Comments by "JP 72" (@739jep) on "Ben Felix" channel.

  1. What are you talking about ? It aged really well?
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  2. I’m in the EU also. I was lucky to be able to get access to Avantis products. I would recommend the ‘small cap value’ products offered by SPDR instead. The problem with investing in small caps is that if you include small cap growth stocks then the size premium appears to take a big hit. SPDR doenst as good a job managing for this but they do better than vanguard in my opinion (at least in Europe)
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  3.  @fuufii2300  I’m not denying that it outperformed VTI. But to point it out as if it’s some gotcha moment is laughable to anyone who paid attention to the video. Did you just read the title or did you fail to understand the content? He acknowledged this very point and went into detail as to why it was the case and backed it with theory and empirical evidence. He explains very clearly why dividend funds have outperformed the broader market , and it’s not due to dividends, it’s due to exposure to other risk factors. Dividend funds may in fact be in inefficient filter for targeting these other factors , but it’s much more effective to target these directly. If this is still unclear there are several other videos on this channel you can look into for more detail. For these reasons AVUV (which does target these factors directly and ignores dividends) Vs SCHD laughs at you sir 😂
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  4. You forgot one part of the Warren Buffet quote. Everyone is ‘ignorant’ of what the future is bringing. Therefore we all should aim to diversify. Diversification is also a way to capture higher returns not just to lower non-systematic risk. Individual stock returns are positively skewed , as jack Bogle famously said , don’t look for the needle - buy the haystack. There are a small minority of investors and funds that beat the market. The important question is how they do it. If they do by being exposed to more risk like Buffet did then it’s nothing extraordinary, if they did if because they were lucky it also isn’t extraordinary. With the research we have on luck vs skill , you will find that hardly anybody beats the market based on their skill. Etfs create mediocre results? I guess it depends on the etf , not all etfs are created equal. But if you just wanted to keep it simple and invest in a broadly diversified, market weighted index tracker with a low fee and you held that asset long term you would have outperformed almost everybody who didn’t do the same. And that’s without any extra tilt towards individual risk factors! I wouldn’t call that mediocre results.
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  5. For example?
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  6.  @m.tt.m2500  it’s the opposite of anecdotal, he’s referencing peer reviewed research and empirical data. Referring to buffets portfolio is what is anecdotal.
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  7. That’s not an argument against international diversification unless you believe that this info isn’t priced in.
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  8. Why is retiring without having to sell a single share of stock preferable to dividends? This is the fungibility issue that was discussed in the video , money is money , the source of the return should not matter to the investor, the size of the return however should matter. Put in other words. I care what my salary is , not whether my employer pays me via cash, cheque or a direct deposit. Do you have an explanation why investors should care about the source, id be curious to find out?
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  9.  @BTx933  those conditions are maybe required for the markets to be perfectly efficient , but nobody has ever claimed they were - not even Eugene Fama. Market efficiency isn’t an on and off switch - it’s a dimmer switch. It’s about how much information is reflected in prices - not whether every participant processes the info rationally and perfectly. If those assumptions were required for a financial theory to have any relevance then we would have to throw out almost every theory we have in finance and economics - even simple laws of supply and demand. As it stands the weight of the evidence would suggest markets are pretty efficient - it’s the best model we currently have for explaining the market. To use terms such as ‘obvious myth’ is more what I find laughable.
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  10. Bold statement to make immediately following being shown evidence that the narrative surrounding the poor performance of declining industries is historically inaccurate.
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  11. It’s not that you need a single fund to replicate it - you could do it yourself using a portfolio of funds at the correct weightings. You would also need to use the same leverage as buffet. Which not everyone has access to. The point of the research referenced in this video isn’t to instruct anyone on how to copy buffet - it is merely to explain his performance. We shouldn’t copy buffets strategy. He’s not a messiah - we all have our own personal risk tolerance levels, stages of our lifecycle , financial goals and financial needs. We should tailor our own portfolios according to these variables rather than what someone else is doing.
