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IFB110: Value ETF Primed for the Value Investing Recovery with Tobias Carlisle

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premi investment guidance for beginners, led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the nbers, your path to financial freedom starts now

New Speaker:                   00:36                     Welcome to the Investing for Beginners podcast. I am Andrew Sather; we have another great interview for you today. Dave’s taking the day off again. Today we have Tobias Carlisle. He has done a ton of stuff in the online space, the investing space and made some great contributions to the value investing world as well. So with that, Tobias, I love to dig into all the stuff you’ve got going on, but thanks for joining us today.

Tobias:                                  01:05                     Hey, thanks for the very kind introduction, Andrew. Appreciate it.

Andrew:                              01:09                     Yeah, so I guess first things first, I’m just going to like dive right in and then maybe we can go over your background a little bit later. , just the top of the thing that comes to my mind cause I was listening to your book acquires multiple, which is a fantastic book by the way. For anybody, basically. We’ve mentioned your book several times on our show, but I think to cliff notes summary. It’s like I’m taking Joel Greenblatt’s ideas and adding an extra component to it and having a ton of backtesting research and all whole lot more than I’m not giving it full justice. But as I was listening to it, this huge thing that comes up as a theme over and over again is this idea of mean reversion. And I think it’s a fantastic way to kind of start a discussion about some of the things when you talk about value investing then that’s something that I don’t think is a term that gets presented to beginners a lot. So can you talk about what mean or diversion is and kind of how that applies to the stock market?

Tobias:                                  02:16                     Yeah, sure. I’m happy to do that. So there’s, there’s, there are lots of different main reversions. We’re not necessarily talking about mathematics law of large numbers. We’re talking here in a very specific sense about the stock market. And, if you’re a value investor, your expectation is that the, there are companies that are undervalued. There are companies that are overvalued in their companies that are what we might call fairly valued. And the companies that are undervalued and overvalued, we’ll at some stage in the future go back to being fairly valued. And it’s that path from being undervalued or overvalued to fairly valued. That is main reversion. So that’s one example of it. It occurs not only in securities prices, in stock markets, in economics, in GDP, it’s, but it’s also everywhere. But it also occurs in the underlying businesses. So businesses have a cycle, and sometimes they’re doing very well.

Tobias:                                  03:20                     Sometimes they’re doing very badly, but given a long enough period, it might be ten years, might be seven years that they cycle between those two extremes. And all we’re trying to do is find them when they’re at, when we’re buying them long, when we’re trying to buy them undervalued, we want to find them at a, at a, a poorly performing part of the cycle in a business sense. So they’re earning less than they would earn in the ordinary course and they are also trading at a discount to what we think they’re worth or what they, what they might be worth. Even at that, you know, the business cycle may be an idea at the, at the depths of that business cycle. And what we’re hoping is that when we buy them, we’ll see main reversion in the business. So the business will start doing a little bit better, and the business will look like a better business over the next five or 10 years. And then that will also cause a discount in the the the price to where we estimate that intrinsic value to close. So we’re relying on two things. We’re relying on the business doing a little bit better doing the way, doing the way it as well as it has done in the past and where we’re hoping that the valuation becomes a little more normal and that’s how we’re trying to generate returns on the long side.

Andrew:                              04:41                     Can we focus, let’s narrow it down on the business side first. So mean reversion happens with earnings too. And I think that’s interesting. Why, why does that tend to happen over longer periods?

Tobias:                                  04:55                     But there’s the, there are many reasons. Most, the primary reason is competition. So when, when times are very good, take a business that has a commodity input like oil and gas or something like that. When times are good, there’s a lot of capital that goes into the sector, competitors come into it, and there are lots of beneficiaries. So you might have a, a company that’s oil field services might look really good. Companies that build rigs might look good. Companies that drill for oil look good and, that’s that, that those, those, the best case conditions for those businesses. So they look very profitable at that point. But there’s a, that too many competitors enter, it becomes increasingly hard to sustain margins. It becomes increasingly hard to make money and, say the oil price falls away. Then there’ll be a lot of businesses that will go out of business that loses a lot of money, and they’ll look really poor for some time.

Tobias:                                  05:57                     So if you think about the best time to buy one of those cyclical businesses, it won’t be when the business looks really good, and it’s cheap because that’s probably closer to the top of its business cycle. The likely the best time to buy that business is that the other end of the cycle when there’s no capital in going into the industry, if anything, everybody’s leaving, they’re not making very much money and so their earnings and so on will be depressed. And so what our value investor, who’s prepared to invest in cyclical companies and not all value investors are. But if you are prepared to do that, you want to try to find the ones that have got a healthy balance sheet that looks like they can survive through the down period, through the tough period and emerge more profitable on the other side. So that’s, that’s the main driver. It’s typically, it’s in cyclical, it’s the commodity inputs, and then in all businesses, it’s competition.

