we want I think this is this is a good jumping-off point to understand from the retail perspective what the tracking error tolerance is for the individual investor so it's a very tailored question and one where we made fun a little bit earlier about the larger providers who provide a big bait of that beta bet with a small value tilt and so you've got to think about as a retail investor or serving retail investors or even institutional investors who have to report to a board that the necessarily understand these nuances that that decision is a very important decision do you want to go long-short true factor do you want to concentrate it along only factor exposure or do you want to do beta portfolio with factor tilt that's all masters at be of mind mass right right it's just brutal because it's it's it's so easy to say my factor ETF is cheaper than your factory - yeah but the question is what your active share is in that PDF how much actual value are you providing for the dollar that you are asking the advice the investor Tripathi yeah and so if you're charging 10 basis points I don't know what like these these ETS that are basically 95% beta and 5% value or charging but they're charging the right amount they're super cheap because they shouldn't be charging anything but is basically free you know the more the more thoughtful you are the more active share you have the more concentrated you are the more likely and you're buying really deep value stocks like I know you guys do you're getting a better portfolio because you're getting the the exposure from the market and you're getting the value exposure now that's that's a double-edged sword right you're you know because it means that when value is on when your long value is on you are making the return above the market and and you're basically getting a hut like and I'm just using this number because I remember from a couple years ago but I think it's like a hundred and sixty percent exposure 100 percent debate and 60 percent to value and you know you're only paying for the value part the problem is that value could be negative and therefore the tracking area we're talking about Mike which is there are times when SNP I thought it was a hundred and sixty percent well value could be negative for a year where beta is positive and it means that your value long-only ETF that has a lot of active active share will have a negative return or a negative Delta 2 naught beta right so this is important it what you get for what you get for right well here's the thing it's about the process right so the process of receiving beta plus factor and understanding the factor could be from time to time negative that's not as hard as it is that's not relevant what's relevant is you you paid for the manager to deliver the factor over long periods of time over short periods of time that factor performance is going to vary between positive and negative and what you want to see is your beta plus your factor and if it's negative and the factor performance is negative you give Toby and and and Wes high-fives you're like yeah you nailed it you did exactly what you're supposed to do so I mean if you ask me if you ask me personally I'm gonna want in my portfolios I'm gonna want the factor exposure and I want it to the purest extent that I can possibly tolerate right and and and if I think about that on a fee basis of how much I'm paying for that I find that when I break down the fees of the products you guys offer it's a bargain it's at an absolute bargain for the factor exposure and even even on the AQR if you're willing to do as Wes as the brain damage to get behind the long short side of it even that is actually pretty reasonable that's a that's a long I think for retail investors is really an on it's a it's not even on the table it's not something that can handle it's not something they can buy so for retail investors my thinking is you're gonna want to go in you're gonna want to have that factor exposure really as pure as you can get it plus or minus the beta educate your clients and then save the money and go buy the SP at two basis points and save that you're not to pay 25 basis points on a hundred percent of the capital to get market beta plus a tiny 5% sliver of value is not as good as saying I'm gonna buy one of your products for twenty five percent of my portfolio pay the exit extra fee and then the other 75% pays zero pays one basis point yeah cumulative I'm saving money right and so we get caught on this treadmill of lower fees and whatnot which are you know they're nuanced and I think that's on your website West or investors to sort of get wrap their head around some of this stuff right just how concentrated its in the target characteristics or the different ETFs and then you can kind of measure that against the basis points you're paying provided a factor exposure I mean there's probably a paper in that somewhere they start there's good tools I got done today it's it's now unlike version 85 we started with Gen Choi back in the day but yeah we've got a software package about the launch out here that's gonna just blow people's brains out because they're gonna be like oh my god dude Wow you guys gonna like it it's uh it's coming to a theater new year it's the it's like the ultra transparency you can't hide behind tool it's very interesting there's there's no more hiding for closeted indexers basically so it'll be an interesting dynamic in addition to the conversations out there on you know what you're buying what you're paying for it yeah there's you know what we have an article I just forgot about this one we wrote an article it's called stop paying for active management beta and we lay it all out so if anybody is confused by what we just discussed and want to dig a little deeper you go to Westside and wait for what he's putting out but in the meantime we live this very short article that kind of you know lays it out for you if you're getting added value that you can't get anywhere else and on top of that you're getting that the cheap beta and you should do both because you're getting capital efficiency if you decide you want to have 10% of your portfolio in value but but you also like your beta well you can either choose to be in beta with these kind of rate sheep not really