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

  1. Just because inflation occurred does not mean it was caused by the FEDs policies. Lots of stuff has happened since this video was made including a longer than expected response to the pandemic and war in Europe
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  2.  @Shemdoupe  I did. I think it holds up well. I often come back to it.
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  3.  @Timbone07  not what I would do personally, hope it works out for you though.
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  4. Yes and in the same manner that doctors bashed smokers 60 years ago. 😂
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  5. He picks those stocks based on risk factors whether he realises it or not. He just does it in a more concentrated way. As was mentioned in the video , his over performance is risk based , not skill based. How has he done lately compared to the market? He’s underperformed. Just like the value risk premium as lagged the market in recent years.
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  6. If you’re only pointing to 2022-2023 as your evidence then you’re guilty of cherry picking, but even so - 2022-2023 doesn’t even serve as good evidence that QE causes inflation. I think you would need to explain why we had years of QE with many countries around the world with no inflation problem , in fact inflation was quite low. You’d also have to explain why Japan , the champions of QE , have had problems with deflation. 🤷‍♂️
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  7. The funny part was I’m pretty sure I remember her making an ad dunking on index funds. 😂
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  8. Nope. Past performance is not an indicator of future performance - in either direction. And although you’d expect actively managers portfolios to underperform after costs over a long time period that doesn’t mean they’ll return a loss.
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  9. There is a huge difference between these two methods of evaluating performance. Historical evidence is always used when investigating the world - it can then be used to make predictions of the future and it can then be tested. Historical premiums have been widely tested in and out of sample and have been shown to be robust and persistent. Not only that there is a strong theoretical basis to support why this empirical evidence exists and why we can expect it to continue (it is not based purely on returns) . This does not exist for all types of investment strategies , in fact , a lot of popular strategies have been demonstrated to be ineffective AND also have a strong theoretical basis as to why nobody should consider these strategies when investing. For example stock picking has been shown to be an ineffective strategy , but it’s obviously possible to pick stocks and get a good outcome. That does not mean the decision to invest in an individual stock was a good one. Likewise you could have invested in a market cap weighted index etf prior to the covid crash and experienced an immediate and significant loss. That didn’t mean the decision to invest in a market cap weighted index was a bad one.
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  10.  @theWebWizrd  thanks for the added thoughts. Yes I’m aware that some investors , and some particularly well known ones as you mention, hold a different view point. I simply disagree with them. I also think Buffet might not be has ardently opposed to EMH as he has vocalised in the past. But not sure 🤷‍♂️ ‘…. unless you personally bring something of value to the investing game you shouldn't expect your decisions to add value, in which case clearly some sort of index and DCA is the best way to go.’ I think here I might have to push back a little - I don’t think DCA would be a ‘theoretically’ correct decision even in this scenario - although of course , when you personally have to deal with the stress of investing a large amount of money at once - perhaps what is theoretically optimal isn’t always what is realistic when considering the emotions and other factors involved in such a situation.
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  11.  @theWebWizrd  yes I would say that it is better to invest it all at once. I view DCA as a other form of market timing. That said , I don’t know if I’d have the intestinal fortitude to invest it all at once. I’ve had the good fortune of never had a large lump sum to worry about investing all at once ;). I just put away a bit of my paycheck each month depending on what I can afford.
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  12. ⁠​⁠​Wow! If nothing else this comment took guts to post on a Ben felix video 😂
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  13. Video was not a prediction that deflation would occur, just claimed (correctly) that when quantitative easing measures are being used that deflation is usually the bigger concern. QEs failure was probably more that it was ineffective at increasing inflation , not that it drove inflation. What happened since this video was the war in Ukraine, Chinas zero covid policy , subsequent variants of covid - to name a few.
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  14. Yes , but that’s missing the point, and it doesn’t mean dividends are relevant. Just because returns did come from dividends historically does not mean the same returns wouldn’t have occurred had companies decided to instead distribute capital via means other than dividends.
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  15. If you ever manage to understand what is being said in this video - you will be embarrassed by this comment 😂
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  16.  @ananditagangwar9988  I feel fine because I know that you have no clue who i am, what level of education I have , what my occupation is etc. I also feel fine because all you seem to have is insults, and you certainly don’t have any comprehension regarding this topic.
