Podcasts of the Week: Carlisle, Black Monday & Dunn

By Jack M. Forehand (@practicalquant) —

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With so many great investing podcasts out there, it can be difficult to identify the best ones. Through our new Podcasts of the Week segment, I will try to help filter out the most interesting episodes and identify the podcasts I learned the most from each week. In addition, we will also take a look at a great podcast from the past via the From the Archives section.

Best Episodes This Week

Tobias Carlisle – The Meb Faber Show – 10/25/2017

On the surface, buying companies that earn high returns on capital seems like a great way to invest. By using that approach, you typically find very profitable firms that are leaders in their industries and are delivering strong results. The only problem: it doesn’t work. Buying cheap out of favor companies turns out to be a much better approach.

This episode gets into why that is, along with many other interesting investing topics, with Tobias Carlisle, the author of the newly released value investing book, The Acquirer’s Multiple, founder of Carbon Beach Asset Management and the guy behind the popular investing blog, https://greenbackd.com.

Carlisle’s Acquirer’s Multiple method looks for inexpensive companies based on the ratio of Enterprise Value (which is Market-Cap plus debt minus cash) to operating earnings. It is a pure value screen that looks for the absolute cheapest companies, which often have problems in their businesses. Those problems, however, are typically not as bad as the market thinks they are, which produces an opportunity for patient investors.  The Acquirer’s Multiple formula is essentially the same as one half of Joel Greenblatt’s Magic Formula that he outlines in The Little Book That Beats The Market. This formula just focuses on the valuation half of it and excludes the return on capital portion because Carlisle found that it enhances returns.

This podcast discusses how to build a portfolio with a deep value approach in the real world, including a look at things like how to determine position sizing in a portfolio and whether to incorporate stop losses as a way to mitigate losses.

Whether you believe in deep value investing or not, this podcast offers a great deal of interesting information that can enhance your investing approach.

Black Monday – Adventures in Finance – 10/20/2017

One of the things I have learned about bear markets is that seeing them on a chart is very different than living through them in real life. I wasn’t in the investing business in 1987, so I like to take any opportunity I can to try to understand what happened on Black Friday from those who went through it. This podcast offers interviews with several investors who were on the ground during the 1987 crash and provides an in depth look at what happened before, during and after the crash.

The setup before the crash was something I wasn’t completely familiar with. I knew the rise of portfolio insurance in the period preceding the crash played a big role, but many traders saw the rising rates and depreciating dollar prior to the crash as warning signs. In addition, several seemingly minor events the weekend before the crash including some unrest in Iran and surgery for Nancy Reagan added to market jitters. Then the morning of the crash, some off the cuff comments by the new SEC chairman that indicated that trading could potentially be halted further added to market skittishness. Those are just a few of the many details this podcast brings together to weave a complete picture of the crash. Included is the episode is commentary from market veterans such as Art Cashin, Bill Fleckenstein and others who were in the thick of it during that period.

Even for those who were there, this podcast will probably add some details that are new and interesting. Anyone who wants to learn from market history would benefit from it.

From the Archives

Eizabeth Dunn – The Meb Faber Show – 5/23/2017

The old adage says that money doesn’t lead to happiness. And that is certainly true to an extent, but there is much more to the story than that. That is where researchers like Elizabeth Dunn come in. She is the author of Happy Money, The Science of Happier Spending and has done detailed research into the relationship between money and happiness. What she found in many ways defies conventional wisdom regarding how money makes us happy. She discovered that when spent properly, money can in fact increase happiness.

She outlines several principles that research shows lead to the optimization of spending to increase happiness. They include a few surprising things.

  1. You get more happiness buying experiences than things – so a vacation, despite being short-lived, tends to produce more happiness than something like a new sports car.
  2. You get more happiness spending money on others than yourself.
  3. It is better to spend money on things that give you more time – for example paying someone to mow your lawn or clean your house can be a great use of money since it frees up time to do things you enjoy.

These are only a few of the principles they discuss in the podcast. If you are interested in learning more about how you can better spend your money and be a happier person, I recommend you listen to this podcast and pick up her book.

If you would like a notification when future posts are released, you can follow me on twitter at @practicalquant.

Photo: Copyright: bryljaev / 123RF Stock Photo

Jack Forehand is Co-Founder and President at Validea Capital. He is also a partner at Validea.com and co-authored “The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies”. Jack holds the Chartered Financial Analyst designation from the CFA Institute. Follow him on Twitter at @practicalquant.