This week, we speak with Ben Inker, head of Asset Allocation at GMO. The legendary Boston-based institutional investor manages about $60 billion in assets. During Dotcom implosion, GMO’s US Aggressive Long/Short Strategy achieved 80+% cumulative net returns for their clients. Inker is regarded as founder Jeremy Grantham’s heir apparent.
We discuss why it is so challenging determining precisely where we are in the market cycle. There are obvious signs of froth — Gamestop, Bitcoin, Tesla, et. al.; At the same time, we have never had as much monetary and fiscal stimulus, which makes low risk assets never having such low return expectations.
Inker believes we are clearly in an asset bubble, which can be blamed on Fed policies. He also explains why what you pay for an asset ultimately determines how successful that investment will be.
Inker explores his theory as to why value, as it is currently practiced, tends to underperform. He suggests several proactive changes value investors need to make to update how they manage value. In particular, he explains why traditional Price-to-Book measures of value fail to capture the worth of intangibles, like intellectual property, processes, expertise, networks, etc.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Doug Braunstein, founder and managing partner at Hudson Executive Capital. The firm manages $1.6B in assets, and has underwritten several successful SPAC offerings. Previously, Braunstein was Chief Financial Officer at JPMorgan Chase, working directly with Jamie Dimon as both CFO and a member of JPMorgan’s Executive Committee. He served as head of JPMorgan’s Americas Investment Banking and Global M&A.
Ben Inker’s Favorite Books
A Short History of Nearly Everything by Bill Bryson
A Little History of the World by E.H. Gombrich