Sven’s arguments are pretty weak in this video tbh. Saying that Ben has incentives to push people to buy factor tilted low cost index fund is completely absurd - he simply can’t profit from it cause people can just buy them at pretty much any broker. At the same time Sven promotes his paid investment platform that returns in line with the market if not worse by justifying that it is “hedged”. I’m not sure what this video was meant to achieve, but it definitely didn’t persuade me to sell total market index fund and buy a bunch of correlated value stocks. When you buy stocks instead of the index you taking on risk that you are not compensated for. With diversified index you eliminate that risk while still getting paid market premium. Also, missing just a few days in the market can mean loosing all the performance, so not investing in the index because it’s expensive is basically a market timing and will lead to lower returns.
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Most important thing is to get started and build your income over time to continue investing more as time goes on. I just hit the 7figure mark on my portfolio. 210k - $1m in nineteen months at 43...
Congrats! Lost over hundred K since 2022 chasing individual stocks and I feel pretty stupid for not understanding how investing works. In the grand scheme of things it's now much, but it's taken a toll on my mental health, to say the least. Going into a new year, maybe my goal should be to stop...
Yuk, that's sucks. Keep it simple, practice proper portfolio diversification, take some risk but don't try to shoot the lights out. I’m invested in ETFs, REITs, and Individual bluechip company stocks and use a CFA. On average, she takes 10% of earnings, but using *Lina Dineikiene's* system makes it much more hands-off. I conservatively follow her recommendations and market entry and exit points, and tbh this makes it fairly simple for me... I am convinced it's not just hard work but smart work:-)
Hello. Have you listened to episode 335 of The Rational Reminder podcast? I think Ben, personally, and his views may have been slightly mischaracterised.
I think investors should always put their cash to work, especially In 2025, we'll start to see more market diversification. Considering the performance of stocks lately it is safe to say the stock market is the best smart investment out there. Hope others agree
Of course, you are not alone.. However, if you are investing in the stock market and you are not well versed, its advisable to work with a financial advisor who is an expert to guide you through the process. I have been making more with less risk since i started working with one
The truth is, the role of an investment advisor can often be overlooked but should never be underestimated. After facing a significant portfolio loss in 2020 during the COVID pandemic while trying to manage my investments on my own, I decided to reach out to an investment advisor. At that time, I had about $126K left in my portfolio. Now, without having to lift a finger, I'm semi-retired, working only 7.5 hours a week, and I'm just 10% short of my $1 million retirement goal thanks to my subsequent investments.
My CFA is Laurel Ann Watkins, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!
I came across your channel through this video case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.
You're correct. I think the smartest way to go is to spread out your investments. By putting your money into different asset classes like bonds, real estate, and stocks from other countries, you can lower the risk if one part of the market goes bad.
That sounds like a good plan. In the past two years, working closely with a financial market specialist, I've built a six-figure diversified stock portfolio. Now, I aim to diversify even more this year.
I'm a newbie talking about a financial market specialist, do you consider anyone worthy of recommendations? I have about 10Ok to test the waters now that large cap stocks are at a discount
Good analysis. However, I think the main point of Ben Felix shouldn’t be forgotten. Most of the people shouldn’t pick stocks and instead just pick a broadly diversified index fund
@ That price is too high at the moment, no discussion about that. But I think that would still be a better option for them (call it less worse) than buying a flashy smallcap biotech stock or something. Unfortunately, there is a very big proportion of investors that simply don’t know what they are doing.
Not only is the index wildly overpriced, but most of them are highly concentrated on a handful of the same stocks, in particular the top 3 holdings. If everyone and their mother is “diversified” into the exact same stocks, is it really safe to own the index? And if the index goes up the more money people dump money into it, does it not turn into a Ponzi scheme after some point?
@@Value-Investing What about the price of that index? Due to the high number of market participants and information available at your fingertip, market is mostly efficient. Market can still be driven by emotion at the extreme end. Look at AI (which is vastly unprofitable), and China with a negative sentiment. If you dollar cost average in an index fund, you smooth out your result in the LONG run (30-40+ years).
@@samm13131 I watched Ben's video. It didn't seem like he dissed Buffet. He actually went out of his way to say that the video is by no means intended to downplay Buffet's genious.
@@Value-Investing Good points here from Sven. They made fun of Buffett during the 2000 tech bubble, until it crashed. A good article from Barron's explaining the situation had a front page headline: "What's wrong Warren?". It's a free1/2 article.
He is not dissing Buffett. Ben is merely pointing out passive investing in low cost index fund will beat 95% of the actively run fund managers over the long run. 99.9% of retail investors cannot beat the market in the long run, so tracking the market is better than underperforming. Even the Munger/Buffett duo said in countless shareholder meetings that if you are not a pro, investing in S&P500 is the way to go.
Keep in mind Ben Felix has no stock picking course to sell. He preaches a style of investing that in no way benefits his business and is backed by academic research. The vast majority of investors should not be picking stocks and should focus on low cost index funds instead.
@@Value-InvestingHe doesn't have funds. My understanding is that he invests his clients' money in Dimensional funds, the costs of which are pretty low.
He charges an advisory fee. His channel is a marketing tool for his services. Here, look, I read all those papers from 1980s, therefore I''ll get you better returns.
Felix is committed to remaining fully closed minded. He will never accept the possibility that there are times when cash is a safer position than the index fund
I gotta give credit to Sven for posting videos even at last day of the year. Some people may call him permabear but very few people have a PhD in Finance and very few know the work to get there, not only the work but the dedication, its not just saying things because they sound good to invest. Happy 2025!
Personally, I don't think there is really such a thing as passive investing. Every "passive" cap-weighted index fund is tilted towards certain countries, sectors and companies, which makes it active-lite rather than truly passive. Technically, what people call passive investing is low-cost momentum investing. Momentum investing in a single index can do well for extended periods, but can also have extended periods of terrible returns (eg, the S&P 500 in the 1970s). Smart beta investing (such as investing in index funds that tilt towards dividend stocks, mid caps, or countries with cheaper indexes) can reduce the risks of momentum investing to a degree, but not as much as value investing in specific stocks or avoiding overpriced markets by holding cash or short-term bonds.
I almost agree with you, but I don't think you have seen the theoretical argument that the market portfolio (everything weighted by market cap) is the only optimal portfolio. You should search for a channel on portfolio theory, but in essence one finds theoretically that everyone should hold the same portfolio leveraged or combined to some degree with cash, and since everyone should have the same portfolio that can only be the market portfolio. But you can certainly ask, why stop at stocks? Shouldn't a market portfolio has everything? Real estate, bitcoin, and stamps? The whole thing seem like neat mathematics but in practice it doesn't apply to the real world, IMO.
For me this discussion is reminiscent of what Benjamin Graham says in the Intelligent Investor about the defensive and enteprising investor. Most people should be a defensive investor and forget about trying to outperform the market
Hi Sven, thank you for sharing! Are you going to do a video about your hedging strategy on this channel (specific puts probably in the research platform)?
The last slide makes sense.... An asset that hedges against the destruction of the dollar (Land/Shelter) . A buck in your back pocket ( hedge yourself) for when Mr Market is stupid and gifts you wealth with a market crash. And I like Sven's mantra of being satisfied with your own performance , if it meets your goals. Always worth listening to Sven. Happy New Year.......
You are a good world citizen fellow Dr. Sven Carlin, the same is true for Mr. Ben Felix, professionalism excel in both for benefit of many, like me. In my humble opinion, he did not diss Mr. Buffet, actually he recognized him. Please, keep in mind there is plenty of room ahead of you, for both of you to become bright stars. So, keep walking!
You can say what you want about Sven, but there’s no conflict of interest in what Sven does or says. On the other hand, Ben Felix’s conflict of interest is readily apparent. It’s my opinion that Ben wouldn’t stand a chance in debate with Sven.
@christiefamily545 , Ben doesn't manage any funds. He is a financial planner. Sven indeed has conflict of interests here, if you all stop watching his channel you will all be better off financially and Sven will be worse off
Hi, Firstly, thanks, Sven, for all your support during this year. Thanks for being so professional and really guiding people like me. I appreciated your videos because they are not selling dreams; they show points of view (pros and cons). I totally agree. I am not trying to outperform the market; I am just trying to get enough value to have a quality life.
Sven, as you said, these active managers are gambling with our money for the fees. My question is what are you doing with your research platform ? You are trying to sell your stock peaks for a fee ? Why don't you share with us you performances ? I bet your stock picks have lost plenty of money for the investors
the performance is around 12% since the platform portfolio inception, the next 7 years will be even better, there is a 21 day money back guarantee, so feel free to check it all...
