The truth about investing - Patrick Boyle, ex-hedge fund manager
Patrick Boyle is an ex-hedge fund trader and one of the biggest finance YouTubers in the world. As a trader, he spent decades looking at data, trying to predict the future. So what does he think will happen over the next 10 years in investing and is Brexit really to blame for the UK’s economic woes?
What you should remember from this episode
Patrick Boyle is BIG on YouTube - Damo is a huge fan.
He films everything in a suit, even when he’s on a beach!
A quantitative, or quant investor, is interested in the statistical characteristics of companies. This differs to accounting-based investing, which is much more common.
He says you’ll throw away 90% of your research because it won’t have value, and that’s normal.
Results-driven research is what his boss used to call it when people tortured the data until it gave them the answer they were looking for.
People often under perform even in high performing funds because they trade at the wrong times (buying high, selling low).
Patrick thinks we’ll see a reversal from growth to value investing. Growth investing is finding companies that are growing really fast, like a lot of the successful tech companies we've seen in the last decade. Value investing is basically looking for cheap stocks.
Historically he’s been a growth investor. But he thinks growth has been the winner for so long that it probably will turn back to value investing.
Since the credit crunch, European and British stocks haven’t done much in terms of growth, nor have most American stocks apart from some massive growth companies, all in tech.
Those high growth tech companies were helped by record low interest rates.
If interest rates stay higher for longer, it won’t help tech companies that focus on growth at all costs rather than profitability because funding that growth has become so much more expensive than it was (and the returns bcome less attractive to investors who can get much better risk-free returns elsewhere).
It’s very unusual for a company to be in hyper growth for more than 5 or 6 years.
Companies are staying private for longer (before floating on the stock market).
