#112 - Peter Ricchiuti - “You’re Better Off Investing When Things Look Miserable"

63 minutes

In Episode 112, we welcome Professor Peter Ricchiuti. We start with Peter’s origin story, which includes his time in the investment world, then managing money for the state of Louisiana, then teaching at Tulane where he created, and now runs, the Burkenroad Reports program (a student stock research program).

Diving into investing, Meb asks Peter about his broad approach to the markets and the economy. Peter tells us that from an economist’s perspective, “labor” is a huge factor when evaluating economic conditions. And he believes the U.S. is facing challenges with its labor pool. From a narrower, equity-perspective, Peter tells us that right now things look perhaps a little too good. He notes “you’re better off investing when things look miserable.” At present, given so much market optimism, he’s pulling back.

The conversation turns toward the global market, and how interconnected we all are these days. Peter tells us that part of the reason we’ve done so well over the past several years is because so many countries were growing at a positive pace at the same time. This dovetails into a discussion about today’s elevated PEs. Peter believes that, here in the U.S., we’re on a “sugar high” from the tax cuts. Companies have been using that money to buy back stock or buy each other. But what they haven’t been doing as much is building for expansion. Peter believes companies haven’t been focusing as much on planning for future growth.

Next, Meb asks a question that he admits hating to get himself – what causes this bull market run to end? What are the main risk factors?

Peter points toward higher interest rates. He believes we’re going to see Treasuries at 3.5%. Plus, earnings growth will begin to slow. He tells us that the economy is at or close to its peak right now – it could last longer, but as far as the peak goes, we’re in that general area now.

The conversation turns toward the Burkenroad program, bouncing around a bit: An interesting takeaway from a lunch with a small-cap company’s CEO… the attributes that Peter and his students look for in the companies they vet… the illiquidity advantage over institutions… even one great find through the program – a stock that went from $0.72 to about $150.

Meb asks which mistakes the students make repeatedly. Peter points toward looking at the past more so than evaluating the future. One manifestation of this is paying more attention to past earnings than the prospect of future earnings. Also, many of the students lack patience.

There’s way more in this fun episode: The recent Buffett op-ed piece on short-termism and Peter’s take on how to teach students to focus on the long-term… How Peter’s approach to markets has changed through his experiences running the program… The actual Burkenroad Fund, which has been around about 17 years and outperformed boatloads of competition… And of course, Peter’s most memorable trade.

Get all the details in Episode 112.

More episodes from The Meb Faber Show

The Best Investment Writing Volume 3: Gary Antonacci – Extended Backtest of Global Equities Momentum

Last year when we published The Best Investment Writing Volume 2, we offered authors the opportunity to record an audio version of their chapter to …

#182 - Larry Hite - I Want To Be In A Position Where Something Great Can Happen…If I Don’t Get That, I Don’t Want To Play

In episode 182 we welcome our guest, Larry Hite. Larry and Meb start off the conversation with Larry’s origin as a trend follower, and the parallels …

#181 - Radio Show: Zero Trading Commissions…Valuations…And Trend Following

Episode 181 has a radio show format. We cover a variety of topics, including the new ETF rule:

  • Major brokerage firms dropping ETF trading …

#180 - Rodrigo Gordillo - “This Craftsmanship Perspective Is About Identifying The Difference Between Complex Versus Robust”

In episode 180 we welcome back our guest, Rodrigo Gordillo. Meb and Rodrigo start the conversation with a walk through Rodrigo’s background and his experience growing up in Peru. Rodrigo …

The Best Investment Writing Volume 3: Justin J. Carbonneau – 10 Reasons Why It’s Tough to be a True “Intelligent Investor”

Last year when we published The Best Investment Writing Volume 2, we offered authors the opportunity to record an audio version of their chapter to …

#179 - Dan Ferris - What We Do In The Markets, It’s An Unnatural Act…You’ve Got To Have Some Discipline

In episode 179 we welcome our guest, Dan Ferris. Meb begins with a discussion of Dan’s background as a guitarist, and his path into finance.

Dan then provides a high level view of his …

How you can listen to this podcast

You can listen to episodes right here on the website, or if you prefer, in a podcast app. Listening in an app makes it easier to keep track of what you’ve already heard, listen without using your data plan and many other conveniences.

Recommended apps
Start listening to #125 - Tom Barton - The Biggest Problem Investors Have is Things Change...and They Don't Change
1:24:56
Start listening to #125 - Tom Barton - The Biggest Problem Investors Have is Things Change...and They Don't Change
1:24:56