In their recent episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Carlisle discussed We’re In A Cotton Eye Joe Market. Here’s an excerpt from the episode:
Tobias: JT, probably going to dump you in this too, mate, but we were momentum value guys and we got started off in this in the mid-2000s. I think if you look back at value versus growth, this is my simple way of doing it. When Jake wrote his 2014 paper about value being the worst opportunity spread in 25 years, we should have bought high-quality stuff then.
The other time to do it was in the early 2000s just after everything got sold off. So, I think that value is probably going to bounce out of that. We’ve got a junky terrible market coming up here for the next six to 12 months if we’re lucky. And then value is going to rip out the other side.
Then through that period of time, I think you want to be trying to find some of these better-quality businesses that you can get for not much, lots of upside optionality. Anyway– [crosstalk]
Jake: That’s when I feel everyone knows it’s going to suck for the next six months in which case, if everyone knows– [crosstalk]
Tobias: Not faded.
Jake: Oh, yeah. How is that going to come to– [crosstalk]
Bill: I don’t know that people are bearish enough. I think that saying– [crosstalk]
Jake: They’re voting with money as much in that way. Is that what, like they’re still pretty long equities.
Bill: You could say it’s going to be like a shitty market.
Jake: Guess who still has inflows. Maybe that’s the question.
Tobias: Does Ark’s still have inflows?
Jake: Last I saw, yeah.
Bill: Oh, good for them. They’re buying down.
Jake: Can you imagine the–?
Bill: Dollar cost average, I can’t imagine buying up, I can’t imagine buying down, I can’t imagine buying. It’s all a zero.
Bill: I do think we could go a lot lower, a lot because I just think we get–
Jake: Just got to get face ripping rallies, though, in the middle of that, right?
Tobias: Yeah, we’re going to have a dozen dead cat bounces before this is all said and done.
Bill: You got to have enough to make everybody hate their lives and I don’t think we’re there yet.
Tobias: The bear market’s not over until everybody’s blown up long and short.
Tobias: I don’t know how it works, but you can’t be long or short through a bear market. You can’t make money on either side.
Jake: Where’s all the money go?
Tobias: I don’t know. Where did it come from?
Jake: Where did it come from or where did it go? [laughs]
Tobias: Cotton Eye Joe, I don’t know.
Jake: Yeah, it’s a Cotton Eye Joe market.
Bill: And somehow, you may end up with taxable gains at the end of it all.
Tobias: That’s it.
Bill: Well, how the fuck that happened?
Tobias: You get all these short-term gains and you make no money. [laughs]
Jake: And how dumb would it be looking if we actually taxed non-transaction events like they were talking about?
Tobias: Oh, my God.
Jake: Then right now, you have to be cutting a check. What idiotic, whoever introduced that idea?
Bill: Well, tax receipts were at all-time highs, by the way.
Jake: Yeah. Smart.
Jake: In fairness, we were still mega deaf.
Tobias: JT, do you want to do your bit?
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