What Many Buy-And-Hold Investors Get Wrong: Professor Hendrik Bessembinder Explains

Ойын-сауық

Subscribe to The Meb Faber Show podcast on your favorite platform so you never miss an episode! pod.link/1128955736
Today's guest is Hendrik Bessembinder, a professor at Arizona State University.
In today’s episode, Meb and Hank discuss Hank's research on long-term stock returns and wealth generation. They explore the concept of power laws in the stock market, where a small percentage of stocks generate significant returns, while the majority underperform. They also discuss the implications of Hank's findings for investors, including the importance of diversification and the challenges of holding onto big winners.
To see links or read the transcript of the episode, visit us at mebfaber.com/2024/05/03/hendr...
(1:12) - Welcome to our guest, Hendrik Bessembinder
(1:33) - Do Stocks Outperform Treasury Bills?
(6:22) - Power laws drive stock market returns
(13:58) - The importance of holding on to winners in your portfolio
(15:28) - Shared traits among the best stocks
(23:16) - Takeaways from his global studies
(28:27) - Mutual Fund Performance and Long Horizons
(31:40) - Other topics Hank is interested in researching
(37:58) - Hendrik’s most memorable investment
-----
Sponsor: 10 East is a membership-based investment firm founded by Michael Leffell, former Deputy Executive Managing Member of Davidson Kempner, focused on providing targeted exposure to private markets. Members invest at their discretion in single-investment and niche fund vehicles across private credit, real estate, private equity, and venture capital.
Learn more: www.10east.co/
-----
Follow Meb:
Twitter: / mebfaber
LinkedIn: / mebanefaber
Website: mebfaber.com/
To learn more about our products and follow us, subscribe to our mailing list: theideafarm.us1.list-manage.c...
Listen and subscribe on the platform of your choice:
Apple: podcasts.apple.com/us/podcast...
Spotify: open.spotify.com/show/6gEEIpE...
Follow The Idea Farm:
Subscribe (FREE!): www.theideafarm.com
Twitter: / theideafarm
LinkedIn: / theideafarm-co
TikTok: / mebfabershow
Instagram: / reels

Пікірлер: 31

  • @BraunRob
    @BraunRob28 күн бұрын

    When you work on something that only has the capacity to make you 5 dollars, it does not matter how much harder you work - the most you will make is 5 dollars.

  • @bombasticlove76

    @bombasticlove76

    28 күн бұрын

    People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.

  • @mohamedali-fj8xz

    @mohamedali-fj8xz

    28 күн бұрын

    Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.

  • @RaghuvirMohanta

    @RaghuvirMohanta

    28 күн бұрын

    Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian.

  • @Faijan-zx5ov

    @Faijan-zx5ov

    28 күн бұрын

    Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit

  • @ysareyes

    @ysareyes

    28 күн бұрын

    I'm surprised that you just mentioned and recommend Mr Brian Nelson. I met him at a conference in 2018 and we have been working together ever since.

  • @Sokrabiades
    @Sokrabiades24 күн бұрын

    Excellent interview!

  • @SkipDulcet
    @SkipDulcet27 күн бұрын

    excellent! this is one of the few non-music videos i'm saving to favorites

  • @abbefaria5518
    @abbefaria551823 күн бұрын

    Treasure trove - thank you, Meb!

  • @TheChismillionaire
    @TheChismillionaire29 күн бұрын

    Where can we get Cambria swag Meb?

  • @Martin-qb2mw
    @Martin-qb2mwАй бұрын

    I think his finding is important. But, I think it has less practical impact than one might originally think. For example, if you get rid of small cap growth with weak profitability from the sample you will find a lot less donuts. This is a very easy thing to do and it makes it substantially easier to build reasonable portfolios.

  • @the_investor9836
    @the_investor9836Ай бұрын

    Most people definitely don’t realize that the majority of stocks lose money or gain less than a bank account would. It is very important to know what you are doing before making a large investment just like you would want to learn to operate a helicopter before flying one. It also makes it important to diversify, specially as a beginner yet most beginners have very concentrated portfolios.

  • @grantmaxted1160

    @grantmaxted1160

    28 күн бұрын

    You’ve just made the case for indexing. It doesn’t matter that you own all the losers. But it does matter if don’t own the 4% of super performers that deliver all the returns over t-bills. Indexing is the only strategy that guarantees you own all the super performers. That, and low cost, is the reason indexing outperforms the vast majority of stock pickers.

  • @chioma3100

    @chioma3100

    28 күн бұрын

    @@grantmaxted1160 I'm learning that. Haven't beat my S&P 500 index; my great picks in the wrong ratios NVDA, ABBV and my huge losses leave me at a wash. And I'm a hodler.

  • @the_investor9836

    @the_investor9836

    28 күн бұрын

    @@grantmaxted1160in a way yes, but also highlights the value of knowing which stocks are more likely to underperform

  • @fredatlas4396

    @fredatlas4396

    21 күн бұрын

    ​@@grantmaxted1160 👍

  • @jamespier7801
    @jamespier780113 күн бұрын

    restoring diversification by rebalancing is how you get rid of excess gains. the guest just recommended investing behavior that runs counter to what his paper shows.

  • @mmm-cake
    @mmm-cake26 күн бұрын

    🤙🏼

  • @jamespier7801
    @jamespier780113 күн бұрын

    it doesn’t seem groundbreaking to learn that the firms with the most net income produced the greatest returns

  • @user-su7dn9kn3s
    @user-su7dn9kn3s29 күн бұрын

    while home runs are a driver of long term returns, large cap, profitable companies purchased at valuations below long term averages generally provide a "good" return. Whether it beats the S&P500 index is another question. You will beat after tax returns on treasuries/bonds. You need 50-100 stocks to achieve the diversification. Ideally you also pay attention to the businesses of these 50-100 companies to identify relatively early the specific risk of that company/industry to be aware and prune that portfolio. Dividends are told to be tax inefficient as a mgmt capital strategy as they are "double taxed". Well, the market will reprice the security for companies pursuing this strategy and the investor can still buy at an efficient price for these dividend yielding stocks. Dividends do mitigate volatility risk. That is the way to buy and hold.

Келесі