I Hit $12,590 k today. Thank you for all the knowledge and nuggets you had thrown my way over the last week .i started with 3k in last week 2024..... now i just hit $12,590…
How did you manage to achieve that level of growth? I've been trying everything I can to improve my investments, I want to retire in a few years and I need a better diversification
Weekly trading is the best way of making money in the market due to lack of experience which resulted in loosing funds.But miss Violet Zyaire, restored hope shes a good woman
Wow. I'm a bit perplexed seeing her been mentioned here also Didn't know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super.
Since I became so rich in her trading I realise that crypto is the future cuz l invested 7k and made up to 36k as weekly profit I appreciate the help of this woman
When I think of why I invest, it is not completely to outperform or compare my performance to others. I enjoy investing. I love reading about companies. I've had to refine my strategy so I don't get too caught up in a good story, but it doesn't change that I like investing. Reading about companies is something I enjoy doing. Business news is way more interesting than the mainstream news. Companies are doing more to build and change the world than governments or politicians or celebrities. Even if I have a down year or a failed investment, it doesn't stop me from investing. Most folks should do index funds with low risk, market performance over years as they don't enjoy investing or know how to do it. But I enjoy the process of investing and will continue to do it whether I outperform every year or not. Main Buffett rule I practice is don't lose money. I had to learn that lesson the hard way. I'm not stopping investing ever.
@@azulsimmons1040 What a great comment thank you. I feel the same way but I have to admit to being delighted recently when I compared my 5y performance to the total returns of the S&P including dividends and was slightly ahead. I know this was probably down to mostly luck but I was happy anyway.
@@6upsidedown It may be due to luck or experience. As a private investor with no stockholders to appease or investors expecting your fund to outperform with smaller sums, over time as you get more experience you will find you can beat the market by being very interested in it. Right now I'm trying to recover from PTSD from losing 90 percent of my money in the tech bubble burst. It's been a real process as my position sizing is off which is negatively impacting my gains even though I choose multiple double ups or better a year. I just can't slide my chips into the investment like I could when I hadn't taken that huge loss. I'm slowly refining my process to make it more risk proof and focused on larger positions in quality winners. With time in in the market, you really start to learn what to look for if you refine your process by analyzing winners and losers and everything in-between.
@ I’m the exact same I dabbled back in 2005 and made lots of mistakes and realized I did not know enough. Then I gave over 10 years reading books and learning. Now I am long term focused with 20 positions making about 4-6 transactions a year. Way more defensively & quality minded and if I would not put a good chunk of my money in a company for 10 years I would not put in any. It is very enjoyable but my holdings have not dropped by 50% yet which in the next 20 years they inevitably will.
@jonathankrimer Yes thanks. I have listened to this episode also to be honest I have not really implemented it. I have had to set rules for myself to stop me from doing something stupid if I want fun I just flat out gamble rather than confusing it with my investing.
❤❤ Great analysis as always Sven... 😂😂 Almost fell of my chair on the Outperform bit🎉🎉 Can you do a video in depth on hedging options (based on portfolio sizes)?😮😮😮
"Trashing" is misleading. He shows how Buffet's performance can be explained by factors, while tipping his hat to Buffet for being one of the factor OG's before factors were understood widely.
Easy to explain anything in hindsight. Everyone can explain why Nvidia did so well in 2024, yet basically no one performed like the Nvidia stock did. The past seems so simple, yet somehow no one who seems to know everything about what to do in the past are able to outperform in the present.
I’m not really sure what the essence of value investing is, but in practice value investing is just buying low P/E, P/S, P/B stocks. It isn’t a very consistent strategy since valuation isn’t a good timing tool.
Value Investing Is Not About low PE, PS, PB, it is about buying value creation at a fair price from now to judgement day... will discuss as we are here for that...
There are so many ways life can play out and most investors will have a few days in the sun. The difference between most investors and Buffett is that regardless of how life plays out, he will do well. Most investors will do well in one senario and go to zero in most other scenarios.
I have followed Buffett’s and Munger’s principles to wealth and have rarely ever had more than five positions at a time. Ben Felix is right in that 99.9% of investors lack patience both to wait for an opportunity and to hold an opportunity along with the ability to deviate from the crowd.
He said he doesn’t do options. He has a list of covered stocks. His portfolios source positions from the list. A hedge against market downturns is an asset that will have a positive return in a downturn. The list is public…
@@mathewwilson9776 "A hedge against market downturns is an asset that will have a positive return in a downturn." That would be puts or treasuries or something similar.
I’m not sure BRK was less risky than the market. With BRK insurance operations if there were a massive natural disaster it would have been more affected than the market. Just because it did not happen in retrospect does not mean the risk was not there.
How about splitting the money between BRK and some worldwide index fund like FTSE All World? I'm struggling with the decision where to park the long term money and don't want to put it all in one fund.
a) Ben is right that index funds are better for most investors, but he fails in saying when to get out. He retreats to outdated models like Fama/French and disregards the glaring evidence against these models, such as successful skilled value investors like Lynch or Buffett or their failure to actually predict stock returns (check wikipedia for a summary) b) Sven is correct in saying that the S&P500 is over valued now and not a safe nor prudent investment today. c) The difference between Sven and Ben is that Ben will tell you the theory and is agnostic to price, whereas Sven tells you when it's time to get out due to the super bubble. Ben would never tell you to sell and that's his issue in my opinion - Ben cares about his theories, Sven cares about my returns.
Lynch picked his successor... Didn't replicate the returns. Finding a "good" fund manager is incredibly difficult. If Lynch can't do it then neither can I. Any time you buy or sell you must be confident that you know something the seller/buyer doesn't. This is unlikely. Sven is good at comparisons and evaluating companies. I like his advice and mindset however I doubt I can replicate his decisions.
Finally someone gives Ben a reality check! He commits basic logical fallacies and then hides behind ''intellectualism'' when all he's really doing is extrapolating the past into the future and ignoring all fundamental factors.
Ben Felix uses peer reviewed research which is based on what has happened as it won’t pass peer reviewed if it is imagined. What fundamental factors does he ignore?
@@6upsidedown presumably OP is referring to fundamental factors in stock valuation, ie business strategy, ratios, competitive advantages, management, brand awareness etc. Academic research does not ignore all of these (spesifically they study quantifiable factors like P/E) but they do ignore a lot of the qualitative things like "can you trust the CEO?", which is what someone like Buffet values above all else but it doesn't fit into a statistical normal distribution.
@@theWebWizrd A lot of the qualitative factors you listed are judgement decisions and are what makes markets. These are basically like predicting the future impossible to know with certainty. If it can’t be academically researched and analyzed you are not taking an evidence based approach. This will mean you will underperform the best investors like the up and coming Buffets but you will also outperform the vast majority investors who have over confidence in their qualitative analysis.
Excellent video! I appreciate both Dr. Sven Carlin's and Ben Felix's channels for sound, rational analysis, research, and discussions. I enjoyed this conversation. For folks that value both approaches (passive index funds vs active stock picking), consider the core-satellite strategy. It's the best of both worlds.
Hasn't Berkshire also aquired companies outright and taken them private? The gains from those companies' growth won't show in graphs as they're not publicly traded any more.
The paper "Buffet's Alpha" concluded Berkshire's public outperforms private companies, meaning he is a better stock picker than a manager. He uses privately held insurance companies to fund leverage with insurance float.
Dear Sven you asked what’s the essence of value investing versus S&P 500 indexing. The answer is very simple indexing is easy,effortless and cheap for most people. Value investing requires perhaps 40 hours per week in Research and reading it is extremely difficult for most people, therefore to answer your question, there are two completely different things. One may be able to do value investing if he or she has lots of time or perhaps if he is retired, but for people who work every day it’s almost impossible.
I was adviced to diversify my portfolio among several assets such as stocks, crypto and bonds since they can protect my portfolio for retirement of about $170k. I need advice: Do I keep contributing to my portfolio in this unstable market or do I look into alternative sectors?
The strategies are quite rigorous for the regular-joe. As a matter of fact, they are mostly successfully carried out by experts who have had a great deal of skillsets and knowledge to pull such trades off.
