Invest Like the Best with Patrick O'Shaughnessy
Description
My guest this week is Dr. Ben Hunt, the chief investment strategist at Salient and the author of the extremely popular epsilon theory. I’ve always enjoyed Ben’s writing style, particularly his use of farm and animal based analogies to describe market phenomenon. In this conversation, we discuss his recent post the three body problem, why growth has been beating value, and why a strategy that he calls profound agnosticism—a take on risk parity—may be the most appropriate investing strategy in what he views as a very uncertain world. We also discuss some of his favorite lessons from the farm. Please enjoy our conversation!
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Links Referenced
Show Notes
1:54 - (First Question) – Applying the three-body problem to investing
7:24 – Fundamental view of investing, Profound Agnosticism
8:24 – Why has value done so poorly relative to growth in this framework
11:01 - Ben’s thoughts on why value has been underperforming for so long
13:52 – Investors should be able to adapt
17:49 – Thoughts on the risk parity approach
23:23 – Ben’s strategy for working with several teams
26:48 – What’s the best way to gain an edge, top down factors vs company/bond individual analysis
28:29 – How do you measure risk amid the large amount of uncertainty that exists in markets
32:40 – How does Ben personally think about investing
34:41 – Ben’s farm and the investing lessons learned by some of the animals
39:55 – How bees can plan out their entire work structure by the angle of the sun
42:58 – Defining basis risk
44:59 – Personal risk vs portfolio risk
49:30 – The concept of fingernail clean and our perception of what eggs are
53:57 – How ETFs are like mass produced eggs
54:56 – Exploring the idea of quality vs scaling
58:39 – What is the current challenge/puzzle that Ben is focused on right now
1:01:59 – What is Ben looking for when looking into game theory and applying it to the words that are published and spoken about investing
1:03:57 – Most memorable day on Ben’s farm
1:05:04 – Kindest thing anyone has done for Ben
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag