The Anti-Factor Year

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In this recent episode of the VALUE: After Hours Podcast, Jake Taylor, Bill Brewster, and Tobias Carlisle discuss The Anti-Factor Year. Here’s an excerpt from the episode:

Tobias: Corey’s got a question, [laughs] Yeah. Corey’s got a question. ​Here’s my open question: is value in public markets a “dead play” after it was financialized (ETFs, etc)? Is it better for value investors to look in niche, private corners?

Bill: Yes.

Tobias: That’s the idea. Look niche, it doesn’t have to be private, but yet, the more niche the better.

Bill: My answer is yes.

Jake: It’s contrarian take. Is price to book niche at this point?

Tobias: Possibly, yeah.

Bill: Ah, price to book sucks.

Jake: [laughs] Exactly. That’s why it’s niche now.

Bill: Yeah, but it’s also– [crosstalk]

Tobias: Core says nothing worked this year. Nothing’s worked this year.

Jake: Oh, good. [laughs]

Bill: Anti- factor year.

Tobias: Anti- factor year.

Bill: Interesting.

Tobias: There we go. There’s the title field year and paper, Corey.

Jake: We might call that disorder in the-

Tobias: Disorder, yeah.

Jake: Cynefin world.

Tobias: Interesting,

Jake: Full circle callback.

Tobias: Value Stock Geek ​says, QVAL up 30% for the year, SLYV up 30%, QQQ is only up 23%.

Jake: Yeah, I have occasionally update the RZV which is small cap value versus NASDAQ, and then also as players Shopify versus Bed Bath & Beyond. Sometimes, I will update those on my Twitter and in the last, I don’t know. You can go look, but it’s the value side of things is crushed those two. RZV is crushed QQQ and Bed Bath & Beyond is crush Shopify.

Tobias: Corey says, ​Value and size both sort of fell apart after an early lead. Low vol getting crushed. Junk ripping over quality. I had an interview with real vision February 2020, I thought that low volatility was going to get smashed. So, probably, the only person who remembers that, sir. There you go.

Jake: [laughs] Yeah. No one watched it.

Tobias: That’s a niche take. That’s a niche take, too. Oh, we haven’t had an inning update. Bill, what are you doing?

Jake: Oh, inning update. What are you doing?

Bill: I don’t know. [crosstalk]

Tobias: I guess, I questioned it.

Bill: I said you guys that there’s been a lot– I think we might be past at all. But I think it may have reset. I don’t know that doesn’t mean that we’re going to crash, but the melt up probably happened. I spent a lot a lot of carnage. I’ve been saying that for a little while now.

Jake: It’s not showing up in the index.

Bill: Yeah, but that’s because the big businesses are crushing.

Jake: Hiding a lot of decay underneath them.

Tobias: Yeah, it’s narrow end.

Bill: Yeah.

Tobias: Small Value has gone sideways for like 6+ months now.

Jake: Do you think breadth is useless now then as a thing to keep your eye on?

Bill: I don’t know. If everything implodes, it’s hard to argue Google’s going to have like a ton of E on– The E would suffer but like still, man, you say what do you want to own for five or 10 years? I don’t know. Coming up with a better argument the big tech here is pretty fucking hard for me. I mean, fine, Berkshire you want to go like older economy, I get it. But I don’t know. I think big tech is a good place to hide.

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