The Compound and Friends
Big Market Delusions
Sep 15, 2023
Rob Arnott, expert in lessons from the tech bubble and smart beta, discusses big tech valuations, Tesla and Nvidia, and the impact of AI on markets and the economy. Topics include the performance and risks of smart beta strategies, catalysts for value stocks, the impact of AI on job security and overpricing in the video market, the surprising performance of NASDAQ 100, and the potential of AI in various industries.
50:09
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Quick takeaways
- Investors should be cautious about smart beta strategies if their strong performance is driven by structural alpha or if they become more expensive relative to the market.
- In the current environment, investors are advised to consider embracing multi-factor strategies due to the low pricing of factors like quality, momentum, and low volatility.
Deep dives
The Pricing of Smart Beta Strategies in 2016
In 2016, smart beta strategies were attracting enormous inflows due to their impressive past performance. However, Research Affiliates warned that if the strong performance was driven by structural alpha or if the strategies became more expensive relative to the market, investors should be cautious.
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