Andrew:                              06:54                     Nice last sentence, and thank you for that breakdown you mentioned. So you know, you have, that’s a big contributor to why value investing works. , with the caveat that you want to make sure you’re investing in strong businesses, you mentioned a strong balance sheet. Can you be more specific on that? How would you determine when looking at a balance you or, or business as it stands in its competitive field and how it’s positioned in the market? What types of things you look forward to kind of weed out the ones that maybe have a better chance of main reverting because of the industry is, is just not as profitable at the moment.

Tobias:                                  07:40                     Yes, it’s very simple. Cash on the balance sheet is the nerve tonic that gets to the root of all of your problems. If you have the cash, you have a long runway to resolve all the other problems. If you don’t have the cash or even if you do have the cash, the next best thing is free cash flow. So that’s important. Positive free cash flow means that you can continue to survive. And so that’s what we’re looking for at a very simple level. We’re looking for cash on the balance sheet and free cash flow.

Andrew:                              08:12                     Okay, cool. So how, maybe that’s a good segue to what you’ve got going on with, the book he requires multiple, and you have a blog as well. Can you dive in and do a better job than I do that describing that book and kind of how these ideas of mean reversion and some of the other things lead to finding, trying to look for undervalued stocks and buying those. And trying to close that gap between where a company might trade in regards to its intrinsic value and then maybe capturing that difference.

Tobias:                                  08:50                     Well, if you, if you believe in mean reversion, so that in the research in that, in the investment research, the academic research that says there are different types of investors, there are some investors who are extrapolation investors. So what they do is they look at the trend in the earnings and then extrapolate that out as far as they possibly can, maybe discount back that each additional year of returns. And that’s how they arrive at a valuation. The problem with that is that many businesses and most businesses when I say most, I mean 96% of businesses statistically have this main reversion feature or bug in their businesses. So if you’re making that assumption for most businesses, it’s going to turn out to be wrong, and you’re going to overestimate or underestimate their future valuation. So the way to do it is to use mean reversion in the business in the future and to build that into your model.

Tobias:                                  09:46                     And it creates some unusual situations where you might be buying something that looks weaker than, some investors might assess it to be. And on the other hand, he might also be selling something. So we short sell in the ETF. You might be short selling something, selling something short that looks like it’s fairly robust, but we think it’s closer to the top of its business cycle. And that might be evidenced by the fact that it’s losing money and, the balance sheet is weak.

Andrew:                              10:17                     You mentioned the ETF. Can you, I’m familiar with our audiences and can you, explain what that is and how people, what’s the strategy behind the ETF?

Tobias:                                  10:30                     The ETF is a one 30, 30 long short, deep value ETF focused on the mid-cap, area of the stock market. So that’s the largest 25% of companies by number. It equates to about the S&P 1500.

Tobias:                                  10:45                     Below that they become a little bit more illiquid and more difficult to trade in an ETF context, but that’s a minim market capitalization about $2 billion. So what we’re trying to do in that on the long side, we look for companies that have strong balance sheets, that are cheap on an operating income to enterprise value basis. Or what I describe as the acquirers multiple that generating free cash flow and they’re using that free cash flow to buy back stock or to pay down debt. And, I think that when those things are in, in concert, that’s a lot of advantage for a company. So we know statistically that companies that buy back stock to about 2.5% on average per year better than the rest of the companies in the market. And we know that companies that sell stock do about 4% worse than other companies on the market.

Tobias:                                  11:38                     So we build in all of these advantages on the long side, and then we concentrate on the 30 best names, and we roll them every quarter. We also have a short book and the short book is not quite the reverse of a long book, even though the idea is pretty similar, it’s just that sometimes it’s very hard to come up with a valuation for some of the companies that we look at. So it doesn’t necessarily bother us that we can’t value the company. And the reason it’s difficult is there’s no balance sheet value. They’re carrying a lot of debt, they’re losing money on a, on an accounting basis, then free cash flow and negative and they issuing stock or raising debt to stay alive. And that describes quite a few businesses out there right now. And so more now at the top of the market than at the bottom of the market because the market, the bottom of the market, we’ll clear a lot of them away.

