Real estate expert George Gammon discusses his libertarian views on investing, emphasizing the importance of catching trends early. He explains the differences between retail and professional investors, highlighting the use of asymmetry to stack odds in their favor.
Successful investors blend value and trend following strategies to identify undervalued assets with growth catalysts.
Catalysts drive investment success by triggering growth or change in asset value, guiding optimal decision-making in the market.
Combining value and trend following approaches with effective risk management enhances long-term investment performance.
Deep dives
Value Investing and Trend Following: Finding an Intersection
Value investing and trend following intersect as successful investors often seek catalysts along with value. Value investors look for undervalued assets with a catalyst for future growth, similar to catching a trend at its onset. This blending of value and trend following strategies can enhance long-term performance and maximize investment opportunities.
The Role of Catalysts in Investment Decision-Making
Catalysts play a vital role in successful investments, influencing both value investors and trend followers. Looking for triggers that can spark growth or change in asset value can provide a competitive edge in the market. Understanding catalysts alongside fundamental and trend analysis can help optimize investment decisions.
Balancing Value, Trend Following, and Risk Management
Investors often balance value and trend following methodologies while incorporating effective risk and money management strategies. Combining the ability to identify undervalued assets with trend potential and employing robust risk management practices can lead to sustainable investment success. Integrating the best of both value and trend-following worlds can yield superior results in navigating market dynamics.
Hedge Fund Manager's Decision Making Process
Successful hedge fund managers focus on macro views, fundamentals, and narratives to inform their investment decisions. They analyze charts to optimize position entries and exits. Unlike many retail investors who emphasize what to trade, professionals prioritize risk and portfolio management strategies, using options for downside protection and upside potential.
Understanding Money Creation and Risk Management
A critical aspect of financial literacy is understanding how money is created and controlled in the monetary system. The majority of people misunderstand money creation as bank lending, whereas banks actually create money when they lend. This misconception impacts financial understanding significantly. Developing a clear grasp of money creation can enhance financial literacy beyond expert levels.
Dan and Corey kick off the show by reviewing the most recent PCE number, what's happening with inflation, and the current state of the economy. (0:41)
Next, real estate expert and entrepreneur George Gammon joins the conversation and explains how he became a self-described "macro addict" without any formal education in the world of finance or economics. Plus, he discusses why he considers himself a libertarian and why most investors and billionaires would fall into this category, even if they don't self- identify as such. (21:59)
Further, George describes how his investment style is influenced by being a libertarian. By default, his view is that the government is always going to do the wrong thing, resulting in unintended, net-negative consequences. George also goes into detail on the similarities between value investing and trend following. He argues that successful value investors are always looking for a catalyst so that they can catch the trend at its very beginning stages, while stereotypical investors are happy to catch the middle portion of the trend. (34:16)
Lastly, George explores the biggest differences between retail investors and professional investors. He details the strategy that the best hedge-fund managers use: starting with a macro view and then looking at the fundamentals and the narrative later. George emphasizes that these experts spend most of their time deciding how to position themselves and using asymmetry to stack the odds in their favor like in a game of blackjack. (46:32)
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