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  17.  @ananditagangwar9988  how about you tell us why you think dividends are relevant or what you think I don’t know about FCF. You havnt actually said anything of substance yet , get some skin in the game champ 😉
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  18. Thanks Ben! Now please do a video on how I can get myself a lump sum 😂
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  19. I would say you’re not as well diversified as you think. Don’t think you’ll find much support here for investing in individual stocks. You are likely far better off investing in a total market index fund.
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  20. If you honestly think this , then you either didn’t watch the whole video - or you didn’t understand it.
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  21.  @jvarszegi they may not call it free money but their behaviour suggests that that’s what they’re treating it as. What many people do call it however is ‘income’ or ‘passive income’ and it’s a mistake to treat dividends that way for the same reasons as outlined by the ‘free dividend fallacy’.
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  22.  @gmk22799898  haha well thanks for the compliment although I’m not sure I’m worthy of it 😂 no not a professor , but i did study finance and econ at uni. I remember this first year or two only doing capm as well but the curriculum expanded after that. I recommend checking out Fama and Frenches website - it might explain it a little better. I can’t share the link here but if you Google Kenneth French data library you will find it. Ben’s channel is also an excellent source for covering all the major topics you will be studying btw. It’s also more fun!
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  23.  @andreachello94  no that’s not quite the case. Although small caps and value stocks may have been thought at the time to have highlighted problems with EMH - all they really did was reveal the problems with the CAPM pricing model. Pricing models now include size and value factors , and while perfect market efficiency is only an ideal state that real world markets can approach- the model is currently the best we have for explaining market pricing. Even if markets are not perfectly efficient, it’s evident that they are efficient enough that investors should behave as if they were efficient. Size and value premiums do nothing in relation to leading us to reject the efficient market hypothesis. In addition , emh doesn’t imply that you will never be able to beat the market. It’s just that if you want to beat you will likely need to be exposed to extra risk.
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  24. If you need cash ‘now’ then why convert your cash into shares at all in the first place.
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  25. ‘Performance of dividend paying stocks out performs non dividend paying stocks’ This is true historically, but it’s not because of dividends. It’s due to dividend paying stocks as a group being more exposed to certain risk factors. The problem with focussing on dividends is that you will ignore non dividend paying stocks that are also exposed to these risk factors which in turn will make your returns less reliable as you will not be as diversified.
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  26. Tell me you didn’t watch the video without telling me you didn’t watch the video. 😂
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  27.  @fuufii2300  true but not many funds available to the public have targeted risk factors that well until very recently. Regardless that does nothing to take away from the main point of what was in the video. When you run the analysis on dividends and control for known risk factors they simply do not have any explanatory power in relation to returns. It’s that simple. Pointing out funds that have beaten the overall market is pointless and betrays a lack of understanding about valuation theory. Nobody is denying that dividend funds can beat the market , there just using theory and empirical evidence to arrive at the true reason why they have outperformed, and propose a better solution than targeting dividends directly. It’s just good science. You can either take that on board or ignore it.
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  28.  @thomasd5488  best of luck to you ✌️
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  29. No. Picking stocks is not rational because you will be under diversified , dividend investing is not rational because you will be under diversified. The same reason for both - they are not in conflict with each other. Investing in broadly diversified low few etfs is rational because you will not be under diversified. If is the investing path most likely to allow you to achieve your financial goals. Not pessimistic at all. Good common sense. I’m also not sure how you could say that someone who regularly says don’t time the market and stay the course is fear mongering.
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  30. This video aged well. VUG (large cap growth fund) returned 35% since this video was published. AVUV (small cap value and etf used as an example in bens model portfolio) returned 97 percent. If buffet has a problem with academics it’s probably because they keep explaining away his alpha and it hurts his ego. I doubt he’s that petty though. But never mind the results. The results don’t matter. Nothing said in this video was incorrect and was backed up by evidence. When analysing stock returns over short time periods (such as since this video was posted) literally anything can happen and it wouldn’t prove anything.
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  31. How’s it ageing now? 😂
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  32. I’m not sure if there’s much theoretical consensus on why they’re riskier , but an explanation I like (which is a long run economic concept) is that profitable firms are known to be profitable , so they attract more competition to the industry and this will eat away at profits / margins.
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  33. Your best video yet. Thanks again!
