Stock Market Crash Protection - Safe Haven by Mark Spitznagel

[@Value-Investing]

WARNING: As the channel grows (thank you all for that), there are more and more scammers impersonating me. The only thing I am selling is my Research Platform and Book ​​sven-carlin-research-platform.teachable.com/p/stock-market-research-platform All that I do, the real links to my content are in the description of the video, I don't give out my Whatsapp number and I don't sell any Cryptocurrency related things! BE CAREFUL OUT THERE!

[@MrGioGio122]

Sven, I've sent you a LinkedIn message with a glorious offer - please respond to it

[@thewonderof06790]

After 40 years working, saving and investing I have my own simple insurance policy. It's the realization that if the market crashes 50% I'm still not exactly poor, or I reflect back to the day I was so happy that my balance was that high.

[@Value-Investing]

that is the most powerful strategy and the best attitude that built it!

[@richardb7726]

Thanks Sven, nice summary. I’ve read this book, for me the discussion on the use of geometric mean is the most important part for ordinary value investors. The two best hedges, I know of are: 1) Know as much as possible about your investment and it’s sector. Watch it like a hawk. Insurance doesn’t stop your house from burning down in the first place, buying a flame proof house does that; 2) Time is a great healer. I have made some terrible financial decisions, especially around property, but with time they have been unimportant; connected to this 3) Saving regularly over the long term and planning your finances is the best insurance

[@Value-Investing]

excellent points Richard!

[@julianmaster]

I have read the book. I think for normal investors who don't/can't deal with complicated options strategies, finding a sector and well run business that historically is unbothered by the rest of the market is one of the best paths forward :-)

[@Value-Investing]

absolutely!

[@mmytacist]

Just read this book. Good distraction from watching the markets every day. Even though I did not understand all of this (maybe even none of it, at least as the author intended), there are some very interesting ideas and if you read over those passages several times your synapses are guaranteed to fire

[@Value-Investing]

great to hear!

[@Bogdanbmm]

risk management, hedging ... most undercovered topics out there for Retail Investors ...

[@Value-Investing]

yes, because it is not easy, everybody prefers stocks that just go up!

[@JohnSmith-nk4vn]

Thanks Sven. This is the most valuable KZbin channel.

[@Value-Investing]

thanks!

[@XMan-mi6gs]

Probably the best protection is time. Let it do it’s work. Don’t do stupid things :). Thank you again for another great value video Sven!

[@Value-Investing]

also a way

[@HasianSunsteel]

I like this book a lot! I would note with the mention of put options, there are plenty of multi legged strategies that mitigate the costs of hedging with puts. For instance, On my nvda holdings I used a strategy called a protective collar, where I sold an OTM call at a higher strike while using a portion of the proceeds to buy an OTM put with a lower strike and the same expiry. Additionally, I would note an additional leg can be added with the “seagull strategy”, where since one doesnt need protection from the put all the way down to zero, one can further cheapen the cost of the put (and thus raise the short call strike price accordingly if one wishes to raise the upside cap) by selling a put that is further otm at a strike price where you no longer need the protection, since in many companies it is unlikely you need protection all the way down to zero.

[@Value-Investing]

thanks for sharing

[@shivshankar054]

Brilliant! Thanks for sharing. Where can I learn the multilegged strategies from? Are there books do you recommend for newbies like myself?

[@simonspencer3108]

My current favourite hedge is the stock you told us about beginning with V. That has performed well in the last couple of dips! Thanks Sven!

[@Value-Investing]

Thanks for sharing!

[@TheBuckonator]

I have been interested in options since I read nassim taleb’s anti fragile but it’s been something I stayed away from until I gained more experience. I would love to see a video giving example of an option you have exercised in the past !

[@Value-Investing]

I haven't gone into that yet, it is a long learning process! But I might dig deeper...

[@antoineleduc4035]

This would be most enlightening. Please do :)

[@chirho888]

Thank you for the recommendation! That was exactly the kind of book I was looking for! Looking forward to hearing more about cost-effective hedging!

[@Value-Investing]

Glad it was helpful!

[@potatofrogs5999]

Options are a very complicated topic. I don't know much about it. The only thing I know is that the pricing not only depends on price (intrinsic value), but also on the volatility and duration (extrinsic value). One needs understand the greeks in detail in order to not to overpay. I would recommend reading a book about greeks before buying puts.

[@Value-Investing]

absolutely!