value ETS or you can have a an ETF for that ten percent that's giving you a hundred or a 16 percent exposure on average right so you're getting that 10 percent of the beta and on top of that 60 percent of the value again I'm that's interesting you guys I know I've written about it very eloquently okay and I found this pretty useful you know because I did learn CTA world too but the concept of all buying is like a no for CK's like oh so I get 20 ball I pay 1% you know I do ten ball I pay 1% that's not it don't get Rodrigo started they don't buy managed futures that often cuz it's kind of an uber geek thing but but when I've actually had some success explaining to people who don't even know what managed futures are but you outline the ball buying per unit fee paid concept and yeah it's not totally analogous to what we're talking about but it kinda is it's it's a lot per unit unit of risk that you take right it's a weed for our for our SMAS we charge like 12 this oh this is how I talk to clients which are 12 basis points per unit of risk you want to take because we thought we'd give investors the opportunity to choose anywhere between 6 and 25 so why don't you fees they are uniform across the board they are yeah 13 basis points per unit of risk and then do them all you want 8 all right well you gonna set up like 95 basis points 112 you're gonna hundred you want 25 well you're gonna pay the almost three percent they're all the same you're just paying with the exposure right actually right on I there's a question to that can you suggest how to apply long value short glamour besides Zig sure answer no yes and Pia is almost almost always glamour anyway can you buy a short ETF like SH or is this too arbitrary of a scheme so my first answer is no you can't but if we had to maybe we'll talk about it and I think you were just touching on that just a little bit Wes on some of the trend following so maybe you want to just tie that knot back to the question well yeah so obviously Wiz would be first choice if anyone was ever gonna do a long short value trade but melissa is somebody's ticket really space he's gonna buy for usually 49.9% 49.99 but for the other two bits you're gonna allocate - yeah you could buy some value thing and then short you know SP future or SP cash you know that's not hard um but you know we know people that actually did that because we have clients that actually do that you know because we deal with some pretty complicated folks and they did that going in to March well they got their ass handed to them yes so yes you can do it but it gots to em behind you've got to have a real well Toby you you click in your cuz I think you you look like you wanted to say something so what's the problem with I would love to set up a short only ETF the problem is that the way that they treat the expenses in a short only ETF is that any dividends paid on the shorts get charged against me as if it's my expense ratio which is ridiculous because I'm not getting credit on the long side for the dividends that get paid so all the short ETFs look like they've got these really high fee ratios like 2.75 that's not what the manager is getting paid the manager could get it it could be getting 50 bits or 25 bits out of that yeah but you got to look at see look at the way someone like Jim Chanos executes sit right so you go to Jim Chanos and you ask for his you want some short exposure from him so what he's going to give you is a hundred and ninety percent long the index 90% short his strategy so you're a hundred percent beta then you're 90% is hedged out and what he's going to say we're gonna go up less than the market because we're in all this junk that doesn't deserve to be there when the market goes down this stuff's gonna fall like a rock and when you look at what his portfolios have done that's exactly what they do they're really good portfolios they kind of that he's very good at finding the these high-quality shorts you know shorts that stuff that's kind of junky and I think that sort of slightly Turkey and something we kind of skated over a little bit here we're only talking about really the value ratios and it was one thing that I think lifts up with really nicely in that paper he says when you bind in all the quality elements that you know wasn't I talked about any qualitative value there's a lot of elements in there that aren't technically value that technically quality but I think it's very hard to separate the two and if you actually use those things and you look at the spread like that's kind of what's driving the spread is there's a real look there's a lot of really junky stuff on the expensive side at the moment once your binding stuff like share based compensation that they're just spewing out all these expensive stocks negative free cash flow tons of debt on the balance sheet you know questionable business business plan at all and you can get short this stuff the problem is it goes at thirty percent a year so you need like some sort of momentum overlay on top of it so you're not standing in front of a truck every time you do it it's hard to do which is why I stuck it in with long stuff as well and as you say it's negative drag that's key it is really hard to do because you are when you're short the S&P 500 you're short a basket of well diversified market cap related stocks that momentum yeah with and and when that momentum comes back aka March oh nine aka March 2020 a KA what was the bottom in 2003 they rip your face off I mean that short cares you a new and no other and I've watched it many times so that performance that you had in the year before is often given back in more the next year and thus you have this other investor behavioral aspect that you have to deal with the person feels great in that they didn't take the drawdown in the next year when the recovery is a hundred percent and they're negative ten they're not feeling so great so you know there's there's obviously some trend-following filters that you can throw on top of that that might help but there is no panacea here there is just picture yeah you're gonna put seed but I'll try and look attract that kind of masochism than that type of client that loves the pain oh you like pain Wes tell you at perform it's the only way to out perform take the