Famed Finance Expert Kenneth French Reveals: Most Dangerous Investor Fallacies
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- čas přidán 18. 04. 2024
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Today's guest is Professor Ken French, the Roth Family Distinguished Professor of Finance at the Tuck School of Business at Dartmouth College. He’s written some of the most influential papers in finance alongside former podcast guest, Professor Eugene Fama.
In today’s episode, Ken shares what topic he and Professor Fama disagree on. Then we get into a number of topics: what it means to truly be a long-term investor, the global market portfolio, misconceptions around stock buybacks, and much more.
To see links or read the transcript of the episode, visit us at mebfaber.com/2024/04/19/kenne...
(01:09) - Welcome to our guest, Kenneth French
(03:27) - Investing in FAANG Stocks: Should You Expect Unexpected Returns? www.dimensional.com/us-en/ins...
(07:02) - Deciphering an investors skill vs. luck
(15:04) - Having an investment plan
(20:16) - The global market portfolio
(24:54) - Thoughts on gold and other commodities
(26:18) - Incorporating human capital
(32:04) - Ken’s thoughts on stock buybacks
(35:28) - Improving financial education
(40:02) - Disagreement, Taste, and Asset Prices: www.sciencedirect.com/science...
(43:57) - Ken’s most controversial opinion
(46:29) - Ken’s most memorable investment
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When you work on something that only has the capacity to make you 5 dollars, it does not matter how much harder you work - the most you will make is 5 dollars.❤
People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.
Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.
Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things
Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit
I'm surprised that you just mentioned and recommend Mr Brian Nelson. I met him at a conference in 2018 and we have been working together ever since.
After the first sentence he had me.I don’t know who this guy is but he is talking sense.
I wrote 23 years - thnx for the great discussion!
Amazing guest . Thank you.
What an amazing interview. K. French is an extremely sharp guy.
Wonderful discussion.
Looking forward to this one!
If it takes 64 data points (annual returns) to be statistically significant, then this is another argument that favors indexing. Don't try to find the needle in the haystack to buy, just buy the haystack.
Or tilt towards characteristics that are known to have higher expected returns and offer independent sources of risk
Great interview....mature perspective...thank you....
No, I did not write down 64.
I wrote 10.
One thing has always puzzled me about the global market portfolio. It’s pretty intuitive that things like options or futures contracts wouldn’t be included, but why doesn’t this also apply to bonds? If someone is long a bond, then someone else (whether a sovereign, corporation, municipality, etc.) must be short that bond, resulting in net zero bond exposure.
Doesn't the t-stat of years vary by the amount of alpha tested? For example, a t-stat to prove statistical significance of a 50 bp annual alpha would be much longer than a t-stat to prove significance of 500 bp? So the lower alpha you test for the more significant the time period to prove it? I want French to sick to the 500 bp of annual alpha and give us the relevant time period. My guess is much shorter than 64 years. In other words, there should be an inverse relationship between the amount of alpha measured and the time period needed to establish statistical significance.
I wonder if French has read any of the Swagger Mark Wizard books; he's always referring to Simon as if he's the only one he knows. What about Paul Tudor Jones? What about Druckenmiller? What about Dalio? But as French said, "my view of the way the world works is totally inconsistent with the way most active investors think about."
The US equity part of passive investing is great until the components' valuations stop making sense... tho better than 1998 when KO was trading north of 60x earnings. At least use a collar.
Al Borland 🙌
This man sound like he smoked allot of cigarettes. And you tell me he understand statistics 📊😂 just joking. Nice interview I liked it. I call this taking an intellectual fresh investing bath. Just set the record again of what is most likely happening.