Dr Bernstein saved me when he wrote about the folly of O'Shaughnessy's "What Works on Wall Street" findings, way back in the early 2000s. This was a much needed slap - I had fallen for the results in that book, and had no idea what a p-value is, so I learned I had no business picking investment strategies. Wide-ranging, diversified index funds all the way from then on (with occasional forgetful forays into "ideas")
I wish Bernstein had talked about active vs. passive management. He sums it up at 23:45, which reminded me of my favorite quote from his "The Four Pillars of Investing": "There is no greater test of character than confrontation with solid evidence that the whole of your professional life has been a lie - that the craft that you have struggled so hard to master is worthless. Most money managers fail this trial and are still in the deepest stages of denial."
I wonder if the corona crash was bad enough to be an indicator of future behavior for young investors. Personally I bought some extra etfs when the market hit 30% drawdown and was prepared to buy some more at 40% down, but that never happened and we are pretty much back where we started now. Not very painfull at all, years of slow decline or a sideways market might be hard to swallow though
@@BenFelixCSI I agree and I think it is especially true for many of the young investors whose jobs weren't affected the shutdowns in both Canada and US. I work in the healthcare sector and I can tell you in a "real recession", even healthcare workers can feel the hurt in reduced incomes in terms of layoffs, pay decreases, etc. The rapid downturn also didn't really affect my other friends and acquaintances in other fields like finance, tax and even in real estate...it was all business as usual. People I know in real estate (in Southern California, US) even tell me they have even more business than pre-covid, it was hard for them to keep up. That's not the case in a drawn out bear market or recession. Like Dr. Bernstein said, the next true downturns likely will expose who's been swimming naked. It's gonna hurt and may scarred many of the young investors.
32:40 LOL I am an engineer and did exactly what he mentioned. Only to find that if I do my analaysis on a data which is one month older/newer it all gets pointless because the results change significantly. In the end I decided to construct my portfolio equally among different factor premiums: 33,33% Small Cap Value weighted, 33,33% Momentum and 33,33% Quality. This is also what some research suggests - best portfolio results are achieved by equal factor allocation and not trying to market time the factors. I think that looking at the past performance is useful but it can also deceive us. Because as Jack Bogle says: "Reversion to the mean - The first shall be the last and the last shall be the first." Just look at the NASDAQ100 index, it had extremely good performance in the last decade, whileas MSCI Canada and MSCI Europe Quality struggled. Now for the past year both indecies are beating the NASDAQ100 by at least factor. Similar story if you compare the NASDAQ with MSCI USA & Europe Small Cap value. Anyways a very knowledgable and insightful guest.
Do you ever consider living off the dividends? In ten years, I intend to have enough in assets in my equity portfolio to live off the dividends, if I so choose, and pass the portfolio on. I am assuming that in a broadly diversified portfolio the dividends won't be cut.
really enjoyed your interview with Dr Bernstein. What books by Dr Bernstein would you recommend? As it seems, some of his books repeating each other. Also, what books would you recommend for learning history? I did read the Random Walk Down Wall Street. But i would appreciate another recommendations.
@@cameronpassmore1561 I once bought The investor's manifesto 2nd hand. Now giving it a fresh try. Would you say that 4 pillars is better or maybe more detailed?
I really did not expect the politics or pushing a specific political agenda from Dr. Bernstein. Really love his books but definitely heard unexpected ideals today.
TY, Dr. Bernstein, for giving us the realness at 49:10 : people are not any better figuring out how to save and invest for their own retirement than they are at operating on themselves or flying themselves from place to place. Giant 90%+ supermajoritiea would be better off with a government pension (aka a UBI, not that he went that far) than trying to muster the knowledge, rationality, discipline, and sufficient income to make enough to live on for 30+ years.
The difference I guess is the airline industry or medical community aren't bombarding people with ads, courses and media experts screaming in their face that they can do it all themselves as well. Not many story of a regular Joe landing a Boeing 747 or performing heart surgery out of the blue without any of the standard 8-12 years of medical training, or maybe there are and I am just not getting all my news. Not to mention the barriers for entry in those and other professional industries arguably get tougher and more complicated each year, while you can trade away your life savings for free on your phones while sitting on the toilet.
