Learning To Love Investment Bubbles

Learning To Love Investment Bubbles

Learning To Love Investment Bubbles by Meb Faber

Guest: Episode 24 is just Meb.

Date: 10/3/16

Is It A Good Time to Be a Stock Picker? Interview With Worm Capital

Fractional Shares Stock PickerValueWalk's Raul Panganiban interviews Eric Markowitz, Director of Research, and Dan Crowley, Director of Portfolio Management, at Worm Capital. In today’s episode they discuss their approach at Worm Capital and where they find opportunities. Q4 2020 hedge fund letters, conferences and more Interview with Worm Capital's Eric Markowitz and Dan Crowley  

Run-Time: 21:11

Topics: Episode 24 brings us back to our most controversial episode format: the “solo Meb” show. Listeners seem to either love and loathe this style of show. If you fall into the “loathe” camp, it’s a short episode so the pain is limited. But hopefully you will listen, as Meb Faber dives into the fascinating, and possibly timely, subject of bubbles. The quick takeaway? Using a trend following approach would have helped you reduce drawdowns as popping market bubbles ravaged portfolios. And this would have helped you achieve investing’s main goal: surviving another day. Meb then dives in, first defining bubbles, then referencing three of the most famous bubbles in history: the South Sea Company bubble, the Mississippi bubble, and the Dutch tulip mania, each of which saw drawdowns of 90%. Meb Faber dives deeper into the South Sea Company bubble. In short, the South Sea Company was a huge pump-and-dump scheme – catching none other than Sir Isaac Newton in its carnage. From here, Meb Faber discusses strategies for capturing the upside of bubbles while protecting yourself from the fallout. One solution? Trend following, using the 10-month simple moving average. It does a great job of reducing volatility and drawdowns, and improving returns. Meb Faber ends the show by revisiting the South Sea Company bubble, this time putting an actual figure on Newton’s losses, and comparing them to what a trend follower would have made. What’s the difference? Find out in Episode 24.


Episode Sponsor: The Idea Farm and Soothe

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Links from the Episode:

Stock Distributions:

Market Bubbles:

History of Markets:

Read the transcript here.


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