[@Miro_L]

Not sure if average investor will understand this. I for sure don’t understand it. You would have to know so much about it and if you know question is are you going to do it right. For me I will stay on your platform and tray to understand the basics. ( iako kao mazga čitam čitam pa ne skontam pa ponovo pročitam pa google, jedan korak napred dva u nazad, ebiga hahaha) So far what I learned from you is to have patience and buy good business at the good price. Keep it simple and if you don’t understand don’t mess with it. Learning how to protect your capital is different story, hope that I can learn that to before I get to retirement. Your work is much appreciated.

[@Value-Investing]

:-)))

[@Mrpredictableart]

Thanks, Sven. Another awesome book summary. Forget Oprah’s Book Club. We need Sven’s Book Club.

[@Value-Investing]

Great suggestion!

[@respektjaeperfekt]

Sven can you make a video on Netflix which is down almost 50%? Bill Ackman just bought shares for $1 billion, having an analysis from you whether it's good value or not right now would be very interesting!

[@Value-Investing]

will do, thanks for notifying!

[@viktorgunnarsson1509]

Netflix Will be interesting from value investing perspective. How does their fcf/owner earnings actually look? And how does their depreciation scedule play Into a valuation?

[@Jerryfromtheblocm]

​@@viktorgunnarsson1509 tough since it depends on your outlook on their future, but purely talking about numbers, best case scenario its murky (alot of questions arise only time will tell). worst case scenario, its a dumpster fire. either way not exactly a gem.

[@viktorgunnarsson1509]

@@Jerryfromtheblocm I dont own Netflix stock and I am probably outside my circle of copetence in the Company as I Think media generally is hard to understand. However it is not hard to see the "scale economies shared" buisness model although the question still remains if there is any FCF to take out the Company one day. You either win or you end up burning money into infinity and beyond.

[@MAchannel2024]

200k subscribers. It’s about time. Congratulations Sven. You should be at 2M.

[@Value-Investing]

thanks!!!!

[@jarlaxe95]

As a regular, boring retail investor with a day job, I always feel I don't know what I don't know. No harm in some insurance to sleep easier at night.

[@Value-Investing]

:-)

[@mbg9650]

It's certainly a good timing for the topic of protecting the value of a portfolio. Sven I have a vid suggestion: how a increasing VIX is an indicator of volatility (up & down) in the SPY (i.e. stock market).

[@Value-Investing]

thanks for suggesting!

[@prs4539]

i think vix index is calculated from the implicit volatility in the options (from Black-Scholes model) written on the s&p500 stocks, the only unknown variable of the model.

[@thewonderof06790]

@@Value-Investing VIX is not an investment its a slot machine. Cover perceived future losses by buying good companies that sell what is needed.

[@RussAbbott1]

You quoted Spitznagel as saying he doesn't like tail risk options. Taleb tried it and lost money. You also quoted him as saying he takes advantage of a market property that is very inexpensive. That also excludes put options. In one of your answers, you said you use volatility in a way that even pays dividends. What do you do to achieve that? Sounds like a good idea. You could buy VIX call options. But that doesn't pay dividends. You could sell VIX deep in the money put options. That pays dividends, but it doesn't produce multiples in the hundreds. So, what is your approach?

[@Value-Investing]

It is a business that benefits from volatility!

[@Armando-jh8lc]

Thank you for the book reccomendation Sven. Keep them coming 👍📙

[@Value-Investing]

Will do!

[@jonnes__4657]

🗽 The real big money printing started 2001 (oder 1971; the end of Bretton Woods). During this time period (until today) gold was a quite good diversifier/hedge against troubles at the stock markets. Not a must have, but also not too bad... .

[@Value-Investing]

we will see how it will go when the printing ends!

[@pieromalutta8457]

Druze Sven , veramente grazie per il bellissimo video . Riesco a fatica a tradurre e capirti quindi opzioni ,libri tecnici etc etc non sono alla mia portata. Sono contento dei 2 titoli Cina e 2 USA che ho scelto dalle tue analisi e i miei 4 sul mercato italiano. Questa è la mia dimensione e mi' sta' bene. Grazie per il servizio

[@Value-Investing]

:-)

[@micalda1]

Congratulations on 200k subs Sven. Thanks for all the value and knowledge you've provided to me!

[@Value-Investing]

thanks!

[@Bogdanbmm]

Amazon coverage next would be awesome

[@Value-Investing]

will do!

