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Jonathan Treussard of Treussard Capital Management joins Forward Guidance to help define what a bubble is. By his strict definition, nothing qualifies right now. But as money flows into risk assets, valuations become stretched. Treussard has trouble with the high valuations in the U.S. market, and sees opportunities in the cheaper European and Japanese markets. He also shares his views on the risk of the “engineered yield” that comes from strategies that sell options explicitly or implicitly. Filmed on April 2, 2024.
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About Treussard Capital Management: https://www.treussard.com/
2004 Paper on Bubbles with Earl Thompson and Charles Hickson: http://www.econ.ucla.edu/workingpapers/wp836.pdf
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Timestamps:
(00:00) Introduction
(00:45) Hallmarks Of A Financial Bubble: New Technology and Valuations Stretching Far Beyond Fundamentals
(05:24) How Bubbles Remake Social Orders
(07:25) Credit Bubbles Vs. Equity Bubbles
(10:00) The Rise of Private Credit
(11:44) In Wealth Management, Private Credit Tends To Be "More Sold Than Bought"
(15:25) Private Credit Is "Concerning" But "Not A Bubble"
(17:05) U.S. Stocks Are Expensive
(19:55) Trade Wars & Geopolitical Blockades Are A Serious Risk To Nvidia
(26:49) Europe and Japan
(29:08) VanEck Ad
(30:10) T-Bill And Chill Has Been Drastically Outperformed By Stock Market Beta
(31:03) Investment Framework For The New Cold War
(43:58) How Option Theory Applies To Economics, Investing, And Life
(49:35) Jonathan's Work As A Risk Manager During 2008
(55:53) Beware "Engineered Yield"
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
