During his recent interview on The Acquirers Podcast with Tobias, Dan Rasmussen of Verdad Capital discussed Value Investors Are Too Meta-Analytical. Here’s an excerpt from the interview:
Tobias: I mean when you said that there was a lot of pessimism in Japan, it did excite me a little bit. It made me to think that I should have a closer look.
Dan: Yeah, as we were talking about, value investing is meta-analytical. Value investors think it’s not about first order thinking, do I like the stock or not. It’s what consensus is embedded in the price and how likely is our events to come out ahead or behind that consensus? Value investors think, “Well, the higher consensus is, the more likely it is to be disappointed.” That’s our meta thinking. As we both talked about, that’s not been the right– You don’t want it to be meta-analytical. You just wanted to be a first order thinker. If you like the product, you like the company, just go buy it. Buy it today in size, if you like the brand, or if you come up with an idea like, “I like payments.” If you like payments, just buy payments stocks as soon as possible, that’s been the lesson.
All of the clever things that we’ve thought out of like, “Well, what about the expectations investing? What about fundamental earnings momentum? What about quality filters?” None of that stuff has worked in the US of late. With the exception of since now we’re entering a new phase, where we can start saying, until Q1 of 21, we’re now where this blissful world where value is back. Hopefully, now we’ll get to start talking about why we’re right all the time and how we’ve been right for years. We were just too early.
Tobias: Well, I hope you right. I don’t trust it at all but that’s just–
Dan: Yeah. Well, you’re a value investor, you’re supposed to be somewhat pessimistic.
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