pain Oh let's get used to it I think as a valley guy as a retail invested into value what you got to know is that seventy to eighty percent of the time you're gonna underperform but over the full data set you're gonna outperform just get that into your head think in terms of decades like decades plural one decade it turns out it's not enough and then just know that you're gonna is gonna suck for most of it but over the full thing you know about perform comes back to being religious about it right becomes back to being sort of cellular believe if I failure you're gonna buy you're gonna buy doll you know two dollars for a dollar you can look for that all day long you're gonna ignore a lot of the volatility that that comes along with that however whatever analogy that you want to use that's better than the analogies I used we're gonna hear about this every day now for defending them like I've still got two-thirds of a drink left but we've been on here for about an hour two quarter I was gonna have yeah we got to get on this Michael Green thing I want it like listen I want to hear this conversation I'm not good because I know Adam you had a conversation with them he revealed some new charts Toby's got some interesting life let's end this on a high point everyone who stuck around this far I don't know it's good let's let's ooh Mike was good two arguments he's got one that he says that the flaws in two indexes are so relentless and they're they're not price sensitive and they drive out the price sensitive plot the fundamental investors get driven out and so that drives the index sort of asymptotically parabolically to infinity and then it crashes so that's a longer-term trend of hit that's that's an a longer-term argument that he's been making on my Kirstin other ones i don't really know it feels wrong to me but i can't kind of articulate exactly why i don't think it's gonna play out like that he has another one that's more recent where he's and he's only two-thirds of the way through so we're sort of commentating before we get to the end but the argument is that valley this there's a problem with valley and I fully don't understand I haven't I need to say the final part of it before I kind of comment I just don't I I was trying to I was coming to you guys to see if he could tell me what the what the argument was I'm not sure that he exposed a problem with value other than he exposed a problem with price-to-book but I think his decomposition was interesting and I think he leaned pretty heavily into some of the research that research affiliates has been doing where they demonstrate that the vast majority I want to say like north and 90 percent of the returns for value comes from stocks that migrate from the small value bucket into the large growth bucket or even from the small value bucket into the small growth bucket and there there's a variant of stocks that if you buy if you just randomly buy the stocks in this small value bucket there's a small percentage of stocks I want to say maybe 4% of stocks that migrate from small value to small growth in any given period call it a year but those stocks rise it's such a huge rate they give like a 84 percent average return or something that the probability weighted return on owning that stocks outweighs the essentially zero excess return on the rest of the small value basket and then there's there's a you can then probability weight the potential for stocks to move from one basket to the other and then small value investors are selling a call because when they move when the stocks move from the small value bucket to the large to the small growth bucket they will sell those stocks right so they're selling any further upside so you're earning a premium on the migration from small value to small mid and a small value to small growth small value to large values like so there's if you're a small value investor you've got all of these different option premium that you're that you're buying large growth or sorry that you're selling large growth has a bunch of premia that you're buying and there should be a negative premium and it's just I think it's the logic way of thinking about the problem as a as a set of different your selling and buying different option ality and getting paid based on the relative some of those different option a letís so I think it's a and that's just that paper there's there's a huge amount of other dimensionality to their thesis but I don't know I thought I was an interesting framework so Adam that we have that podcast that you had with green it's up in live so after you guys sorry up it's already up it spun its published one minute one minute ago it was published and so so you know Toby West will have you back next week and we'll talk about it he covers some of that what you were questioning in this podcast so I kind of like the idea of I mean I'm not sure this I haven't listened to it yet but it seems to me that if the central banks are gonna take out all of the the sort of the moral hazard of risk-taking it would seem to me that that would mean that the risk premia for equity markets would would be would disappear would become like a you know what would become like a fixed income investment because you know you're gonna get this excess return because you have you don't have this this this hazard of risk-taking it's been removed for you and thus the indexes would then rule and would crowd out all other financing which then well how do you finance anything else how does that the end I was like value I actually don't not he's worked really well in Japan yeah it's ready 2011 study that I stuck up on grain backed way back in 2011 and just like looking it's simple price ratios that's that's been the only place to be in Japan they've compounded their faces off of that full period just needs a CEO of Peter Kundel Peter don't run you're gonna hear that Peter Kendall made his with value stocks out of Japan through the 90s I mean crushed it made it build the whole firm on it so it's it's interesting I look forward to listening no prob about Japan and just thinking about greens argument is that you don't need to have stocks move out of small value to make money all right like philip morris has been a value stock classified for god knows how long and it's