YouSaid · the spoken record

Ben Inker

lines on the record: 105
first: 2020-03-30
most recent: 2020-03-30
sittings or episodes: 1
sources: podcast

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“That's another area I think of a lot of interest and debate within my firm as well as, of course, across the industry. When you lower the risk-free rate, in principle, that should impact every investment, not just risk-free investments. Because if you are taking risk, the reason why equities have an equity risk premium is because they are riskier. The size of that equity risk premium should not in principle go up just because the risk-free rate went down. And so the required return to equity should be lower if interest rates are permanently lower. Now, a couple of the key questions are how can you tell what is permanent versus temporary? That is hard. And the other is, I think when it comes within equities, how do we determine how sensitive both the overall equity?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which are the industries where the returns to scale and the ability to scale are going to be profound and which are the industries where it won't?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“are more important. Figuring out which companies are going to accrue the benefits of scale and which are not is hard. And it's not just hard for quantitative investors. I think one of the things we have seen in some of the trials of what's gone on with the vision fund is this basic idea that we can determine who is going to be the winner here by throwing a ton of money at one of the competitors and assuming that that means they will conquer everybody else. And it turns out that the reasons why you will scale do not simply come down to money and if you were the guy with more money, you will win. So it's not that this makes it easy to do investing of one kind and not another, but in principle, if there was one thing I could know about the future of the world That would help me from an investing standpoint”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's two pieces of that. There is one is how does that shift impact the economic reality of companies that is not reflected in the standard accounting data? And a number of people have written about that, but we have done a lot of work to try to incorporate as much of that intellectual property intangible assets into value measures as we can. So there's that aspect of it where it hasn't fundamentally changed anything except it's fundamentally changed what you are trying to measure. And so you better change your measurements. The other piece, which is, I think, more difficult in principle for certainly a quantitative process is in Far as the world has changed in a way that means returns to scale.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Another challenge to value has been this significant shift in the economy towards technology and the disruption of technology across industries. How do you think about integrating the economics of that into any modeling of what would constitute a good value stock or portfolio?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Evolving that precedent is slow. So I think it has been a wonderful time to be a big dominant company in the U.S. I think it will continue to be a wonderful time to be a big dominant company for some period in the future. My guess is the next 20 years are not going to be as kind to these companies as the last 20 years have been. But over the course of 20 years, you can. Make a lot of money”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Something is secular doesn't mean it continues forever and doesn't even mean that it's not going to reverse. It's just not going to be driven by the business cycle. My guess is this is a secular trend that is going to reverse. It is going to reverse as policy reverses that is going to be a slow and unsteady process because even if you did get A lot of this stuff winds up in the courts, and the courts are pretty. Conservative. I don't mean that politically, although maybe there's some of that creeping in now too, but a lot of things are driven by precedent. And unless you are explicitly changing the law,”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Consumers. I'd say the great uncertainty about what's going to happen in the next 20 years. On the academic side, we are increasingly seeing the evidence of what other harms there are to the economy from increased concentration and monopoly power beyond simply consumer prices. So I think antitrust is going to evolve, which will not be to the good for the big dominant companies, but one of the things I think we got wrong in our forecast was we said implicitly that that unwinding is going to occur in the same kind of timeframe as cyclical fluctuations in earnings. And it's not a cyclical thing. It's a secular thing. And one of the things that's important to remember about secular trends is just because”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Most accommodating of major economies to companies that want to aggressively expand. We did that because we had a very straightforward view of the dangers of concentration and monopoly power, kind of the underlying Bork doctrine that what matters is where this impacts consumer prices. Frankly, some of the mergers that have been allowed to occur, you still scratch your head as to exactly how did we decide this was unlikely to impact consumer prices, but it's allowed more or less free reign in areas where the business does not directly charge.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I'd say that's probably the most important question in trying to decide what the US stock market is worth these days. There is no question the gap between the biggest companies and everybody else in their industries, the gap in profitability has widened very significantly. And that widening has been much more pronounced in the US than it has been elsewhere. And that's true, as you say, for the tech giants. It's true across other industries as well. And if you look at it, I'd say the most obvious thing is the US has been”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“To what extent when you have this growth, and we think of the tech giants or we think of Google and advertising and obviously Amazon and commerce, even if growth slows down, whether it's a few years out or 15 or 20 years out, you end up with highly concentrated industries, and certainly Jonathan Tepper's argument, we have that, not just in the tech companies, but really across the board, some of it due to regulatory ease, some of it from natural monopolies. Even if the growth slows, do profit margins in those businesses inevitably settle out at a higher level than other companies just because of the concentration in the industry?