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  12.  @tman458  causation is different from correlation, there was a lot of stuff going on in 2020 that could explain inflation , not just QE. The pandemic , shocks to supple chains , war , large govt fiscal deficits. If you want to cherry pick this specific time in history to establish a correlation then you’re going to have to find an explanation for decades of QE in Japan , who actually had deflation. You also need to explain why qe has been ramping up in many countries since the gfc unaccompanied by significant inflation until now.
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  13. You also have to consider why a dividend fund like schd may have performed better. This video partly about what explains stock returns , is it because of the dividends that schd held up better this year , or is it because it has more exposure to other risk factors like value and profitability. Take AVUV for example. A fund that targets value size and profitability directly and ignores dividends. Only down 2.96 % this year and up 56.87% since it’s inception in 2019. During the same time period SCHD is down 5.62% this year and is only up 40% during the same time period. It may just be that the perceived benefits of dividends have nothing to do with the dividends themselves , and everything to do with the other risk factors Ben mentioned. You’d like to better of you targeted them directly.
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  14. I believe I saw in the RR community that he plans on releasing another video related to this , although not sure when. Regardless , this video was not a prediction that inflation would not occur. This video can both be correct (I think it is) and inflation can occur at the same time , they’re not mutually exclusive. There are a lot of variables that impact inflation , for example fiscal policy and supply chains. There’s a YouTube channel called money and macro that delves into this topic a little more if you wanted to check it out.
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  15. He can’t provide specific advice without knowing a lot more information about you. But you can read his model portfolio papers and it may give you a very good idea how he invests , even though it may not be what he is personally invested in. That doesn’t mean you need to copy the model portfolios , but you should weigh your own attitudes to risk and decide what would be best for you.
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  16. Perhaps - but wouldn’t it make more sense to target those factors directly? After all companies that don’t pay a dividend could have good exposure to those factors , and some companies that don’t pay a dividend may have limited exposure to those factors. You also run into problems of diversification investing this way.
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  17. I like your final thought. In my mind I’d go a step further though. To me ignorance or lack thereof when it comes to investing would come down to knowledge of future events and how the market will react to them. As none of us can accurately predict the future , especially not all the time - we should all consider ourselves ignorant investors. Even buffet himself !
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  18. Those things may make them ‘good’ companies but they don’t make them good investments.
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  19. Do you have evidence that QE caused inflation? Genuinely curious. This video isn’t predicting that inflation would not occur, just that QE isn’t likely to cause it. Not sure it can be claimed the video aged poorly.
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  20. Margin of safety is a non starter I think. It’s either referring to value , which is a systematic risk - but shouldn’t be targeted by picking stocks anyways. Or it’s referring to the miss-pricing of stocks against their intrinsic value , which in efficient markets shouldn’t happen often. If someone thinks that something is trading at a margin of safety they need to ask themselves why they’re right and the market is wrong. You’re right in your initial thought as well. If you’re sitting around waiting for a stock to begin trading at under what you perceive to be its intrinsic value then you’re spending time out of the market. Time in the market beats timing the market. As usual , people are most likely better off with a broadly diversified low fee index fund.
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  21.  @whateverrandomnumber  to be honest it sounds like you’ve missed something important in the dividend videos. I’m not sure how you can make this statement otherwise. ‘You want to become the owner of a businesss shares because you want a share of its profits. Not because you think you’ll sell it for a higher price later.’ The problem with that statement is that you will share in the companies profits regardless if they share it via dividends or not. Dividends are only one way to share profits with investors. That is why they are said to be irrelevant. Returns have been explained by a variety of factors. It’s true the models are not complete but they’re the best we got so far. Dividends are not included as a factor when explaining returns. At least not in any model I’ve seen. It’s true they are important for simply calculating total returns, but that doesn’t mean they drive returns. Edit: and of course when you focus on dividends you may still be exposed to these factors. You may also be more likely to stay invested during volatile markets, which is also important. But if you ignore other stocks that also have exposure to these risk factors you will reduce the diversification of your portfolio and thus the reliability of obtaining your expected returns. That’s how I’ve understood the argument from those videos anyways. Happy to be corrected or have someone point out something I’ve missed.
