Investing by the Books

#55 Edward Chancellor: Capital Returns

7 snips
Mar 4, 2024
Christian Billinger and Edward Chancellor discuss the benefits of capital cycle investing, forecasting supply vs. demand. They explore the impact of quality on generating Alpha, excesses in the current market, and applying the framework in capital-light industries. The conversation touches on market bubbles, underinvestment trends, and navigating turbulent markets with a supply-focused approach.
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ANECDOTE

Marathon's Tech Bubble Bet

  • Marathon bet against the tech bubble in 1999-2000 by being underweight companies like Nokia and T-Mobile.
  • Their approach focused entirely on supply-side dynamics.
INSIGHT

Capital Cycle Applicability

  • Capital cycle analysis applies to all investments.
  • Businesses are either subject to the cycle's fluctuations or operate in areas exempt from it, like quality companies.
INSIGHT

Capital Cycles in Value and Growth

  • Growth and value investing implicitly involve capital cycle considerations.
  • Value stocks often discourage investment, while growth stocks incentivize it.
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