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe, despite what I said about Google, the limits to their growth are going to come in 2035, not 2020. But the limits to growth of some of the branded companies in Europe that are trading in a very big premium to the more apparently dopey cyclicals, that's really hard to economically justify those gaps.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“This is what happened historically, and I am going to extrapolate this into the indefinite future versus these are the conditions for the company that I can be confident are going to persist in the future. So today what we see, and it varies across markets. In the U.S., you have definitely paid up for growth. In much of the rest of the world where there aren't that many Googles out there, what you have really paid up for is quality. And today, I think there's been this huge gap that has opened up, again, in the US, the value spread is significantly wider than normal, and that probably means value deserves to win over the next five to ten years. But if you look at Europe, if you look at Japan, if you look at the emerging worlds, the spreads are both wider. And the underlying economic justification for them is a lot more technical.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“On the other hand, what they have, at least today, is an advertising business. Google has been able to grow extraordinarily fast by taking share from every other kind of advertising that has happened. The underlying fundamental truth that advertising grows with GDP has not changed. And as their share of advertising gets bigger and bigger, their ability to outgrow. Gets compromised. They are not going to be able to outgrow forever unless they fundamentally change the way they make money. Google's just this nice, easy example. I don't actually think that Google is necessarily that mispriced today. But being able to pull apart the difference between”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly, if you look at what has been dominating. It has been a wonderful time to be a dominant company. And the gap between the underlying fundamentals for big dominant companies relative to the also RANs has gotten really big. Now, the area where I think there is something to really exploit about that is when you can pull apart the difference between what has happened historically that has accrued to the benefit of these companies. And what will happen going forward that will accrue to the benefit of these companies? Google has a great business. It has a wonderfully scalable business”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“The assumption about what investors really dislike, you don't want to take shortcuts. You don't want to just assume that what investors disliked in 1998 is the same as what they disliked in 2014 is the same of what they dislike in 2020.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“And say, yes, I own these companies because things have been horrible for these companies. And they're like, oh, yeah, that's great. That's what we like. And so I think value has this inbuilt advantage as you are getting closer and closer to some platonic truth about how companies will generate cash flow going forward. And the nice thing about value relative to other things like say momentum is you don't have to care what the market inefficiency was that caused this thing to be mispriced. You can be agnostic to that. And so if that changes over time, if suddenly people don't like companies that start with the letter A, those companies will wind up cheap. And you can outperform that way. The thing you need to be careful about is...”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that really has evolved. I used to believe that buying simple cheap PE cheap price to book was going to outperform because there was this underlying behavioral bias towards people not wanting to own companies that bad things had happened to. And that this was just a shorthand way of, you know, if you're trading on a cheap PE basis, probably that means something bad happened. And nobody likes talking to their clients about, yeah, we own this company and something bad happened and we keep owning it. I think that's probably too simple an analysis. And we've definitely seen this, that at various times, like 2005 after a wonderful period for value, you could very proudly go to your client.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“The anger about it that I can remember in the late nineteen nineties, the emblematic story from then was there was a US institution that we had gone to speak to their investment committee every year for 15 years. And in 1999, we were disinvited from speaking to their investment committee on the grounds that their committee chairman said that Jeremy Grantham was both dangerously persuasive and totally wrong. And there was this idea that, oh my God, even talking to them might infect you with bad ideas. We don't see that level of disgust with the idea of value today that we did back then.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been doing better than value. We weren't doing better than the broad market, but they said, hey, we have you as a value manager. We're very happy with how you've done. And you're the last value manager we have. So we don't really want you guys to have really good performance, but we'd like you to perform well relative to value. And it is that tendency, the idea that value as a style. Feels completely passe. And investors don't really get that concerned about the fact that 90% of the active investment managers they have have a growth bias. That feels similar to the late 1990s. A difference though is while some of our clients have terminated us after some tough performance, there isn't...”