The hosts dive deep into the nuances of growth, value, and quality investing, emphasizing the importance of personal strategies. They explore the intriguing correlation between Bitcoin and global liquidity, revealing how macroeconomic shifts impact various assets. Recent portfolio changes are shared, highlighting reallocations towards Canadian growth stories and increased cash positions. Personal experiences underline the need for a balanced approach, especially in volatile markets, while reflecting on the emotional aspects of investing.
The debate between growth, value, and quality investing emphasizes the necessity of understanding personal investment priorities and methods.
Research indicates Bitcoin's price is closely linked to global liquidity trends, significantly impacting its valuation relative to other assets.
Recent portfolio adjustments reflect a strategic approach to reallocating capital and increasing cash reserves to manage risks effectively.
Deep dives
Returning to the Podcast
The hosts discuss their recent return to the podcast after a brief hiatus, highlighting their appreciation for listener feedback and support. Personal circumstances necessitated the break, and the hosts express a renewed enthusiasm for sharing insights in the financial markets. As they approach a notable milestone of 500 episodes, they acknowledge the ongoing commitment required to produce such a large volume of content. Their interaction underlines the relationship they maintain with their audience and the importance of being engaged with their listeners.
Investing Styles: Quality vs. Value
A central topic is the difference between quality investing, growth investing, and value investing, sharing insights from a Twitter conversation. The hosts emphasize that regardless of the style, the goal remains the same: investing in companies that will appreciate in value over time. They argue that growth investing, even when stocks trade at high earnings multiples, can still align with value investing if the future prospects justify it. They delve into specific examples, referencing the impressive trajectory of NVIDIA and the challenges in assessing high-multiple stocks without the benefit of hindsight.
Understanding Global Liquidity and Bitcoin
The discussion shifts to a paper analyzing Bitcoin's correlation with global liquidity, particularly through the lens of M2 money supply measurements. The authors of the paper find that Bitcoin shows a strong correlation with global liquidity, even stronger than traditional equities like the S&P 500. This correlation implies that as liquidity increases, Bitcoin's price is likely to follow similar trends. The hosts caution listeners regarding Bitcoin's volatility and discuss the impact of significant events, like the failures of prominent crypto lenders, that can dramatically influence its price.
Personal Investment Strategies
As the hosts transition to sharing their personal investment strategies, one discusses the recent sale of a top-performing stock, TFI International, to reallocate funds into other opportunities. He reasons the sale was strategic due to the stock reaching fair value relative to its growth potential, choosing instead to focus on holdings with better return prospects. The other host highlights his strategy of increasing cash reserves, specifically in short-term Treasury bills, as a means to hedge against potential market downturns. This conversation illustrates the importance of adapting investment strategies based on market conditions and personal risk tolerance.
Market Sentiment and Future Concerns
They conclude with a discussion about market sentiment, acknowledging the excitement among new investors and potential risks associated with geopolitical tensions. The hosts point out that while markets may experience robust growth, the possibility of significant downturns due to international conflicts is a real concern. They underline the necessity for investors to be prepared for volatility and highlight the importance of reassessing portfolios to ensure comfort during uncertain times. The dialogue reinforces the significance of maintaining a balanced perspective on investment decisions amid fluctuating market conditions.
In this episode, Simon and Braden explore the nuanced debate between growth, value, and quality investing. Braden shares his perspective on how these styles overlap and differ, emphasizing the importance of understanding your own "order of operations" when analyzing investment opportunities. Whether you're starting with business quality or valuation first, this discussion will help you refine your approach.
They also dive into a fascinating research piece by Lyn Alden and Sam Callahan, examining Bitcoin's strong correlation with global liquidity. The piece also looks at how global M2 influences equities, and other assets, and why liquidity matters more than you might think for long-term investors.
Finally, Braden walks through recent moves in his portfolio, including trimming winners like TFI International and reallocating capital to Canadian growth stories like Terravest and WSP Global. Simon explains recent adjustments he has made to his strategy, including increasing cash allocation with US treasury bills to balance risk and take advantage of future opportunities.
