Daily Briefing – October 21, 2020

Published on
October 21st, 2020
Duration
32 minutes


Daily Briefing – October 21, 2020

Daily Briefing ·
Featuring Nick Correa, Ash Bennington, and Jared Dillian

Published on: October 21st, 2020 • Duration: 32 minutes

Senior editor, Ash Bennington, joins Jared Dillian, editor of The Daily Dirtnap, to discuss the art of portfolio construction and his current outlook on markets. Dillian shares his thoughts on why investors whose sole focus is on returns fail and how to structure a portfolio that properly accounts for risk. He also breaks down how he gets exposure in real estate as well as how he's thinking about the implications of the Fed backstopping the credit markets. Dillian also covers his thoughts on Bitcoin, time horizons, U.S. election outcomes, and trend following. In the intro, Real VIsion's Nick Correa share the latest CEO confidence numbers and the next big, potential SPAC deal between Michael Bloomberg and Bill Ackman.

Comments

Transcript

  • RY
    Roy Y.
    23 October 2020 @ 12:58
    Love the special guests ... Superb
  • CM
    Cory M.
    22 October 2020 @ 21:10
    Solid. Always prefer Long Term thinking in RVDB.
  • SB
    Shawn B.
    22 October 2020 @ 19:30
    Extremely good interview
  • RM
    Robert M.
    22 October 2020 @ 17:38
    On GDP annual growth, just to be clear for viewers, sounds like Jared is talking nominal growth rates while the chart appeared to show real GDP growth rates. Real GDP has not exceeded 3% since 2005 per US Bureau of Economic Analysis.
  • RS
    Robert S.
    22 October 2020 @ 02:32
    Oh Myrtle Beach describes this guy well
    • RM
      Robert M.
      22 October 2020 @ 17:06
      Having grown up in SC and spending a lot of time in Myrtle Beach in my formative years, appreciate this comment.
  • JB
    Joe B.
    22 October 2020 @ 04:37
    Real vision essential is now just underwhelming and very disappointing to older members: a bit of crypto content, a bit of CEO industry or company insights, a bit of Macro. So Macro is 1/3 and majority of the exciting content is under RV pro.. I can also access a lot of the content directly on your pro guest’s other platforms at no cost. You need to rethink your sub packages.
    • AI
      Andras I.
      22 October 2020 @ 05:46
      Definitely it's a bit out of balance. I agree with your valuation of the Essentials tier. It's a marketing tool and a gateway drug :) Plus is by far the best value proposition recently - for that price it's offering a steady stream of otherwise hard(er) to find content (although free podcasts and fintwit are a competitor), especially with the recent addition of extra research material. Seems like it's a bit ignored for education, either it has a different, more focused model or just a bit lagging behind. Crypro - so far it's mostly a promotion platform for various companies shilling their services. From what I understand this will be free going on (? I might be totally off), sponsored by these companies. So I expect it to continue in a somewhat similar fashion. There is still some interesting interview from time to time but it's not steady. Pro is what it is - a time saver for those who have a large enough portfolio but missing time/understanding/patience/confidence to come to their own conclusion - for a price that's still acceptable compared to similar offerings elsewhere. If the education content ramps up, it will be more worthwhile for a broader audience.
    • RM
      Robert M.
      22 October 2020 @ 17:05
      Have suggested this numerous times. Maybe it is working for them financially, but find it confusing as a subscriber.
  • TC
    Timothy C.
    21 October 2020 @ 23:23
    HYG might be ok due to diversification and they Fed supporting HYG in terms of liquidity (so it feels like Jared has a valid point there). That said, the Fed can't underpin bankruptcies of zombies, so we are going to have a huge insolvency phase moving forward. That feels like if it gets big enough, it will eventually snowball into the NAV of HYG and drive the price down naturally, although that could take a long time... Flows...
    • RM
      Robert M.
      22 October 2020 @ 17:04
      Liquidations are the issue. Some project liquidation % is higher than the interest you earn on high yield. To suggest that you can clip these coupons almost like treasuries is a high risk strategy to earning historically low yields on high yield bonds.
  • AA
    Aymman A.
    22 October 2020 @ 15:46
    Great discussion!
  • TC
    Timothy C.
    21 October 2020 @ 23:38
    Ok, one other thing. The Q2 GDP number is not exactly misleading, it simply needs to be taken into context as numbers that follow it. The calculation of quarterly GDP numbers has a form of weighted moving average that can produce extreme values when month to month data over the measurement period is volatile. Makes the upside numbers misleading as well. When a formula doesn't work as intended, relying on it is risky outside of the assumption that others are relying on it and using that as input to your respective decisions...
    • RM
      Richard M.
      22 October 2020 @ 14:50
      You've got to remember, that negative 35% GDP number will disappear shortly - it's the 2nd quarter number annualized. So when the "full" year reading comes out (to match all those earlier data points in the chart that was shown) it will probably be a reading of maybe 10 to 12% down. A big difference!
  • JA
    John A.
    21 October 2020 @ 22:56
    Doesn't like Treasuries, but HYG is ok? If you believe the Fed is going to support HYG, then you kind of have to believe the Fed is going to lock the curve into place no matter what happens. So in the end, the spread is simply a function of risk of defaults reducing the actual payout of the bonds held in HYG. Not sure I get that point of view, unless the idea is simply to damn the torpedos and go for the highest yield and ignore the underlying issues.