Tobias:                                  12:30                     But that’s not enough. You know what I described two on the short side you can go and look and you’ll see there are lots of businesses that are like that and they are materially 30% you know 20% every single year because they do have some high growth rate. And say that revenue line, and there’s some assumption that at some stage they’ll grow to a scale where that revenue line will start generating, you know that will turn into a bottom line. That will be a good bottom line down the road. It’s necessary to lose a lot of money at this stage so that you can beat out your competitors. So what we look for in addition to all of that, and this is not a very value investing thing to do, but this is more like a short sewing thing to do. Short selling I think is a little bit of a dark art.

Tobias:                                  13:15                     But we look at, we make sure they’ve got no moment. And I think what that tells us, it’s just we look back 12 months to make sure that they’re not up over those 12 months. I think what that tells us is that the market is getting a little bit tired of the story. Market’s getting a little bit tired of funding the losses in the business and when we see that the moment has gone out of the stock, and in addition to that, they have all of those other things I’ve described, that nasty balance sheet, losing money, issuing stocks, so on. Typically I think that that’s a pretty good tipping point to initiate a short and we build it so that the fund is 100% net long. It’s one 30 30 net long, 100%

Andrew:                              13:58                     So you can, can you describe what that is for somebody who doesn’t know those terms?

Tobias:                                  14:02                     Sure. So that means that we borrow an extra 30% long. So we, we take 30 positions long, and we add inception at each rebalanced state, which is quarterly. We put 4.33% as close to that as we can into each long position so that we’ve borrowed 30% so we are 130% long and then we hit yet that 30% additional long with a 30% short in these other names. And we hope and believe that when the market goes down, the shorts are going to go down faster than those extra 30% long. And that will create, a cushion that will mean that we don’t go down as much as our benchmark. So the way, the way they think about it is to think it as two different portfolios. In the ordinary course, it’s two portfolios. There’s one portfolio that is a 100% long, and then there’s another portfolio that’s market neutral, 30 30 markets neutral. And in the ordinary course of 30 30 market neutral makes money by that spread between the overvalued stocks in the undervalued stocks closing and long portfolio makes money because we think that in the usual course value stocks slightly outperformed the market and that’s the value premise that it has existed for a very long period of time. It’s been a very rough period for value, and we can talk about that. Yeah, that’s what we’re trying to,

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Andrew:                              15:39                     Okay, so forgive my ignorance, I’m in a kind of allocation like that. If you have one that was allocated like you just said, and then one that was 100% equities with no shorts or borrowing, would they perform the same? In essence?

Tobias:                                  15:55                     No. So then the one 30 30 does add something to just being a hundred percent long, which is why I like it and which is why I put it into the fund. So what typically happens is it won’t go down as much. Oh, that’s out. That’s our hope. And in addition to that, it generates a little bit more performance in the usual course because overvalued stocks tend to mean revert back down to valuations, which means overvalued stocks tend to go down on the valued stocks tend to mean revert up to the average valuation, which means that gap between the two tends to close. So it adds a little bit more performance in most markets. And then if the market collapses to shorts, typically when they’re not selected because they are high beta, but they do tend to become high Beta stocks in that kind of market. And the and, and what that means is that they fall faster than other stocks in the portfolio. And so hopefully create a little bit more of a cushion on the way down.

Andrew:                              16:50                     Yeah, I, I get, I get that part. I mean you’re, you’re bending against the ones that are showing in the numbers that they’re failing and burning cash and not doing what businesses should. But I’d set the question wrong. So like in a scenario where it just is a bull market for however long that is on the upside, is it the same or is it different for them, between the two?

Tobias:                                  17:14                     Would you still get them, you still get the spread closing in the market neutral portfolio? So it is, it should generate a little bit more return on average.

Andrew:                              17:27                     Okay. Gotcha. All right, thanks. So, how long has the ETF been around, and how is it doing so far? You mentioned it’d been a terrible time for value investors. For quite a while it’s, I’ve been hearing that narrative for a long time, and it’s, I mean, for me, it’s like, depending on which industries want to get hit by the value is then there. They’ve, some of my positions will be doing great and some of them not as great because for whatever reason they’re not catching up with like say the FANG stocks for example. So, what kind of performance have you seen, and how do you see if there has been any part of the value investing? Kind of not working out for a lot of big value masters. How has that contributed to the fall?

