Behind the Balance Sheet #26 The Pragmatist - Alec Cutler on Low‑Risk Global Value, Inflation & Grandma’s Investing Rules
11 snips
Sep 21, 2023 Alec Cutler, a successful investor, discusses inflation, markets, and stock selection. He also shares his investing principles learned from his grandmother. The podcast covers topics like losing capital, living away from financial centers, impact of greenflation, timing in investing, Mifford II's negative impact, diversity in investing, moving to Bermuda, and qualities of a successful contrarian portfolio manager.
AI Snips
Chapters
Transcript
Episode notes
Selling Winners Early Cost Big Gains
- Cutler disliked Brandywine's rule to sell value stocks once they rerated to median, feeling it lost long-term upside like with Adobe.
- He cites Adobe at $8 with $10 cash (1998) that was sold early then later became a multi-thousand percent winner.
Inflation Is The Probable Pressure Valve
- Alec sees inflation as the likely outlet for excess liquidity because bond markets can't absorb central bank buying forever.
- He prefers TIPS and short-duration inflation protection, betting market-implied inflation is too low.
Make Bonds Compete With Equities
- Force fixed income ideas to compete with equities and other assets when building a balanced portfolio rather than assuming bonds are the default diversifier.
- Example: buy Kinder Morgan pipeline equity for 7% inflation-linked cash flow instead of a 10-year US Treasury at 3.74%.