The conversation covers several critical investing myths and insights, including:
The evolution of fundamental indexing and why "smart beta" has lost its meaning
Why historical returns can be deceptive when estimating future equity risk premiums
The surprising truth about long-term forecasting in markets
The impact of index funds on market efficiency and stock prices
Why buybacks aren't necessarily equivalent to dividends
The challenges facing U.S. growth stocks at current valuations
Rob brings over four decades of investment experience to this discussion, offering candid perspectives on market valuation, index fund dynamics, and the future of passive investing. His insights are particularly valuable for investors trying to navigate today's complex market environment.
0:00 - Intro and episode overview
0:53 - Rob discusses science advancing "one obituary at a time"
3:15 - The three approaches to quantitative finance: data first, theory first, Bayesian
6:02 - Rob analyzes the flaws with "data mining" in finance
10:35 - Rob's analysis of low volatility strategies and revaluation alpha
15:17 - Rob explains fundamental indexing and its origins
20:01 - The Super Bowl of Indexing story and industry resistance
24:38 - How "smart beta" lost its meaning
28:41 - The Tesla S&P 500 inclusion case study
35:25 - Analysis of index fund impact on markets
42:28 - Market concentration: Top 10 stocks at 40% of S&P 500
47:52 - Historical excess returns and the equity risk premium myth
53:30 - Why long-horizon forecasts can be easier than short-term
58:42 - The "20 years is not a long horizon" myth
1:02:38 - The myth of a static equity risk premium
1:07:13 - Buybacks vs dividends: Debunking the "stealth dividend" myth