What Many Buy-And-Hold Investors Get Wrong: Professor Hendrik Bessembinder Explains

Рет қаралды 13,715

Күн бұрын

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Today's guest is Hendrik Bessembinder, a professor at Arizona State University.
In today’s episode, Meb and Hank discuss Hank's research on long-term stock returns and wealth generation. They explore the concept of power laws in the stock market, where a small percentage of stocks generate significant returns, while the majority underperform. They also discuss the implications of Hank's findings for investors, including the importance of diversification and the challenges of holding onto big winners.
To see links or read the transcript of the episode, visit us at mebfaber.com/2024/05/03/hendr...
(1:12) - Welcome to our guest, Hendrik Bessembinder
(1:33) - Do Stocks Outperform Treasury Bills?
(6:22) - Power laws drive stock market returns
(13:58) - The importance of holding on to winners in your portfolio
(15:28) - Shared traits among the best stocks
(23:16) - Takeaways from his global studies
(28:27) - Mutual Fund Performance and Long Horizons
(31:40) - Other topics Hank is interested in researching
(37:58) - Hendrik’s most memorable investment
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Пікірлер: 40

@HaZa-bz1xy 26 күн бұрын

This was a wondefully engaging, educational and entertaining interview. Please bring Prof Bessembinder back when you can. Thank you.

@BraunRob 2 ай бұрын

When you work on something that only has the capacity to make you 5 dollars, it does not matter how much harder you work - the most you will make is 5 dollars.

@bombasticlove76 2 ай бұрын

People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.

@mohamedali-fj8xz 2 ай бұрын

Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.

@RaghuvirMohanta 2 ай бұрын

Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian.

@Faijan-zx5ov 2 ай бұрын

Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit

@ysareyes 2 ай бұрын

I'm surprised that you just mentioned and recommend Mr Brian Nelson. I met him at a conference in 2018 and we have been working together ever since.

@theowenssailingdiary5239 23 сағат бұрын

Quality interview style.

@SkipDulcet 2 ай бұрын

excellent! this is one of the few non-music videos i'm saving to favorites

@Sokrabiades 2 ай бұрын

Excellent interview!

@abbefaria5518 2 ай бұрын

Treasure trove - thank you, Meb!

@philipgottschalk8713 7 күн бұрын

@Prof Bessembinder, you mentioned you had updated the list recently - where can we find it? It would be great to see if there has been an acceleration in how long it takes a superstar to achieve this status.

@fredatlas4396 Ай бұрын

Here in the UK we have the option to choose Accumulation or Income share classes in funds or some etfs so dividends are automatically reinvested within the fund for Acc funds. Also a lot of platforms offer automated reinvestment of dividends for shares or income etfs etc

@TheChismillionaire 2 ай бұрын

Where can we get Cambria swag Meb?

@Jpsantos94 15 күн бұрын

Hello! I wanted to verify based on all this research. Does this mean I should be buying 100% US stocks via VTI? Or going global with 100% VT? What is the better option for a long term buy and hold 30 year old US investor? Thank you!

@Martin-qb2mw 2 ай бұрын

I think his finding is important. But, I think it has less practical impact than one might originally think. For example, if you get rid of small cap growth with weak profitability from the sample you will find a lot less donuts. This is a very easy thing to do and it makes it substantially easier to build reasonable portfolios.

@the_investor9836 2 ай бұрын

Most people definitely don’t realize that the majority of stocks lose money or gain less than a bank account would. It is very important to know what you are doing before making a large investment just like you would want to learn to operate a helicopter before flying one. It also makes it important to diversify, specially as a beginner yet most beginners have very concentrated portfolios.

@grantmaxted1160 2 ай бұрын

You’ve just made the case for indexing. It doesn’t matter that you own all the losers. But it does matter if don’t own the 4% of super performers that deliver all the returns over t-bills. Indexing is the only strategy that guarantees you own all the super performers. That, and low cost, is the reason indexing outperforms the vast majority of stock pickers.

@chioma3100 2 ай бұрын

@@grantmaxted1160 I'm learning that. Haven't beat my S&P 500 index; my great picks in the wrong ratios NVDA, ABBV and my huge losses leave me at a wash. And I'm a hodler.

@the_investor9836 2 ай бұрын

@@grantmaxted1160in a way yes, but also highlights the value of knowing which stocks are more likely to underperform

@fredatlas4396 2 ай бұрын

@@grantmaxted1160 👍

@jamespier7801 2 ай бұрын

restoring diversification by rebalancing is how you get rid of excess gains. the guest just recommended investing behavior that runs counter to what his paper shows.

@DeLanoLLoya 6 күн бұрын

Similar to how you are taught that a maximal sharpe ratio is good. When in reality the market will reward dynamically. Not just the assets that have had the maximal risk reward.

@mmm-cake 2 ай бұрын

🤙🏼

@jamespier7801 2 ай бұрын

it doesn’t seem groundbreaking to learn that the firms with the most net income produced the greatest returns

@user-su7dn9kn3s 2 ай бұрын

while home runs are a driver of long term returns, large cap, profitable companies purchased at valuations below long term averages generally provide a "good" return. Whether it beats the S&P500 index is another question. You will beat after tax returns on treasuries/bonds. You need 50-100 stocks to achieve the diversification. Ideally you also pay attention to the businesses of these 50-100 companies to identify relatively early the specific risk of that company/industry to be aware and prune that portfolio. Dividends are told to be tax inefficient as a mgmt capital strategy as they are "double taxed". Well, the market will reprice the security for companies pursuing this strategy and the investor can still buy at an efficient price for these dividend yielding stocks. Dividends do mitigate volatility risk. That is the way to buy and hold.