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The Contrarian Investor Podcast Posts

Season 3, Episode 9: Risk Versus Returns: Rethinking the Connection

With Chris Belchamber, Author of ‘Invest Like The Best: The Low-Risk Road To High Returns’

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Chris Belchamber joins the podcast to discuss his book Invest Like The Best: The Low-Risk Road to High Returns and challenge the axiom that market-beating returns are not possible without taking on large amounts of risk.

Belchamber has studied the most successful investors’ track records over decades. One thing they all have in common is prioritizing risk aversion and behavioral discipline. There are simple lessons to be learned for ‘novice’ investors.

Content Highlights:
(Spotify users can link to the segment directly by clicking on the timestamp)

  • Most financial advisers have bought in to the idea that more risk will generate higher returns. This “simple line of argumentation is just wrong.” (6:39);
  • ‘Paradox investing’ and Radobank’s model (10:57);
  • The mindset of successful investors is all about risk aversion. The biggest problem facing investors is their own behavior (13:56);
  • ‘The optimization of the brain’ function: what it is and how to go about it without getting exhausted (17:23);
  • Background on the guest (23:05);
  • Belchamber’s meeting with John Meriwether (26:42);
  • Jim Simons and Renaissance Technologies (28:52);
  • Red flags and other things investors should look for (33:07);
  • The current state of the economic and market cycle and why the second half of this year could be a lot different — and worse (38:29).

More Information on the Guest:

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Season 3 ,Episode 8: Archegos Capital and Using Behavioral Finance to Protect Yourself From Yourself

With Gary Mishuris, Silver Ring Value Partners

Gary Mishuris, managing partner and chief investment officer at Boston-based Silver Ring Value Partners, joins the podcast to discuss using behavioral finance to protect against mistakes in one’s own investing process.

The conversation quickly moves to Archegos Capital and whether this is a contained event that can be a buying opportunity — or whether it constitutes systemic risk for the market in general.

Later we discuss financial literacy and how investment managers face a real conflict that prevents them from being true fiduciaries.

Content Highlights
(Spotify users can link to the segment directly by clicking on the timestamp)
  • Behavioral finance: not just to identify investment opportunities (3:42);
  • The first step is admitting you have a problem (5:25);
  • The Devil’s Advocate Club (6:31);
  • Archegos Capital and the blocktrade controversy (14:19);
  • Is the Archegos Capital issue a contained event or something like the Long Term Capital Management crisis? Or perhaps a ‘canary in the coalmine’ type of thing? (21:40);
  • Central banks may not have the market’s back indefinitely and relying on the Fed may be (24:19);
  • Background on the guest (32:51);
  • The conflict preventing fund managers from being true fiduciaries (31:31);
  • The need for fund managers to train their investors (35:20);
  • Financial literacy and educating the broader public about investing (46:54);
  • The name of the fund (Silver Ring) is not a Lord of the Rings reference. The story behind how the fund got its name (50:03)
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Contrarian Calls, Revisited: Biden Victory and the ‘Rotation to Value’

Scott Colbert, chief economist at Commerce Trust Company, on the eve of last November’s presidential election predicted a ‘blue wave’ followed by a rotation into value stocks.

“The Democratic turnout is going to be much larger than it was, and that’s enough right there to carry most of those swing states back to the Democratic side,” Colbert said last Oct. 28. “You’re not going to have enough pro-Trump voters to offset that Democratic wave.”

This would lead to “Democrats rolling this thing” and taking back the Senate as well as the White House. The biggest change for markets would be a rotation from growth to value. “It’s the combination of the election and a vaccine,” Colbert said.

Corporate America would be punished in the terms of higher tax rates, which would affect growth companies more than any other segment of the market. This would make growth stocks less appealing to investors. Value stocks would benefit from this development.

“If you’re looking for a contrarian play, I think it’s the rotation to value,” Colbert said.

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