[@Gjackliu]

Thank you. I remembered Warren once said it's too expensive for him. What do you think about hedging? Do you think you can find a way cheap enough for you?

[@Value-Investing]

Maybe I can find for me, but as soon as I would share it would not be doable anymore.

[@Gjackliu]

@@Value-Investing Then I should figure out one for myself. The 2nd book you recommended is on sale today so I will start with that. Thank you for recommending these great books. It would be appreciated if you share your bookshelf with us.😀

[@vittorio1731]

Hi Svean, I have read the book! It was a great experience... I also remembered my high school days when I was studying philosophy! The book gives you a fromework for invetsing in a more conscious way (as well as to live in a more conscious way). I successifully tried to repeat the same graphs for SP500 returns using monthly/annual data provided by Shiller. If you have some safe haven to evaluate we can test it and verify if it increases the average geometric return over the time. (p.s. I have a technical background, good in maths and programming and decent in statistics, but not in economics... but I'm studying!)

[@Value-Investing]

hi, I am just a business owner, none of that fancy stuff is for me really

[@vittorio1731]

@@Value-Investing ok! Anyway, thanks for your work! It's great, bonth on youtube and on the research platform (as a subscriber I can appreciate it) P.s. By the way, we are looking forward for the new position after the last sells...

[@davidborsic2400]

Will read the book.When it comes to 10k nominal distributions of expected SPX returns (11:00) is super simplified model. Distributions are effected by 1.current price of spx (PE ratio ) and 2. expected future interest rate. Insurance is premium being paid for worst possible scenario (default risk if talk about equity investment). I can only go bust when being leveraged. So I use insurance when I am leveraged. To me it does not make sense otherwise.

[@Value-Investing]

thanks for sharing - it is up to the individual to make sense of this!

[@JayKay9112000]

I buy a few SQQQ call options every few months. Premiums are pretty high on puts right now.

[@Value-Investing]

thanks for sharing!

[@Guest44988]

I am reading it for a second time. I found it was a very rigorous scientific approach using Karl Popper's falsification method to determine if Safe Haven Investing increases your wealth over long term. Dropping in gems from Nietzsche added a touch of class. Added with the work from Taleb removes the need to predict and listen to noise from macro forecasting. Great summary Sven I shared it on twitter. I hope this video gets more views and appreciations.

[@Value-Investing]

thanks! This is a video that will not get traction, but I hope it will get to the right people!

[@FxBrawler]

Hedging for beginners is probably the least covered topic in the ''Buy, Buy, Buy'' herd mentality we are seeing now. Most people I talk to don't even know what shorting is. It's scary to think about.

[@Value-Investing]

:-)

[@harikrishnanchandramohan4209]

Sven, are you against the investing philosophy of owning shares like its your family business. If the business that you owned is a private company, like See's candy or BNSF, you can't exit whenever you find another attractive opportunity right.

[@MagicNash89]

The only problem I have with long-term investing - and this is what A LOT of people I meet have problem with, is that its basicly significantly delaying wealth generation, so if someone who is young is basicly investing to be rich when he is significantly older - while the wealth is much more needed when you are younger.

[@bigfudge2031]

if it was easy to become rich then everyone would be rich.

[@mann8098]

Yeah taking a thousand years to get rich is not exciting. Even KZbinr here makes more money selling stuff than stock investments. To get rich you have to sell something and sell it often (goods and services) and if you can scale and leverage other people's time and energy to do so, it can happen quickly. Or you can become the best in your field achieving celebrity status. OR work like hell take that money and make high risk high reward investments. Those that want to get rich fast need to be ambitious, smart, bold and be able to take risks and never give up until they make it. "Dream no small dreams for they have no power to move the hearts of men" Goethe. And if you still don't reach your goal? Well, at least you dared greatly and excitedly endeavored for the fulfillment of your dreams and the noble quest of achievement.

[@mbg9650]

You are at the wrong KZbin channel if your mindset is: "deferred gratification is so old school, I want to get wealthy fast." lol

[@Jerryfromtheblocm]

So what do you expect? to be given free money? or taking extreme risk for reasonable return in a short period of time? the premise is stupid... ur better off asking "why wasnt i born with a billionaire father? should i hop into traffic to respawn?" its dumb.

[@ve2jgs]

Actually the wealth is more needed when you become elderly, need extra care, and are unable to work. So set aside some for this eventuality. But for now you have to really understand the difference between needs and wants. Fancy gadgets, vehicles, luxury travel, oversized houses are big wants but non essentials.