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“The similarity to, well, not so much 2000 to 2002 because 2000 to 2002 was a wonderful period for value. The similarity to the 1994 to 1999 period is this has been another dreadful period for value as a strategy. We see that kind of on a individual stock level. It's also been a lousy period for valuation driven investing at kind of an asset allocation level, which is what I tend to focus on. So there is very much that similarity. I'd say there is a noticeable difference, though. I was talking to a client not long ago about twenty nineteen performance, and 2019 was another lousy year for value as a stock selection parameter. But they were very happy with our performance because we had”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“The history of GMO inevitably comes to this two thousand to two thousand two period. Where business was great, value underperformed for a while, business was less good, and then you had a bounce. What is similar and different from that period of time than where we sit today?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Here is this fundamental change when we are analyzing these companies, we realize it's not just that we don't care about their book value anymore, but even their stated earnings turn out to be a lousy test of whether this is a good business model. And so being able to sort of feed that back in and saying, oh, well, even if we are going to care about value and even if we are going to try to do this in a quantitative way, maybe we shouldn't be starting from gap earnings.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that there has been a lot of synergy over the years for us as investors in having quantitative and traditional fundamental investors sitting near each other because the great strength of quantitative investing is if you have a theory about how the world should work, you can very efficiently express that across kind of a wide view of assets you can test it across a long run of history. The danger you always face is Noticing how the world may have changed. And The fundamental analysts are more likely to be in a position to be seeing”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Over the years GMO's known mostly for colloquially, we will say quantitative investing and a value bias. There's certainly been both quantitative and qualitative fundamental products. As you've looked at the activities of the people on your team, what do you see as the strengths of quantitative investing and the weaknesses?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Other tests you could do to answer the question of, yeah, this is actually why this works. I don't know how you can get confident in any finding until you can answer the question, this is why I believe this thing should work. This is why my analysis of the I don't know, the economy over the next three months is going to have an impact on the prices of the things that I'm looking at. And this is.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why do I think he is asking me to do this? And it's the why questions, and frankly the how questions that I think have been most valuable to my understanding of investing and are where I feel like at this point since I'm no longer that capable of doing the direct research myself Our research infrastructure has passed me by and I no longer have the requisite skills, but where I feel like I can be helpful to the analysts that are actually doing the direct work it is by continually prodding at, well, why? Why this? Why that? Why do you think that this affect you are seeing is there? And what are the implications in terms of”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“So much of it comes from Stepping back from what you are doing for a moment. To just ask why am I doing this? And I think. A lot of what I have learned over the years, not surprisingly, having spent 28 years working with Jeremy Grantham, an awful lot of what I have learned has come from Jeremy Grantham, but some of it has been the explicit teaching, but a lot of it has been Jeremy is asking me to look at this rather than just looking at this and doing this analysis and giving it back to him.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“a great broad context for thinking about investing. Where along the way did you find your own footing in the activities you were doing within GMO that drove your belief in why you're going to get paid for what you're doing?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the most valuable lesson that I feel like I have learned over the years is that To be a good investor, you don't need to have a particular. Style to your investing. But you do need to have a strong view of what it is you are doing such that you should be getting paid for it what is necessary given that underlying belief to be doing, to be paying attention and What it is that given that underlying kind of philosophical viewpoint You shouldn't be agonizing over, and I think the understanding of which pieces of information are utterly essential for the way you are going to be trying to invest and which ones you would be well advised not to spend your time worrying about. It really helps you understand how you should be spending your days.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“All right, so that was now, what, 27 years ago. So why don't we just circle around to Did you come to learn about your own investing philosophy and the ethos of GMO, even starting then, we can talk about how that's evolved?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it took a while. I can remember when we were coming up on my one year anniversary. And this was quite important to me because I had been explicitly hired for a one-year trial period. And it was just about one year. And Jeremy brings me into his office. And he says, okay, well, we're a little bit late. We normally do reviews and pay adjustments for June 30th. And, you know, it's the beginning of August. Here's what your new salary is going to be. And I said to him, so this means I still have a job. And he had no memory that he had in fact hired me for a year. So once we got through that, I was feeling reasonably good that at least I was doing something of some value. Yeah, that first year was a little bit nerve-wracking.