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  22. ⁠​⁠​⁠​⁠ @trumpthelegend6357 ‘you forget that governments heavily cut spending during deflationary periods’ You forget that they commonly do the exact opposite. Saying deflation is simply too little money chasing too many goods is reductionist and not necessarily correct. Periods of deflation in the past : - the great depression - Japan’s lost decade - the great financial crisis - eurozone crisis - Asian financial crisis During these periods of deflation, governments were not the only ones worst off. Many periods were severely affected. Your post is simply incorrect.
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  23. Sometimes gambles pay off. Doesn’t mean betting on unexpected returns wasn’t a gamble.
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  24.  @pbinsb3437  don’t get caught basing investment decisions off past returns, that is not basis to evaluate an investment decision.
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  25. Why does there need to be a safe haven?
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  26. The message I got from this video wasn’t that returns are all that matter. He covered many points , but the main one seemed to be that driving change through investment decisions or otherwise is very complex and it’s probably not as simple as just buying stocks in green companies on the secondary market. I don’t think one needs to have the answers as to what’s best for climate change in order to post videos. Nobody on this planet has all the answers to that problem yet. The concepts discussed here help move the conversation forward however. This video wasn’t a directive on how to invest to improve climate change. I found it thought provoking. It doesn’t matter whether you’re investing to affect climate change or achieve a higher return - the points covered in this video should be relevant for both. 🤷‍♂️
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  27.  @cemdursun  the algorithms are written by humans sure , but they are rule based and certainly not ‘emotional beings’.
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  28.  @cemdursun yeh ok I think I get what you’re saying but not quite sure how it means that dividends are relevant to stock returns?
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  29. You’re assuming people get no fulfilment or value from their jobs. Also passive investors outperform day traders over all meaningful time frames. If passive investors have to wait 20-30 years for their returns then traders need to wait even longer - or more likely , never receive it at all.
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  30.  @royjohnson9043  maybe , but I suspect its not working itself that’s the problem , just the specific job they’re in. Many people feel that way as well and then when they stop working find that they miss it. Regardless day trading clearly isn’t the solution for most people. Im sure if you surveyed day traders you’d find that most don’t make a living from it. In fact the video here points out studies that discovered that very thing.
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  31.  @royjohnson9043  the lottery also works for some especially if they don’t want to wait 30 years to make their money. But most people with that objective will be worse off in the attempt. Taking the time to learn how to day trade (which is what I assume you meant by being serious?) just increases costs and is about as useful as taking the time to learn how to pick lottery numbers.
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  32.  @royjohnson9043  you don’t know anything about me. But if you don’t want to continue the discussion then that’s fine.
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  33. Day trading is a zero sum game though - before considering costs like transaction costs and tax. So overall a net loss. Gambling at a casino isn’t a zero sum game because there is an edge favouring the house.
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  34.  @marthvader14 the cash on the companies balance sheet is finite too. As are its retained earnings.
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  35. False equivalence fallacy
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  36. Yes but you’re forgetting about skewness. There is a very very very small amount of traders that earn alpha long term, and a smaller sample still of traders who earn alpha that isn’t explained by luck. The skewness in trading is far greater than sports - and there is little benefit of engaging in the activity if you don’t succeed - which isn’t true for failing to make the Olympics. Also in sports you’re not competing against very high powered algorithms. And I guess while we’re talking about money. Your expected returns would certainly be more reliable if you didn’t attempt to make the Olympics and instead got a good education and a good job.
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  37. Holy moly this is silly 😂
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  38.  @dakotadak100  it’s silly because ‘share price volatility being greater than dividend volatility’ isn’t evidence that dividends are relevant in the slightest. It’s basically the same argument (just a different metric) as saying ‘dividend stocks have historically returned more therefore dividends are relevant. ‘ Both these arguments confuse correlation with causation. What matters is if dividends themselves affect risk adjusted returns. There is no evidence that they do which supports the generally accepted theory. It’s even more silly if you use this kind of reasoning to justify picking individual dividend stocks , or even dividend funds because then you become under diversified and exposed to more unsystematic risk.
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  39. What do you mean? Everything stated in this video is still true?
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  40. That’s always a possibility , same holds true for the market premium though.