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  34.  @Green__one  I think your mistake is failing to see that MV=PT tells us nothing important about each of those variables and how they’re related. You’re treating them like independent variables when they are interdependent. If M increases the formula tells us nothing about why it increased or what it will do to the other variables in the equation. This is one reason why economics abandoned monetarism long ago. I understand the confusion, I used to think the same thing , it is even what is taught very early on in econ courses. But economics students often joke about econ degrees just being a progression of classes that teach you why everything you learnt in the previous class is complete bs. Expanding money supply = increasing inflation is one of those things. There are many factors at play and many theories that attempt to explain inflation , even the best ones we have now will probably not explain inflation well at some point in the future. Until economics improves our inflation models I think the best thing we can do is be nimble in our thinking and in our policy and diligently keep an eye on our economic data.
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  35.  @Green__one  your perception of what is occurring in reality is deeply flawed my friend. ‘as has happened every time in history when the money supply has drastically increased , inflation skyrocketing can’t be far behind’ How would you explain Japan then? If you look at the global average inflation rate of developed nations over the last 100 years , you actually cannot identify periods where money supply expanded rapidly based on the inflation data. What you can easily identify are periods of war , supply shocks and other economic shocks. The reason economists come out with new theories is becuase inflation isn’t caused by the same things over and over again. It is not ‘always and everywhere a monetary phenomenon‘. When new data comes in that challenges a model you need to fix the model. That’s just basic science as I’m sure you agree. Some of these new theories , explain the current inflation phenomenon much better. You must surely accept that correlation doesn’t necessarily mean causation? That seems to me to be the error you’re making here. What else has happened recently other than money supply expansion ? Heck what’s happened even just this year. There’s a war , new covid strain coupled with the covid recovery , supply chain shocks, expansion fiscal debts ….. could it be that perhaps inflation is a multi variate problem? To deny this would surely demonstrate your reasoning is purely ideological. I fail to see how inflation existing in an environment of rising money supply proves me wrong. The amount of teams in the nhl is expanding pretty rapidly as well, using the same logic you could conclude the size of the nhl rather than the feds balance sheet is what’s causing inflation? 😂 ‘There’s no way you can accumulate wealth with a mindset like that’ Only a sith deals in absolutes 😈
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  36. No such thing as over diversification. Investing in Apple would be an easy way to beat the market IF there was such thing as earning historical returns 😂 how do you know which stocks will outperform the market long term before it happens? Remember that the market does a pretty good job of pricing in all available information. Individual stock returns are positively skewed, it’s like finding a needle in a hay stack.
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  37. You’re forgetting that you can leverage stocks as well
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  38. And pay higher commission costs. Not to mention you’ll likely have a significant tracking error.
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  39. He’s not saying that there are no individual companies that have had huge returns. We know who these companies are now , because we have the benefit of hindsight. We don’t know what the next Apple stock will be. He’s saying it’s extremely difficult to know ahead of time which will be the performers. Trying to pick them is demonstrably a losing battle and akin to trying to pick the winning lottery numbers. And buffet says that most people shouldn’t be picking individual stocks. The problem is everyone thinks they’re not ‘most people’ . In recent history Buffet likely would have been better off investing in a broadly diversified index fund himself.
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  40. I see a bunch of people who can read academic papers and understand data.
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  41.  @fatrat92  he does explain that dividends are an important component of total returns, pointing that out is hardly a gotcha moment. His point is that they are not a useful indicator in determining which stocks will have good future returns. Just stating that demonstrates you haven’t paid enough attention. If you’re holding on to the assumptions of the dividend irrelevance theory (which he talks about simply to say where the argument starts and provide context - it is not his main argument) then I think there is a flaw in your thinking. The theory is there merely to explain what we see in the data, the argument isn’t hanging on the thread of whether its assumptions are true, what truly matters is the evidence. If you see a problem with the theory, that doesn’t mean the default position is to say dividends are in fact relevant. They need to be shown to be relevant which many have tried to do. Unfortunately when regressions are run and dividends are analysed as a potential factor for explaining returns they don’t have explanatory power in the data. It’s that simple. 🤷‍♂️ the dividend irrelevance theory is just a way to explain that, no academic claims that the assumptions are true in the real world. Bens argument isn’t hanging on the dividend irrelevance theory , it’s relying on the empirical data which has shown other factors such as size, profitability and value are what drive returns - not dividends. Knowing this , and ignoring the dividend irrelevance theory , how would you respond to this data and that argument? What is your own dividend theory to explain why dividends have low explanatory power (R squared) when running regressions for stock returns?
