Rob Arnott on The Upside of Getting Dumped: Investing in Index Deletions | #549

The Meb Faber Show - Better Investing

The Idea Farm

Business, Investing, Management

4.7 • 938 Ratings

🗓️ 13 September 2024

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Today’s returning guest is Rob Arnott, founder and Chairman of Research Affiliates. In today’s episode, Rob discusses his newest article, ‘Nixed: The Upside of Getting Dumped,’ which explores the concept of investing in stocks that have been removed from major indexes. He explains that these ‘dumped’ stocks often outperform the market and thinks investing in a strategy such as this provides an opportunity to invest in deep value, small-cap, and unloved companies. Meb and Rob touch on other topics, including the performance of value investing, the narrative around AI, and the macroeconomic backdrop. (2:01) NIXT overview (16:05) Factors behind the strategy (21:52) Expanding the strategy internationally (24:17) Market concentration (30:26) AI narratives and Nvidia (35:25) Macro conditions & election impacts on markets (45:25) Small cap value ----- Follow Meb on Twitter, LinkedIn and YouTube For detailed show notes, click here To learn more about our funds and follow us, subscribe to our mailing list or visit us at cambriainvestments.com ----- Today's episode is sponsored by YCharts. YCharts enables financial advisors to make smarter investment decisions and better communicate with clients. Get 20% off your initial YCharts Professional subscription when you start your free trial Follow The Idea Farm: Twitter | LinkedIn | Instagram | TikTok ----- Interested in sponsoring the show? Email us at [email protected] ----- Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more. ----- Meb's invested in some awesome startups that have passed along discounts to our listeners. Check them out here! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to the Mebb Faver Show, where the focus is on helping you grow and preserve your wealth.
0:10.8	Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help
0:15.4	you grow wealthier and wiser.
0:17.1	Better investing starts here.
0:19.6	Meep Baber is the co-founder and chief investment officer of Cambria Investment Management. Due it industry regulations he will not discuss any of Cambra's funds on this
0:25.0	podcast. All opinions expressed by Podcast participants are solely their own opinions and do not
0:28.7	reflect the opinion of Cambria Investment Management or its affiliates.
0:30.9	For more information, visit cameria Investments.com.
0:35.2	Welcome back everybody. In to summertime we have one of our fan favorites back for
0:40.0	at least his fourth appearance. Our guest is Rob or not,
0:43.0	founder, chairman of research affiliates.
0:45.0	Today's episode, Rob is going to talk about his newest article, paper,
0:49.7	strategy. I love it.
0:51.5	Super cool. We're going to touch also on the state of the markets what's going on the economy and lots more Rob welcome back the show
0:57.5	It's always a privilege. Thanks
1:00.0	So I tweeted out so followers on Twitter and elsewhere, this new article you guys published, which immediately spoke to me called Nixt, the upside of getting dumped.
1:11.5	It has a couple rhymes with some work you've done in the past that
1:17.3	we'll probably get into a little bit. But give us, what's the inspiration, what's the idea
1:21.0	here and we'll dig in?
1:22.0	Indexing is the gift that keeps on giving.
1:25.0	The indexing world has a whole array of interesting peculiarities.
1:31.0	Firstly, index funds aren't passive. They do trade. They add stocks to the index. They drop stocks from the index.
	...

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