Topics Covered:
Why GMO didn’t abandon value—it improved it
The difference between "value" and "valuation"
How restating financial statements improves valuation accuracy
GMO’s two-step top-down and bottom-up ETF strategy
The deep value opportunity: why it’s never been cheaper
How GMO incorporates quality in a forward-looking way
Why momentum and macro are excluded from some strategies
How ESG is treated as a portfolio risk—not virtue signaling
The China supply chain shift and the Beyond China strategy
Passive investing’s long-term impact on price discovery
Managing risk, constraints, and position sizing in quant portfolios
Whether today’s market mirrors the dot-com bubble
What’s driving valuation gaps across global markets
Timestamps:
00:00 Intro: The divorce between valuation and financial statements
01:00 Why GMO improved value rather than abandoning it
03:00 Defining forward-looking valuation vs. traditional value
05:00 Restating financials to fix distorted inputs
08:00 From asset allocation insights to portfolio construction
11:00 The deep value opportunity: how rare is this setup?
13:00 Adjusting for intangibles in valuation models
15:00 How GMO defines and integrates quality
16:45 Momentum’s role—or lack thereof—in deep value
18:00 Product design and factor exposure tradeoffs
19:00 ESG: risk factor, not moral factor
20:00 Why macro is excluded in value ETFs but vital in EM
22:00 Does value perform better in high-rate environments?
23:00 Portfolio concentration, sizing, and sector constraints
25:00 Rebalancing frequency and turnover management
28:00 Passive investing’s impact on price discovery
31:00 GMO’s global valuation outlook: deep value vs. the world
34:00 Is this another dot-com bubble?
36:00 Deep value across global markets: EM vs. DM
38:00 Country constraints and international risk
40:00 Modeling tariff exposure and exogenous risks
42:00 AI, text analysis, and quant research advances
43:30 GMO’s Beyond China thesis and manufacturing shift
47:00 Can EM really absorb China’s manufacturing share?
49:00 Tariffs and the weaponization of trade
51:00 Will global trade shifts cause long-term inflation?
52:45 The one investing belief Warren’s peers might not share
55:00 One lesson Warren would teach every investor
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