1:51 Deep Risk - 1914 St.Petersburg stock exchange market - 1989 Japan is Deep Risk - 2020 is not Deep Risk 3:15 Great Depression analogy 5:04 1989 Japan 26:16 Bond investing in low rate environment. - Absolutely - Buffett's equanimity comes from large pile of T-bills. 27:35 Human spirits that allow us to make it through this tough times - Capital market does good job and it is extremely resilient 28:17 Germany's productive capacity was destroyed in 1940s but within 3~4 years they came back to pre-war level.
Great interview...thanks! I would have loved to have heard more about what his thoughts are on all of the manipulation of the markets by the Fed...keeping rates low, massive QE, resulting in lots of stock buybacks over the past few years. It seems this kind of activity is both reckless and drives extreme risk taking by removing perceived risks.
Great interview. Nice to hear from a calm hand who can think rationally about where we are...at the same time unclear why this has "Black Swan" in title...if you read taleb....and recently he is on record that this is a white swan :)
My understanding is that current world events are surely Black Swan and would be interpreted by most models as such .... Whereas current worldwide market action could be interpreted as White Swan when viewed in a vaccume on a 100-200year historical chart?
Ben, groomed to perfection, uber-prepared on Bill's writings, great questions and the cool when your kid was about to enter the screen (which would have been awesome to see..!) 😂 Great job and several pearls of wisdom out of a legend.
Just watched the interview again, and I am just a little more optimistic than an hour ago. Most of a companies value is years into the future, so even if we just shut down for a year there is still decent value to be had. Thoughts anyone ?
I think the market is pricing in a 2019 trailing earning (trailing p/e is 15.5) into 2021. I personally think it will take till 2022 to get back to 2019 so it's overpriced to me but I surely could be wrong. Everytime you see a p/e on your screen ask yourself when it really gets back to that p/e
Both Stocks and Bonds are still massively overvalued! Companies are only valued years into the future as a rationale for jumping into an isolated earnings meltdown and hoping for an unexpected turn around. But mass international unemployment transforms consumption at a global scale. Those effects need to feed through before the you can make a solid investment case.
I was just thinking of bernstein given his medical and investing knowledge and why I haven't heard much from him given the pandemic and the volatile markets of today's
I am a great fan of william, I have a couple of his fantastic books. However, I was hoping for some optimism from him regarding the current crisis, but it wasnt freely forthcoming I felt. Ben tried to coax some hope from Bill, mentioning the great depression and other crashes giving the idea that surely today may not get as bad as that, but Bills answer was that " who knows, it could be". Certainly no talk of a "v" shaped recovery. Thats a worry ! Also his bond/cash position stretches out further than most which may make me re-asses my own portfolio. I think I will keep my tin hat on for longer than planned. Good to see Bill being interviewed again, its been a few years since I have seen him on youtube. Ben, did the interview change your thoughts on how to plan going forward from here ?
I actually felt better about things after chatting w/him. he's always been forthcoming about the fact that the future is impossible to predict and I think that's what he was saying
During the great depression we had deflation so dollars increased in purchasing power while asset prices (denominated in dollars) went down. Might we see an outcome this time where asset prices don’t go down as much and instead we have a burst of inflation? The inflation adjusted results might end up being the same as what happened in the great depression except that nominal government bond holders will end up receiving much lower real returns. Can central banks control inflation if they are not permitted to raise interest rates high enough because their host governments cannot afford to pay higher interest rates on their debts?
Keeping money in FDIC insured savings / money market accounts at banks is a good substitute for treasury bills provided you are able to stay below the FDIC insurance limit.
I always keep in mind that the sale of one share of stock gives you the current value of the millions of others out there and that makes no sense. Two people deciding on a price should not drive your decisions.
Discounted cash flow with a short period of low or no earnings, has an inherent assumption that the corporation survives and returns to business as usual. That's a bit like saying that a car crash that puts you in a wheel chair and bankrupts you with medical bills doesn't change the future much.
Ego System Neither interviewer nor interviewee would advocate owning individual stocks. Some companies may go bankrupt, but not all. If they all do, you’ll have bigger problems than your portfolio!
