Wes Gray, former Captain in U.S. Marines, and founder of Alpha Architect and author of several excellent books on investing such as DIY Financial Advisor: A Simple Solution to Build and Protect Your Wealth (Wiley Finance), Quantitative Value,: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors, Quantitative Momentum: A Practitioner’s Guide to Building a Momentum-Based StockSelection System and one on combat, Embedded: A Marine Corps Adviser Inside the Iraqi Army speaks with Meb Faber – video embedded below also check out Meb’s site for the full transcript and more info
What if you had perfect foresight and knew ahead of time which stocks would be the best performers? The reality is even if you knew this and invested accordingly, you’d still suffer gut-wrenching drawdowns along the way so painful (around 75%) that “even God would get fired as an active investor” if he was managing other peoples’ money. That’s the result of one of Wes’s studies which he and Meb discuss. By the way, with perfect foresight, you’d do about 28% a year, so what does that mean for those investment groups that want your business, claiming they do 35% or so a year? Then Wes says it’s not about volatility – it’s about protection against tail risk. That leads into a discussion on one of Meb’s favorite topics, managed futures, “one of the best diversifiers to a traditional portfolio.” There’s talk of Wes’s roboadvisor, timing factors, and Wes’s secret to getting the best prices on Amazon. All this and more on Episode #4.
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Audio below and link to more here