Pods & Recs: No. 145
Today we have Jim Leitner on his macro views, Marko Papic on how geopolitics are impacting his market outlook, Chamath Palihapitiya on building Berkshire 2.0, and how Masterworks is letting people invest in art.
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Investing
Macro Hive Conversations: Jim Leitner On Growth Vs Value, Digital Options And Bitcoin. This macro-focused episode features Jim Leitner, who shares his big picture themes and how he is implementing his ideas. He starts with diving into the value vs. growth debate by looking under the hood of what is included in each (banks vs. fintech, energy vs. no energy) and addressing whether the spread should grow or shrink going forward. He talks about using options to express his views, the rationale for being long the Renminbi (his largest position), and why he’s bullish on real estate long-term. Finally, he talks about the current U.S. stock market valuations from a few angles, all of which indicate the market isn’t as overvalued as most think, and why he went long bitcoin under $10,000. [December 11, 2020–1 hour, 13 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
I think the future of macro longer-term investing is really understanding the optionality of your portfolio and allocating a fraction to longer-dated options that allow you to capture a minimum of 2x per annum.
Real Vision: Finance, Business & The Global Economy. This is a phenomenal discussion between Mike Green and up-and-coming hedge fund manager Dan McMurtrie of Tyro Partners. They start with how Dan broke into the investment management industry by leveraging an anonymous Twitter account and building a network of mentors. Then they discuss how they both factor in fund flows in their investment process. Both Mike and Dan say while doing fundamental stock valuation is important, you have to think who the next marginal buyer is and what the impact of passive investing is on that security. They also talk about the underperformance of the value factor within this context and why it can’t be assumed value will outperform if the market sells off. [December 5, 2020–1 hour, 12 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
Flows were always important, and they’ve just become more important today.
CFA Institute Take 15: Geopolitical Alpha: A Framework for Investors. Papic is the Chief Strategist at Clocktower Group and the author of Geopolitical Alpha: An Investment Framework for Predicting the Future. He begins by going over the book and his constraint based approach to using geopolitics to predict the market. He also explains the median voter theorem and why the median voter tends to drive what happens politically over time (he states the median American is moving to the left economically and fiscal austerity is a thing of the past). Then he offers his current thoughts on the market: the U.S. is not in a Cold War with China since the world is multipolar, the EU will remain intact because it needs economics of scale as the world becomes more deglobalized, and he thinks Russia is in a good economic position. [December 9, 2020–35 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
Capital Allocators: Chamath Palihapitiya — The Social Capital Flywheel. Palihapitiya is the founder and CEO of Social Capital, where he invests in private and public companies. He’s been very open about his personal struggles and maturing as a man before (this episode is a great listen on that), but this is the best I’ve heard about his professional journey and what he hopes his legacy will be from a business perspective. He talks about what it was like to be an early employee at Facebook and early days as an angel investor and the genesis of Social Capital, which he hopes to be Berkshire Hathaway 2.0. He talks about the process of doing both public and private investments, funding emerging managers, and why he’s embraced the SPAC as much as anyone. At the 54 minute mark, he talks about being bullish on companies that can disrupt the utilities sector (which he predicts will happen in the next few years) and why he thinks we’re in a renaissance of biotech. [December 7, 2020–1 hour, 4 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
Alpha Exchange: John-Mark Piampiano, Founder and CIO, Engineered Portfolios. This is a great episode on how options and volatility have evolved over the years. Mark Piampiano talks about his experience on both the buy-side and sell-side and how price discovery for equity options has become more transparent over time, with tightening spreads and shorter weighted average maturities. He also states the renaissance of single stock option trading reminds him of 1999. Then he discusses tail risk hedging: how to think about it, where it fits in a portfolio, and why it doesn’t necessarily have a negative expected outcome. As they wrap up, they talk about what he’s seen with both single stock volatility and equity market volatility, and the impact of the rise of SPAC’s in 2020. [December 9, 2020–50 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
Infinite Loops: Tren Griffin — Escaping Gravity. Griffin is a Senior Director at Microsoft and is a great listen on how to live a purposeful and rewarding life. His advice includes being a continuous learner, focusing on relationships and not owning ‘things,’ embracing mentorship (his mentor was Bill Gates Sr.), going for whatever you want, and not giving a sh*t what others think. [December 7, 2020–1 hour, 15 minutes] iTunes Podcast | Spotify | Google | Breaker
There are a lot of paths towards the promise land. You’ve got to find a process that’s right for you.
The Meb Faber Show
The Meb Faber Show: Episode #269: Scott Lynn, Masterworks, I Think Art As An Asset Class Has To Be The Largest Asset Class That Has Never Been Securitized. Lynn is the Founder & CEO of Masterworks, the first company to allow investors to buy shares in pieces of art, an alternative people have begun to look at allocating to. He gives an overview of the art market — it is a $1.7 trillion asset class that typically outperforms and is uncorrelated with equities. After explaining what led him to start the company, he explains how to securitize paintings with the SEC and sell shares to the public. He touches on how it works for an investor to purchase art on their platform, what quantitative factors contribute to price appreciation, and what the biggest risk factors are with the art market. [December 7, 2020–1 hour, 3 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
I think art as an asset class has to be the largest asset class that has never been securitized.
The Meb Faber Show: #270 — Terri Spath, Sierra Investment Management — We Use A Quantitative Rules Based Process To Go Risk On, Risk Off. Spath is Chief Investment Officer and Portfolio Manager at Sierra Investment Management, a firm that offers multiple mutual funds and strategies, ranging from junk bonds, municipal bonds, and an all-asset fund. She talks about why and how the firm applies a trend following strategy due to their strong focus on downside protection. Then she explains why she is bullish on muni-bonds with the expectation of higher tax rates in the near future and why she’s also bullish on emerging markets, specifically South Korea. She finishes by explaining how investors can implement some of these ideas in their own portfolios. [December 9, 2020–58 minutes] iTunes Podcast | Spotify | Google | Breaker | Website Link
You can be better at buying or better at selling, but you typically don’t come in better at both.
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Chamath Palihapitiya (CEO, Social Capital, GS Warriors Owner):
Tren Griffin (Senior Director, Microsoft):
Jim Leitner (President, Falcon Management):