"if you're dealing with bonds, you want rocket scientists working for you. But if you're dealing with stocks, then you want linguists and philosophers working for you"
Great interview! Can you guys take a look at Lars kroijer. I believe he could be a great person to have on the podcast. Also little for us european viewers :)
I kind of wonder whether in todays political environment governments and central banks will tend to error in the direction of easy money / higher inflation. So it’s hard to think of fixed income as a safe place to store your wealth for future consumption - basically even if you have won the game you have to keep playing it because the odds are stacked against those who stop playing. The only alternative option is to buy TIPS in a tax deferred account and lock in a known loss of purchasing power over time. At a negative real interest rate of 7.5% Tbills are no long a riskless asset.
“If you are compensated for taking risk, then you have to be compensated the most when the risk looks most frightening”
Dr Bernstein saved me when he wrote about the folly of O'Shaughnessy's "What Works on Wall Street" findings, way back in the early 2000s. This was a much needed slap - I had fallen for the results in that book, and had no idea what a p-value is, so I learned I had no business picking investment strategies.
Wide-ranging, diversified index funds all the way from then on (with occasional forgetful forays into "ideas")
I wish Bernstein had talked about active vs. passive management. He sums it up at 23:45, which reminded me of my favorite quote from his "The Four Pillars of Investing": "There is no greater test of character than confrontation with solid evidence that the whole of your professional life has been a lie - that the craft that you have struggled so hard to master is worthless. Most money managers fail this trial and are still in the deepest stages of denial."
So goodie.
This is a fantastic interview. The best so far. I really enjoyed. Great questions, guys!
Thanks Grant!
Thanks for bringing this Legend!
Great information delivered with humor!
Wonderful conversation! Both dr. Berenstein and the hosts did a great job!
The Dr.'s response at 49:16 was a curveball for me as well - really interesting. Loving the podcast!
Thanks for being part of the community!
I wonder if the corona crash was bad enough to be an indicator of future behavior for young investors. Personally I bought some extra etfs when the market hit 30% drawdown and was prepared to buy some more at 40% down, but that never happened and we are pretty much back where we started now. Not very painfull at all, years of slow decline or a sideways market might be hard to swallow though
I suspect that this rapid downturn and recovery may give some young investors a false sense of knowing what a crash feels like.
@@BenFelixCSI I agree and I think it is especially true for many of the young investors whose jobs weren't affected the shutdowns in both Canada and US. I work in the healthcare sector and I can tell you in a "real recession", even healthcare workers can feel the hurt in reduced incomes in terms of layoffs, pay decreases, etc. The rapid downturn also didn't really affect my other friends and acquaintances in other fields like finance, tax and even in real estate...it was all business as usual. People I know in real estate (in Southern California, US) even tell me they have even more business than pre-covid, it was hard for them to keep up. That's not the case in a drawn out bear market or recession. Like Dr. Bernstein said, the next true downturns likely will expose who's been swimming naked. It's gonna hurt and may scarred many of the young investors.
Hooked on every word. Great guest, great interview.
Great interview!! Thank you
Agree. So happy to have him on.
32:40 LOL I am an engineer and did exactly what he mentioned. Only to find that if I do my analaysis on a data which is one month older/newer it all gets pointless because the results change significantly.
In the end I decided to construct my portfolio equally among different factor premiums: 33,33% Small Cap Value weighted, 33,33% Momentum and 33,33% Quality.
This is also what some research suggests - best portfolio results are achieved by equal factor allocation and not trying to market time the factors.
I think that looking at the past performance is useful but it can also deceive us. Because as Jack Bogle says: "Reversion to the mean - The first shall be the last and the last shall be the first."
Just look at the NASDAQ100 index, it had extremely good performance in the last decade, whileas MSCI Canada and MSCI Europe Quality struggled.
Now for the past year both indecies are beating the NASDAQ100 by at least factor. Similar story if you compare the NASDAQ with MSCI USA & Europe Small Cap value.
