) as they continue to make record gains in the market, but is it finally time to see some broadening out?is joined by Portfolio Wealth Advisors chief investment officer at Lee Munson to explore common myths behind valuations the recent run of mid-caps on the Russell 2000 and how the Federal Reserve's next policy decision will impact the broader market.
I think the inflation issue is the biggest thing on Wall Street that I think people miss, remember Wall Street is a bunch of rich guys like me. Little xerox copies and it is Rightness Seth Klarman, you know, margin of safety bottom line is what we all were taught in little broker school.And in, you know, C fa land was that you'll have a cycle where growth gets out of control.
It just means it's like a rubber band, you know what's ignored will suddenly come back into favor But Lee, you're saying the Phoenix won't necessarily rise this time.Because we had 1415 years of free money where private equity vultures picked up every decent company in the small cap universe using free money from the fed.I mean, the, all the uni all the tech unicorns were financed by cheap money that kind of chipped away at us, growth, us growth.
That's why, you know, you're seeing people like me go up the market cap and that's not what we traditionally did.Warren Buffett said it, I'm never gonna make the returns I did because I can't invest in smaller companies anymore. We saw that in 2000, but the value managers aren't coming back because there's no hunting ground for them anymore.I think what you have to do is remember you know, Charlie Munger just, you know, died this year.He was the dude who went to Warren Buffett and said, listen, I appreciate you wanting to buy the cigar butt with like two more puffs on it.And that's where the price is, the wonderful prices.I want an ok, you know, a good price for an excellent company.
But when you're looking at 20% growth rate, I mean, we're looking at 20 plus percent growth rate going forward in the NASDAQ, which we all know is mag seven driven, right?You get a little unexpected inflation.I'm not, no, no, no, no, I'm talking about hard commodities as in a factory that you cannot build tomorrow.
Um Pharmaceuticals, you know, versus a biotech, you're really talking about big mature companies that grow slower.And so in the old days, what we were trying to do is we're trying to buy something and say, eight times earnings that screwed up earnings, you know, screwed up their, their, their thing at the time.
When you look at some of these old fogey stocks, if you look at them over a long period of time, they do compound.And so it's hard to game that system.We used to have a lot of smart guys running around from a different era trying to find and discover a beat up company that was going to improve.But you know, when SARS Oxley happened, when we had the, you know, everything from the.
Uh with private equity, taking a lot of these things off public, you know, hands and into the private sector and then whatever they do with it doesn't matter because we can't buy it.I've got serious concerns whether they can really compete in today's more global market. I'd go over the little Bloomberg terminal, you know, it was a little orange screen and you still got, you still got some of those.You got them in the back and you would, you would go every day to look at your small cap companies and see if there was a, a news announcement.There's just, you know, earnings four times a year, but there was action every single week on these small cap things.
No, when you don't add more in the kitty and it only comes out like a reverse roach motel, then I've got to go through the nuclear stock market winter like we saw in the great financial crisis, 7374 the next big blow up and I have to cannibalize my bond portfolio because I'm not capitulating and selling stock at a loss because my client needs to go to Greece this summer.
Small cap value space and we've got two proxy ETF sspyb, that's spider portfolio S and P 500 value F ETF.So small cap value both happen to be up about 25% from the October of last year.Is it large, large cap value or small cap in the context of everything you said before?I own a lot of VBR because II, I love torturing myself VBR actual VBR, you know, it's not a valid business reason.
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