We Study Billionaires - The Investor’s Podcast Network TIP258: Current Market Conditions and Value Investing w/ Tobias Carlisle (Business Podcast)
Sep 1, 2019
Tobias Carlisle, Principal of Acquires Fund and host of The Acquirers Podcast, dives into the intricate world of value investing. He explores current market volatility and the challenges of short-selling Netflix, stressing the importance of cash flow metrics over traditional valuations. Carlisle highlights the historic underperformance of value stocks compared to growth, providing insights into why this trend persists. He also emphasizes the need for analytical tools to navigate today's complex investment landscape, particularly in the competitive streaming market.
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Market Overvaluation
- The stock market is significantly overvalued, nearing levels seen during the dot-com bubble, based on various metrics.
- This overvaluation doesn't predict short-term market behavior but suggests lower long-term returns from equities, especially in the US.
Netflix's Risky Valuation
- Netflix's high valuation depends on sustained growth, but increased competition and content costs threaten this.
- Its business model, now resembling a movie studio, faces challenges in producing consistently successful content.
Netflix vs. Cable TV
- Unlike cable TV, Netflix lacks the "stickiness" of a monopoly and faces easy competition.
- The $1000 per subscriber valuation, based on cable, is inappropriate given this different competitive landscape.
