Academic studies show that 90% of returns are determined by asset allocation decisions, not security selection or stock picking. Warren Buffett had been telling investors for decades that he beat the market because he bought cheap stocks that were more profitable and they were higher quality. If you just bought an index of those stocks you basically match Buffett's performance and his alpha all his outperform is virtually disappears. He has not outperformed these types of indices for the last 13 years or so.
IN THIS EPISODE, YOU’LL LEARN:
06:00 - The key to a winning investment strategy.
12:02 - What percentage of stocks actually outperform the market?
14:08 - Why active strategies such as active management, stock picking and market timing are “losing strategies”?
24:01 - Do markets value stocks correctly?
28:09 - Disentangling market efficiency with the concept of current valuation.
33:54 - How Warren Buffett’s outperformance can be explained by factors.
38:45 - How investors can improve their long run returns through factor investing.
39:12 - The 5 rules factors must meet to invest in them.
60:12 - Larry’s guide on how to think about allocating your portfolio between investing in US equities vs International equities vs Emerging Market equities.
67:18 - Why all factor ETFs are not created equal and which are best to invest in?
67:18 - The 3 characteristics to look for when comparing factor ETFs.
01:10:18 - How long you have to hold these investments to earn the expected premium?
And much, much more!
*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.
BOOKS AND RESOURCES
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