TIP688: Long-Term Market Cycles w/ Rob Arnott

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 3 January 2025

⏱️ 62 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Clay is joined by Rob Arnott to discuss the Fundamental Index, the equity risk premium, and where Rob believes we’re at in the value cycle. Rob Arnott is the founder and chairman of the board of Research Affiliates. Rob plays an active role in the firm’s research, portfolio management, product innovation, business strategy, and client-facing activities. He is a member of the Executive Committee of the board. Rob is co-portfolio manager on the PIMCO All Asset and All Asset All Authority funds and the PIMCO RAE™ funds. Over his career, Rob has endeavored to bridge the worlds of academic theorists and financial markets, challenging conventional wisdom and searching for solutions that add value for investors. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 02:02 - What the Fundamental Index is and how it has performed over the past two decades 16:32 - How to calculate the equity risk premium 23:44 - Why short-term forecasts are impossible to project accurately, but long-term forecasts are not 27:50 - Where Rob believes we are in the value cycle 44:03 - Why companies that get removed from the index tend to outperform those that get added 49:21 - How companies get added to the S&P 500 And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Check out the Research Affiliates. Follow Rob on LinkedIn. Email Shawn at [email protected] to attend our free events in Omaha or visit this page. Follow Clay on Twitter. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: Bluehost Fintool PrizePicks Vanta Onramp SimpleMining Fundrise TurboTax HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:03.0	On today's episode, I'm joined by Rob R. Not.
0:06.0	Rob is the founder and chairman of the board of research affiliates.
0:09.5	Over his career, Rob has endeavored to bridge the world of academic theorists and financial markets.
0:14.8	During that journey, he's pioneered several unconventional portfolio strategies that are now widely applied in the investment industry,
0:21.6	as over $156 billion are invested in strategies that were developed by his firm.
0:27.6	Most notably, he developed what's known as the Fundamental Index, also known as Rafi,
0:32.6	which waits companies on business fundamentals rather than market capitalization.
0:36.6	Over the past 20 years,
0:38.3	the Fundamental Index strategy has exceeded the return of the S&P 500 by 2% per year. With the
0:44.5	Magnificent 7 now comprising 33% of the S&P 500, I'm always looking for sound investment strategies
0:51.0	that don't rely on the continued outperformance of just a few of
0:54.6	the market's biggest names. During this episode, Rob and I cover the source of the fundamental
0:59.2	indexes outperformance, how to calculate the equity risk premium, why short-term forecasts are
1:04.5	impossible to project accurately, but long-term forecasts are not, where Rob believes we're
1:09.5	at in the value cycle, the next strategy
1:12.1	in why companies that get removed from an index tend to outperform those that get added
1:16.3	and so much more. With that, I bring you today's episode with Rob Are Not.
1:24.2	Since 2014 and through more than 180 million downloads, we've studied the financial markets
1:30.4	and read the books that influence self-made billionaires the most.
1:34.5	We keep you informed and prepared for the unexpected.
1:37.6	Now for your host, Clay Fink, and today I'm happy to welcome
	...

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