Jack Forehand
@practicalquant
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Quant Investor - Validea Capital | Excess Returns:
Fairfield, CT
Joined August 2017
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Pinned Tweet
This week
@JJCarbonneau
and I are joined by
@larryswedroe
to take an evidence-based look at many of the biggest issues facing investors.
☑️Does systematic value investing still work?
☑️How is passive investing impacting the market?
☑️Do factors need to
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"If I get to be 85 and you came to me on my deathbed and said, you know what, you could have made 50 basis points more or 25 basis points more a year by investing in index funds instead of doing what you did, value companies and buy cheap companies.
And he asked me, are you okay
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1K
"Options are not a derivative. They are the underlying. When people refer to options and all the volume increases, the phrase that everybody uses is 'the tail is starting to wag the dog.' I'm here to tell you that options are the dog."
"My belief is that if you look forward in
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This was one of the most eye opening parts of our interview with
@jam_croissant
for me.
Market returns from 1968-1982 were obviously not good.
But the election years had some of the best returns in history.
Cem explains why.
Full episode:
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This week
@JJCarbonneau
and I speak with
@jam_croissant
about the importance of option dealer flows and the changing macro landscape.
We also get an update on current dealer positioning and what it might mean as we begin the second half of the year.
15
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To celebrate crossing 200 episodes of Excess Returns, we created a compilation of the biggest lessons our guests would teach the average investor
We also wanted to share our favorites
@jam_croissant
explained why fundamentals are set to matter again
8
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I am a big believer in value investing. But to combat my own confirmation bias, I wanted to take a shot at making the argument against it. Here is my case against value investing.
8
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As we close out the year, I wanted to keep with my annual tradition and share our most watched episodes of Excess Returns.
In the top spot this year was
@jam_croissant
discussing the unique way he builds his personal portfolio.
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25
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There seem to be two extremes when it comes to the risk of 0DTE options.
Some think they don't pose a risk, while others think they could cause a major crash.
@jam_croissant
explained to us why the truth isn't that black and white.
Full episode
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182
In each of our Show Us Your Portfolio episodes, we ask our guests about their portfolio construction framework.
As someone who has always looked at that question from a traditional perspective, I found
@jam_croissant
's answer unique and insightful.
Full episode in comment ⬇️
5
22
173
One lesson I think all investors can learn from the options world is the importance of thinking in probabilities.
@jam_croissant
explains the idea and why the COVID crash could have played out very differently than it did.
Full episode:
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27
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This week
@JJCarbonneau
and I welcome back
@jam_croissant
We cover a lot of ground:
- the no landing scenario
- the challenge of the Fed's dual mandate
- the rise of structured products
- the risk of 0DTE
- what Cem is most worried and optimistic about
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This week
@JJCarbonneau
and I return to the bakery and bring back our most popular guest.
But this time we switched things up and asked
@cemkarsan
to do something we hadn't seem him do before and talk about how he manages his personal portfolio.
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Whenever we have
@jam_croissant
on, we always get asked for the breadcrumbs.
Here is Cem from our interview yesterday on his outlook going forward and the February window of weakness (and why it is important to understand what that means)
Full episode
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I asked
@jam_croissant
if the increased use of options will make market major market declines worse.
He reminded me that it isn't that simple.
Full episode:
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This was one of my favorite
@tferriss
episodes of the year. The concept of the one thing you could do now that would make everything else easier or unnecessary is really powerful.
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What happens to the hourly YouTube views on your podcast when you have
@jam_croissant
on.
This one is tracking far ahead of any other episode we have ever done.
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Technology, globalization and demographics are often cited as significant deflationary forces in the pre-Covid period.
In our recent charity livestream, we asked
@jam_croissant
how he looks at them going forward.
Full episode and link to donate
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My interview with
@EpsilonTheory
- why narrative is so important in today's market
- why this time might in fact be different
- whether an analytical edge can be used to generate alpha
- The importance of learning to say "I don't know"
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This week,
@JJCarbonneau
and I welcome back
@jam_croissant
We cover:
- The weighing machine vs the voting machine
- Why flows could drive a year end rally
- Why secular inflation is still a risk
- The bifurcated returns of election years
- A lot more
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The Fed is in a challenging spot right now.
