Steve Johnson: The search for extreme dislocations

The Rules of Investing

Livewire Markets

When Walter Schloss founded the funds management firm that bore his name in 1955, markets were a very different place. Schloss harnessed the power of Ben Graham's "net-nets" strategy and managed to outperform the market by more than 5% p.a. over the next 45 years. But could such a simple strategy work in today's deeply researched markets? Steve Johnson, Chief Investment Officer of Forager Funds thinks so. But why isn’t every fund manager pursuing this strategy?

“I still know people who are making exceptional returns doing that… Does it still work? Yes, it absolutely still works if you’ve got $500,000 or $1 million dollars.”

In this week’s episode of The Rules of Investing podcast, we discuss the biases that fund managers and private investors are most susceptible to, how to separate luck from skill, and his approach to properly valuing a business.

Further reading and listening

Timestamps

  • 1:33 - The road from Macquarie to Forager
  • 5:45 - On the millionaire's factory and Walter Schloss
  • 12:30 - The dangers of anchoring and the narrative bias
  • 17:57 - Suck it up and admit you were wrong
  • 22:06 - Luck versus skill
  • 26:16 - Investing mistakes: a couple of real clangers
  • 34:08 - This time is always different
  • 39:12 - The one immutable rule of investing
  • 42:37 - It's not about building complicated DCF models
  • 47:17 - Arriving at the appropriate risk-free rate
  • 50:50 - Superforecasting
  • 52:19 - Find the approach that works best for your skill set
  • 53:20 - Microsoft: robustness and sustainability

More podcasts

If you're enjoying The Rules of Investing and don't want to miss a future episode, subscribe now to get notified when a new episode is released.

Or stay up to date with my content by hitting the 'follow' button below and you'll be notified every time I post a wire.


1 contributor mentioned

The Rules of Investing
Livewire Markets

The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment