2024 Will See A Black Swan Payoff Event | The Acquirer's Multiple®

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Brewster discussed 2024 Will See A Black Swan Payoff Event. Here’s an excerpt from the episode:

Jake: All right. I’ll make one throwaway, fun, bold prediction that’s probably not going to happen. But 2024 will be the year that a black swan type of payoff profile happens and pays off. So tail risk hedge. That’s what I’ll say. We’ll have a year in 2024.

Bill: To the upside, baby, the re-bubble.

Tobias: How long since tail risk has been paid? Did tail risk get paid in 2020? Did any of the tail funds get paid in 2020?

Jake: Yeah. You don’t remember these screwy articles of talking about–

Tobias: [unintelligible [00:32:43] Pharma?

Jake: Yeah. -making 4,000%-

Tobias: 3,500?

Jake: -in a day. [chuckles] I love how they do these calculations.

Tobias: The vol funds have got to get their press release up by lunchtime, because sometimes it fades in the afternoon.

Jake: Right. That’s the tough thing with those VIX call options being European. Unless you just get it right on the right day, you don’t get paid really.

Tobias: I’ve held them in size all the way to zero on three different occasions. I can’t do it anymore

Jake: In the money and then not able to cash the cheque?

Tobias: Well, I think you could. You could sell it. You can liquidate it.

Jake: But it never moved as much as–

Tobias: But I just always thought it was going to go–

Jake: More.

Tobias and Jake: Yeah.

Tobias: They move so much. Yeah, there’s a lot of volatility and volatility turns out.

Jake: Yeah. Bill, you want to throw one parlay back?

Bill: I don’t know what I have. I don’t know what I have.

Tobias: I thought that the Chinese tech stocks was a reasonably good. That’s an outside-

Jake: Let’s put that down, for you.

Tobias: -possibility?

Bill: Well, they’re just so beaten up. It’s like every day they just go lower and lower and lower.

Tobias: Yeah.

Bill: Baba’s cash is even remotely close to real, which– They’re buying shares and they’re returning it in a dividend. I don’t know, maybe that’s all just lies. But at some point, this thing gets too cheap. Says the guy who always said you can’t own it. This is the problem.

Tobias: [crosstalk]

Jake: It is a little bit of that Benjamin Graham thought experiment of imagine this box that theoretically has cash building up inside of it, and how much would you pay for that box? You’re not really sure if you can get the cash out ever necessarily. Maybe Baba now with some return on capital is a little bit of a different story. But for quite a while, there are a lot of these weren’t that story.

Bill: Yeah. But now they’re showing you they’re no longer that story. So, slightly different. Maybe.

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