Due to minor technical issues with the Zoom call between Ben, Cameron and Professor Campbell, there are portions of audio that were not picked up throughout the interview.
"expected future real returns on stocks declines when the level of the stock market goes up." The amount of people I meet who are oblivious to this is just jaw dropping.
Since real rate of returns on equity investment merely adjust for the impact of inflation and taxes on the nominal return, I assume what they are at talking about in this presentation is the law of diminishing returns? The law of diminishing returns states that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant. I suspect many investors do recognize this principle when it is stated as such.
Wow !!!! Incredible episode covering such an array in finance. Really well done . Great guest as usual. Ben if you could share the best place to locate these papers by Dr. Harvey I would appreciate it.
As a Value tilter this episode confused me slightly. Why is the risk associated with value equities considered "bad beta"? If cash flows are generally higher for value I'd assume that's good. Is hedging against discount rate shocks(such as right now with rising interest rates) really considered bad? I guess what I'm asking is, what does value being considered "bad beta" mean to a long term investor regarding portfolio allocation?
Excellent conversation! The most interesting and informative guest in a very long time. Great job guys! P.S: I think he meant that the total amount of the mortgage would increase, not the interest rate, by buying point. (1:28 or so).
I was confused by this as well; what he describes sounds like the opposite of typical mortgage points (i.e. "discount points"). Turns out there's something called "negative mortgage points" which align with his description. I think he messed up the terminology.
I hold a masters of (mathematical) finance. This interview is 2 years of material ! Of course you are only hearing the conclusions but nevertheless WoW
On Currency Hedging, how should one consider the USD JPY pair where, whilst Prof. Campbell puts USD and JPY in the same basket as moving against the market, the cross rate has changed from 76 Yen to the Dollar in 2009 to 150 at the highest in 2022, and is now floating around 136, which before 2022 was last seen in 1998, with 150 going back to 1990?
Biggest problem with this entire episode is that variance isn’t a good representation of risk. People only care about the downside risk. No one ever complains about upside risk. The entire model is flawed when you build everything off variance when half of that variance is desirable. It’s an academic model that doesn’t match reality.
You may have misunderstood. John Campbell is one of the leading academics on describing why variance is not a good measure of risk for long-term investors. -Ben
Due to minor technical issues with the Zoom call between Ben, Cameron and Professor Campbell, there are portions of audio that were not picked up throughout the interview.
Didn’t use Microsoft Teams lol
I'm a buyer, this is not what I'm experiencing. All the best properties are selling. Tried to offer on one yesterday and it was sold.
This conversation is mind blowing. I understand the value premium better than ever before.
"expected future real returns on stocks declines when the level of the stock market goes up." The amount of people I meet who are oblivious to this is just jaw dropping.
Since real rate of returns on equity investment merely adjust for the impact of inflation and taxes on the nominal return, I assume what they are at talking about in this presentation is the law of diminishing returns? The law of diminishing returns states that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant. I suspect many investors do recognize this principle when it is stated as such.
I think that's right but the mechanism is one of risk tolerance.
John gives one of the best answers to how to the "how do you define success in your life" question. It might actually be the best answer given yet.
Yea especially the part about business serving the clients and the employees.
John Campbell is a Genius! And interviewers ask great, informed questions, as usual.
Wow !!!! Incredible episode covering such an array in finance. Really well done . Great guest as usual. Ben if you could share the best place to locate these papers by Dr. Harvey I would appreciate it.
a worthy episode nr. 250!
This was one of the best episodes in a while. Thank you for sharing it with us.
There are a couple occasions that the voice of Prof. Campbell are missing. Like, 19:20-24, 22:43-47, 22:58-23:00.
As a Value tilter this episode confused me slightly. Why is the risk associated with value equities considered "bad beta"?
If cash flows are generally higher for value I'd assume that's good.
Is hedging against discount rate shocks(such as right now with rising interest rates) really considered bad?
I guess what I'm asking is, what does value being considered "bad beta" mean to a long term investor regarding portfolio allocation?
Excellent conversation! The most interesting and informative guest in a very long time. Great job guys!
P.S: I think he meant that the total amount of the mortgage would increase, not the interest rate, by buying point. (1:28 or so).
I was confused by this as well; what he describes sounds like the opposite of typical mortgage points (i.e. "discount points"). Turns out there's something called "negative mortgage points" which align with his description. I think he messed up the terminology.
One of the most educational episodes!
Thank you all so much.
Thank you amazing episode as always !
I hold a masters of (mathematical) finance. This interview is 2 years of material ! Of course you are only hearing the conclusions but nevertheless WoW
3rd time I'm watching this phenomenal interview... learned a lot have to say.
Incredible episode! Thank you
What an incredible episode. Thanks!
On Currency Hedging, how should one consider the USD JPY pair where, whilst Prof. Campbell puts USD and JPY in the same basket as moving against the market, the cross rate has changed from 76 Yen to the Dollar in 2009 to 150 at the highest in 2022, and is now floating around 136, which before 2022 was last seen in 1998, with 150 going back to 1990?
Biggest problem with this entire episode is that variance isn’t a good representation of risk. People only care about the downside risk. No one ever complains about upside risk. The entire model is flawed when you build everything off variance when half of that variance is desirable. It’s an academic model that doesn’t match reality.
You may have misunderstood. John Campbell is one of the leading academics on describing why variance is not a good measure of risk for long-term investors.
-Ben
The US just solved the mortgage issue by making fees for good credit scores higher than for bad credit scores. Complexity solved
Leave it to the government to always make the wrong decision out of a binary even money bet. They are batting a 1000 in that respect.
Where is the long tail video? Though you might share some gold nuggets info
Prep of questions amazing, did JC have Qs in advance?
He had them in advance.