Everything & Everyone Underperforms Eventually

Aug 23, 2023

The podcast discusses the article 'Everything & Everyone Underperforms Eventually' and compares the performance of long-duration bonds to other asset classes. It emphasizes the importance of investing in intermediate to short-term government bonds as a defensive position. The host expresses trust in Eduardo Repeto's strategies and plans to share valuable information through regular newsletters.

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Introduction

00:00 • 3min

Performance of Long-Duration Bonds and Other Asset Classes

03:24 • 8min

Investing in Intermediate to Short-Term Government Bonds as a Defensive Position

11:09 • 11min

Gaining Trust and Confidence in Investment Strategy

21:57 • 5min

Plans for Regular Newsletters and Information Sharing

26:42 • 4min

The podcast opens with Paul reading and discussing Ben Carlson’s recent article on the collapse of bonds,“Everything & Everyone Underperforms Eventually.” Paul references a table of returns that compares Short, Intermediate and Long Term Treasures. Paul also references a table of Fixed Income Returns during years with S&P 500 loss. The following short article is referenced in a discussion of Bill Miller and Legg Mason Value Trust's 15 year record of returns ending in 2005.Russel Kinnel Jan 3, 2006

"Bill Miller has done it again, but it was a close call. Miller's Legg Mason Value (LMVTX) extended its winning streak against the S&P 500 Index to 15 straight years, with a 2005 return of 5.32%. The S&P 500 returned 4.91% for the year.

Miller's aversion to commodity producers, specifically energy stocks, meant he had an uphill climb in 2005. In addition, duds like Tyco International and eBay (EBAY) added to the challenge. However, big bets on Google (GOOG) and UnitedHealth Group (UNH) won the day.

Those stocks nicely illustrate Miller's style. He believes that you have to stick your neck out on controversial or at least misunderstood names to beat the market. EBay and Google are bold bets because their multiples are so steep that they need nearly flawless execution to produce good returns for shareholders. Yet, Miller will also buy fallen growth stocks where controversy has frightened off less-secure money managers. Hence, Tyco and UnitedHealth.

While his streak against the S&P 500 is a fun way to keep score of Miller's accomplishments, his goals revolve around long-term success versus the market. The consistency of his record helps to keep investors in, but his 10-year return is more impressive. The fund has gained an annualized 15.19% over that period, which is about 6 percentage points per year better than the index. For more perspective on the streak, read Chris Traulsen's Fund Spy column from November 2005."

The Long Term Investor – Episode 62 – Investing for Higher Returns with Eduardo Repetto

Rational Reminder – Eduardo Repetto : Deep Dive with Avantis Investors’ CIO – 11/24/2022

Paul recommends investors listen to the following interviews with Eduardo Repetto, the Chief Investment Officer of Avantis Funds. Bogleheads on Investing (the one w Rick Ferri) - Episode 43: Eduardo Repetto on factor investing