    • DS
      David S.
      21 October 2020 @ 23:21
      Agreed on the whole HYG and UST
    • DS
      David S.
      22 October 2020 @ 00:19
      I understood that Mr. Dillian meant the interest rate on the US Treasuries is just not enough to fool with. DLS
    • RM
      Richard M.
      22 October 2020 @ 14:46
      I think this might also play into his "buy stocks" thesis. If you overlay a chart of the S&P500 on HYG you will see they are virtually identical (so if stocks are being supported by Fed policy HYG will be too). I don't know that I believe that the Fed can cure all ills (since it was responsible for a lot of those ills), but it kind of follows Jared's thought process.
  • DR
    David R.
    22 October 2020 @ 12:48
    Really good. All simple stuff but loaded of common sense, always good to get back to basics. I liked the tech bubble analogy to BTC behavior, brilliant.
  • AG
    Amol G.
    22 October 2020 @ 12:38
    Jared is probably one of my favorite guests. I've gotten to follow so many brilliant people on Twitter due to RV. Appreciate y'all!
  • SY
    Shiva Y.
    22 October 2020 @ 09:05
    "MMT is currency debasement with an academic veneer." "Selling too early is the biggest sin!" "Bitcoin is 10 to 20 years trade." Great interview! Jared Dillian just became one of my favourites!
  • sj
    sara j.
    22 October 2020 @ 08:54
    Jared's asset allocation is intresting, its seems a modified Golden Butterfly portfolio with a small change, instead of 20% SCV(small cap value) it has 20% real estate.
  • JK
    John K.
    22 October 2020 @ 04:44
    Does anyone have a link to the leaked Stan druckenmiller speech that is talked about near the end of the video ?
  • XM
    Xavier M.
    22 October 2020 @ 04:23
    What can you say? Mr. Dillian is a tour de force in the world of personal finance. When I listen to him I find myself hanging on every word. I highly recommend listening to his excellent radio show weekdays at 6 PM (EST). The link is on his website. Cheers.
  • DS
    David S.
    22 October 2020 @ 03:20
    I can see the dollar declining against gold, land and Bitcoin. Do investors really think it will decline a substantially against the Euro, Pound, Yen, Yuan, Ruble? I thought everyone was rushing to the basement. DLS
  • NI
    Nate I.
    22 October 2020 @ 00:04
    Tony Greer says the market has priced in Trump. Jared Dillian says the market has priced in Biden. Are you the tiebreaker Ash?
    • DS
      David S.
      22 October 2020 @ 00:14
      The election is important, but life and the markets will go on either way. DLS
    • AB
      Ash B. | Real Vision
      22 October 2020 @ 03:18
      I try to avoid making any election predictions of any kind — except to say that at this point nothing would shock me.
  • RB
    Robert B.
    22 October 2020 @ 03:04
    Ash, is Jared referring to Jawad Mian when he quotes the "if you want to bet against America, buy stocks" tweet?
    • AB
      Ash B. | Real Vision
      22 October 2020 @ 03:17
      Yes. I believe so.
  • JM
    John M.
    22 October 2020 @ 00:56
    I thought Jared said he had an investment in Canadian equities in his portfolio but I believe he was short CIBC for quite some time. I wonder if he is still short?
    • RW
      Robert W.
      22 October 2020 @ 03:01
      He has no Canadian equities and is still short CIBC...
  • DS
    David S.
    22 October 2020 @ 00:11
    Excellent discussion. Mr. Dillian is smart, experienced, and straight forward. Within a topic Mr. Bennington used each question to learn more about the prior answer. This requires a lot of interviewing skills and experience on Mr. Bennington's part a la the interview with Dr. Roubini. This cannot be done often. You need to dialog on a Socratic level where understanding Mr. Dillian’s approach to markets is the end game. As you know, I am not always so effusive. Following up on Mr. Harrison's point that seasonally adjusted data can be misleading, I would suggest that you put up both charts when possible just to see if there is a difference. If there is no real difference, the non-seasonally adjusted chart is my preference. DLS
    • AB
      Ash B. | Real Vision
      22 October 2020 @ 02:43
      Thanks, David. Good point on looking at data NSA — especially during non-linear moves where the adjustments distort.
  • MA
    Mike A.
    22 October 2020 @ 01:50
    A lot of traders here are doing the inflation play. Interesting..Probably this is what Druckenmiller said. The problem is he can change is mind at any time and you would never know it until it's too late..
  • VN
    Vitali N.
    22 October 2020 @ 01:19
    not a particularly new idea https://www.permanentportfoliofunds.com/permanent-portfolio.html also replacing Fixed Income with HYG, which has a correlation of what? 0.9 to stocks defeats the purpose
  • FG
    Felix G.
    22 October 2020 @ 00:01
    I'm very impressed by Jared
    • JM
      John M.
      22 October 2020 @ 00:53
      Agree and I like his awesome portfolio mix.
  • IN
    I N.
    22 October 2020 @ 00:52
    One of my favourite segments on RV DB. And my guy Jared said "Beyond Meat" which is a favourite of mine and where my ideology aligns.
  • MC
    Michael C.
    22 October 2020 @ 00:19
    Mr Dillian is using something similar to Chris Cole's Artemis 100 year portfolio. Rebalancing after 1 year and a day (for LT capital gains) when the target allocation gets out of whack, say 10% or more, would be the other part.
  • LB
    Lukas B.
    21 October 2020 @ 23:13
    "The next five years...." I think the end of the line is a LOT closer than that...
    • DS
      David S.
      21 October 2020 @ 23:20
      #word