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  42. VT for the entire world Or a mix of VTI + VXUS . Which gives you a little more holdings at a slightly lower fee. Will increase your trading costs buying two instead of one.
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  43.  @johndorian3685  I’m not so sure that it’s difficult to ‘define’ at least basically. In a perfectly efficient market prices should reflect all knowable information and prices should trade at their fair value. However you are correct that it’s difficult to measure/prove outright as it faces the joint hypothesis problem. That does not mean it is irrelevant to the investor. It may be impossible to ‘prove’ but we can still empirically test predictions of the model , and after testing them the general consensus in academia is that markets are at least efficient enough that investors should behave ‘as if’ they are efficient. Note that this does not mean that markets are efficient , not even Eugene Fama claims they are perfectly efficient - but what really matters is how investors should act. You are of course free to outright reject the hypothesis , a collection of academics do. But they, for the most part, still recommend people invest as if they’re efficient. I think most of the disagreement stems from whether to classify certain variables as ‘risk’ or ‘anomalies’. If the anomalies are expected to continue I see no reason why the labels matter all that much anyways. Thjs evidence includes the random walk of stock prices , the speed at which prices react to news, and how difficult it has historically been to beat the market long term on a risk adjusted basis (you can of course beat it by being exposed to more risk). Buffet for example has beaten the market long term by investing with leverage and having extra exposure to the value risk premium. Without a decent understanding of the efficient market hypothesis, a lot of Ben’s positions may seem wrong to you especially as they are at odds with a lot of views you will find in trading courses , investment books and even advice from advisors. I would say that those sources positions are unsupported by the empirical evidence and are likely biased in their position. You may in fact reject it yourself (and it would likely be to your own detriment in my opinion) but at least you will understand where Ben is coming from and we can discuss the literature and the evidence to identify exactly why we’re in disagreement. Btw - loved you in Scrubs 😜
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  44. True, the dominos pizza example is anecdotal but that was simply an example for illustrative purposes , this is a YouTube video not a academic paper. Importantly he did also mention studies that backed up empirically what he was suggesting with the dominoes pizza example. I see no problem with sprinkling in real life examples to keep the video light and to help support the data and research that is discussed.
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  45. You’re not wrong but you’re mentioning things that the market knows and this should be reflected in prices. A good company is not the same thing as a good investment and a bad company is not the same thing as a bad investment. At any rate Ben never advocates for investing in individual companies or targeting specific sectors - he was merely using historical fact to highlight a point here. As always you are probably better off in broadly diversified index funds and if you have an appetite for more risk perhaps you can consider overweighting small cap value stocks within thjs well diversified portfolio as well.
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  46. Dividends are not like salaries though. This is a common mistake, common enough to be given a name. It is called the free dividend fallacy.
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  47.  @lorenzo121191  I’m not sure the indexes being market weighted was really relevant to the arguments for and against the possibility of an index fund bubble. It was more the passive nature of the funds , which would indiscriminately purchase stocks if they were in the index - the same type of thing happens with five factor investing just in a slightly different way. Small cap value funds , although perhaps slightly more active, still purchase stocks based on a simple set of rules and will hold them simply because they meet a certain set of criteria. Also people investing in small cap value funds 1) likely still hold a market weighted fund 2) likely don’t know much about the individual stocks within the small cap value funds they’re investing in. I could be wrong though. 🤷‍♂️ I doubt the the arguments in favour of their not being a index bubble have changed though. It is still relevant how much trading is being done by the funds and the grossman Stiglitz paradox still holds here.
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  48. How so?
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  49. This doesn’t inform us that dividends are relevant. It informs us that investing is relevant.
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  50.  @junkequation  replicating his results is different from explaining what drove his returns. But yes you could gain similar levels of exposure to the relevant risk factors fairly simply using etfs and (provided you could get similar leverage as buffet ) you could get similar ‘expected returns’ for even less risk than buffet. This is different from actual returns which include unexpected returns - but as they’re unexpected I think it makes sense for investors to simply focus on expected returns. This wasn’t possible in the past , nor do we have a Time Machine so the exercise of trying to mirror buffets performance historically is purely theoretical but still relevant for investors making decisions today.
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