Jake Taylor, Kathy Would, Twenty Percent discussed on We Study Billionaires - The Investors Podcast
Carlisle worse gray. And jake taylor to talk about. We see in the financial markets right now. Today we're discussing. how why catherwood. And it's a move in the stock market. We're talking about why it's too simplistic to say. The low interest rates are good for stocks. And we also looking at whether or not. The sheila p is valid measure of the stock market. We'll talk about that and much more. You definitely don't want to miss out on this one. You're listening to the investors podcast while we study the financial markets and read the books that influenced self made billionaire. The most we keep you informed and prepared for the unexpected burst. Welcome to the investors. Podcast i'm your host. And what lineup we have here today. Toby kyle west gray. And jake taylor a joining me for investing mosman group here in q. One it's always great to speak with you and even better to speak to all you have the same time so welcome to the show. Gin's thanks for having us guys. Thanks so i'm sure the audience really going to enjoy this station. And what you guys see in the financial markets right now. Toby whereas and i wrote a book of fairy long time ago now. It's almost a decade since it came out and that's pretty good explanation of sort of the underlying process which is like the screen basically and then under a few things on top of that. I think the most interesting thing in the market at the moment is kathy would and ach. Etf's you might remember. In the early dot com days those funchal janus and the head break performances go great flows like a of flaws as a result and they were focused on smaller quid. Take names said janus had these gripe flows into these very illiquid stocks and they degrade performance as a result and it was probably van driving up. The performance of those stocks has been a similar argument made about ach that they tend to focus on smaller. Non-profitable take stokes and Sorta gigantically big of the last few years. It's now sort of a third or fourth biggest. Ats show out there that flows now that go into these small illiquid tech stocks of they control prices of these textbooks. Had this little wobble of the last few days colson redemptions for them which may cause them to do some selling as well they also have been exposure tasteless I just think that that's the driver of the market at the moment is potentially getting some redemptions having to sell out of some of those stocks which will push an the names and a very sort of beholden to what tesla Much big stuff. But it's still quite volatile. Hasn't made a great deal of money and so there's some risks that creates Cascade selling an odd gets coordinated. And then i didn't know what that does to the rest of the market. That seems to me that there's a lot of money in tessler knocked is fairly new money. Little be sensitive to what happens odyssey on his it relates our business little bit. We have a momentum fund. The traffic's at a lot of the names that arc funds as complex trades in. I've definitely noticed correlation in day to day up and down all around with respect to art funds. Which has actually been really cool last couple months but the last couple of days as been pretty painful. I don't know if it's actually true. But it certainly seems to be the case that art fund flows are driving demand and supply shocks in these kind of tech firms. I don't know how big of a issued is a broader marketplace though but certainly case in that narrow sector of the marketplace somebody joked at aachen sprung a lake of the last days it's flows it just amazing it's been. It was a lot of money in that redeploys because they active funds that redeployed immediately into the market as they see fit and this being this weird little wall of less dies with some of the. The frothy take names of pullback has tesla and said kesse shifted its portfolio. Mix a little bit from taking it away from some of those moya liquid names and it's moved a little bit more into tesla which might make it a little bit more liquid that they holdings in some of these companies are kind of. It's extraordinary hab much of the company that sort of in the twenty percent plus range in some of these companies. How's this going to play out like when you own that much of a company. And i don't know if you're that familiar with arc. What's the plan. How can they ever get out especially for some of the smaller names. I guess where there's just not enough liquidity. it's perfectly legitimate. Strategy and valley goes to this. Oh i'm not criticizing much but it's a perfectly legitimate strategy to buy something when it's very liquid and planned selling when it becomes more liquid much less liquid which is what tends to happen selwyn. Stocks it down low because they they wanna get out they sell typically because they have to get at somebody's sort of you know the redemption so that need the money somewhere also leave at margin line or something like that because they know that run the valued so he said it's no liquidity when you trying to buy some of these up nine not that big not a head. I'm just saying as a value got. You're always trying to buy And then you sort of hoping that down the road year. Oh two or three or five. Whatever at some point. The thing that you're buying so it comes back into fashion. People wanna pi pay high multiple and typically. That's when you see a little liquidity and you can probably ask about the research city liquidity as a factor. I think that that's the idea. Is that the list liquid. Is this typically bitter attentional list liquid stocks and more liquids wanna be buying illiquid and selling liquid has fun that does in thinkers firm called zebra technologies Started by some group. Academics that specifically targets factor and gotta make sense should earn extra for you know buying things that are paying the but to get in and out. But that doesn't solve the problem. I if you kind of forced an audit nah what they do in that scenario. I think it's going to be tough to get on all right guy so nothing wanted to talk about is whether or not you accused the thirteen filings in your investment approach and for sitting out there not completely sure what. A fighting is quarter. Report filed to the sec. If you control more than one hundred million dollars in assets it's something that institutional investment men just have to do jake stop. Would you for thirteen fs. I use it as a screening tool. It's a place to look for ideas. The vast majority of the time. When i kick the tires on something that i look at it doesn't make any sense to me. And that's okay. You don't have to understand everything but every once in a while. They'll be an idea that i'll find that is worth digging into more and those makeup for all the other times where it's a fool's errand one of the biggest problems that i see in that when people are kind of thirteen. F cloners if you will. It's really easy to clone the portfolio. But it's really hard to clone the conviction and the conviction doesn come until you've actually done some of the work yourself you know if you wanted to sort of quantify are use a quantum approach to it in thirteen f. Like i think has written about this. A fair amount met favor. You can do that. And i think that probably works over a long period of time but the periods of time where it doesn't work better really hard to get through because you just don't have the conviction to to hold in there. The other thing i would say is that you have to be really careful about who you choose to follow in the thirteen space. Because some people turn over their portfolios in such a way that that information by the time it comes out might be really stale. It might not look like their portfolio at all. So there are you can figure out who the ones are who are the long-term holders and those tend to be better places to look that's been my experience with a portfolio either because you can't see international holdings and you can't see shorts that they have on which you might be looking at half of arbitrage or something like that and you can't see any option positions that they have onset you getting one picture of the portfolio. The other rico. That's one thing. I learned this from may.