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Universal Bullishness
This Week on The Compound
This Week on The Compound
This week on TCAF, Josh and Michael were joined by returning guest Adam Parker, Founder of Trivariate Research. They discussed the importance of high corporate profit margins, the two stock deciles to avoid, universal bullishness, the risk to regional bank stocks, the potential for AI, and the dumbest chart ever. (Listen)
INSIDE THE COMPOUND
Why have large-cap stocks outperformed mid and small-cap stocks since the depths of the Covid bear market? Simple, it’s earnings. While earnings expectations for all three sectors rose over the subsequent four years, large-cap stocks saw the biggest jump in earning estimates. Will that continue? Maybe, but diversification is always a solid plan. Ben writes:
Valuations haven’t mattered that much during this extended bull market because the biggest, fastest-growing companies have been so dominant. It’s possible that could continue. As long as earnings continue to grow it seems foolish to bet against the best companies in the world. However, there are cheaper areas of the market if you’re concerned about valuations.
OUTSIDE THE COMPOUND
This week Josh spoke with Robin Wigglesworth, Editor of FT Alphaville and author of Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever. They discussed the crucial role that the late John ‘Mac’ McQuown played in the passive investing revolution. Wigglesworth writes:
McQuown had many able colleagues who played important roles in the genesis of passive investing. But it was McQuown’s combination of bullheadedness and brilliance that proved the crucial driver of the first entirely passive, index-tracking investment fund’s birth in 1971.
ADVISOR UNLOCK
This week over on our advisor-focused channel, Advisor Unlock, Michael spoke with Meb Faber, co-founder and CIO at Cambria Investments. They discussed a new suite of ETFs Cambria is launching to help investors diversify out of low-cost basis stock positions. Michael wrote:
Let’s say you’ve got a bunch of stocks that you’ve done really well with and want to sell, but are not too psyched about the tax boogeyman. The existing options for diversifying out of them without paying taxes aren’t great. Enter TAX. With this ETF, you can exchange securities for shares in a diversified basket of stocks that Meb and his team manage. To be very clear, this is not a tax arbitrage. Your cost basis follows you into the fund. But this is a diversification play.
COMING SOON
This week on TCAF, Josh and Michael will be joined by Cliff Asness, Managing and Founding Principal of AQR Asset Management.
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