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Difficult for Jeremy to figure out how to engage with me to be useful to him. So it took a few months before between the two of us, we managed to figure out what problems he had that I could actually help solve versus the ones that either due to my lack of background or my lack of technical knowledge of how to navigate their systems just Couldn't do anything about.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was disconcerting. They truly had no idea what to do with an undergraduate, and one of the strongest pieces of evidence for that is I had said that I wanted to start on, I don't know, August 3rd or something, and I was going to be a research assistant for Jeremy Grantham. And he said, okay, well, that's fine. What he failed to tell me was that he was on vacation the first two weeks of August. So I showed up. They didn't really have any place to put me. They wound up moving the fax machine and they had me sit where the fax machine was. But I had literally nothing to do for the first two weeks. One of the other partners at the firm just gave me a stack of journal of portfolio management and just said, why don't you read these? So the first two weeks I did more or less exactly nothing. And even then, since I knew so little, it was.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I owe David a tremendous debt, not only for teaching me a tremendous amount, but having gotten me a job in kind of one of those unique situations where you get a job at a firm where there are no human beings at the firm that actually wanted you.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“As much as I understand of what happened in the conversation, we're worried about what happens if we hire him because we're just not sure whether we can really make use of an undergraduate. And he's got job offers now. But if he winds up out of a job after a year, now we've put him in a bad place. And maybe we don't want to make a job offer that actually winds up hurting somebody's career. And David's response was, oh, well, if that's your concern, don't worry about it. Give him a job for a year. If you don't like him after a year, I will get him another job. If I can't get him another job, I will give him a job at the investments office. So that's fine. Take that off of your worry list. So Jeremy having backed himself into a corner as to exactly why he wasn't going to give me a job, found his legs cut out from under him and found himself talked into making me a job offer against his better judgment.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I went up and I interviewed. And as near as I can tell, favorably impressed absolutely no one at the firm. I came back down and from what I can understand since I wasn't in the call, Jeremy Grantham, the founder of the firm, called up David. And he was trying to be careful about this because Yale was a very big client of the firm, saying, you know, we interviewed him seems like a nice kid, but we're really not that interested. So David being the persistent man that he is, said, well, talk to him one more time, because if you don't want to hire him now, maybe you'll hire him after business school. So I went up, I interviewed. Once again, I think I favorably impressed nobody at the firm, came back down, and before they spoke to me, again, Jeremy felt the need to speak to David and let him down gently. So he said to David at least.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wound up taking a seminar from him and asked him to be my thesis advisor for my senior thesis and so had gotten to know him really quite well and then at some point one of the partners at GMO Called up David to ask if he knew of any students at the Yale School of Management that he thought would be a good fit for the firm. And David said, no, I don't, but I have this undergraduate that I think you should talk to. And the response was, okay, well, thank you, but we're not really interested in hiring undergraduates. They never had hired anyone straight out of undergraduates, certainly for an investing role. But he talked them into at least interviewing me”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Get a lot of this guy's shoes, aren't they the ugliest shoes you've ever seen? And I thought it was quiet. I did not think he was going to be able to hear, but he did. And he then stopped the lecture and he said, you know, I just heard something from the front of the room that maybe that I'm wearing really ugly shoes. And that is important knowledge to determine whether I do. So can I please get a show of hands who in the class thinks that these are really ugly shoes? First, I was horrified that, oh my God, he overheard me say how ugly his shoes were, but he turned it into something so much fun that from then on we decided to sit in the front row for every class and wound up getting to know him and talking to him after class and it wound up changing my life”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“And David was talking animatedly and seemed to be having a good time, but my attention wandered and I happened to notice his shoes. And his shoes were not very attractive, at least to my fashion-challenged mind. And I whispered to my roommate,”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“That does speak to the random nature of the things that impact you in life. I wasn't actually originally supposed to take David Swenson's class. At the time he taught this big lecture class at Yale on investing that was somewhat affectionately named Stocks for Jocks, and I wasn't going to take it because I had taken the ostensibly more serious course from Bob Schiller, but wound up taking it because I wasn't able to get into this undergraduate's last graduate program that I thought was going to teach me a lot. So I wound up taking it because my roommates were taking it. And then my roommates and I showed up late to the first class. And this was a very popular class because it was deemed to be easy. And the only room was in the front of the lecture hall. So my roommates and I were sitting in the front row.