In our recent livestream to benefit Susan G. Komen, we asked
@jam_croissant
what he thinks they should (and will) do.
Full episode and link to donate
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Haven't posted a full episode on Twitter before, but since our recent interview with
@jam_croissant
looks like it will be our most watched ever, I figured it was a good one to try.
We talk to Cem about inflation, structured products, 0DTE options and a lot more.
5
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Really excited to announce the first
@excessreturnpod
and
@spotgamma
charity day.
We will interview 24 great guests, including
@jam_croissant
,
@jposhaughnessy
,
@dampedspring
and
@EpsilonTheory
live on YouTube and X from 8AM to 8PM on 4/30 to help raise money to fight cancer.
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We ask one question at the end of our podcast:
If you could teach one lesson to the average investor, what would it be?
Here are our favorite answers from 2022 featuring
@jam_croissant
@EpsilonTheory
@profplum99
@MebFaber
@alphaarchitect
@GestaltU
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We ask one 1 question at the end of each of our episodes:
What is the 1 lesson you would teach the average investor?
Since we just crossed 200 episodes we wanted to bring them all together in 1 video
Our most popular guest
@jam_croissant
kicks it off
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Options expirations can sometimes be significant market turning points.
In our first episode of the OPEX Effect,
@spotgamma
talked about the conditions that are usually present when that occurs and broke down yesterday's expiration .
Links to subscribe in comments ⬇️
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"You have to go big as soon as they start to figure out what you already know."
Loved this approach to taking concentrated positions from
@Mike_Taylor1972
Full episode:
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We will be releasing the interviews from PNL for a Purpose in groups of two over the next week to keep raising money for Susan G Komen
Here are
@spotgamma
and my full conversations with
@jam_croissant
and
@dampedspring
Please donate if you can.
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Thought this was very interesting from our interview with
@dampedspring
this week.
The 4 most important things to look at when evaluating a deleveraging.
Full interview:
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Higher for longer island has gotten more crowded.
In our recent livestream to benefit Susan G. Komen,
@dampedspring
explained why he decided to leave and take his boat back out to sea.
Full interview with Andy and link to donate
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"I don't care if you're a momentum investor, or a value investor. All that talk pales in comparison to: can you stay the course? And if the
answer is no, the best strategy in the world isn't going to do you any good"
Great talk with
@jposhaughnessy
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My favorite part of our podcast interview with
@jposhaughnessy
this week was Jim's advice on parenting and the idea of making raising great adults a primary goal.
With young kids myself, I can use any help I can get so here is a quick thread on Jim's thoughts.
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Lessons From Our Most Read Interviews
@choffstein
- Beware the risks you can't see
@jposhaughnessy
- Admit when you don't know
@alphaarchitect
- You get paid for pain
@mjmauboussin
- Have a process
@EpsilonTheory
- Sometimes this time is different
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@AlexDemolitor
@BillAckman
I am pretty confident he has beat the market. He alluded to that in the full interview. I think his point was he does it because he loves it so if he does underperform he won’t have any regrets.
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We just released an episode of all 119 answers we have received to our closing question:
If you could teach 1 lesson to the average investor, what would it be?
I wanted to highlight my favorites.
Here is
@mjmauboussin
on the importance of base rates.
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One of the best emails I have gotten in a while. Passed the CFP exam.
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This week
@JJCarbonneau
and I look at the biggest lessons from our 5 most popular episodes of 2022.
Here is a compilation of our favorite clips from our interviews with
@alphaarchitect
,
@MebFaber
,
@Rick_Ferri
,
@profplum99
and
@jam_croissant
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Our latest Five Questions interview is with one of my favorite thinkers in the investing world. I took advantage of the opportunity and asked the most challenging questions I could come up with.
My interview with
@mjmauboussin
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Don't listen to the investment advice of billionaires.
@awealthofcs
explains why.
Full episode:
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We had some detailed questions on value investing.
When the answers we got back were 2500 words long, included footnotes, and had 15 links to external research papers, it was clear we had asked the right person.
My interview with
@alphaarchitect
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With all the recent debate about the David Einhorn podcast, I wanted to share the interview we did a while back with Mike Green that takes a look at the issues it addressed.
As a fundamental investor, I have learned a lot from Mike's ideas.