Tobias:                                  18:20                     The ETF is brand new, the ETF’s only six weeks old. And at the time that we’re recording this, it’s trading, at or just slightly below its issue price. , value though for the last value has been a difficult trade for the last ten years. And there are several different ways that we can define it. But if we use the fem of French data, that’s the academic data set that’s available free online. Anybody can go and test this and that. They track the number of different ratios. So they track price, the free cash flow price to book price to earnings, and they do it in several different universes. So they look at one that’s weighted by market capitalization, which is the way that the S&P 500 is weighted and many indexes are weighted that way. So that’s, many people are familiar with that method of constructing a portfolio, and they also track it in an equal way universe, which is probably the way it most active investors construct their portfolios or they might even lean into their best positions a little bit more.

Tobias:                                  19:18                     It doesn’t matter how you look at the data or how you cut the data. You, you come to the same inescapable conclusion. It doesn’t matter which ratio you use, either book, cash flow, or earnings. They have all, massively outperformed over the full data set. So the full data sets go back to 1951 for cash flow and earnings, and to 1920, I think 28 for book value in each case, the most. So the cut into Desalle. So DSRs 10% of the market, the cheapest 10% typically outperforms the most expensive 10% by quite a margin on average each year. But there are periods in the market where that’s not true. So in the dotcom run-up, , growth stocks, which is the most overvalued portfolio that did outperform value stocks for for two or three years by quite a wide margin before that all reversed in the early two thousands and that was at about the time that they were magazine covers saying Warren Buffet’s lost his touch.

Tobias:                                  20:21                     And so you can go back through the data, and you can see every bull market, every sort of famous bull market or infamous bull market has had this period where growth stocks that perform value stocks. And that’s no different to this one that we’re currently in. It’s just that this one is longer and deeper than we’ve seen before, which is surprising to many people because they think that the.com boom was the, was the worst time for the valley. But it looks like this time might be even worse. So price to free cash flow, price to cash flow, which is a metric that many value investors like to use has had its worst performance in the data ever. It’s underperformed by the longest period. It’s about five years now, and it’s about 67%, so the value portfolio is about 67% behind the growth portfolio, which is unusual because the app performance has been about 9% on average per year to value.

Tobias:                                  21:19                     So we’re coming to where we’re in the midst of this unusually long drawn out deep period of underperformance for value and outperformance for growth when it reverses or if it ever reverses, nobody knows because I’m a guy who believes in mean reversion as we’ve discussed. I think it’s likely that it reverses at some stage. And the thing to watch out for is that the reversal is very rapid. So in the early two thousand, we had a value underperformed the late 1990s and an underperform for two or three years, but it took seven months for that gap to be closed and then value went on to outperform for about ten years after that. And I suspect the same thing happens this time. Once it reverses, the gap will close very quickly. It could be less than a year before it catches up. And then I think it’ll be a long period of performance, could be another five or 10 years beyond that.

Andrew:                              22:13                     So does that knowledge and if not that knowledge, maybe other knowledge and other studies you’ve done, which is what I like about your writing by the way, as you back up a lot of what you say with all this data and all these different studies, all these different backtests. So those, that, that fact that the mean reversion can happen very quickly, does that play a factor in the way that you’ve structured the ETF to rebalance, I think you said quarterly.

Andrew:                              22:46                     Or are there other factors, you know, are other factors and how can invest like the average investor take advantage of the fact that a mean reversion can happen so quickly? Or how can even the average investor do like make a mistake that will lead them to not participate in that?

Tobias:                                  23:06                     There’s nothing about them, the rebalancing or the nature of the fund that is designed to capture that rapid rebalancing. We can go into why it rebalances quarterly and at in a moment. But the only thing that influenced the only influence on the fund that is knowing that it’s underperformance for so long and they get real close so quickly is just that I wanted to launch it now cause I, I don’t know when it’s going to happen. But when you start seeing those extremes, I think that they, they indicate some instability and it’s that we’re probably getting closer to the end of the period of underperformance in that performance, better performance values coming. And possibly it’s coming soon. And I would hate to have missed out on it because if you miss out on it, there’s a lot of the performance gone.

Tobias:                                  23:55                     So, the reason that the fund rebalances every quarter is there’s a lot of timing luck in investing. So if you start your portfolio at a date that includes the March 2009 low, which means you’ve rebalanced close to that much, 2009 low, then you’ll, you outperformed by quite a lot. And if you rebalance your portfolio at the start of the year, you capture this thing known as the January effect. Because people sell theirs loses at the end of the year for tax loss reasons. They can capture the tax loss at the end of the year. Then they rebuy at the start of the year. And so you see value stocks tend to have tended to dip into the end of the year or undervalued stocks. They can dip into the end of the year, then bounce at the start of the year. So ideally you want to be buying at the end of the year to capture them when they dip and holding them through that bounce in January. So I don’t know when the next bottom will be.