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Teach simply the profound concept of replacement cost. The way to have a simple way of determining is this a fair price or not, it doesn't matter what you paid. It doesn't matter what you will pay tomorrow. It is what is the replacement cost of this thing. And the replacement cost should drive price. And once you have that, it's like, oh, well, this has applications across everything. But he was able to teach me in this one stupid case where I didn't know how to analyze the problem. And it's like this one simple insight. It's like, oh, okay, the world suddenly makes sense.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“As the gas station owner twenty dollars barrel for, and now suddenly the price of oil has gone to sixty dollars a barrel, should you raise your prices instantly? Is that profiteering? I was struggling with, well, is it? Is it not? I don't know. How do I come up with a consistent way of thinking about whether something is a fair price or a non-a fair price? And it was one of those wonderful ways where Tobin was able to”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Certainly the original idea of the cape, which again isn't even quite his idea, it is him just saying, well, we should really try to do this systemically. And the understanding to be able to pull apart what are the cyclical factors impacting earnings versus what is the underlying trend? And how do we try to make sense of that? And I remember one of the things kind of embarrassingly stupid mistakes that one makes. Trying to think about investing, I did this research piece on oil when I was taking this seminar from Jim Tobin. And we were just talking about, well, what should happen to the price of oil at the gas station if there is a sudden supply chalk? So there is no more oil coming from Saudi Arabia. But you've got all this oil that you paid.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Did on analyzing the clairvoyant value of the market. He said, hey, the basic problem with trying to do an analysis of investing is you need to know. How much volatility is there to the underlying fair value of the stock market? And came to both the Obvious yet stunningly non intuitive answer that there is very little volatility to the underlying fair value. It's about 1% a year. And yet the market has a volatility of 17. And that's a mismatch that says there must be some predictability to the market, but it kind of came from asking this very simple question. How can I analyze something? How can I try to understand when there's this profound unknowable piece of it?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can't be investing. You can't be thinking about investing until you have answered the question, what is the price that I'm paying for something? And one of the things I love is when somebody says something that is both incredibly obvious and incredibly clear and yet you hadn't thought of before. I was just like, oh wow, yeah, investing, of course you can't do this. Of course no one can tell you whether something is a good investment without talking about the price that you're paying. And time and time again, one of the wonderful things about Bob Schiller and Bob Schiller's work over the years is how he asks some very simple questions that have in some cases non-intuitive but profound answers. And what are some of those other questions? I love the work he did.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“The professors who I had for investing as an undergraduate, first, Robert Schiller teaching me in intro finance course, which was fascinating. Then I got to take another intro finance course from David Swenson. And then I got to take an investing seminar from Jim Tobin. So I had the advantage of some of the most extraordinary teachers you could ever hope for. And what do you remember if you can walk right through but start with Schiller's class? One of the things that struck me, I remember in one of the first classes, he was talking about investment advice and he was talking about a call that he received from someone who was pitching an investment idea. And nowhere in the conversation did the concept of price ever come up. And he just said, well, you.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ben, great to see you. Good to see you, Ted. Well, why don't we get started with your original interest in investing? Yeah, I think for me, one of the things I've learned looking back is there's something really to be said about following those teachers who seem to be most excited about what they do. And I think for me, my interest in investing came from the teachers I had who made investing seem like a really interesting problem and seemed so enthusiastic about what they were studying. I got a little bit of that in high school from an economics teacher who made economics seem fun. But then getting to college, the classes that were the most exciting were the ones who were being taught by professors who just loved thinking about investing problems. And who were those professors?”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“Placed a few weeks ago, but the world's changed a lot since then, so I reach back out to Ben late last week to get his current thoughts on the market. Please enjoy my first meeting with Ben Inker from GMO.”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's first meeting is Ben Inker, the head of the Asset Allocation Team at GMO, a $60 billion asset manager known for its value bias under founder Jeremy Grantham. Ben joined GMO right out of college nearly 30 years ago and has been there ever since. Our conversation starts with Ben's early investment lessons from renown economics professors at Yale and how that led him to GMO upon graduation. We discuss his framework for thinking about investing and the struggles of value investing over the last decade, including the impact of global dominators, technology, and interest rates. We then turn to the case for value today, the challenges of value going forward, and the characteristics spend sees in allocators, successes, and mistakes. Lastly, our conversation took place”
2020-03-30 · Capital Allocators · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · IDENTIFIED FROM THE TRANSCRIPT · source