That is very correct. Having the right financial expert is invaluable. My portfolio is well matched for every season of the market and recently it has hit 80% rise from early last year. I and my CFP are aiming for a 6 figure ballpark goal.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with "Caroline Suzan Olson" for about five years now, and her performance has been consistently impressive. She's quite known in her field, look-her up.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Sven, like others have said Ben Felix went out of his way to recognise the genius of Buffet many times and highlighted his use of factor ahead of it's discovery. But you clearly don't understand passive investing or value factor. Some more notes: - Ben doesn't manage funds, at PWL they use Dinensional funds (3rd party). - Would be good you to recognize that he is right on advising people to buy index funds. - Would be good for you to recognise that most people following your channel will lose time and money following your approach compared to using index funds. - Would be good for you to recognise that you are the only one making money out of this channel compared to index funds.
You know absolutely nothing about Warren Buffet when you suggest that he was 'using factor'. Buffet invested in companies, not factors. If you disagree with Sven and thinks this guy with a PhD in finance does not understand finance like you do, then go ahead and explain what he is missing. What is true is that *for the last several decades you would have been very well off if you had invested in the US stock index and never panicked or needed the money*. We don't know how that will hold in the future. We do know that the earnings we get from a US index is extremely low right now, one of the lowest point in history, and at previous similar yields passive investors have gone decades without making back their money. How is it that it is so easy for you to see that you can't say that 'you could have just bought Berkshire Hathaway or Monster early on and made millions' because of hindsight bias and that the returns are not gusranteed to continue and in fact should be guaranteed not to, but you can't apply the same logic to the S&P index? Please, show your evidence that Sven's approach will underperform the index the next decade. We are all very excited to share in your clairvoyance. By the way, Sven has been outperforming the S&P both on a nominal and risk-adjusted basis for two decades.
@@theWebWizrd Oh yes, Sven knows a lot about finance, but it uses it skillfully to manipulate audience into buying his platform. He sells his product, nothing wrong with that, but he is in a clear conflict of interest with index investing and has been bashing it for the last 7-8 years at least. On the other hand, his results some find difficult to track/prove and some find it inconsistent. On top of that, he seldom mentions considerable friction costs when buying stocks his way (taxes, illiquidity etc). To sum up, its not enough to beat the index. Sven has to beat index + taxes (acc etfs are mostly tax free in europe) + fees + some factor exposure. And do it consistently over 10-20-30 years.
@theWebWizrd ( or should I call you Sven?) - few comments: - I know a thing or two about Warren buffet, trust me. For example, is is true or not on Warren's first career phase he focused on buying "small cigar butt" companies? "Cigar butts" are defined as low price to book which is the key characteristic of the value factor. - the same applies to Warren second phases with quality and leverage. - yes, I disagree with Sven ( "this guy with a PhD"). I didn't use titles before as arguments were more important. But since we go there, its not just me disagreeing, the broad community of PhDs in finance do! The proponents of CAPM and factors like size or value are not just PhD, they won Nobel prizes for their work. - Evidence that Sven approach will underperform? There's overwhelming evidence (many papers to the speeva report) that active managers or retail stock pickers have consistently and overwhelmingly underperformed the market. And the above applies to stock pickers that follow Warren buffet style too - Sven is selling a method that will in more than 95% of the times result in worse outcomes for individuals following it. Everyone following this channel thinks the sentence above doesn't apply to them. Please think carefully as your future wellbeing is more important than your pride.
I really dont know how deep you are in the topics of CAPM, 3F, 4F, 5F etc. but as someone who analyzed it deeply for the german stock market I just want to say one thing: No Model could describe the Price Fluctuations pretty well. Some have more explanation some have less some depends on the time you choose to analyze but not one is really pretty good. It is just a way academia tries to explain the Stock Market with Maths and Models. And even with a lot of not practical existend assumptions the models are just ‘ok’ in terms of R2 or whatever metrics you like to choose.
Really like how all the themes tie back nicely to the same consistent lessons. An apple a day, keeps the Dr away. A Sven a day, keeps the Bubble FOMO at bay. Thanks for your sharings in 2024. Happy New Year
Nice, now two of my favorite Investment youtube channels are ditching each other :D , but I have to agree with Sven, academics are never right when it comes to investments theories and value investing is about risk first, profit second , majority of people still don't understand this , but in other hand index investing is indeed the better for majority of people.
@@tiagosantos680 agree, when your in a 20 year bull cycle with artificial government stimulus we detach from academics and financial theory however, when we see a correction/recession the only indicator people rely on is actual academic fundamental analysis (usually when we revert to the S&P 500 P/E mean of 15 or lower)
@@Value-Investingif by hedged you are not talking about low risk cash instruments have you done any videos on your volatility based hedging i know that people like chamath palihapitiya has shared his option approach to that . he didn’t ever claim to be a value investor so much as a early investor , venture capitalist for us value investor it would be usefull to hear your version as a dyed in the wool value investor regarding what volatility hedging looks like for a value investor? is that in your video library for”fellow investor”s? your hedging comment worries us long term subscribers 😮😊😊 thanks
Also, passive investing is easy. You don't need much knowledge. But active investing is different. Yoy only learn by exposure, and that means time and learning from mistakes.
These arguments of passive investing are so boring: -Nobody seems to have read investing books or either undersood where the incentive of hedge fund managers is which explains perfectly why most of them underperform the market -Continously pointing out the concept of outperforming the market without considering market fundamentals, bubbles etc... -Failing to understand that is not a religion. One can still do passive investing and pick individual stocks in circle of competence. I have seen so many creators making arguments that amateurs shouldn't pick individual stocks that I would tell to all of them "do whatever". But maybe read "One up of Wall Street" first.
You can beat market what you do is you buy the index fund then you sell an extremely deep strangle trying to get an extra one and a 1/2 % after-tax you get 1% and that's absolutely killer over the long run keep buying shares...and use 5 or 6 % leverage
Somebody named Ben Something trashed Warren Buffett? I really couldn't care less. If they were my only choices I know which of them I'd go to for financial advice.
Hi Sven! With all due respect, one point you make seems quite illogical to me. The whole idea behind being active, and not indexing, is to outperform. If someone just tries to perform in line with the market, dollar cost averaging is best, precisely because it comes with less risk (for 99% of us). Active/value investing is grest only if you're really skilled, otherwise it can also be riskier and dangerous than indexing. If if you buy an index at all-time-highs, you're still avoiding picking all losers (you could with active investing) and you're diversified. I think Ben Felix is right on this. What he's wrong on, is that he then suggests those aiming to outperform should buy his funds or Dimensional, without exaplaning that most of these funds are unavailable in many parts of the world. In EU at least, most retail investors can't access Dimensional funds, let alone trying to apply the same tecnique on their own (leverage is off the table for retail investors because it's too expensive). I think, picking single stocks (value-approach) is still the only way to go for most people who'd like to do great.
Could you please comment on investing in BDC’s? I have looked into investing in GBDC. BRK has a very small investment in this company and that made me interested in it. It pays a very high dividend and has proven to have a very low default rate even going through the 2008 crisis. I would love to hear your opinion on this.
Buffett doesn't practice what he preach. I agree with that. Pay dividend or invest that cash pile, Mr. Buffett. Practice what you preach. Buffett lost his shareholders around $1T in last 20 years by holding cash and treasuries. Microsoft does not cry like a baby about size and scale and bought Activision. It could be Buffett... And his cash pile would be cut in half.
@@Value-InvestingHe does not know. Even if he bought SPY at the top of 2000 bubble, he would make more money than by holding treasuries. If he DCA his cash into SPY he would make double digit returns isntead of 1% in treasuries.
@@fredwinslow744 Yes I look backward and 200 year history shows that stocks delivered better returns in 98% of all moving 20 year periods. 4 to 1 returns. Even Buffett said that long term bonds are stupid investment. But he owns short term treasuries like long term bonds so by his own words his holding of bonds is stupid.
How is it trashing Buffett to point out that he took a factor investing approach before the factors were discovered, and to call him a genius for doing so?
@6:35 Is it that simple though? There are so many methods that people try to invest with can there really be enough people that could apply Buffett's old advantage to today that then erases the advantage due to too many players? With all the other things people are trying to do and then the size of the market, to me, it seems like the market advantage is still there, though to a smaller degree. thoughts?
Ben is very detailed-oriented, deep into studies and facts, and he wasn't trashing Buffett. The 22 year-graph was unfortunate, but he did show the older results as well. Most people should probably stay away from active investing, and this is true for viewers of this channel as well
22 year is used because the market keeps getting more competitive. It's a more accurate way to compare recent results. Sven is correct, once an edge has been discovered it is no longer an edge. Arbitrage.
