The Long View

Bill Nygren: The State of Value Investing Today

Aug 15, 2023

Bill Nygren, Chief Investment Officer at Harris Associates, shares his insights on investing after major market events and the 2008 financial crisis. He discusses share repurchase as a capital allocation tool, the impact of the global financial crisis on value investors, and the analysis of Charles Schwab's investment strategy. The chapter concludes with a discussion on market mispricing and the importance of efficient cost management for long-term success.

01:02:32

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Episode guests

Bill Nygren

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Episode notes

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Quick takeaways

Investing doesn't work reactively, as the market generally prices in information before it hits mainstream media.

Undervalued sectors like financials and consumer cyclicals offer greater potential rewards for investors.

The current market presents attractive opportunities for value investors due to the widening spread between growth stocks and cheap value stocks.

Deep dives

Market Anticipation: The Importance of Looking Ahead

The speaker discusses how the market always anticipates economic trends, which means that by the time news of a recession or inflation spike is widely reported, it is generally too late for investors to react effectively. He emphasizes the need for individual investors to understand that investing doesn't work in a reactive way, and that by the time news hits the mainstream media, the market has likely already priced in the information. The speaker mentions a historical exception during the 2008 housing collapse, but notes that in most cases, waiting for news to react is not a wise investment strategy.

Introduction

4min

Understanding the 2008 financial crisis and value investing

12min

Insights on Share Repurchase as a Capital Allocation Tool

2min

Diversification and Impact of the Global Financial Crisis

10min

Analyzing Deposit Franchise and Charles Schwab's Investment Strategy

3min

Understanding the Market's Mispricing

30min

Concluding Remarks and Disclaimer

2min

Our guest this week is Bill Nygren. Bill was one of our earliest guests on The Long View, appearing for the first time back in August 2019. Bill is a partner at Harris Associates, which he joined in 1983. There he serves as the firm’s chief investment officer for U.S. Equities and is also the longtime manager of several Oakmark funds, including the Oakmark Fund, the Oakmark Select Fund, as well as the Oakmark Global Select Fund. Bill received his bachelor’s in accounting from the University of Minnesota and his master’s in finance from the University of Wisconsin’s Applied Security Analysis Program. He is also a CFA charterholder.

Background

Bio

“Bill Nygren: ‘A Stock That Doesn’t Look Cheap on the Surface Might Be One of the Cheapest,’” The Long View podcast, Morningstar.com, Aug. 7, 2019.

Recent Commentaries

“Oakmark Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark Select Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark Global Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark Global Select Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark International Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark International Small Cap Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark Equity and Income Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.

“Oakmark Bond Fund: Second Calendar Quarter 2023,” by Bill Nygren, oakmark.com, June 30, 2023.