We Study Billionaires - The Investor’s Podcast Network

TIP589: Stock Market Crises & Bubbles w/ Brendan Hughes

Nov 26, 2023

01:01:44

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Brendan Hughes, a Registered Investment Advisor for Lafayette Investments, discusses his new book that explores various market crises. Topics include hyperinflation in Zimbabwe, Iceland's stock market bubble, the lost decade of Japan, potential parallels with current US markets, and companies that perform best during inflationary periods.

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Episode notes

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Quick takeaways

Studying history helps investors anticipate market scenarios and challenges conventional wisdom.

Companies with strong pricing power tend to weather inflationary periods better.

Investors should focus on businesses that can pass on cost increases to consumers and have resilient business models during inflationary periods.

Deep dives

Definition of Market Crises

A market crisis refers to a shock to the price of assets, typically involving extended periods of easy monetary policy, loose oversight, booming credit creation, and rising asset values. It can also include market bubbles where asset prices are far from fundamental value, or macroeconomic triggers like the COVID-19 pandemic and hyperinflation scenarios.

Introduction

2min

Understanding Market Crises: Lessons from History

8min

Hyperinflation: Lessons from Zimbabwe

6min

Iceland's Economic Downfall

19min

Analysis of Valuations and Comparisons to Japan's Stock Market

6min

Lessons from Market Crises and Constructing an All-Weather Portfolio

10min

Potential Structural Nature of Wage Inflation and its Impact on Businesses

7min

Concluding Thoughts and Book Information

2min

Clay Finck is joined by Brendan Hughes to chat about his new book – Markets in Chaos. The book explores various market crises including the covid-19 pandemic, hyperinflation in Zimbabwe, the stock market bubble in Iceland during the great financial crisis, and much more.

Brendan is a Registered Investment Advisor for Lafayette Investments and has more than a decade of industry experience in investments and public finance. Lafayette Investments has $720 million in assets under management and primarily caters to high-net-worth individuals.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro.

02:12 - What a market crisis is.

05:42 - Why it’s important to study history as investors.

09:11 - What led to hyperinflation in Zimbabwe.

15:14 - The market crisis in Iceland that led to their stock market falling by 95%.

28:09 - The lost decade of Japan.

32:11 - Potential parallels between the bubble in Japan and markets in the US today.

47:53 - Brendan’s biggest takeaways from studying market crises.

53:44 - The US energy crisis in the 1970s.

58:06 - Companies that perform best during inflationary periods.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Brendan’s book: Markets in Chaos.
Brendan’s firm: Lafayette Investments.
Learn more about the Berkshire Summit by clicking here or emailing Clay at clay@theinvestorspodcast.com.
Related Episode: TIP542: The Crisis is Bigger Than Banks w/ Jeremy Grantham or watch the video.
Connect with Brendan on LinkedIn.
Follow Clay on Twitter.

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