[@phvaessen]

If I understand correctly: Mark Spitznagel is insuring his fund portfolio selling leap PUT's . He is a market maker. Options is a win-lose game , and we as retail investors are betting against the bank, odds are against us. Also time decay distroys the insurance, you need to roll-over before time eats all your insurance. Finally if the market move in the wrong direction you quickly lose your insurance. I have been using Put&calls strategies but could not make it work properly as an insurance policy. So, I bought the book to understand the details and learn more about the subject.

[@Value-Investing]

enjoy the read!

[@QuotidienFinancier]

Awesome work Just like every video Thanks for sharing your knowledge

[@Value-Investing]

thanks!

[@Bogdanbmm]

Besides Long Puts, what other instruments / vehicles can be use to deploy insurance / hedging ?

[@Value-Investing]

this is just a framework, don't know if going deeper is for YT, something you should do yourself :-(

[@danielgallagher363]

Thanks Sven! This is just the video I was asking for!

[@Value-Investing]

happy to hear that!

[@matthewcrupi8169]

Something to think about but I’m still about finding good businesses at good prices. If market crashes 50%, I can pick up new positions I have been watching and add to current positions increasing my long term returns.

[@Value-Investing]

yes, you are finding them all else equal, wait for the fundamentals to start changing

[@Ironmanalby]

I know Mark and after reading the black swan I tried to hedge, it is not easy options costs shorts are complex and gold is useless, it is not AN easy task

[@Value-Investing]

who says getting rich should be easy!

[@ve2jgs]

Interesting and informative. I always learn something new from your presentations. I would very much appreciate if you would bring back your podcast. Thanks again.

[@Value-Investing]

hi, my brother usually does that, he has covid now, so after he will likely do it :-)

[@khanjones9390]

The latter suggestion is to buy a out worth 3% of your portfolio, is that right? I haven't an account where I could afford anything near that, and also wouldn't you need to keep cash in the account to service/financial back the drawdown of the option? Am keen to look at his bear fund

[@Value-Investing]

there is no advice, just a framework, then you have to see how it applies to you

[@alireza2295]

Many thanks for the great video, Sven. I watched twice to better understand the concept; all comes down to invest with margin of safety which we do here, right? Based on your remark at the end as to hedge in the platform, is it right conclusion that the hedge stock in your portfolios can act like an insurance in our portfolios?

[@Value-Investing]

only time will tell

[@tonyont700]

buying puts is very expensive hedging..... you have to perfectly timing a market crash.... i would rather "put" some money into my pocket selling covered calls and selling put a ridicolous discounted strike thnaks Sven

[@Value-Investing]

depends what you buy - but I see now why Spitznagel isn't afraid of competition

[@Bogdanbmm]

Great coverage Sven ! Thank you ! To be sure, one cannot invest with Universa ? Closed-ended fund ? Minimum sum to invest / buy insurance ? Who are the shareholders of Universa ? Would be nice if we could also buy insurance ...

[@Value-Investing]

you need to be a billionaire, so that is goal one!

[@Bogdanbmm]

@@Value-Investing haha ... good one, work in progress ;)) for the next 3-5 generations ;))

[@noredbull1]

How did I miss this video?!

[@ATLJB86]

I hedge with gama condor, and take risk with tight spreads. Short the futures market, and earn yields on crypto buy borrowing against my position at a small rate while staking it at a higher rate for guaranteed yield. All while letting my miners print money daily.

[@Value-Investing]

good for you!

[@TbirdThunderstruck]

From what I have noticed from most retail investors online: -They go too heavy on risky hedges, and portfolio declines a lot during market rallies -They cannot keep emotions in check, give up, or get jealous of those 100% long equities making more than them -They deviate from process, change their minds because they believe a certain narrative short term, start trading, and lose a lot. If you can find a process that works and 100% commit to it, then most likely you will do much better.

[@Value-Investing]

like the CALPERS pension fund did!

[@eweng903]

Insurance is not a free lunch for investors. Clients of Universa Investments only invest a small part of their total portfolio in the insurance, meaning that insured investors never actually saw that 4144% return. If the stock market does not crash hard and frequently investors will inevitably underperform because they have to pay the insurance premium. Consequently, insurance is often justified by including a huge market crash (eg like the global finical crisis) in the math justifying it.

[@zekevfab]

I think it is not about overperforming or underpeforming the market but rather increasing the chance to get to financial goals.

