Comments
Transcript
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WH37:40 - re 30 year bonds. Why give away convexity?
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MPSorry that I'm coming on to this a bit late but I'd humbly suggest reading Mr. Marks memo, "Something of Value." He is a very lucid thinker with lots of experience and, as bonus, a pretty good writer. https://www.oaktreecapital.com/insights/howard-marks-memos/
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DDTwo extraordinarily successful and humble investors and true gentlemen of the old school sharing their respective wisdom. Thank you and I hope you young(ins) appreciate the shared knowledge.
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AATwo of the greatest of all time. I couldn't help but wonder how this conversation would have been different if the Fed hadn't stepped in on a massive scale last March.
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TEClass. Both leave such a rich library of valuable writings. This interview is a small snippet.
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NTHonestly, I was expecting a much more insightful discussion from such accomplished investors. They say nothing new.
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PMFlee! Sell! Now the fundamental Makro value investors even wanna buy FAANG stocks!!!
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JTWhat a privilidge to be a fly on the wall.
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CMThey cannot fathom the system which worked for them will inevitably cease to exist. Fundamentals matter but not in a system without transparency and integrity. Tell me one corrupt system throughout history that is still surviving today?
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PPHoward Marks & Joel Greenblatt leave a wonderful legacy for the future by time stamping the global financial markets - as they are & how we got here - while on the cusp of a new paradigm. Each man with proven track records across up & down markets, they offer their thoughts & their valuable time to remind us how to look at markets when this system is normalized. Thank you both for making & sharing this conversation with Real Vision subscribers. @ 37:00 I gave copies of Adam Smith's (i.e. George Goodman) the Money Game to the interns & young people I worked with. One of the best books ever written about the financial markets & how they work - As I remember the chapter on the "Great" Winthrop discussing his three young star money making portfolio managers in the current bull market -> In the next bust two will be ruined, and one will be seen as an investing "genius", and then the cycle begins anew (1966 ; 1982 ; 1999 ; 2009 ; 2021-22 ?)
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BMStarting from 21:20 an interesting thought came out - EVERYBODY has access to all present (legal) information due to computers and technology speed. So finding imbalances in price and "actual current value based on present information" is an almost impossible task. "Actual current value.." is the expected mean point where price is expected to revert to, and a profit margin is within that gap. But... Theoretically, with current data known to all, price no longer relates to "Actual current value.." . In truth, current price relates to participants' perception of future expected value based on projections of expected performance. So investing requires insight on that perception accuracy. However, when that future time comes, price won't reflect "Actual current value.." at that time either, but again, perception of more distant future expected performance. That may have been part of the equation in the past, but it's the only equation now. Price may never reflect a rational "Actual current value.." standard ever again. Investing is no longer about judgement of present value. It is about judgement of perceptions of future potential value, that will never be realized because when that future time arrives there will be perceptions of value at a more distant future time....ad infinitum.
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MHThank you for the discussion from two top investment thinkers. Howard mentions early in the discussion that the FED had to save us from a Depression. That was the most humane and eithical choice. I question that. We will never know what would have been if the FED had not intervened. But ok ...they did what they had to do and I get that. I do not get the next 12 yrs of QE2 QE3 twist...and then QE to infinity making a mockery of the modern financial system. The world central banks helped destroy the price of money ( interest rates). We kick the can down the road and leave the next generation a pile of excrement. The chickens will come home to roost. I ask: Can we have capitalism without the central bank system?? Can we have capitalism without the crony??? Can we have capitalism and markets that are fair and without massive leverage ( derrivatives are weapons of mass destruction)??? There should be more outrage from the grey beards . Sadly we have lost our way.
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JHGreat discussion. Thanks to Howard and Joel, and the Realvision team.
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PPReally Funny! ... Howard brought up Argentina and 100 year bonds...in the same sentence with America.... does he realize we are one in the same?...... It's just a matter of time.
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ABOut of touch. Clueless. Disappointing.
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DAI think too much deference is paid in the comments below to these two grandees, presumably on account of the reputations and their learned air. Did they actually say anything other than some vague truisms?
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CMI'm a fan of Howard Marks but turned this off at the 35 minute mark. Joel Greenblatt made the comment that this virus is a one time event. I believe we are now witnessing another huge government bureaucracy in the making that has and will reach into many aspects of our lives. COVID will be used to continue to print and pump money perpetually. This only accelerates the demise of the currency and the economy.
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jcSuch humility / open-mindedness !!!
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bfi think the money system has pushed a lot of people to high time preference thinking (the bitcoin standard) and in combination with the democratization of investing via computing technology it has led to this "pinnacle in investing psychosis", which wont end until its blasted out of the water. i think the return to hard money will reverse this trend and investing will mean building low time preference industries.
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MVThese guys are legends and obviously great at what they do, but as far as an interview/discussion, nothing of substance was really said. Howard is amazing at talking and saying nothing, it's a gift he has. Maybe I missed it, and everyone else sees it and I don't. If that's the case, please comment.....want to put a positive spin, but I can't.