Tobias:                                  24:52                     It could be anytime in the year, but you want to be rebalancing as close as possible to the bottom of the market to make sure that your portfolio is filled with the most undervalued stocks. So if you’re an investor and you’re running your portfolio, those are just some things to bear in mind. You want to be doing your rebalancing at the end of the year to cap to the January effect. And then you want to make sure you regularly rebalance through the year, or at least check in with your portfolio to see if there’s anything that you can, you know, that no longer meets your value criteria that you can sell and replace with other things that are better ideas. So that if you, so that if that big event does happen, you rebalancing at least close to the bottom, you’re unlikely to get it exactly on, but you’ll be close enough that you capture enough of the effect.

Andrew:                              25:39                     That makes a lot of sense. So something that I want to ask since I have you here, and I feel like you would know the answer to this a lot better than I would do. Do you know if there are any backtests that look at periods like holding periods longer than one year? Because I’ve noticed when I read about different studies where they talk about, let’s say this value factor or that value factor outperforms, for however many years it seems that they’re always rebalancing in those studies. And I don’t know if that’s because it would be really hard to run the backtest by not doing that. So are you aware of that and does that play a factor in why you guys rebalance?

Tobias:                                  26:26                     Yeah, there, there are quite a few studies that show that and we looked at, we did some of that testing in quantitative value, the book that came out in 2012. So, , that the, the, the answer is that, and this is a well-known phenomenon in value, and you could contrast this with moment, and I’ll talk to talk about a moment at the moment, but in value, a stock that’s undervalued at the time that the portfolio is formed tends to outperform for about five years. But the bulk of the app performance happens in the first year and then a smaller amount in the second year, a smaller amount again in the third year and so on out to the fifth year. So it’s like the rubber band is stretched the most at the start of the fifth year at the start of the first year.

Tobias:                                  27:13                     And it’s that gap closes most rapidly and then slows into the, into the next few years. So if you’re rebalancing after about a year, you capturing the bulk of that performance at the moment. It’s a different scenario. So moment that there are lots of different ways of looking at it. You know, there’s. They say that this is not something that I, I practice, but it’s just an interesting idea that I’ve, I’ve seen basically moment works that the signal plus the period that it works or happens inside a year. So if you use a three months signal, it works for about nine months. If you use a nine months signal that works for about three months, there’s a lot of decay in the signal. So I, I don’t use moment. I, I, other than in my short book, I make sure there’s no moment in there, but I don’t use it as a, as a strategy to outperform.

Tobias:                                  28:02                     But I’m just aware of the way that it works because it’s, I think it’s important to understand how your strategy works and when your strategy is likely to underperform when your strategy is likely to outperform. So value tends to underperform at the tail end of a bull market. And My, my guess why it does is because value investors don’t tend to chase value. And this is a pretty disciplined that won’t pay up for things though they’ll let things get away from them rather than participate. What that means is that undervalued stocks lose their bid a little bit and then they tend to sell off first too. So value investors, who get the message a little bit before the market and that’s often a feature of a, of a big crash that value stocks are down well before the market gets the message. But on the other hand, value, stocks tend to recover first.

Tobias:                                  28:48                     So they will be up quite materially before the market recovers. And, the best time for a value investor is right out of the bottom of a crash because that’s where all the bulk of the return happens.

Andrew:                              29:02                     Okay. Yeah, that makes a lot of sense. , so sorry, to go back to it, the, the study, like the study you’re referring to, they would hold it for many years and not just one, and then they found that it was within the five years. And then after that, it was just kind of, there are no correlations, or there is just basically it takes about, it still outperforms the market.

Tobias:                                  29:27                     It still generates Alpha and undervalued stock should you know, or an undervalued portfolio still outperforms the market for five years after the formation of the portfolio. But the bulk of the up performances in the first year.

Andrew:                              29:41                     Right. Okay. Does the, how, how can investors add that ETF to their portfolio? Does the ETF pay a dividend? And anything else about the ETF that we didn’t cover?

Tobias:                                  29:54                     The way that I think about the ETF is it’s very concentrated exposure to value. So you can go and find other ETFs that’ll hold a lot more stocks. And the reason that they do that is you can put a lot more money in them. So I have specifically designed this thing cause I want it to have the best chance of outperforming. So it’s very concentrated. And what that means for an investor if you don’t have to put a very large part of your portfolio into it to capture that value performance. You can put a small portion of your portfolio into it, and you can put the rest of it into vanguard total market or some other low-cost ETF and you can, you can recreate what many value ETFs are trying to do.