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  41. Would you not just work out the exposure buffet has to known risk factors by running regression analysis - then compose a portfolio using etfs that achieve the same exposure? And then use the same amount of leverage as buffet? Shouldn’t take that much skill - there are online tools for this stuff? Ps. Not saying this would be a good idea, just saying if you wanted a buffet like portfolio that was passive this would be an option. He’s not saying you need to pick index funds you think will do better. It’s about constructing a portfolio that has similar exposure to factors such as market beta , value , size , profitability etc
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  42.  @ramzib.1092  I don’t know what to tell your really. At 6.20 in the video he does compare small value and large growth directly. He shows a graph comparing the FamaFrench small value research index Vs the FamaFrench Large Growth research index. He presented another chart comparing the returns of the MCSI small value index vs the MCSI large growth index. I’m not even sure why you think it’s a problem that he looks at the data and research we have on the size and relative cheapness metrics individually. It’s all relevant. He also mentions the research done by Fama and French , which you admit. Out of it the Fama and French three factor model was born. Large cap growth stocks by definition, have less exposure to the size and value risk factors - and all else being equal this means they have a lower expected return. You say that it doesn’t account for people moving in and out of stocks as growth prospects change. I’m not sure how you deduced that from their paper , but let’s say i granted that , what evidence do you have that employing that strategy leads to excess returns? Now for your comments on aiming for average performance. Informed investors , who have read the research and looked at the data , actually recommend investing this way. So called self proclaimed informed investors who recommend stock / sector picking , marketing timing and other forms of active management (a lazy term i know as all forms of investing are active in some capacity) are actually turning a blind eye to the evidence and unless they gain utility from investing in assets with highly skewed outcomes then they’re investing strategy has no evidential basis. They’re just handing the ‘informed investor’ trophy to themselves. There’s no research that supports the idea that ‘informed’ active managers outperform. This isn’t because they’re not intelligent or hard working, it’s just how the market machine is built. It prices assets extremely efficiently. Add to that that ‘average’ doesn’t seem to appear what you think it does here. This isn’t a story of picking yourself up by your bootstraps, doing the hard yards in order to be better than the pack. Ben Felix , Fama/ French and countless others in their space don’t make these recommendations because they’re lazy , or because they’re uninformed. They’ve come across all the same information about investing that you have - plus a lot more I think it’s fair to say. Individual stock returns are positively skewed , extremely so! That means most stocks earn less than the market average (and I really mean most). 96 percent of all stocks collectively only matched the one month t-bill return (an essentially risk free asset). ‘Average’ in this sense is anything but. It’s a better return that the significant majority of active investors make. Earning average is to be above average. Or to use a better term , well above the median stock return. More so, this channel doesn’t necessarily tell people they should aim to do ‘average.’ If that’s what you’ve taken away from the videos then I’m afraid you’re not paying attention. There are evidence based strategies for earning premium returns in excess of market returns , if you’re willing to stick to the strategy and it suits your attitude towards risk. None of this is distorting anything , this is all fairly non controversial within financial academia. Whenever he mentions something that is less clear , he says as much. What did he say that was actually incorrect?
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  43.  @ramzib.1092  I don’t think you know what average means in this context. Historically it’s always outperformed stock picking , until the market breaks it always will. It’s just how asset pricing works 🤷‍♂️
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  44. You not being able to understand the financial literature doesn’t mean that it is ‘mental gymnastics’. Also Ben has never referenced his personal portfolio. Nobody has any clue how it is performing , nor does it matter. The performance of a single portfolio isn’t basis for anything.
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  45.  @SpaceTravel1776  it isn’t equivalent diversification though, that’s my point i guess. Americans companies are subject to American laws , economic shocks to the American economy , the US dollar , to war etc etc etc. Diversification of revenues is only diversification of one variable as well. Returns don’t come from future revenues , they come from what you pay for those revenues and what you pay is influenced by all sorts of factors. Just look at Japanese companies and their returns over the last few decades. They were also exposed to a lot of international revenue.
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  46.  @BenFelixCSI  oh no! don’t paper hands your title!! 😂 Thanks for all the content Ben, both the podcast and YouTube- keep it up!