Outperforming is the same thing as performing. If you aren’t benchmarking your investment performance then you aren’t really investing - you’re just picking stocks based on vibes, hoping for the best, without any sort of introspection or evaluation
I closed this year with 40% , but I know it’s impossible to replicate every year this result. My personal hedge is Berkshire stock in a percentual about 20% of my portfolio.
About Valuations, is it possible that more and more investors comming into the stock market are increasing prices and pushing away tradition valuations and concepts of value? Are there more investors now than 2,5,10,20 years ago? If so, I would expect everything to be expensive on the long run, or until the bubble pops and stock become impopular again. It is also true that it is the first time that so many ppl are exposed to web-finance (good and bad) and so passive investors will not run away with the bag, creating a big chunck of the market that is not foccused on Value on short and mid-term.
Tbh Ben and his team shared in their podcast that Buffett destroyed the market in the 50's and 60's but probably underperformed in the last 10 years, so it depends on the time frame, that's why he shared 20 years.
You work for 42yrs to have $2m in your retirement, Meanwhile some people are putting just $20k in a meme coin for just few months and now they are multi millionaires I pray that anyone who reads this will be successful in life...
Value investing requires a special type of mindset. If you have it - you will perform very well like many active investors have proven over the years. If you don't have it - just invest in index funds.
The best way to invest like Buffett is to buy Berkshire. Its like a fantasticly managed active ETF with shitloads of cash to bail out or buy other companies. People say "buy low, sell high" but they don't do either. Buffett has actually bought Apple low and sold it high.
this and more is why it appears brk is anyones all weather portfolio except with free management , stability , common philosophy amongst companies , cash , leverage and so much more. they don’t advertise and they don’t want nervous money invested with them and that is why they likely point to s and p 500 they are pointing you away from themselves as a physician i don’t want anyone really to know the quality of my work except my patients. as i already was too busy
Another bit of outstanding work and what a great video to end the year. I second all those others who have expressed their gratitude for Sven’s contributions over 2024. I would also like to thank Sven for improving my sex life! I am no longer going to compare my lovemaking performance with others 😂😂😂
index investing is also active investing. Some managers have to choose which stocks add and remove from the index. So entire theory that active investing does not work is wrong. In that case DOW and SPY would be bad investmens over time. I doubt that managers who decide which stocks will be in SPY are so much better stock pickers than other money managers.
I like the wife metaphor. Not many people can say they run the world's largest holding company, or get a 60% return each year on KO (thanks to enormous YOC), or become the fattest alligator investor ever while safely "elephant hunting."
Hi Sven! Can you take a look at PAX? Patria Investments. Looks like a P.Lynch pick. A stock for diversification towards Latin America. PE 11,6, 5.1% yield, will likely grow 5-10% per year. Asset manager, just like your beloved Brookfield ;)
I like Ben just because we're from the same province but other than that don't mirror Warren Buffett just buy Berkshire Hathaway stock and be a Boglehead and you can't lose.
I wonder if a practitioner looking to buy a convenience store, plumbing business, laundromat, etc needs to do backtesting on the price of these businesses to determine if they are good investments lol. Everyday we drift further and further from true investing. Buffett always says "a bird in the hand is worth two in the bush". Its really that simple. You don't need all these greek letters, backtests, EMH, etc. Also these 'factor-based' speculators always bring up "quality", without considering valuation. Overpaying for quality companies often turns into a bad investment. Underpaying for a "garbage" company can turn into a good investment. Happy New Year Sven!
There is one big problem with index investing via ETF that John Bogle warned about and that would be a great addition to your video. ETFs can be traded daily, just as individual stocks. In case of a crash/bear market, the owner of an ETF can panic sell every single minute. Don't underestimate this factor. If you don't know what you own/do, you can try all the ETFs in the world, but you won't get the "academic hinsight" results anyway.
@@michalsladek8809 Of course this is the same for individual stocks, that's the whole point of my post. For individual stocks nobody doubts this but somehow for index investing often a different picture is painted as if people suddenly become more rational than with individual stocks. Like Peter Lynch said, the most important organ is the stomach AND you have to know what you own (both for the individual stock as well as for the index. I think this is also one of the key messages of Sven on his channel. At least that is what I take out of it 😉)
I watched a hilarious podcast where even Fama said these factors have become largely irrelevant since momentum has been a problem for them. So the academics even themselves admit their limits with understanding human behaviour in markets that leads to excesses. Ben Felix was shocked when he listened to Fama telling value could disappear if everyone tried to get the premium😂
Both Fama and French say that their factors are just theories that don't accurately describe the market. And like you said, they are both well aware of how market dynamics work and that nothing is an evergreen strategy for outperformance.
Isnt going to 100% cash timing the market? Even if you're right Sven, and the market pulls back 30%, your missing out on 20% a year for the last two years??? Im sitting on about 20% cash, but 100%?
Sven’s arguments are pretty weak in this video tbh. Saying that Ben has incentives to push people to buy factor tilted low cost index fund is completely absurd - he simply can’t profit from it cause people can just buy them at pretty much any broker. At the same time Sven promotes his paid investment platform that returns in line with the market if not worse by justifying that it is “hedged”. I’m not sure what this video was meant to achieve, but it definitely didn’t persuade me to sell total market index fund and buy a bunch of correlated value stocks.
When you buy stocks instead of the index you taking on risk that you are not compensated for. With diversified index you eliminate that risk while still getting paid market premium.
Also, missing just a few days in the market can mean loosing all the performance, so not investing in the index because it’s expensive is basically a market timing and will lead to lower returns.
I have a 3 fund portfolio but I have finally decided to invest in ETFs, alongside. I’m looking at SCHD, VOO and XLK or SCHG.
Great picks! I like XLK and SCHD equally!
@@ShelleyfromCali thank you! Actually would it be silly to have both?
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Most important thing is to get started and build your income over time to continue investing more as time goes on. I just hit the 7figure mark on my portfolio. 210k - $1m in nineteen months at 43...
Congrats! Lost over hundred K since 2022 chasing individual stocks and I feel pretty stupid for not understanding how investing works. In the grand scheme of things it's now much, but it's taken a toll on my mental health, to say the least. Going into a new year, maybe my goal should be to stop...
Yuk, that's sucks. Keep it simple, practice proper portfolio diversification, take some risk but don't try to shoot the lights out. I’m invested in ETFs, REITs, and Individual bluechip company stocks and use a CFA. On average, she takes 10% of earnings, but using *Lina Dineikiene's* system makes it much more hands-off. I conservatively follow her recommendations and market entry and exit points, and tbh this makes it fairly simple for me... I am convinced it's not just hard work but smart work:-)
Hello. Have you listened to episode 335 of The Rational Reminder podcast? I think Ben, personally, and his views may have been slightly mischaracterised.
I think investors should always put their cash to work, especially In 2025, we'll start to see more market diversification. Considering the performance of stocks lately it is safe to say the stock market is the best smart investment out there. Hope others agree
Of course, you are not alone.. However, if you are investing in the stock market and you are not well versed, its advisable to work with a financial advisor who is an expert to guide you through the process. I have been making more with less risk since i started working with one
The truth is, the role of an investment advisor can often be overlooked but should never be underestimated. After facing a significant portfolio loss in 2020 during the COVID pandemic while trying to manage my investments on my own, I decided to reach out to an investment advisor. At that time, I had about $126K left in my portfolio. Now, without having to lift a finger, I'm semi-retired, working only 7.5 hours a week, and I'm just 10% short of my $1 million retirement goal thanks to my subsequent investments.
This is incredible. Could you recommend who you work with? I really could use some help at this moment.
My CFA is Laurel Ann Watkins, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!
Ben felix didnt "trash" Buffett, what a reprehensible cIickbait title
I came across your channel through this video case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.
You're correct. I think the smartest way to go is
to spread out your investments. By putting
your money into different asset classes like
bonds, real estate, and stocks from other
countries, you can lower the risk if one part of
the market goes bad.
That sounds like a good plan. In the past two
years, working closely with a financial market
specialist, I've built a six-figure diversified
stock portfolio. Now, I aim to diversify even
more this year.
I'm a newbie talking about a financial market specialist, do
you consider anyone worthy of
recommendations? I have about 10Ok to test
the waters now that large cap stocks are at a
discount
Please How can someone know a professional broker when legit once are hard to find this days
Mrs Martha Ann Hammerton was my hope during the
'bear summer last year . I did so many
mistakes but also learned so much from it
Good analysis. However, I think the main point of Ben Felix shouldn’t be forgotten. Most of the people shouldn’t pick stocks and instead just pick a broadly diversified index fund
good point, but what about the price of that index?
