Tobias Carlisle: Value Investing - Simple, Not Easy

May 2, 2024

3 minute read

Listen on The Move

In this conversation, Mike and Pierre talk to Tobias Carlisle, Managing Principal and Chief Investment Officer at Acquirers Funds, LLC, and portfolio manager of ZIG and DEEP ETFs. Toby shares his approach to value investing and the historical perspective he brings to the art of investing. He also talks about the performance of value investing and the importance of staying consistent with your strategy. Our conversation highlights the benefits of a systematic and quantitative approach to investing. We explore the challenges and strategies of value investing. Toby emphasizes the importance of having a systematic design and sticking to a set of rules to avoid emotional and behavioral mistakes. We discuss the ideological debate between value and growth investing and the need for a balanced approach. Our conversation turns to the role of activism in value investing and the importance of avoiding ruin and focusing on survival. The conversation continues with Toby sharing his insights into portfolio construction and the baked-in returns of value investing. We further explore the concept of investing in value stocks and the challenges that come with it – the importance of considering the long-term perspective and the potential for high returns despite short-term fluctuations. Mike and Toby deconstruct the role of market feedback loops and the impact of market crashes on investment strategies. Toby highlights the significance of character and reputation in investing. We ask Toby about his upcoming book 'Invincible' and its exploration of the parallels between value investing, Sun Tzu's 'Art of War,' and Lao Tzu's 'Tao Te Ching.'

Chapters

0:00 Introduction to ZIG and DEEP ETF
5:12 Quantitative Approach to Investing
6:13 Challenges to Value Investing
8:16 Historical Perspective on Value lnvesting
13:50 Ideological Debate: Value vs. Growth
15:31 Opportunities in anticipation of a regime shift
16:46 Challenges of value investing and mean reversion
17:52 Dot-com boom and its impact
19:41 Value approach and business characteristics
21:36 Diversification and overlap
23:45 Tips for staying disciplined as a value investor
24:33 Behavioural biases and cognitive errors
25:36 Private equity experience and insights
29:04 Warren Buffett's approach to influence
32:51 Investing off the beaten path
34:00 Flexibility in portfolio expression
36:02 Portfolio construction and sector weightings
37:18 Balancing and allocation process
40:56 Stock selection and portfolio positioning
42:50 Risk management and performance
43:57 Returns and ergodicity
45:06 Value investing and market flows
47:59 Risk aware strategy and market volatility
49:55 Surviving market crashes
52:09 Buying low and selling high
56:59 Investor behaviour and performance
57:59 Author's New Book - "Invincible"
1:00:50 Character and success

Takeaways

Tobias Carlisle is a value investor and the managing principal and chief investment officer at Acquirers Funds, LLC, issuer of ETFs - ZIG and DEEP.
He takes a systematic and quantitative approach to investing, using a rules-based process to buy stocks.
Toby emphasizes the importance of staying consistent with your investment strategy, even during periods of underperformance.
He discusses the historical performance of value investing and how it has gone through cycles of outperformance and underperformance.
Toby believes that a systematic approach provides consistency and helps investors avoid making emotional decisions based on short-term market movements.
Having a systematic design and sticking to a set of rules is crucial in value investing to avoid emotional and behavioral mistakes.
The value vs growth debate is an ideological argument, but everyone can agree on the importance of process and having a set of rules.
Activism can be a way to unlock value in companies, but it requires a certain personality and approach.
Survival and avoiding ruin should be prioritized over maximizing returns in value investing.
Returns are baked in at the time of purchase, and value investing is about buying businesses, rather than focusing on short-term stock price movements.
Portfolio construction should balance exposure to different sectors and industries, with a focus on diversification and rebalancing.
Investing in value stocks requires a long-term perspective and the ability to withstand short-term fluctuations.
Market feedback loops play a significant role in determining stock allocations across sectors.
Market crashes are inevitable, and investors need to be prepared to survive and take advantage of opportunities.
Character and reputation are important factors in successful investing.
Toby's upcoming book, titled, 'Invincible' explores the parallels between value investing, Sun Tzu's 'Art of War,' and Lao Tzu's 'Tao Te Ching.'