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  47. ‘An expansion of the money supply IS inflation.’ No , that is only how it is defined by some economists , most of whom probably subscribe to the Austrian school of economics, but t they’re certainty in the minority. Respectfully it sounds like you’ve maybe fallen for either Friedman/monetarist theory or Austrian economics. Their view on the monetary system has no support in the empirical data. I think your error is two fold. First it seems you’re treating the relevant variables as independent when they are in fact interdependent. ‘More dollars chasing the same or fewer goods…’ for starters why couldn’t the increase in money supply lead to more goods? Also why does the increase in money supply have to ‘chase’ anything? Second it’s not clear where causation lies. Increases in money supply are caused mostly by commercial banks via lending. Why does an increase in bank lending have to ‘cause’ a rise in prices? Could it be that rising prices causes an increase the demand for loans and hence money supply? Could new technology and emerging industries (increasing the amount of goods) result in businesses demanding loans in order to capture market share in the new industry? If it was so simple that raising money supply leads to rising prices you would expect it to show up empirically. However if you look at average global inflation levels over the last 120 years it’s not at all easy to identify which periods we saw massive expansion in monetary supply. It is however easy to spot periods of war and economic shock such as the end of the Bretton woods system. Heck even just take a look at Japan , who has expanded their monetary supply like crazy for decades and has struggled to even avoid deflation.
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  48.  @willryan5508  First of all doubling the supply of money on a monopoly table wouldn’t make the prices go up , those are fixed according to the rules (unless the rules of changed since I was a kid?), it would however increase the amount of hotels being built. You need a better analogy. Regardless that’s not how changes to the money supply happen in reality , what you’re describing is the treasury printing new dollars (which has happened historically and led to inflation i grant you) but that is not what is happening now in the west. your position sounds purely ideological and not backed up by data at all I’m afraid. Friedman monetary theory of the price level no longer holds much stock at all in economic academia for that very reason , the model wasn’t supported by the data. Could inflation be a monetary phenomenon? Sure , but it hasn’t been for some time now , and there’s little evidence to conclude it is currently. Only speculation and a reliance on 50 year old theories. More modern fiscal theory of the price level proposes that inflation is caused by rising govt deficits and a decreasing likelihood that they can be paid back? Couldn’t that explain the current environment? Keynesian economics is indeed flawed but not the only school of thought that considers inflation not purely a monetary phenomenon. Current inflation is most likely caused by fiscal policy and supply chain issues. Why is it silly that more dollars could create more goods? If I’m a business , and borrow from a bank , is it not reasonable to assume I will use those funds to finance production? And for the record I’m not saying it has to lead to an increase in production, I’m just saying it can’t be ruled out. The reason QE failed wasnt because it caused inflation - it failed precisely because it didnt increase production or inflation. It’s strange you suggest deflation could be a good thing. Deflation historically has been associated with economic hardship , not increasing wealth. Just look at the Great Depression. This is one reason why most developed nations aim for a controlled/moderate level of inflation.
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  49. This video is gold and by the sounds of it may benefit you if you watch it again and understand what’s actually being said. Dividends don’t matter when it comes to selecting stocks. That doesn’t mean that they arnt an important component of total returns - it just means that the dividends arnt responsible for driving returns total returns. They’re just a method that capital is distributed to the investor and which method is chosen ha no bearing on the amount of capital that can be returned to you. I’m not sure how you argue against that if you’ve actually seen the data. This is pretty strongly supported in the academic literature. It’s hardly bullshit. Although I could understand why you’d think so if you hadn’t come across the data or the theoretical papers. Dividends can feel like free money and there is a lot of room for cognitive basis - but in fact there are five factors that explain most of the total returns of stocks - dividends are not one of them. This video even states that dividend paying stocks are an important part of an investors portfolio. It’s just that a dividend focussed portfolio is less less diversified , tax inefficient and less able to capture the risk adjusted returns of the market. This video is not saying that, for example , that there arnt behavioural implications of targeting dividends that may benefit the investor - such as they may be more willing to hold long term and avoid market timing. But after recognising this couldn’t an investor simply correct for this behavioural bias. Then they could invest more broadly (focusing on dividends reduces diversification) and target factors that actually drive returns such as market beta, size and value + others.
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  50.  @scottiebumich  dividends are irrelevant to total returns , that doesn’t change during ‘times of undervaluation’
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