[@eweng903]

@@zekevfab Trouble with using tail risk strategy on your stocks is simply that the extra costs could lead to lower returns, and in that case you might have been better choosing another high-risk financial instrument such as REITs or high-yield debt.

[@zekevfab]

@@eweng903 High yield bonds and REITs might very well become worthless at the same time stock prices fall, not great hedges. Yes when you take insurance you accept to pay a premium and lose a bit of returns, but if it provides insurance your money will be available to withdraw when you need it, it could be worth it for some. For others who privilege raw performance and have no plan to withdraw the money, I agree with you.

[@eweng903]

@@zekevfab Trouble is that tail risks are actually quite rare. There has since the '60s only been one S&P500 crash where the market declined >50%. REITs and high-yield are generally considered to be lower risk than stocks

[@Value-Investing]

for them it is mispriced, that is the advantage they have

[@mranthony1886]

Since I don't have options in my platform I am choosing CHAD as my insurance

[@Value-Investing]

thanks for sharing!

[@gmax0]

Sven, i'd like to hear about practical ways to tail hedge an average retail portfolio? Buying SPY puts would cost ~7-8% annually that would kill your returns. Do you hedge your portfolios?

[@Value-Investing]

this and the book is just a framework, even if I find a way, I can't make it public, it would lose the effectiveness

[@evni6208]

Great vid Sven definitely gonna read it

[@Value-Investing]

Hope you enjoy it!

[@HowDoYouShakeIt]

Thanks Sven! Most valuable content on youtube. Suggestions for the next video. Can you explain the Magic Formula (created by Joel Greenblatt) and also the combination of the strategy called magic formula momentum? It’s an interesting topic with its performance over time. Keep up the good work.

[@Value-Investing]

hi, I don't really like it, so not really for me!

[@Atemi1990]

So, history shows that we have more good years than bad once and if you make such hedge you will lose most years but you will make in few years.... if you are focus on absolute returns thsi is total bs. it's just you may have a little less volatility.

[@Value-Investing]

that is why you need to find the right hedge!

[@whiskey_tango_foxtrot__]

I gotta disagree. Putting 5-10% of investments into "safe harbors" means that 10% lags and your other 90% does pretty good in the good times. And then in an implosion, which happen all the time (see Turkey, Argentina, Cyprus, Greece, Afghanistan, etc. for recent examples) that 10% will save you...

[@Value-Investing]

that is the problem, the 10% doesn't save you, and 50% isn't cost effective over time!

[@xdman20005]

Bingo. This is the reason for why hedge funds are inherintely useless. Well I guess not for the fund collecting the management fee...

[@kimpoulsen6623]

@@Value-Investing Now looks like a good time for gold. Inflation is high, valuations are crazy.. I don't know why Polyus went down by that much, but it surely has to go up soon !

[@jackskal4302]

I am still on the roundabout of Dao!!! that book made me dizzy :D

[@Value-Investing]

hahahahaha, but it is really the core of investing!

[@jackskal4302]

@@Value-Investing will need more time in the investing world to get out of the first exit :) learning from your videos & Researches helped me alot.

[@k4ir0s]

Can you do a video for FB, and perhaps a video about whether it is wise for a investor to manage his own stock picks instead of using ETFs? I know the data shows that people who manage their own stock portfolio underperform the market by a lot, but can it still be a wise move for those of us who are smarter about it (even though every investor likely thinks they're smart)?

[@Value-Investing]

Friday!

[@qahtanalqaysi5116]

Great 👍 job as always and keep it up 👍

[@Value-Investing]

Thanks, will do!

[@bernteinar906]

Thank you Sven

[@Value-Investing]

Thank you too!

[@andremooney]

Waiting for amazon analysis

[@Value-Investing]

will come!

[@joseellenberger9602]

Many thanks ! Great content !

[@Value-Investing]

Glad you liked it!

[@MaurizioParenzan]

Thanks Sven, great value as usual in your video. At the end you mention 'I also have a hedge'. did I get it right? any hedging in the platform I miss?

[@Value-Investing]

there is a hedge, just read the research on the core portfolio positions

[@fonebook]

Universa recommends a 3% allocation to their tail-hedging fund. Minimum investment is $50 million.

[@Value-Investing]

yes, thanks for adding!

[@danielsiemmeister5286]

Hello Sven - first of all, I find your videos very very good. Because of this, your theoretical depth and that I also read "Safe Havens", I want you to ask a simple question: Why don't you calculate the geometric mean instead of the arithmetic mean in your scenario-spreadsheets?