@ That price is too high at the moment, no discussion about that. But I think that would still be a better option for them (call it less worse) than buying a flashy smallcap biotech stock or something. Unfortunately, there is a very big proportion of investors that simply don’t know what they are doing.
Not only is the index wildly overpriced, but most of them are highly concentrated on a handful of the same stocks, in particular the top 3 holdings. If everyone and their mother is “diversified” into the exact same stocks, is it really safe to own the index? And if the index goes up the more money people dump money into it, does it not turn into a Ponzi scheme after some point?
@@Value-Investing What about the price of that index?
Due to the high number of market participants and information available at your fingertip, market is mostly efficient. Market can still be driven by emotion at the extreme end. Look at AI (which is vastly unprofitable), and China with a negative sentiment. If you dollar cost average in an index fund, you smooth out your result in the LONG run (30-40+ years).
@@FR-nc3vb How about bonds then? they surely offer a higher expected return with 0 RISK - great for people who don't know what they are doing
When more and more ppl diss Warren publicly, you know that sh.t is getting nearer and nearer to hit the fan😂
totally agree!
@@samm13131 I watched Ben's video. It didn't seem like he dissed Buffet. He actually went out of his way to say that the video is by no means intended to downplay Buffet's genious.
@@Value-Investing Good points here from Sven. They made fun of Buffett during the 2000 tech bubble, until it crashed. A good article from Barron's explaining the situation had a front page headline: "What's wrong Warren?". It's a free1/2 article.
He is not dissing Buffett. Ben is merely pointing out passive investing in low cost index fund will beat 95% of the actively run fund managers over the long run. 99.9% of retail investors cannot beat the market in the long run, so tracking the market is better than underperforming. Even the Munger/Buffett duo said in countless shareholder meetings that if you are not a pro, investing in S&P500 is the way to go.
Happens every time just before a crash. I remember the same in 2008, 2014, 2018 etc......
Pozdrav Sven! Kako se zove video gdje detaljnije govorite o kupnji kuće i uzimanju kredita na 30 godina? Hvala.
bilo ih je nesto, vidi sa mortgage ruclips.net/video/VsVdpAvDKgU/видео.html
@Value-Investing znam da ste napravili lani/predlani zbog inflacije da je free money.
Keep in mind Ben Felix has no stock picking course to sell. He preaches a style of investing that in no way benefits his business and is backed by academic research. The vast majority of investors should not be picking stocks and should focus on low cost index funds instead.
I didn't know his funds are no fee funds, my mistake, thanks for sharing!
@@Value-InvestingHe doesn't have funds. My understanding is that he invests his clients' money in Dimensional funds, the costs of which are pretty low.
This comment is 100% correct. The only thing stopping me following Ben’s approach is ETFs are taxed different to stocks in Ireland.
He charges an advisory fee. His channel is a marketing tool for his services. Here, look, I read all those papers from 1980s, therefore I''ll get you better returns.
Felix is committed to remaining fully closed minded.
He will never accept the possibility that there are times when cash is a safer position than the index fund
I gotta give credit to Sven for posting videos even at last day of the year. Some people may call him permabear but very few people have a PhD in Finance and very few know the work to get there, not only the work but the dedication, its not just saying things because they sound good to invest. Happy 2025!
Personally, I don't think there is really such a thing as passive investing. Every "passive" cap-weighted index fund is tilted towards certain countries, sectors and companies, which makes it active-lite rather than truly passive. Technically, what people call passive investing is low-cost momentum investing.
Momentum investing in a single index can do well for extended periods, but can also have extended periods of terrible returns (eg, the S&P 500 in the 1970s). Smart beta investing (such as investing in index funds that tilt towards dividend stocks, mid caps, or countries with cheaper indexes) can reduce the risks of momentum investing to a degree, but not as much as value investing in specific stocks or avoiding overpriced markets by holding cash or short-term bonds.
I almost agree with you, but I don't think you have seen the theoretical argument that the market portfolio (everything weighted by market cap) is the only optimal portfolio. You should search for a channel on portfolio theory, but in essence one finds theoretically that everyone should hold the same portfolio leveraged or combined to some degree with cash, and since everyone should have the same portfolio that can only be the market portfolio.
But you can certainly ask, why stop at stocks? Shouldn't a market portfolio has everything? Real estate, bitcoin, and stamps? The whole thing seem like neat mathematics but in practice it doesn't apply to the real world, IMO.
Ben has a video on this. Lol. He discusses the best way to structure your investments to have a global etf.
For me this discussion is reminiscent of what Benjamin Graham says in the Intelligent Investor about the defensive and enteprising investor. Most people should be a defensive investor and forget about trying to outperform the market
agree, my message is just to focus on performing...
100%
Most people should stick with a passive strategy, just as Buffet and Ben Felix recommend.
Don't think so, SP500 dividends are very low now. What if the market crashes and you need cash?
Sure but it's also about the price of the index. Now bonds would be a safer bet
Agree with the statement, key word is 'most'. And this comments section is filled with people who think it doesn't apply to them :D
@@mikkelhansen3714 Do not buy bonds ETFs, I'm holding $TLT and it is a huge loss for me.
@@druvaciam5407 Why on earth would you hold 20 year bonds?????? you could literally just own 3 month bons with no risk....
Apart from cash and bonds, how do you hedge? Options? Happy new year everyone!
Hi Sven, thank you for sharing!
Are you going to do a video about your hedging strategy on this channel (specific puts probably in the research platform)?
The last slide makes sense.... An asset that hedges against the destruction of the dollar (Land/Shelter) . A buck in your back pocket ( hedge yourself) for when Mr Market is stupid and gifts you wealth with a market crash. And I like Sven's mantra of being satisfied with your own performance , if it meets your goals. Always worth listening to Sven. Happy New Year.......
thanks, Happy New Year!
You are a good world citizen fellow Dr. Sven Carlin, the same is true for Mr. Ben Felix, professionalism excel in both for benefit of many, like me. In my humble opinion, he did not diss Mr. Buffet, actually he recognized him. Please, keep in mind there is plenty of room ahead of you, for both of you to become bright stars. So, keep walking!
Would you be willing to make a guest appearance on The Rational Reminder podcast (Ben's podcast) and discuss your differences in opinions with him?
hahahahaha he selling membership calling another snake funny
Felix is only interested in serious financial professionals and academics, not scammy youtubers
You can say what you want about Sven, but there’s no conflict of interest in what Sven does or says. On the other hand, Ben Felix’s conflict of interest is readily apparent. It’s my opinion that Ben wouldn’t stand a chance in debate with Sven.
@@christiefamily545and what exactly would that conflict of interest for ben be?
@christiefamily545 , Ben doesn't manage any funds. He is a financial planner. Sven indeed has conflict of interests here, if you all stop watching his channel you will all be better off financially and Sven will be worse off
Hi, Firstly, thanks, Sven, for all your support during this year. Thanks for being so professional and really guiding people like me. I appreciated your videos because they are not selling dreams; they show points of view (pros and cons). I totally agree. I am not trying to outperform the market; I am just trying to get enough value to have a quality life.
pleasure to hear that! thanks!
Last video of the year. Thank you for another year of great content, keeping vievwers grounded and rational.
thanks!
Sven, as you said, these active managers are gambling with our money for the fees. My question is what are you doing with your research platform ? You are trying to sell your stock peaks for a fee ? Why don't you share with us you performances ? I bet your stock picks have lost plenty of money for the investors
the performance is around 12% since the platform portfolio inception, the next 7 years will be even better, there is a 21 day money back guarantee, so feel free to check it all...
@@Value-Investing isn't it illegal to promise a future performance on the stock market investment ? You are just a scammer Sven
@@aleksandarbalov9236he didn't promise you anything. He is reporting how it did.
🕐 1 o'clock GMT sharp 🔪 every day 💪
Love the consistency! ❤
See you tomorrow, happy new year...
I Hit $12,590 k today. Thank you for all the knowledge and nuggets you had thrown my way over the last week .i started with 3k in last week 2024..... now i just hit $12,590…
How did you manage to achieve that level of growth?
I've been trying everything I can to improve my investments, I want to retire in a few years and I need a better diversification
Since meeting Expert Violet Zyaire., I now agree that with an expert managing your portfolio, the rate of profit is high, with less risk.
