During their latest episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Carlisle discussed Why You Should Be Short-Term Bearish And Long-Term Bullish. Here’s an excerpt from the episode:
Tobias: I like it too much. I don’t want to blow up. I just want to keep on going. I want to survive. That’s my primary setting, which is why I tend to be short-term bearish, long-term bullish. I think that’s the best way to do it. I’m nervous in the short run, but long-term, very, very optimistic. I think got good– [crosstalk]
Bill: Dude, you see where assets are trading right now? It’s hard to be like Uber bowled up.
Tobias: I just mean long-term. Long-term– [crosstalk]
Bill: No, I understand. I get it.
Tobias: Long-term is not a call on the level of the market. Long-term is a call on the underlying civilization’s ability to generate technology and quality of life for people into the future. I think it’s very good. The pricing of it in the short-term is always a little concerning for me. I’d rather get a bit of a discount for the birds that I don’t have in the hand I want a bit of a discount.
Bill: Yeah. I might start to flex towards long-term mediocrity as a base case. I don’t know. I don’t disagree. I’m not just talking about equity markets. I’m talking about assets generally. Although my dad watches cars, and apparently, the middle of that market that was strong has really started to fall off and the high-end stuff is still hanging in there, but that’s about what you’d expect I think towards the beginning of the end of one of those cycles.
Tobias: The hardest thing to tease out is that COVID has just ruined all of the chart– It’s not just the price charts. It’s the underlying fundamentals and all of these things too. So, you can’t look at anything like– You got to get what, pre 2019 now for normalization– [crosstalk]
Bill: Four-year stacks, baby. It’s awesome. The four-year stack.
Tobias: What’s that?
Bill: When you’re referring back to 2019. There was a two-year stack and then the three-year stack, and then it’s like, “Well, we’ll go back to 2019. It’s a four-year stack.”
Tobias: Ah, yeah.
Bill: I can’t wait till we have a 10-year stack. It’s going to be amazing.
Bill: You’re not wrong.
Tobias: Well, 2008 was such anomaly that you can’t use it.
Jake: [crosstalk] for that.
Tobias: Yeah. There’s always going to be anomaly. But I do think that that COVID is a real anomaly in that data. Like, the lumber prices, which we followed for a while– [crosstalk]
Bill: Still quite a bit higher. I would not call Mike, wrong.
Tobias: Oh, I’m not– [crosstalk]
Bill: No, I’m not saying that you are. I’m just saying, you think about what– So, what lumber goes into as an end market is basically directly what the Fed has been attacking as a way to slow down everything. And right now, if you look at the September lumber futures, they’re north of 500 per thousand board feet. 500 per thousand board feet four years ago was like a high price. This is like the end market is basically stopped and it’s there. So, we shall all find out.
Tobias: Jake might have said it a few times. Maybe even Meb Faber said it as well. If someone 12 months ago or 2 years ago gave you the current interest rates and then asked you to guess where the market is, there’s just no way you’d guess it is where it is. You’d say rate stuff market down.
Bill: Especially since you and I did this in the beginning of the year, and Jake reminded us, and we were wildly off.
Jake: [laughs] Oh, man. That was embarrassing.
Bill: I think it only has to go down 20% for me to be right. Buckle up.
Tobias: I think that the biggest tell on me is that none of those are internally consistent. Like, there’s just no way that–
Jake: I thought you were hedging your bets by making them nonsensical. [laughs]
Tobias: That’s what I’m going to claim.
Bill: That’s right.
Tobias: I had the hedge, the portfolio hedge.
Bill: Makes perfect sense to me.
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