Tobias:                                  30:33                     But you do that for yourself. So all I’m trying to do is give the very concentrated a portion of the value. So you capture that part. You have to remind me of the second part of the question. What’s the ticker of the tick is zig cig as in zig when the market ZAGs, it’s called the Acquirers fund.

Andrew:                              30:54                     Nice. And does it pay a dividend?

Tobias:                                  30:57                     Oh yes, it does. So that the dividends will be paid out, the exact detail of that, I, I can’t recall off the top of my head, but it’s at least once a year. And I think it’s towards the end of the year.

Andrew:                              31:08                     Good answer because I’m big on dividends as everybody who’s listening knows. , so what else? You know you’ve, you’re, you’ve got so much that you publish to contribute to this space. So, again the ticker is gig and weather. Where else are you online and you have a podcast as well, right?

Tobias:                                  31:28                     So the best way to learn is about me is that they’ll have a website called Acquirers Multiple.com, and we have our blog and our podcasts, and it has a free screener that you can use, just shows you the 30 stocks, , that best meet that we think are the most undervalued, that best meet our criteria for undervaluation. On the podcast, we interviewed value investors, and we talk to them about their strategy, the mechanics of this strategy, how they construct portfolios, how they identify stocks, and so on. And I’ve written a series of books. The Acquirers Multiple came in 2017. That’s very short, easy to read the explanation of what we do. But if you want the more academic, more difficult to read books, then Quantitative Value came out in 2012, and I partnered with a Ph.D. at booth Wes Grey. We went through, and we looked at every single, academic, and industry research that we could find on fundamental investments.

Tobias:                                  32:30                     So we looked at how you identify companies that are frauds, how you identify earnings manipulation, how you identify distress, how you find good companies or good businesses earning high margins, generating high returns and invested capital and how you find undervaluation. We construct it a model out of that. And that’s detailed in that book. I’ve found this unusual phenomenon in there that there’s this funny behavior, very undervalued stocks that sometimes the worst, the fundamentals, the better the stock price performance. I wanted to explain; I wanted to understand why for myself, and then I wanted to explain why. And so that was, that process was described in a book called Deep Value. And the short answer is activists and mean reversion and private equity firms. And then because I think that stock selection is about half the battle and portfolio construction is about the second half of the battle.

Tobias:                                  33:22                     I wrote a book in 2016 called Concentrated Investing that describes how to form a portfolio, how many, how diversified, how concentrated, how often to rebalance, how other value investors have done it. , how academics have approached the problem, how quantitative investors have approached that problem. And I think that that’s just an interesting way of, you know, does Kelly, does the Kelly criterion work for value investors? Does equal weighting work? What does a market capitalization wedding do and so on? And that’s one of my favorite books, but it’s the book that is reviewed the worst on Amazon.

Andrew:                              34:00                     Is it because you’re, you’re going against the law, you’re going against the grain on a lot the way a lot of people kind of hold their portfolios.

Tobias:                                  34:08                     I think it’s, you know, we interviewed guys who had 25 years. The criteria for being for empiric in the book was that you had to have a 25-year track record of concentrated value investment outperformance. And so that’s a very small crowd of people. That’s Buffet. That’s Munger. That’s Simpson. , and then there’s a Christian, he’s the Nordic buffet. He’s an oil and gas guy. His name is [inaudible] brave warrior. It is used to be chieftain. There are a few other guys in there, and it’s just a, I don’t, I don’t know. I don’t know why it didn’t strike a chord, but it, it hasn’t been particularly popular.

Andrew:                              34:52                     People don’t like to hear about success.

Tobias:                                  34:53                     Maybe. Yeah. I think I, I’m not sure. Maybe it’s just; maybe it’s just poorly written.

Andrew:                              34:59,                 I doubt it.

Andrew:                              35:01                     So, well, thanks for joining us, Tobias. It was a good conversation, and I’m always happy to talk to other fellow value investors, fighting the fire if you will.  Wish you the best of luck with the ETF, and hopefully, people will learn more about you and, and dive into some of the numbers and figure out why a lot of the things that we like to teach tends to work. So thank you.

Tobias:                                  35:26                     Hey, thanks so much for having me on Andrew. I enjoyed it. Great questions.

Andrew:                              35:29                     Great. Thanks.

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