Weekly trading is the best way of making money in the market due to lack of experience which resulted in loosing funds.But miss Violet Zyaire, restored hope shes a good woman
Wow. I'm a bit perplexed seeing her been mentioned here also Didn't know she has been good to so many people too this is wonderful, I'm in my fifth trade with her and it has been super.
Since I became so rich in her trading I realise that crypto is the future cuz l invested 7k and made up to 36k as weekly profit I appreciate the help of this woman
Sven can you do a video on comparing your portfolio returns against the market?
When I think of why I invest, it is not completely to outperform or compare my performance to others. I enjoy investing. I love reading about companies. I've had to refine my strategy so I don't get too caught up in a good story, but it doesn't change that I like investing. Reading about companies is something I enjoy doing. Business news is way more interesting than the mainstream news. Companies are doing more to build and change the world than governments or politicians or celebrities. Even if I have a down year or a failed investment, it doesn't stop me from investing. Most folks should do index funds with low risk, market performance over years as they don't enjoy investing or know how to do it. But I enjoy the process of investing and will continue to do it whether I outperform every year or not. Main Buffett rule I practice is don't lose money. I had to learn that lesson the hard way. I'm not stopping investing ever.
@@azulsimmons1040 What a great comment thank you. I feel the same way but I have to admit to being delighted recently when I compared my 5y performance to the total returns of the S&P including dividends and was slightly ahead. I know this was probably down to mostly luck but I was happy anyway.
@@6upsidedown It may be due to luck or experience. As a private investor with no stockholders to appease or investors expecting your fund to outperform with smaller sums, over time as you get more experience you will find you can beat the market by being very interested in it. Right now I'm trying to recover from PTSD from losing 90 percent of my money in the tech bubble burst. It's been a real process as my position sizing is off which is negatively impacting my gains even though I choose multiple double ups or better a year. I just can't slide my chips into the investment like I could when I hadn't taken that huge loss. I'm slowly refining my process to make it more risk proof and focused on larger positions in quality winners. With time in in the market, you really start to learn what to look for if you refine your process by analyzing winners and losers and everything in-between.
@ I’m the exact same I dabbled back in 2005 and made lots of mistakes and realized I did not know enough. Then I gave over 10 years reading books and learning. Now I am long term focused with 20 positions making about 4-6 transactions a year. Way more defensively & quality minded and if I would not put a good chunk of my money in a company for 10 years I would not put in any. It is very enjoyable but my holdings have not dropped by 50% yet which in the next 20 years they inevitably will.
Ben felix has an episode on this, too. The academic presents why a percentage of the portfolio should be for fun.
@jonathankrimer Yes thanks. I have listened to this episode also to be honest I have not really implemented it. I have had to set rules for myself to stop me from doing something stupid if I want fun I just flat out gamble rather than confusing it with my investing.
❤❤ Great analysis as always Sven... 😂😂 Almost fell of my chair on the Outperform bit🎉🎉 Can you do a video in depth on hedging options (based on portfolio sizes)?😮😮😮
Great suggestion!
"Trashing" is misleading. He shows how Buffet's performance can be explained by factors, while tipping his hat to Buffet for being one of the factor OG's before factors were understood widely.
allow for some drama for RUclips... :-)
Easy to explain anything in hindsight. Everyone can explain why Nvidia did so well in 2024, yet basically no one performed like the Nvidia stock did. The past seems so simple, yet somehow no one who seems to know everything about what to do in the past are able to outperform in the present.
I’m not really sure what the essence of value investing is, but in practice value investing is just buying low P/E, P/S, P/B stocks. It isn’t a very consistent strategy since valuation isn’t a good timing tool.
Value Investing Is Not About low PE, PS, PB, it is about buying value creation at a fair price from now to judgement day... will discuss as we are here for that...
There are so many ways life can play out and most investors will have a few days in the sun. The difference between most investors and Buffett is that regardless of how life plays out, he will do well. Most investors will do well in one senario and go to zero in most other scenarios.
I have followed Buffett’s and Munger’s principles to wealth and have rarely ever had more than five positions at a time. Ben Felix is right in that 99.9% of investors lack patience both to wait for an opportunity and to hold an opportunity along with the ability to deviate from the crowd.
100% hedged? What does that mean? 100% in treasuries or Eurobonds? Buying puts? All in BRK? Or zero stock market exposure?
Exactly, you will have to pay a membership fee to see what he means. 😂 and then he trashes a guy selling nothing.
He said he doesn’t do options. He has a list of covered stocks. His portfolios source positions from the list. A hedge against market downturns is an asset that will have a positive return in a downturn. The list is public…
@@mathewwilson9776 "A hedge against market downturns is an asset that will have a positive return in a downturn." That would be puts or treasuries or something similar.
I didn’t get why you didn’t mention Buffett receives dividends, on top of shares values.
That is his key focus
excellent reaction video.
thank you
how hedged are you or more generally how much do you recommend keeping
in cash equivalents and fixed income ?
I’m not sure BRK was less risky than the market. With BRK insurance operations if there were a massive natural disaster it would have been more affected than the market. Just because it did not happen in retrospect does not mean the risk was not there.
How about splitting the money between BRK and some worldwide index fund like FTSE All World? I'm struggling with the decision where to park the long term money and don't want to put it all in one fund.
I got nothing against outperforming. Especially if performing is consistently lagging the index.
We will see
a) Ben is right that index funds are better for most investors, but he fails in saying when to get out. He retreats to outdated models like Fama/French and disregards the glaring evidence against these models, such as successful skilled value investors like Lynch or Buffett or their failure to actually predict stock returns (check wikipedia for a summary)
b) Sven is correct in saying that the S&P500 is over valued now and not a safe nor prudent investment today.
c) The difference between Sven and Ben is that Ben will tell you the theory and is agnostic to price, whereas Sven tells you when it's time to get out due to the super bubble. Ben would never tell you to sell and that's his issue in my opinion - Ben cares about his theories, Sven cares about my returns.
Lynch picked his successor... Didn't replicate the returns. Finding a "good" fund manager is incredibly difficult. If Lynch can't do it then neither can I. Any time you buy or sell you must be confident that you know something the seller/buyer doesn't. This is unlikely. Sven is good at comparisons and evaluating companies. I like his advice and mindset however I doubt I can replicate his decisions.
Finally someone gives Ben a reality check! He commits basic logical fallacies and then hides behind ''intellectualism'' when all he's really doing is extrapolating the past into the future and ignoring all fundamental factors.
:-)
Ben Felix uses peer reviewed research which is based on what has happened as it won’t pass peer reviewed if it is imagined. What fundamental factors does he ignore?
@@6upsidedown presumably OP is referring to fundamental factors in stock valuation, ie business strategy, ratios, competitive advantages, management, brand awareness etc. Academic research does not ignore all of these (spesifically they study quantifiable factors like P/E) but they do ignore a lot of the qualitative things like "can you trust the CEO?", which is what someone like Buffet values above all else but it doesn't fit into a statistical normal distribution.
@@theWebWizrd A lot of the qualitative factors you listed are judgement decisions and are what makes markets. These are basically like predicting the future impossible to know with certainty. If it can’t be academically researched and analyzed you are not taking an evidence based approach. This will mean you will underperform the best investors like the up and coming Buffets but you will also outperform the vast majority investors who have over confidence in their qualitative analysis.
I think the key of best investors is performing at low cost. Many etf have high cost.
Excellent video! I appreciate both Dr. Sven Carlin's and Ben Felix's channels for sound, rational analysis, research, and discussions. I enjoyed this conversation. For folks that value both approaches (passive index funds vs active stock picking), consider the core-satellite strategy. It's the best of both worlds.
Hasn't Berkshire also aquired companies outright and taken them private? The gains from those companies' growth won't show in graphs as they're not publicly traded any more.
The paper "Buffet's Alpha" concluded Berkshire's public outperforms private companies, meaning he is a better stock picker than a manager. He uses privately held insurance companies to fund leverage with insurance float.
That growth should obviously be priced into the Berkshire stock price.
Dear Sven you asked what’s the essence of value investing versus S&P 500 indexing. The answer is very simple indexing is easy,effortless and cheap for most people. Value investing requires perhaps 40 hours per week in Research and reading it is extremely difficult for most people, therefore to answer your question, there are two completely different things. One may be able to do value investing if he or she has lots of time or perhaps if he is retired, but for people who work every day it’s almost impossible.
I was adviced to diversify my portfolio among several assets such as stocks, crypto and bonds since they can protect my portfolio for retirement of about $170k. I need advice: Do I keep contributing to my portfolio in this unstable market or do I look into alternative sectors?