[@Value-Investing]

because those are just linear estimations - just an indication where we are now - not expected to be precise.

[@supaflydann]

Thoughts on an inverse leveraged ETF Sven? (2x or 3x bear etf) A more active insurance strategy as you can't buy and hold those, but during a rout it could be an option. 2020 has been a good year for those ETFs so far.

[@ve2jgs]

These are dangerous. They are possibly profitable in short term, almost always big losers long term. But the market professionals will still outmaneuver the non professional in many many situations.

[@Value-Investing]

those are daily products, not? Read the prospectus!

[@donkalzone6671]

Do you think gold will go up in the next months? And what do you think, which factors drive the goldprice, beside roaring inflation?

[@Value-Investing]

I don't know how to predict gold prices :-(

[@SMASHsmus]

If I pay for insurance, every single year, how would that compare to just dollar cost averaging and staying long, and buying slightly harder on dips? On long bull runs I'll enjoy maximized returns. If the difference isn't significant long term, is it really worth my time and attention?

[@Value-Investing]

Depends on your risk tollerance and risk

[@fredrock7264]

Good job Sven!

[@Value-Investing]

thanks!

[@TheMoatKing]

Hi Sven Do you plan to do must read books for investing, or maybe you already do have done it. But thank you for these videos. kind regards!

[@Value-Investing]

svencarlin.com/best-investing-books/

[@TheMoatKing]

@@Value-Investing Thank you Sven

[@gianlucacalace327]

Some ETFs in the US, like SPD or HEQT, seem to implement this strategy on a rolling basis, with easier implementation for a retail investor. What do you think about these ETFs?

[@Value-Investing]

I don't know about those ETFs, haven't analyzed them

[@MauroP69]

Hi Sven I'm your customer, do you think is enough have edge as exposed in your platform or do you think is better buy put option? Grazie

[@Value-Investing]

depends on what happens in the future - will work more on that!

[@antoineleduc4035]

Thank you again Sven for educating me. Would you disclose whether you personally have a portion of your portfolio in options as protection? I.e., are you implementing this approach?

[@Value-Investing]

I dont'have options but we can say I am long volatility.... plus it pays a dividend :-)

[@RussAbbott1]

@@Value-Investing That's a tease. How are you long volatility?

[@erikklootwijk8044]

Would payday loan companies, pawn shops and leasing companies maybe be an interesting, somewhat unconventional hedge?

[@Value-Investing]

ah, too complex, plus very negative karma for me

[@erikklootwijk8044]

@@Value-Investing The part about the karma is (very) true. Another "inflation goes out of control" suggestion then, a simpler one: Jewellers. People start carrying wealth on their person instead of currency. Signet Jewellers with a current PE of 7.5 and a small dividend yield or Emperor Watch & Jewellery Limited, Chow Tai Fook. Last two are Asian and I see less issue for those ahead, compared to USD. Emperor is very overlooked. Would be nice to see analysis from a seasoned researcher.

[@Rocket_King]

Great video Dr. Sven! ordered the book and looking forward to reading and digging deeper to add to my insurance!! Thank you for sharing!

[@Value-Investing]

great to hear, enjoy!

[@stevetaylor20]

You ever done a video on portfolio sizing.. I find that an interesting subject (sad I know!). Partly because I'm into a relatively small group of stocks for various reasons as I want need an increased chance of higher gains and more quickly (no drama if not) . I always hear,. Never have more than 5% in a position, I then hear place a small group of concentrated bets.

[@Value-Investing]

kzbin.info/www/bejne/eISacpigfJKKqZY

[@stevetaylor20]

@@Value-Investing Thanks man. Also be interested in future what you make if terry Smith at fundsmith fund and his metrics of buying stocks primarily ROCE and high quality companies. Not particularly value but buying at a reasonable price not necessarily a great discount. Have a good one dude

[@MagicNash89]

Sven, how do you choose what to sell when you desperately need extra cash? Assuming its not enough from regular income that is not invested

[@Value-Investing]

I never get to such a situation :-)

[@MagicNash89]

@@Value-Investing Well, aIm a subsvriber and you did sell one of your Russian stocks for an emergency you didnt specify, so thats why Im asking

[@rajeevnair32]

I agree with Sven, as an investor, you should anticipate the problem in advance and have the cushion to absorb 20-30% loss on any given day. Remember the old Buffett saying "Only when the tide goes out do you discover who's been swimming naked", or need to hedge your bets by covering your upside a bit.