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Just recorded an awesome Excess Returns interview (out tomorrow) with
@jam_croissant
We covered inflation, the Fed, structured products, 0DTE and a lot more.
To get notified when it comes out, subscribe on YouTube below (audio links in the comments)
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Those of us who use factors have been taught that they need a risk-based or behavioral explanation.
We have been taught to avoid data mining.
But what if both are wrong?
We are joined by
@achenfinance
and
@alejandroll10
whose new paper suggests exactly that.
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Interesting article by
@verdadcap_quant
. Have seen the same thing in our value research. The cheapest stocks have the highest expected returns, but also the highest error rates (more value traps). Reducing errors without hurting returns is very difficult.
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I talk with
@dampedspring
about his approach to building his personal portfolio.
We cover a ton of ground:
- constructing an all weather portfolio
- overlaying alpha strategies
- macro
- international diversification
- leaving money to kids
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"Right as everybody is proclaiming active investment dead, my view is that active investment is actually right on the verge of a new bull market.
-
@jam_croissant
Full episode:
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We launched a small-cap value ETF in 2014.
We ran it for 6 years, but ultimately had to shut it down.
This week
@JJCarbonneau
and I share the behind the scenes story and
@CultishCreative
helps us break down the lessons we learned from the experience.
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In our latest episode, we bring together the insights of
@alphaarchitect
@jposhaughnessy
@GestaltU
@Greenbackd
@nirkaissar
@vitaliyk
@ckaiwu
@pmohanram
All to help us try to answer one question:
Is Value Investing Dead?
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The fact that momentum investing works has become commonly accepted.
But that wasn't always the case.
This week, we talk to Sheridan Titman, who co-authored the seminal paper on momentum that helped to change that.
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Part I of my interview with
@jposhaughnessy
- the process of evolving an investment strategy over time
- why the Price/Book may have reached the end of its useful life
- balancing actual and investor returns when building portfolios
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What better way to celebrate crossing 20,000 subscribers than with a nice fresh 🥐
Just recorded a great conversation with
@jam_croissant
that will come out tomorrow morning.
Subscribe here to get a notification when it releases
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Investors have a tendency to think that momentum is highly correlated with growth. But the reality is that momentum doesn't care about why a stock is going up. It just cares that it is.
I look at the changing nature of momentum.
2
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To celebrate crossing 200 episodes, we put together a compilation of the biggest lessons from our guests.
We also wanted to feature some of our favorites.
Here is
@EpsilonTheory
explaining why we should seek alpha in things close to us rather than in public markets.
7
8
44
David Einhorn's arguments would seem to be very bad for value investors.
But he made the case that the market's lack of concern for fundamentals can also create opportunities.
I asked Mike Green for his take.
Full episode:
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7
45
In a recent interview, David Einhorn discussed why he thinks the market is broken.
His arguments cited the research of
@profplum99
.
This week, Mike joins us to dig deeper into the issue.
We also get his take on inflation, the Fed and a lot more.
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9
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The media we consume is like the water in which we swim.
And it can influence us in ways we don't even recognize.
In our first episode of Breaking News,
@EpsilonTheory
explained the problem, and how we hope to help.
4
7
43
With everything going on in the economy and markets, it was a great time to welcome back
@dampedspring
to help us navigate it all
We cover a lot of ground:
- A deleveraging framework
- Inflation and the economy
- Fed policy
- The VIX spike
- A lot more
4
7
45
Crossed 1,000,000 views on our YouTube Channel.
Thank you to everyone who has supported us. Hopefully the second million will come faster than the first.
@JJCarbonneau
@CultishCreative
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3
43
November options expiration is coming up this Friday.
In our latest episode of the OPEX Effect (recorded Monday before CPI), I asked
@spotgamma
what he is seeing in this and other upcoming expirations.
Full episode:
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9
42
We asked Jim O'Shaughnessy whether he is worried about factor strategies not working as more assets pour into them.
He reminded us that as long as human nature doesn't change, they are probably in good shape.
Full episode:
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41
Younger generations today don't think they have a chance.
They see a deck stacked against them.
So they resort to gambling to try to get ahead.