The strategies are quite rigorous for the regular-joe. As a matter of fact, they are mostly successfully carried out by experts who have had a great deal of skillsets and knowledge to pull such trades off.
That is very correct. Having the right financial expert is invaluable. My portfolio is well matched for every season of the market and recently it has hit 80% rise from early last year. I and my CFP are aiming for a 6 figure ballpark goal.
Could you kindly elaborate on the advisor's background and qualifications?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with "Caroline Suzan Olson" for about five years now, and her performance has been consistently impressive. She's quite known in her field, look-her up.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Sven, like others have said Ben Felix went out of his way to recognise the genius of Buffet many times and highlighted his use of factor ahead of it's discovery. But you clearly don't understand passive investing or value factor. Some more notes:
- Ben doesn't manage funds, at PWL they use Dinensional funds (3rd party).
- Would be good you to recognize that he is right on advising people to buy index funds.
- Would be good for you to recognise that most people following your channel will lose time and money following your approach compared to using index funds.
- Would be good for you to recognise that you are the only one making money out of this channel compared to index funds.
You know absolutely nothing about Warren Buffet when you suggest that he was 'using factor'. Buffet invested in companies, not factors. If you disagree with Sven and thinks this guy with a PhD in finance does not understand finance like you do, then go ahead and explain what he is missing.
What is true is that *for the last several decades you would have been very well off if you had invested in the US stock index and never panicked or needed the money*. We don't know how that will hold in the future. We do know that the earnings we get from a US index is extremely low right now, one of the lowest point in history, and at previous similar yields passive investors have gone decades without making back their money.
How is it that it is so easy for you to see that you can't say that 'you could have just bought Berkshire Hathaway or Monster early on and made millions' because of hindsight bias and that the returns are not gusranteed to continue and in fact should be guaranteed not to, but you can't apply the same logic to the S&P index?
Please, show your evidence that Sven's approach will underperform the index the next decade. We are all very excited to share in your clairvoyance. By the way, Sven has been outperforming the S&P both on a nominal and risk-adjusted basis for two decades.
@@theWebWizrd Oh yes, Sven knows a lot about finance, but it uses it skillfully to manipulate audience into buying his platform. He sells his product, nothing wrong with that, but he is in a clear conflict of interest with index investing and has been bashing it for the last 7-8 years at least. On the other hand, his results some find difficult to track/prove and some find it inconsistent.
On top of that, he seldom mentions considerable friction costs when buying stocks his way (taxes, illiquidity etc). To sum up, its not enough to beat the index. Sven has to beat index + taxes (acc etfs are mostly tax free in europe) + fees + some factor exposure. And do it consistently over 10-20-30 years.
good discussion here, but that is exactly what makes things beautiful...
@theWebWizrd ( or should I call you Sven?) - few comments:
- I know a thing or two about Warren buffet, trust me. For example, is is true or not on Warren's first career phase he focused on buying "small cigar butt" companies? "Cigar butts" are defined as low price to book which is the key characteristic of the value factor.
- the same applies to Warren second phases with quality and leverage.
- yes, I disagree with Sven ( "this guy with a PhD"). I didn't use titles before as arguments were more important. But since we go there, its not just me disagreeing, the broad community of PhDs in finance do! The proponents of CAPM and factors like size or value are not just PhD, they won Nobel prizes for their work.
- Evidence that Sven approach will underperform? There's overwhelming evidence (many papers to the speeva report) that active managers or retail stock pickers have consistently and overwhelmingly underperformed the market. And the above applies to stock pickers that follow Warren buffet style too
- Sven is selling a method that will in more than 95% of the times result in worse outcomes for individuals following it. Everyone following this channel thinks the sentence above doesn't apply to them. Please think carefully as your future wellbeing is more important than your pride.
I really dont know how deep you are in the topics of CAPM, 3F, 4F, 5F etc. but as someone who analyzed it deeply for the german stock market I just want to say one thing: No Model could describe the Price Fluctuations pretty well. Some have more explanation some have less some depends on the time you choose to analyze but not one is really pretty good. It is just a way academia tries to explain the Stock Market with Maths and Models. And even with a lot of not practical existend assumptions the models are just ‘ok’ in terms of R2 or whatever metrics you like to choose.
Really like how all the themes tie back nicely to the same consistent lessons. An apple a day, keeps the Dr away. A Sven a day, keeps the Bubble FOMO at bay. Thanks for your sharings in 2024. Happy New Year
Legendary honesty, you couldn’t have explained it any better. Keep up the good work.
Thanks, will do!
Nice, now two of my favorite Investment youtube channels are ditching each other :D , but I have to agree with Sven, academics are never right when it comes to investments theories and value investing is about risk first, profit second , majority of people still don't understand this , but in other hand index investing is indeed the better for majority of people.
Value investing is about growth in first place and price you pay for it is second. Low profit is risk itself.
thanks for sharing!
@@tiagosantos680 agree, when your in a 20 year bull cycle with artificial government stimulus we detach from academics and financial theory however, when we see a correction/recession the only indicator people rely on is actual academic fundamental analysis (usually when we revert to the S&P 500 P/E mean of 15 or lower)
Sven, can you add more context when you said you’re personally 100% hedged? Do you mean you have put protection on all of your stock holdings?
let's put it like this, if there is more volatility, I make more money....
@@Value-Investing spoken like a pro, thanks
@@Value-Investingif by hedged you are not talking about low risk cash instruments have you done any videos on your volatility based hedging
i know that people like chamath palihapitiya has shared his option approach to that .
he didn’t ever claim to be a value investor so much as a early investor , venture capitalist
for us value investor it would be usefull to hear your version as a dyed in the wool value investor regarding what volatility hedging looks like for a value investor?
is that in your video library for”fellow investor”s?
your hedging comment worries us long term subscribers 😮😊😊
thanks
Also, passive investing is easy. You don't need much knowledge. But active investing is different. Yoy only learn by exposure, and that means time and learning from mistakes.
Thanks for sharing
Have tried to look at S&P 500 with not $ but gold prices? Looks still on level since 2020... So only what is going on is printing machine $.
These arguments of passive investing are so boring:
-Nobody seems to have read investing books or either undersood where the incentive of hedge fund managers is which explains perfectly why most of them underperform the market
-Continously pointing out the concept of outperforming the market without considering market fundamentals, bubbles etc...
-Failing to understand that is not a religion. One can still do passive investing and pick individual stocks in circle of competence.
I have seen so many creators making arguments that amateurs shouldn't pick individual stocks that I would tell to all of them "do whatever". But maybe read "One up of Wall Street" first.
You can beat market what you do is you buy the index fund then you sell an extremely deep strangle trying to get an extra one and a 1/2 % after-tax you get 1% and that's absolutely killer over the long run keep buying shares...and use 5 or 6 % leverage
nice one with performing vs outperforming :)
Glad you liked it!
Somebody named Ben Something trashed Warren Buffett?
I really couldn't care less. If they were my only choices I know which of them I'd go to for financial advice.
:-)))
Hi Sven! With all due respect, one point you make seems quite illogical to me. The whole idea behind being active, and not indexing, is to outperform. If someone just tries to perform in line with the market, dollar cost averaging is best, precisely because it comes with less risk (for 99% of us). Active/value investing is grest only if you're really skilled, otherwise it can also be riskier and dangerous than indexing. If if you buy an index at all-time-highs, you're still avoiding picking all losers (you could with active investing) and you're diversified.
I think Ben Felix is right on this. What he's wrong on, is that he then suggests those aiming to outperform should buy his funds or Dimensional, without exaplaning that most of these funds are unavailable in many parts of the world. In EU at least, most retail investors can't access Dimensional funds, let alone trying to apply the same tecnique on their own (leverage is off the table for retail investors because it's too expensive). I think, picking single stocks (value-approach) is still the only way to go for most people who'd like to do great.
Price to yield is what i discusd
Well spoken, Mr. Sven !
:-)
The second essence of value investing is buying underlying businesses. Stocks are just means to get exposure to strong fundamentals
Could you please comment on investing in BDC’s? I have looked into investing in GBDC. BRK has a very small investment in this company and that made me interested in it. It pays a very high dividend and has proven to have a very low default rate even going through the 2008 crisis. I would love to hear your opinion on this.
Why a fixed rate mortgage and not a variable mortgage?
Betting against Beta is a factor that is statistically significant to Berkshire's stock returns.
Good video Sven! I totally agree with you!