[@Jerryfromtheblocm]

Pick your lowest conviction stock. Or the stock closest to your ideal exit scenario. Always have dry powder, if not too bad you have to play the cards that are dealt to you.

[@samfish6938]

Insurance is understanding stocks don't buy puts or calls You can have unlimited losses Dollar cost average

[@Value-Investing]

thanks for sharing

[@harshrajjadhav940]

Hello Sven! Loved the summary. But i have a doubt regarding blackswan insurance. Lets say you have a equity portfolio. You insure it using 30% otm puts. With about 2-3 months to expiry. Lets say assume a big enough crash will occur once every 8 years thats 12*8 payments = 72 payments.(please pardon my calculations I am a med student been away from maths for a long time but i hope you get the gist. So i checked using historical data of Indian index options data, during the 2020 crash the options would have gone up about 80-100 times. So basically a 40 percent gain on account(using 0.5 percent). So is the 8 years of portfolio drag worth it?

[@Value-Investing]

yes, the point is the you increase your long-term returns with more safety!

[@tantomanontroppo8582]

I need to ask, isn’t put option strategy a way to timing the market? I have seen through this last year many value investors doing put option strategy when the say to not timing the market. Btw thank you for the video i am going to read the book and see if my question is explained

[@Value-Investing]

depends how you do it, but not if always applied as insurance

[@petercarlsson6606]

I don't get it, Sven. For a long time we have learned that the best way is to buy, compound, and keep. Now, suddenly the advice is to sell, move and do other things. Why don't just wait out the down time and compound in the mean time?

[@Value-Investing]

insurance should allow you to keep more for longer - keep in mind just a fraction is spent on insurance

[@HaiTran-fi1uc]

Hi Sven, will you be doing a video on how to use interactive broker soon? You had mentioned you will do a video on that last year.

[@Value-Investing]

maybe, if I can open an account:-(

[@mihailghinea]

Where does the profit of an insurance company comes from? If an insurance compay makes profit, doesn't that mean that people who buy insurance pay more than they should compared to the risks?

[@zekevfab]

Traditional insurances make profit by (1) receiving more premium from their customers than they pay in claims (if the insurance manage risks well) and (2) investing the pool of premiums paid and make interest on it. Now the type of insurance discussed in this video is very different.

[@Jerryfromtheblocm]

on average

[@mariof1468]

Of course that if you buy an insurance, most of the time the risk will not materialize. So in the long term your return will be lower. But you are trading return for a lower risk if its materialize

[@zekevfab]

@@mariof1468 exactly, most likely you won’t need it but if you do it can save you from catastrophic loss is the principle behind taking insurance.

[@mihailghinea]

Thank you for your answers guys!

[@shyamramachandran6940]

The issue is that Universa.. type insurance is not available to the average investor unless you are in the 150 million bracket..so what should the average investor do if they want an insurance? Products like the TAIL etf..cannot be compared to Universa in the event of a crash. What is your suggestion Sven?

[@Value-Investing]

That is the message, it is up to you whether you wish to remain average or not :-( Nobody said getting rich is for the average!.

[@marcovalsesia2020]

really interesting this time ;)

[@Value-Investing]

Glad you think so!

[@youngsdrums]

Super topic. 👍🏾

[@Value-Investing]

thanks!

[@Luke_735]

Sven, great video. I definitely want to invest a small portion into a safe haven! But I'll be honest... I have no idea how options work, or how to leverage this into my portfolio/investing strategy. Do you plan to include these in one/any of the portfolios in the research platform? (I'm a member, by the way, but I definitely need to brush up.) Pardon the ignorance or if I missed it in the video. Thanks!

[@Value-Investing]

We will see, for now the hedge is there but not in the form of long tail hedging

[@Luke_735]

@@Value-Investing Thanks! I would definitely like to see/learn more about a long-tail hedge. I feel like this should be a part of most portfolios, especially with the current state of things. We can't easily predict, but we can at least be ready! Also, got the e-mail today for members as well. Was very timely! Good stuff. Thanks again!

[@idontnowachannelname]

thank you!

[@Value-Investing]

You're welcome!

[@Laszloh_Kovacs]

Sven, if I use the affiliate link to order the book, but buy it with an audible credit, do you still get a return from the purchase? I wouldn't mind having a hard copy, but I enjoy listening to books when I run so I'll decide what format to buy based on your answer.