In our latest Breaking News,
@EpsilonTheory
explained this idea of Financial Nihilism
Full episode:
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10
39
We asked
@rjparkerjr09
about the flaws in the 60-40 portfolio.
He didn't have a hard time coming up with them
Full episode:
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9
37
I really like Cullen Roche's idea of All Duration Investing as a way for investors to match the time horizon of investments with their future liabilities.
He explained it in our recent interview
Full episode:
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3
35
Options expiration is this Friday.
Although the February expiration is smaller than January was, there are still some interesting dynamics playing out.
In our latest OPEX Effect, I asked
@spotgamma
what he is seeing behind the scenes.
Full episode:
2
9
37
In prepping for the interview we did today with
@jposhaughnessy
(out in two weeks), I came across this clip from our interview 3 years ago
As a father of two kids, this idea of focusing on raising good adults was probably the most impactful advice for me of any from the podcast
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9
33
9AM is a great time for a 🥐
It is even better when it comes with a side of breadcrumbs and helps raise money for a great cause
Join
@spotgamma
and I at 9AM ET tomorrow morning for our interview with
@jam_croissant
to support Susan G. Komen
3
9
35
When we started Show Us Your Portfolio, we assumed there would be one requirement - a portfolio.
It turns out we were wrong.
We talk with
@EpsilonTheory
about why he avoids public markets and invests in the things closest to him instead.
2
5
34
The latest OPEX Effect is out.
@spotgamma
and I discuss:
- the large June quarterly expiration
- the major dispersion beneath the surface in the market
- lessons from Gamestop
- the massive size of the NVDA options complex
2
6
35
This week we speak with Standpoint's Eric Crittenden about how he builds his personal portfolio
- Maximizing true wealth per unit of risk
- Why the 60-40 portfolio is incomplete
- Factor investing
- Using leverage
- Leaving money to kids
- A lot more
4
7
34
There has been a lot of weird stuff going on in the market.
While volatility in the S&P 500 has been muted, we have been seeing big swings beneath the surface.
In the latest OPEX Effect,
@spotgamma
and I dig into what is going on.
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5
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Our favorite lessons from our first 100 episodes:
@BRK_Student
and
@CunninghamProf
on Buffett
@cullenroche
on MMT
@GestaltU
on factor decay
@rresendes
and
@RobertGHagstrom
on redefining value
Rob Arnott on bubbles
@jposhaughnessy
on strategy evolution
1
10
34
Anyone who watches the market recognizes how important NVDA has become.
But I had no idea how much bigger its impact is on the options complex.
In our latest episode of the OPEX Effect,
@spotgamma
explained just how massive its impact is
Full episode
1
8
34
This week
@JJCarbonneau
and I talk health care investing with
@Mike_Taylor1972
We cover:
- running an ETF for charity
- the major breakthroughs coming in health care
- how Mike builds a portfolio to take advantage of them
- Inflation and macro
-
4
12
31
Part II of my interview with
@jposhaughnessy
- the tradeoffs that come with trend following
- can simple Graham-like value strategies still work?
- could technology, big data and quantitative easing kill value investing?
1
7
33
Some have pointed to the upcoming January expiration as a risky one for the market.
In our latest episode of the OPEX Effect (recorded before the Nov. expiration), I asked
@spotgamma
if he agrees and why Jan. expirations are important.
Full episode:
2
7
30
To celebrate crossing 200 episodes of the podcast, we put together a compilation of the biggest lessons our guests would teach the average investor.
We also wanted to feature some of our favorites.
Here is
@mjmauboussin
talking about why we should focus more on base rates.
0
7
31
Crossed 5000 subscribers to Excess Returns on YouTube yesterday.
Thank you to everyone who has watched and listened and supported us along the way.
@JJCarbonneau
5
3
31
NVDA reports earnings next week.
And expectations are exceptionally high.
In our latest episode of the OPEX Effect,
@spotgamma
took a look behind the scenes to see just how high they are.
Full episode:
1
4
31
This is an excellent intro to machine learning.
Our new paper on applying machine learning to investing, by
@kczat
.
Using NFL wide receivers (quants can have fun too) and investment factors, we detail the move from linear regression to simpler ML techniques like ensembles of decision stumps.