The market appears to be disregarding unemployment and any other negative numbers. Seems to be looking past the current situation, figuring it is only temporary and government will provide stimulus. I think we have already seen the lows but we’ll see.
27:45 to 28:25?......confused? Straight out of the cato institute and Mises. I thought the MARSHALL PLAN helped, but I could be wrong. Just good ole ingenuity ...."The Marshall Plan may have been a generous act, but that doesn’t mean it spurred Europe’s recovery. The real lesson of the Marshall Plan is that entrepreneurial culture, legal stability and free markets are necessary for economic success. Liberty, not money, is the key to prosperity."----Doug Bandow
To be clear I don't think he is implying the yield is sufficient to live off of. Rather for funds to be there when needed they must be in t bills or similar so that you can liquidate some percentage for expenses. Similar to what the FIRE community somewhat tragically thinks could work with index funds.
1:51 Deep Risk
- 1914 St.Petersburg stock exchange market
- 1989 Japan is Deep Risk
- 2020 is not Deep Risk
3:15 Great Depression analogy
5:04 1989 Japan
26:16 Bond investing in low rate environment.
- Absolutely
- Buffett's equanimity comes from large pile of T-bills.
27:35 Human spirits that allow us to make it through this tough times
- Capital market does good job and it is extremely resilient
28:17 Germany's productive capacity was destroyed in 1940s but within 3~4 years they came back to pre-war level.
Great interview...thanks! I would have loved to have heard more about what his thoughts are on all of the manipulation of the markets by the Fed...keeping rates low, massive QE, resulting in lots of stock buybacks over the past few years. It seems this kind of activity is both reckless and drives extreme risk taking by removing perceived risks.
One of the best interviews/videos I have listened to on investing in general. Great Interview thank you so much! Keep up the amazing work.
Wow. What a fascinating interview. Your ability to not interrupt Bill is commendable, the man is a genius. Surprised I haven’t heard of him.
killer interview, thank you for producing it
Outstanding interview. Not just on the quality of the discussion, but I think you guys have really captured the mood of April 2020.
Great interview. This is the best content you guys have had on The Compound!
Big Bill! Great choice...!
Great interview. Nice to hear from a calm hand who can think rationally about where we are...at the same time unclear why this has "Black Swan" in title...if you read taleb....and recently he is on record that this is a white swan :)
My understanding is that current world events are surely Black Swan and would be interpreted by most models as such ....
Whereas current worldwide market action could be interpreted as White Swan when viewed in a vaccume on a 100-200year historical chart?
incredible was waiting for this one!!! i have his books and yours... good stuff
Ben, groomed to perfection, uber-prepared on Bill's writings, great questions and the cool when your kid was about to enter the screen (which would have been awesome to see..!) 😂
Great job and several pearls of wisdom out of a legend.
It's him, it's Bernstein, the man!
Very good interview. I’m always interested to hear what Bill thinks.
Just watched the interview again, and I am just a little more optimistic than an hour ago. Most of a companies value is years into the future, so even if we just shut down for a year there is still decent value to be had.
Thoughts anyone ?
I think the market is pricing in a 2019 trailing earning (trailing p/e is 15.5) into 2021. I personally think it will take till 2022 to get back to 2019 so it's overpriced to me but I surely could be wrong.
Everytime you see a p/e on your screen ask yourself when it really gets back to that p/e
Both Stocks and Bonds are still massively overvalued! Companies are only valued years into the future as a rationale for jumping into an isolated earnings meltdown and hoping for an unexpected turn around. But mass international unemployment transforms consumption at a global scale. Those effects need to feed through before the you can make a solid investment case.
Outstanding video. Thanks!
Is interesting to see that quite a few people who have studied other than finance or economics became very good at both of them.
I was just thinking of bernstein given his medical and investing knowledge and why I haven't heard much from him given the pandemic and the volatile markets of today's
Great interview! 21:44 looks like a millions are about to experience the living hell of the overqualified and long term unemployed!
This was great. I love you using these outside sources. More please!
I am a great fan of william, I have a couple of his fantastic books.