Buffett doesn't practice what he preach. I agree with that. Pay dividend or invest that cash pile, Mr. Buffett. Practice what you preach. Buffett lost his shareholders around $1T in last 20 years by holding cash and treasuries. Microsoft does not cry like a baby about size and scale and bought Activision. It could be Buffett... And his cash pile would be cut in half.
i think Warren knows what he is doing...
@@Value-InvestingHe does not know. Even if he bought SPY at the top of 2000 bubble, he would make more money than by holding treasuries. If he DCA his cash into SPY he would make double digit returns isntead of 1% in treasuries.
@@PavolKosik-b3uand without the guarantee you may miss that point you are looking backwards. marty mcfly and biff did that also
we can’t
@@fredwinslow744 Yes I look backward and 200 year history shows that stocks delivered better returns in 98% of all moving 20 year periods. 4 to 1 returns. Even Buffett said that long term bonds are stupid investment. But he owns short term treasuries like long term bonds so by his own words his holding of bonds is stupid.
What are your thoughts on Booking Holdings?
Love the reply Sven! Happy New Year 🎉
Excellent Analysis
:-)
How is it trashing Buffett to point out that he took a factor investing approach before the factors were discovered, and to call him a genius for doing so?
allow for some drama in RUclips titles....
@@Value-Investing haha, fair response. Drama now permitted.
Hehe .. entertainment & education.
Great way to end 2024.
Happy New Year!🥳
it would be really nice to have an episode / podcast with you and Ben Felix (or the Rational Reminder) :D
that would be very interesting...
Love your channel Sven! Keep it up!
My philosophy in life is now AND & AND
:-)
Active management is not smart for your average retail… WB has the resources to do it right.
@6:35
Is it that simple though? There are so many methods that people try to invest with can there really be enough people that could apply Buffett's old advantage to today that then erases the advantage due to too many players?
With all the other things people are trying to do and then the size of the market, to me, it seems like the market advantage is still there, though to a smaller degree.
thoughts?
Ben is very detailed-oriented, deep into studies and facts, and he wasn't trashing Buffett. The 22 year-graph was unfortunate, but he did show the older results as well. Most people should probably stay away from active investing, and this is true for viewers of this channel as well
thanks for sharing!
most viewers of this channel got nowhere the last few years by following svens 'advice' 😂😂
22 year is used because the market keeps getting more competitive. It's a more accurate way to compare recent results. Sven is correct, once an edge has been discovered it is no longer an edge. Arbitrage.
Outperforming is the same thing as performing. If you aren’t benchmarking your investment performance then you aren’t really investing - you’re just picking stocks based on vibes, hoping for the best, without any sort of introspection or evaluation
I closed this year with 40% , but I know it’s impossible to replicate every year this result. My personal hedge is Berkshire stock in a percentual about 20% of my portfolio.
Wonderful. Your best, most informative and entertaining video so far. Great job.
Glad you enjoyed it!
Just I did not get how Warren can get 20% from Treasury can you explain?
Over 5 years.
Love your comments on focus on performing, not out performing others in bed with spouse lol
:-)))
About Valuations, is it possible that more and more investors comming into the stock market are increasing prices and pushing away tradition valuations and concepts of value? Are there more investors now than 2,5,10,20 years ago? If so, I would expect everything to be expensive on the long run, or until the bubble pops and stock become impopular again.
It is also true that it is the first time that so many ppl are exposed to web-finance (good and bad) and so passive investors will not run away with the bag, creating a big chunck of the market that is not foccused on Value on short and mid-term.
Tbh Ben and his team shared in their podcast that Buffett destroyed the market in the 50's and 60's but probably underperformed in the last 10 years, so it depends on the time frame, that's why he shared 20 years.
he picked 22 years because that is where the VTAX was from bottom to superpeak now... other time frames don't hold the point
You work for 42yrs to have $2m in your retirement, Meanwhile some people are putting just $20k in a meme coin for just few months and now they are multi millionaires I pray that anyone who reads this will be successful in life...
Value investing requires a special type of mindset. If you have it - you will perform very well like many active investors have proven over the years. If you don't have it - just invest in index funds.
or don't invest at all
The best way to invest like Buffett is to buy Berkshire. Its like a fantasticly managed active ETF with shitloads of cash to bail out or buy other companies.
People say "buy low, sell high" but they don't do either. Buffett has actually bought Apple low and sold it high.
correct!
this and more is why it appears brk is anyones all weather portfolio except with free management , stability , common philosophy amongst companies , cash , leverage and so much more. they don’t advertise and they don’t want nervous money invested with them and that is why they likely point to s and p 500 they are pointing you away from themselves
as a physician i don’t want anyone really to know the quality of my work except my patients. as i already was too busy
Another bit of outstanding work and what a great video to end the year. I second all those others who have expressed their gratitude for Sven’s contributions over 2024.
I would also like to thank Sven for improving my sex life! I am no longer going to compare my lovemaking performance with others 😂😂😂
:-)))))))) just go for it!!!!
index investing is also active investing. Some managers have to choose which stocks add and remove from the index. So entire theory that active investing does not work is wrong. In that case DOW and SPY would be bad investmens over time. I doubt that managers who decide which stocks will be in SPY are so much better stock pickers than other money managers.
thanks for sharing!
Sven call out Ben is like US calling UK for scam🤣
I like the wife metaphor. Not many people can say they run the world's largest holding company, or get a 60% return each year on KO (thanks to enormous YOC), or become the fattest alligator investor ever while safely "elephant hunting."
:-)))
Hi Sven! Can you take a look at PAX? Patria Investments. Looks like a P.Lynch pick.
A stock for diversification towards Latin America. PE 11,6, 5.1% yield, will likely grow 5-10% per year.
Asset manager, just like your beloved Brookfield ;)
I like Ben just because we're from the same province but other than that don't mirror Warren Buffett just buy Berkshire Hathaway stock and be a Boglehead and you can't lose.
I don’t agree Buffett invested with much less risk than the s&p with 30% in one stock. Volatility is not the same as risk. Also drops of 50% are rare.
Hi, Everybody- Dr Nick...Simpsons 😂
Excellent
I wonder if a practitioner looking to buy a convenience store, plumbing business, laundromat, etc needs to do backtesting on the price of these businesses to determine if they are good investments lol.
Everyday we drift further and further from true investing. Buffett always says "a bird in the hand is worth two in the bush". Its really that simple. You don't need all these greek letters, backtests, EMH, etc.
Also these 'factor-based' speculators always bring up "quality", without considering valuation. Overpaying for quality companies often turns into a bad investment. Underpaying for a "garbage" company can turn into a good investment.
Happy New Year Sven!
True, Happy New Year!!!
it takes over 60y to value an active manager. anything less than that is cherry picking.
interesting point, but the key factor is also whether the investment style is aligned with your requirements...
. . . . Che ne pensa dei titoli . SLB..... e.... TRMD . . . . .. ?
There is one big problem with index investing via ETF that John Bogle warned about and that would be a great addition to your video.
ETFs can be traded daily, just as individual stocks. In case of a crash/bear market, the owner of an ETF can panic sell every single minute. Don't underestimate this factor.
If you don't know what you own/do, you can try all the ETFs in the world, but you won't get the "academic hinsight" results anyway.
excellent point!
And in case of single stock this won't happen? Panic sales were happening even before ETFs
@@michalsladek8809 Of course this is the same for individual stocks, that's the whole point of my post. For individual stocks nobody doubts this but somehow for index investing often a different picture is painted as if people suddenly become more rational than with individual stocks.
Like Peter Lynch said, the most important organ is the stomach AND you have to know what you own (both for the individual stock as well as for the index. I think this is also one of the key messages of Sven on his channel. At least that is what I take out of it 😉)
Can you Explain more? because i don't see the difference with a single share of a company
I watched a hilarious podcast where even Fama said these factors have become largely irrelevant since momentum has been a problem for them. So the academics even themselves admit their limits with understanding human behaviour in markets that leads to excesses. Ben Felix was shocked when he listened to Fama telling value could disappear if everyone tried to get the premium😂
Both Fama and French say that their factors are just theories that don't accurately describe the market. And like you said, they are both well aware of how market dynamics work and that nothing is an evergreen strategy for outperformance.
Well, I've learn a lot from you, but I have also learned a lot from Ben Felix. I wouldn't give up on any of you.
Isnt going to 100% cash timing the market? Even if you're right Sven, and the market pulls back 30%, your missing out on 20% a year for the last two years??? Im sitting on about 20% cash, but 100%?
He wasn’t suggesting going to 100% cash he did allude to being hedged.
Hail the King!