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JRTwo brilliant and successful thinkers. However; As usual, Marks is a waste of time. You can read his book for 16 hours, or watch a video for one hour and walk away with 0 investment ideas. Mr. Marks; PLEASE Tell me something I don't know! Joel Greenblatt. Another waste of time. Every interview is like a lecture to really smart MBA students -- which is his passion -- but his content assumes that his audience has minimal real world investment knowledge. Not your typical Real Vision member. His mutual funds are among the highest fees out there with average performance
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NRLets do another video with two other independent thinking value investors analyzing if the fact that two of the greatest value investors of all time saying this time is different means: (1) we are in a giant bubble (2) even the brightest minds have given in to the enormous peer pressure bubbles impose.
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NCThis is like sitting in the sauna at the Washington Athletic Club listening to old dudes talk about how everything has changed and how ya gotta stay in touch with young people. These are nice guys, I listened to them, and I have no regrets; but next time I go in the sauna, I'm bringing a magazine with me.
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KKI think about the high valuations not as people being optimistic, but as if they were dealing with a, fear induced, manic episode, and experiencing euphoria as a side effect. When you don't think positively of the future, you don't invest in the new, but clamp down on what you know and try to hold onto it. Could also (partly) explain the private savings rate spike at the beginning of the lockdowns.
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TSWhat a conversation! Two investing wizards going back and forth, sharing their ideas, sharing how they think about today’s environment and their process. Overloaded with investing wisdom and intellect. Also, what is pleasant is how humble they seem to be.
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MOThe video started the question are we in a bubble. I will provide two perspectives what Ray Dalio deems to be a bubble and what George Soros definition of a bubble. Ray Dalio says the most defining characteristics of bubbles that can be measured are: 1) Prices are high relative to traditional measures 2) Prices are discounting future rapid price appreciation from these high levels 3) There is broad bullish sentiment 4) Purchases are being financed by high leverage 5) Buyers have made exceptionally extended forward purchases (e.g., built inventory, contracted for supplies, etc.) to speculate or to protect themselves against future price gains 6) New buyers (i.e., those who weren’t previously in the market) have entered the market 7) Stimulative monetary policy threatens to inflate the bubble even more (and tight policy to cause its popping) George Soros said that financial bubbles don’t grow out of thin air. Bubbles have a solid basis in reality, but a reality that is distorted by a misconception, therefore bubbles are assets that are artificially expensive based on a belief that happens to be false. You can also have assets that are grossly undervalued based on misconceptions. To identify bubbles you need to identify misconceptions and the market narrative that feeds into the bubble.
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KTRecord low interest rates may mean that maybe it’s not a bubble. It’s been said before but to hear it from these guys is great. I also finally got growth versus value. Very good.
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MCI enjoyed this interview. Hope they can do this again in a year or so. Thanks
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SSDoes anyone else find the video scrubber does not work?
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APhi, I am being censored again
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BVThis interview is the definition of intellectual honesty. 11 out of 10. Love-it (!)
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DC"we have to help now..." by printing more fiat, adding to sky rocketing national debt. It all feels so fake, everything feels like a bubble including our national culture.
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PEFascinating to be able to hear this conversation and their thoughts. I never miss reading a Howard Marks memo and always find value in each one. Much wisdom in this one, really appreciate it!
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CKExcellent discussion. Completely agree with Joel Greenblatt's questioning of benchmarks and whether they are meaningful. I think a possible alternative to the current process would be, say, to give a US Large Cap Equities manager a mandate, but with an absolute rather than a relative benchmark. If they have negative returns, then that would be bad. However, if they have positive returns, but lower than those of S&P, then the client can blame their investment consultants (who are responsible for their asset allocation and manager selection, and who have such dominance over the UK and US market), for not recommending an ETF / passive fund instead, or a better manager, rather than blaming the manager. For the record, I'm not a professional active manager, nor have I ever been.
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EGReally enjoyed watching the video of two great investors.. A suggestion: both Howard and Joel are value investors, so they basically tell the same arguments. I believe Howard talking to a growth investor could be also very educational to watch, while they comment to each others investment philosopies..
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FLIt also came up in the video with David Rosenberg: Is it sensible to be discounting future cashflows at today`s rates given that they are at the low end of historical ranges? What are historical median interest rates? Do we start counting in the Old testament? or When in the 1500 the Vatican's letters of credit where the only game in town? Or an average of the 10 year US bond for the last 200 years? Or how about the last 5 years 2 year bond? Of course the latter will be favoured by who supports current valuations, the previous three that come out as very close matches 6 to 10% will be dismissed as difficult to extrapolate to the next quarter. maybe.
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MLThanks, this was fantastic.
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JMReal value for understanding, thanks!
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PUTwo great investors and people! Excellent! Thank you.
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SCamazing to watch these two guys talk. kind of sad the Audio is so bad.
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MRFirst !