probably one of the best performing stocks of all time so you don't need to move in transition buckets that's just like a nice to have but you know if you buy with a higher carry in the form of higher dive in yield or what-have-you like you still can outperform and you may not move anywhere you could stay small value for a million years so I just think like anything like it's just very complicated and if I can't explain on a napkin anymore I just don't believe it because I don't think anyone can really understand it so I need to have they to have a napkin drone up and I don't believe it otherwise I'm out that's all right we've asked conversation lots of times yeah I understand his argument that it's short volatility so he's saying you selling it yes I get that part of it is that part feels right to me it's the it's the it's the next part that I don't fully understand the implications of all that and then he says it's the returns to Val you've been mischaracterized I need so I'm waiting for part three before I okay well that's that's all read and then come back and chat about it perfect yeah I love it that seems like a a nice moment of pause and now we can talk about sports all right rod they're back West and I can talk both football and what it wasn't I took you I've been watching MMA that's been really good I've been going back and watching balance well I've been watching all the old fights on YouTube that's the only kind of sport you can get these days yeah yeah sorry have you heard about the NBA with with the Disney shortened season eight games they're all gonna count 22 teams make it in they're all they're all playing a Disney they'll be sort of sequestered into the ESPN Park at Disney and five games a day they have to play one game back-to-back it's pretty neat it's pretty the NHL is going to come up with something interesting as well so on the last note we'll wrap up what do you guys finding in in this era of kovat what are you finding that has been a pleasant surprise as you've been as you've been kind of navigating this for me it's been the idea of we get together and the result team we play a little poker together in the evening and not a big game or thing but we talk about all the all the topics of the day and and then also we've got a little D&D game going with with some folks out there so a bit of a fantasy ballplayer kind of guy and as weird as that may sound probably fits my personality so those are the things that I've kind of come across that have been really interesting and novel and new that ivory engaged in what were you guys yeah I've been catching it with friends from Australia it's been great like a I don't know why I wasn't doing it beforehand just I know that everybody's home so we I've been doing Skype is similar this one I've got one in a fella now I'll finally be other have a beer finish the wood to finish the work they often ever be that's been great and having the kids around Zach Chua Lee been really fun so yeah that's amazing and everyone's everyone's healthy all the kids are healthy and the families are healthy I'm assuming yeah garcy perfect how about us uh you know for me honestly this kind of sounds cheeseball but I actually just became a more in love with my wife cuz like we have to hang out all the time and she's like managing the kids and my you know hanging out my cave and work it's actually text me about that that's why we're not talking as much yeah yeah much more appreciative of yeah I was already appreciative but I just you know I just really came I got even more tribal man just like I love my family even more and I like them before which is you know I think it's great thing from from the event Adam L net isn't that great when they're like this pre teenage years its to enjoy it I have I have like 20-somethings now yeah yeah you're you're you're in place don't worry by the way honey I know you're listening live I feel the exact same way that was done fortunately like 95% of the people listening this or men have you seen the YouTube breakdown so if these are always pretty great like mine mine's about the same it's like 95 percent blokes like three percent female 2 percent non banda not non gender binary non-binary gender I was Lucas that's great I've got a really diverse podcast I'm happy with I know I know a couple of guys who transitioned over so it's been two girls so that's great that's quality like if the value community has a few I'm proud of the value can be here like yeah we also like I have I'm twenty-five minutes late to my college buddies poker game right now so we gotta come to any new Butler besides your stuff we cover like can't wait we got our D&D campaign tonight at 8:30 you know it's I gotta settle in I gotta cook some lamb burgers and then check into the game yeah yeah yeah and you should everyone should should text us and guess what character Butler is and and what class and race I am Lee funny I can't disclose now I mean it does yeah Toby give us your gas I'd say I'd say yeah feel bricks like you're a mage or something like that and I'm gonna say but was say barbarian it's a trick I'm a celestial warlock you are awesome inside baseball because I think that in real life Philbrick is a barbarian in Europe you're always you're a wizard so of course you're playing against type when you're playing the game I love it see that is terrific that's why we have you guys a good one with Korey though to make sure that you guys haven't already been on alright gentlemen that was the real I gotta tell you what all catching up in the chinwag I miss you guys and I can't wait to see you in 3d at some point in the future yeah that's fun thanks guys

Channel: ReSolve Asset Management

Views: 820

Rating: 5 out of 5

Keywords: adaptive asset allocation, alpha, asset allocation, asset management, diversification, equity momentum, evidence based investing, factor investing, financial plans, global equity, hedge fund, investments, liquid alternative, machine learning, managed futures, momentum, mutual funds, portfolio management, portfolio optimization, quant, quant investing, risk parity, security selection, systematic investing, tactical asset allocation, trend following, wealth management

Id: AvghnHo_yy4

Length: 87min 10sec (5230 seconds)

Published: Sat Jun 06 2020