However, I was hoping for some optimism from him regarding the current crisis, but
it wasnt freely forthcoming I felt. Ben tried to coax some hope from Bill, mentioning the great depression and other crashes giving the idea that surely today may not get as bad as that, but Bills answer was that " who knows, it could be".
Certainly no talk of a "v" shaped recovery. Thats a worry !
Also his bond/cash position stretches out further than most which may make me re-asses my own portfolio.
I think I will keep my tin hat on for longer than planned.
Good to see Bill being interviewed again, its been a few years since I have seen him on youtube.
Ben, did the interview change your thoughts on how to plan going forward from here ?
I actually felt better about things after chatting w/him. he's always been forthcoming about the fact that the future is impossible to predict and I think that's what he was saying
During the great depression we had deflation so dollars increased in purchasing power while asset prices (denominated in dollars) went down. Might we see an outcome this time where asset prices don’t go down as much and instead we have a burst of inflation? The inflation adjusted results might end up being the same as what happened in the great depression except that nominal government bond holders will end up receiving much lower real returns. Can central banks control inflation if they are not permitted to raise interest rates high enough because their host governments cannot afford to pay higher interest rates on their debts?
I was thinking the same but I'm not sure I could have said it so well.
Keeping money in FDIC insured savings / money market accounts at banks is a good substitute for treasury bills provided you are able to stay below the FDIC insurance limit.
Thanks for this !
Great Stuff, Thank U So Much!
Glad you enjoyed it!
Great content 👍
This is all a good argument for buying LEAP spreads and averaging into them. Maybe even trading in and out of the short side of the spread.
Great chat
Why am I only just seeing this now??
Actionable. Substance. Thanks.
Great interview
I always keep in mind that the sale of one share of stock gives you the current value of the millions of others out there and that makes no sense. Two people deciding on a price should not drive your decisions.
Discounted cash flow with a short period of low or no earnings, has an inherent assumption that the corporation survives and returns to business as usual. That's a bit like saying that a car crash that puts you in a wheel chair and bankrupts you with medical bills doesn't change the future much.
Ego System Neither interviewer nor interviewee would advocate owning individual stocks. Some companies may go bankrupt, but not all. If they all do, you’ll have bigger problems than your portfolio!
TheoreticallyNo So are the advocating buying indexes or sector ETFs aren’t these overdue for massive recalibrations by market cap?
The market appears to be disregarding unemployment and any other negative numbers. Seems to be looking past the current situation, figuring it is only temporary and government will provide stimulus. I think we have already seen the lows but we’ll see.
We have bread lines already! They are called EBT cards.
Market conditions will always pose the most risk..stocks do not care how young or old you are.
Too bad bernstein doesn't have an open web page where people can message and ask him questions
27:45 to 28:25?......confused? Straight out of the cato institute and Mises. I thought the MARSHALL PLAN helped, but I could be wrong. Just good ole ingenuity ...."The Marshall Plan may have been a generous act, but that doesn’t mean it spurred Europe’s recovery. The real lesson of the Marshall Plan is that entrepreneurial culture, legal stability and free markets are necessary for economic success. Liberty, not money, is the key to prosperity."----Doug Bandow
Would you bet on the banks learnt the lesson or they would take even bigger risks
interview Nassim Taleb
Did he bust you for plagiarizing Paul Samuelson?
3 months later, all their predictions were wrong, just to show you, no one knows what's coming.
Japan stock market 1990 = USA stock markets 2024
Long $MNK. Incredibly cheap right now.
All is well but not addressing the changing character of fixed income in a neg rate world is a very boomer thing to do indeed.
Former neurologist? WTF? We are losing too many of our ppl to finance.
welll, real a little more of his bio, and you will understand. money.cnn.com/magazines/moneymag/moneymag_archive/2003/09/01/348607/index.htm
Live off the bond portion of the portfolio... Ok boomer 😂
To be clear I don't think he is implying the yield is sufficient to live off of. Rather for funds to be there when needed they must be in t bills or similar so that you can liquidate some percentage for expenses. Similar to what the FIRE community somewhat tragically thinks could work with index funds.
Ha, ha
Lost a lot of credibility by repeating the old "WWII 'public spending' saved us from the great depression"