Excess Returns

10 Lessons From Our 5 Most Popular Podcasts of 2021 - Rob Arnott, Michael Mauboussin, Ben Inker, Cullen Roche, Tobias Carlisle

Jan 2, 2022

Finance experts Rob Arnott, Michael Mauboussin, Ben Inker, Cullen Roche, and Tobias Carlisle discuss lessons learned from popular episodes of 2021. They cover topics such as spreads between value and growth stocks, inflation, systematic value investing, valuing companies using simple multiples, and the rise of indexing.

50:00

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Quick takeaways

Valuation multiples should not be confused with actual valuation and investors need to understand the underlying economic assumptions embedded in the multiples used.

The rise of intangible assets has complicated the valuation process, and investors need to accurately capture the economic value of intangible assets to avoid distorting earnings.

While defining market bubbles in real-time is tricky, key factors include extravagant assumptions about future growth and a lack of concern for valuation models by marginal buyers, so investors should focus on owning less expensive stocks instead of timing market corrections.

Deep dives

Valuation process and multiples

Valuation multiples are a shorthand for the valuation process, but they should not be confused with actual valuation. It is important to understand the underlying economic assumptions embedded in the multiples used. Assessing the economic implications of the multiples and their underlying assumptions is crucial. Investors should focus on understanding how a company makes money, the assumptions required to justify the multiples, and the prospects for future cash flows.

Introduction

2min

The Spread Between Value and Growth

10min

Understanding Inflation and its Historical Context

11min

Systematic Value Investing and Historical Evidence of Outperformance

10min

Valuing Companies Using Simple Multiples

12min

The Rise of Indexing and Its Impact

6min

Our goal when we started the Excess Returns podcast was to hopefully use the platform to help educate investors, and to learn ourselves in the process. Initially, we didn’t have outside guests on the podcast, but it quickly became evident that bringing in voices other than our own would significantly help us in achieving our goal. Starting with our first interview in 2020 with Tobias Carlisle up until our most recent one with Dave Wright from Sierra Investment Management, we have tried to put together the best group of guests we could with the goal of learning what has made them successful investors and how all of us can benefit from their experience.

In this episode, we look back at 2021 and look at the biggest lessons we learned from our most popular episodes of the year. We feature interviews with Tobias Carlisle, Cullen Roche, Ben Inker, Michael Mauboussin and Rob Arnott.

We hope you enjoy the discussions.

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

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