Two Quants and a Financial Planner | Bridging the Worlds of Investing and Financial Planning

The Six Most Controversial Takes from Excess Returns in 2024

Nov 18, 2024

The discussion heats up with Aswath Damodaran's bold critique of the Berkshire annual meeting. Cem Karsan presents a mind-bending take, suggesting options are the 'dog,' challenging traditional views. Meb Faber stirs the pot by questioning the value of dividend investing, while fresh research calls into doubt the need for intuitive market explanations. A special guest simplifies options trading complexities, adding more spice to the conversation. Emphasis is placed on enjoying the investing journey, balancing risk with personal satisfaction.

57:21

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Quick takeaways

The podcast discusses the significant variability in long-term stock market returns, emphasizing the need for diverse investment strategies to manage risks effectively.

Criticism of old-school value investing highlights the danger of dogmatism, promoting a flexible approach to align with individual investment philosophies.

The rising prevalence of options trading signifies a shift in investing methods, with education playing a crucial role in managing associated risks effectively.

Deep dives

Dispersion in Market Returns

Real returns across global stock markets exhibit a significant dispersion over 30-year rolling windows. The worst-case scenario has shown a negative return of 94%, while the top performers squeezed out gains up to 70 times the original investment. This vast difference indicates that investors can experience markedly varied outcomes depending on the specific timeframes and conditions under which they invest. Hence, a focus on long-term strategies should not overlook the inherent risks that accompany market volatility and the unpredictability of individual stock performance.

Intro

2min

Exploring the Power of Controversial Takes in Investing

3min

Challenging Investment Norms

7min

Navigating Long-Term Stock Market Dynamics

17min

Navigating the Evolving Landscape of Options and Dividend Investing

6min

Rethinking Dividend Investing

15min

Joyful Investing: Balancing Risk and Enjoyment

8min

In this episode of Two Quants and a Financial Planner, Jack and Matt dive into some of the most controversial takes we've heard on Excess Returns in 2024. From Aswath Damodaran's spicy thoughts on the Berkshire annual meeting (spoiler: he's not a fan) to Cem Karsan's mind-bending perspective on options being the "dog" rather than the "tail," we're breaking down six of the hottest takes from 2024. We explore everything from Meb Faber challenging the sacred cow of dividend investing to groundbreaking research suggesting that maybe we don't need intuitive explanations for what works in the market. Plus, we bring in a special guest to help us mere mortals understand the complex world of options. As two self-proclaimed "non-controversial" guys, we try to find the nuance in these polarizing perspectives. Whether you're a quant, a value investor, or just someone interested in different ways of thinking about markets, there's something here for everyone. And yes, we even manage to work in references to everything from Little Rascals to My Fair Lady (Matt's brain works in mysterious ways). Join us for an episode that proves even "wildly controversial" Jack Forehand can stir things up once in a while! 😉

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