#132 - Radio Show - Since 1989 80% of Stocks Had a Collective Return of 0%... A Goldman Bear-Market Indicator at Its Highest Point in Decades... and Listener Q&A

69 minutes

Episode 132 has a radio show format. In this one, we cover numerous Tweets of the Week from Meb as well as listener Q&A.

For our Tweets of the Week, a few we cover include:

  • A chart from Longboard about returns. Since 1989, the worst performing 11,513 stocks – which is 80% of all stocks, collectively had a total return of 0%. The best performing 2,942 stocks (20% of all) accounted for all the gains.
  • A tweet about another option selling fund blow-up.
  • A Jason Zweig post about how many investors should question the dogma of “stocks for the long” run since history shows that a portfolio of bonds has outperformed stocks surprisingly often and for long periods.
  • The statistic “According to Goldman, its indicator at 73% marks the highest bear-market reading since the late 1960s and early 1970s, which (with a few exceptions) is consistent with returns of zero over the following 12 months.”

We then jump into listener Q&A. Some you’ll hear include:

  • In your book, Global Asset Allocation, you compare the results of well-known asset allocations and find that the returns are quite close. Over a long period of time, would you also expect the results of a momentum / value strategy to be similar? Is the main advantage that it allows for better behavior (lower drawdowns, etc) or would you also expect the performance to differ (net of fees)?
  • Would you rather own a stock with a high free cash flow yield or high dividend yield?
  • I was wondering if you could touch on the process of launching an ETF. What are the startup costs, how much AUM and at what fee would the ETF breakeven?
  • I've heard you (and others) extol the benefits of a diversified global allocation but I rarely (if ever) hear the counter argument: that the US deserves a premium to the rest of the world because it has the largest and deepest capital markets, has comparatively lower regulation and fosters innovation and creative destruction. Do those factors warrant an over-allocation to US equities?
  • How much should the average investor be willing to spend (as a percentage of portfolio value) in order to carry some protection in the form of puts?
  • What beats the 60/40 portfolio over the next 5 and 10 year periods?

As usual, there are plenty of rabbit holes. You’ll find them all in Episode 132.

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