[@Value-Investing]

I really don't know, haven't actually spent much time on amazon afiliates so unlikely :(((

[@MegaBuyer]

I think it might be another good time to tell us not to panic about the Chinese stock market. Enough said.

[@Value-Investing]

why, better if people panic :-)

[@kelleyhaldorson209]

Wow! This was way above my understanding. I didn't get it at all??? Here is the voice of ignorance, options sound way too dangerous and should be illegal. It sounds like a rental agreement where neither the landlord or the tenant have any control over the terms of the agreement or have a clue as to what should be charged for rent, but both sign a document knowing that one of them is gonna get ripped off!

[@Value-Investing]

read the book :-)

[@kidze73]

sounds like he makes good market timing put trades.

[@kidze73]

let's see if he can pull off something like this at the size of Berkshire

[@Value-Investing]

I think he has only 100 million invested at a moment!

[@peters972]

13:51 Sven his argument is that hedge funds lose less in a crash and make less in a boom. Isn’t that exactly what happens when you purchase puts? Seems like a good idea to me! Ty vm for your research, I’m a big fan btw. But would like to know your take on the above question.

[@Value-Investing]

yes, but there is a HUGEEE difference between hedge funds and buying insurance/puts

[@CRM82]

To get a 4000% return he almost certainly used options. Clearly not simply buying put, I think he plays with VIX and options strategie that are cost effettive. What he does we don't know..

[@Value-Investing]

of course!

[@mikestanmore2614]

Out of the money puts have interested me since reading Nassim Taleb's books, but I'm afraid I have a blind spot there. (I've no doubt I'll 'watch and learn' through the next crash) . One question: is it more, or less effective to buy puts on the whole index, or to buy them on the companies in your portfolio?

[@Value-Investing]

depends on what the price is!

[@mikestanmore2614]

@@Value-Investing Fair enough. :-)

[@hvidtsted]

So you say it might be time to insure your bets, i.e. hedge. Then you say that hedge funds are a misnomer, that they lose less in a market downturn, but gain less in an upturn. I.e. they suck. So we hate on hedge funds that are overpaid, but want to try to emulate hedging by getting insurance? Those two statements are conflicting for me. Aren't there reasonably priced hedge funds? Isn't there good hedging if you know how to do it right? If someone knows how to do it right, can they charge for it? Or are they now a hedge fund which is a bad thing?

[@Value-Investing]

These are Mark's idea that I shared here, his framework and then next is for each to find his own solution.

[@lesleyjohnson8488]

‘Choosing good stocks’ cannot be a hedge against losses. Why not? Because the 99% of people who do NOT buy insurance tend to freak out when the market goes down. This effect increases the greater your capital, as the perceived sense of loss increases exponentially as your capital increases. When ‘fire’ is yelled in a crowded theatre, there’s a lot of money to be made if someone happens to have keys to a second door. Just sayin’ 😅

[@seriouslysatirical9278]

Yet another of many videos about a stock market crash. Maybe try to tell your value investors that they should just dollar cost average in and dollar cost average out. Shoulda been averaging out of the market and your channel ages ago.

[@Value-Investing]

good for you, bye!

[@richardhead2318]

Great- so how does the average investor invest in that hedge fund?

[@Value-Investing]

the average doesn't - but the advanced can start thinking about improving his risk reward over time

[@richardhead2318]

You can start thinking about being a billionaire- also unactionable advice.

[@kashganja]

why not selling covered puts on stocks you want?

[@Value-Investing]

that is also an option, but dont' know whether it is profitable...

[@es9382]

Sven if FED continues this policy the best and safest way to invest is to park in term deposits of 5%+ for the next couple of years.

[@Value-Investing]

you never know

[@es9382]

@@Value-Investing true. On the other hand inflation of 7% (and rising) means that FED rates have to go much higher to catch up. Currently dividend yield for SPY is about 1.5% and for bonds even lower so the cost of opportunity to hold a 60/40 portfolio vs keep the money parked into a commercial bank deposit grows bigger by the day. Imo the DY for SPY needs to go up to at least 3-4% to make sense, this means current share prices should go down 50%+...

[@michaelm.8307]

What about japan stock market that for the last 30 years the trend is down !!!

[@mariof1468]

If a country has a wrong economic polilicy and does not growth in 30 years, you will not have good returns.

[@Value-Investing]

can happen too, but look at the distribution of outcomes even for the SP 500