Anyways a very knowledgable and insightful guest.
Do you ever consider living off the dividends? In ten years, I intend to have enough in assets in my equity portfolio to live off the dividends, if I so choose, and pass the portfolio on. I am assuming that in a broadly diversified portfolio the dividends won't be cut.
I
I didn’t hear politics I heard common sense and good facts. Great interview.
Man, that last quote is golden.
What did he say? I didn't understand him :(
Glad to know Ben is alive and kicking.
Please stop saying this podcast is for Canadians. I enjoyed it from India!
Amazing guest.
This Englishman agrees with the above! 😄
Done :D
@@JamyOats lmao
12:24: That’s the ultimate The Silence of The Lambs.
Amazing episode, thank you.
Thank you. I’ll pass these comments on to Dr. Bernstein.
fantastic interview!!!
really enjoyed your interview with Dr Bernstein.
What books by Dr Bernstein would you recommend? As it seems, some of his books repeating each other.
Also, what books would you recommend for learning history? I did read the Random Walk Down Wall Street. But i would appreciate another recommendations.
I really liked 4 Pillars.
@@cameronpassmore1561 I once bought The investor's manifesto 2nd hand. Now giving it a fresh try.
Would you say that 4 pillars is better or maybe more detailed?
great interview thank you!
I really did not expect the politics or pushing a specific political agenda from Dr. Bernstein. Really love his books but definitely heard unexpected ideals today.
July 2022 here. Prayers answered 🙏
TY, Dr. Bernstein, for giving us the realness at 49:10 : people are not any better figuring out how to save and invest for their own retirement than they are at operating on themselves or flying themselves from place to place. Giant 90%+ supermajoritiea would be better off with a government pension (aka a UBI, not that he went that far) than trying to muster the knowledge, rationality, discipline, and sufficient income to make enough to live on for 30+ years.
The difference I guess is the airline industry or medical community aren't bombarding people with ads, courses and media experts screaming in their face that they can do it all themselves as well. Not many story of a regular Joe landing a Boeing 747 or performing heart surgery out of the blue without any of the standard 8-12 years of medical training, or maybe there are and I am just not getting all my news. Not to mention the barriers for entry in those and other professional industries arguably get tougher and more complicated each year, while you can trade away your life savings for free on your phones while sitting on the toilet.
@@thao6112 Facts. Scary and true.
Amazing episode
"if you're dealing with bonds, you want rocket scientists working for you. But if you're dealing with stocks, then you want linguists and philosophers working for you"
At 30:01 Bernstein talks about a company that begins with "vig", whats its name? I'm sorry, brazilian here.
Guessing Vanguard ....
So is market efficient or value stocks are undervalued? Time to chose one 🤑 Great podcast gentelmens!
No, it’s risk premium on volatility.
Four pillars definitely screwed my head on
Great interview! Can you guys take a look at Lars kroijer. I believe he could be a great person to have on the podcast. Also little for us european viewers :)
Seems like a good idea. We will look into that and try our luck.
Fascinating podcast.
50:48 - 50:53 A duplicate of Cameron's voice is playing while he speaks. Dunno what's going on there.
We will investigate. It wasn’t in the copy I listened to prior to release. Thanks.
Should've sent him a mic
Oh God, he's in Portland. Glad he's safe.
That's scary, hopefully the secret police don't throw him in an unmarked van.
I kind of wonder whether in todays political environment governments and central banks will tend to error in the direction of easy money / higher inflation. So it’s hard to think of fixed income as a safe place to store your wealth for future consumption - basically even if you have won the game you have to keep playing it because the odds are stacked against those who stop playing. The only alternative option is to buy TIPS in a tax deferred account and lock in a known loss of purchasing power over time. At a negative real interest rate of 7.5% Tbills are no long a riskless asset.
I love the new music.
Kudos to Trevor May of the band Cornflower Blue. Thanks.
I like Bill but I promise you that financial analyst firms don’t prefer English and philosophy majors over finance majors
Bernstein Bear
I like bill but You don’t need a couple million dollars to retire successfully lol
#1
This video title hasn't aged well