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347
0
3
30
My interview with
@jfc_3_
- investing lessons that have stood the test of time
- arbitraging human nature
- the benefits of reaching out to people you respect
0
5
29
This week
@JJCarbonneau
and I talk options with
@spotgamma
founder Brent Kochuba.
We discuss the influence of dealer flows, why major market pivots often happen on expiration dates and what options tell us about the current market.
1
4
29
There have been a lot of weird short-term moves in the market recently.
In our latest OPEX Effect,
@spotgamma
explained how the behind the scenes options activity in the big tech names can help explain them.
Full episode:
4
7
30
Of course we get the biggest down day in a while right when we post the livestream
@spotgamma
and I did on the muted volatility environment .
If anyone needs it to reverse, just let us know and we will put out a "Markets in Turmoil" episode.
We look at the factors that have
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3
28
With all the research I read for the podcast, it is rare to find things that are truly unique
Our guest this week produces more of that type of research than anyone I follow
We talk with
@WarrenPies
about inflation, the economy and his 2nd half outlook
2
7
30
How
@Greenbackd
will enter his appearance on our podcast when value finally has its massive run.
4
2
28
We will be releasing the interviews from PNL for a Purpose in groups of two over the next week to keep raising money for Susan G Komen.
Here are
@spotgamma
and my full conversations with
@profplum99
and
@Mike_Taylor1972
Please donate if you can.
1
8
28
My interview with
@MebFaber
We discuss:
- Cambria's unique path to success
- the future of the asset management business
- how to evaluate an investment strategy when it underperforms
- the benefits of tail risk strategies
1
4
28
Thank you again to everyone who participated yesterday.
Thank you to Brent and the whole team at
@spotgamma
Thank you to
@JJCarbonneau
and
@CultishCreative
Thank you to
@SusanGKomen
.
Thank you to
@SimplifyAsstMgt
and
@EMcArdleInvest
Thank you to all the guests, everyone
8
6
29
I thought this was very interesting from our interview with Matthias Hanauer
When Fama and French added profitability and investment to their model, value became redundant.
But some simple changes can reverse that conclusion.
2
8
29
When we started our podcast, I made a list of the people I most wanted to interview based on how much I have learned from their work.
This week we are joined by the person who was
#1
on that list.
Our interview with
@mjmauboussin
3
6
29
Those of us who run value strategies (myself included) have had a tendency to look at the past year and conclude that value investing is back.
But when you look behind the scenes, the reality is a little more complicated than that.
4
7
28
I have been one of the people trying to dissect all the data to figure out what inflation is.
In our latest Breaking News,
@EpsilonTheory
explained why by focusing on the map, I might be missing what is going on in the territory.
Full episode:
1
5
27
In our 2nd edition of Show Us Your Portfolio,
@alphaarchitect
reveals what he holds in his personal portfolio for the first time publicly.
We discuss the three principles that guide his portfolio and the unconventional approach he uses to build it.
3
3
28
This interview with
@fundstrat
is very good.
The concept of looking at the most recent market cycle as asset light companies outperforming asset heavy companies as opposed to growth over value is an interesting one.
2
11
23
For long-term investors like me, what happened last Monday can be hard to make sense of
In our latest episode of the OPEX Effect,
@spotgamma
and I go behind the scenes to look at the driving forces behind it, and what it means going forward.
3
6
27
Had our best month ever for the podcast in February (by a wide margin)
Thank you to everyone who watched and has supported us along the way.
@JJCarbonneau
@CultishCreative
5
4
27
The
@excessreturnpod
and
@spotgamma
PNL for a Purpose livestream to help fight cancer is now a week away.
As we approach the event, we wanted to highlight each of the great guests that will be joining us.
At 9:30 AM ET, we will talk technical analysis with
@StocktonKatie
. We
3
8
25
Setup a YouTube notification for when we go live or donate now here:
2
2
25
I had no idea that Red Bull is made to taste bad intentionally.
In our latest episode of Breaking News,
@EpsilonTheory
and
@CultishCreative
explained the marketing strategy behind it and why political entrepreneurs use similar tactics.
3
3
26
Momentum has very strong evidence supporting it
But investors can struggle to believe in it because they don't see a direct tie to fundamentals
In our recent episode on momentum,
@JJCarbonneau
,
@CultishCreative
and I discussed this idea
Full episode
1
5
25