James O'Shaughnessy: Long Duration Bond Holders In Trouble if Federal Reserve Raises Interest Rates

Jason Burack of Wall St for Main St interviewed first time guest, pioneer of quantitative equity analysis for stocks, author of multiple best selling investing books and CEO of O'Shaughnessy Asset Management http://www.osam.com/, James O'Shaughnessy. James' firm has over $5 billion assets under management. His full bio is here: https://en.wikipedia.org/wiki/James_O'Shaughnessy James' books can be purchased here: http://www.amazon.com/James-OShaughnessy/e/B00ITVH4CO/ref=sr_tc_2_0?qid=1464277863&sr=1-2-ent Definition of Quantitative Analysis: http://www.investopedia.com/terms/q/quantitativeanalysis.asp?o=40186&l=dir&qsrc=999&qo=investopediaSiteSearch During this 30+ minute interview, Jason starts off by asking Jim about his background and how he became interested in investing and finance? Jim talks about how his father and his father's friends would sit around discussing the management teams of companies they were investing in and considering investing in. James always thought these were the wrong way to invest so he started researching the 30 DOW stocks at his local library in Minnesota as a teenager. When he got to collect computers were becoming far more powerful and useful so he was able to to research using computers and go through a lot more data to find good stocks to invest in. Jim talks about the types of fundamentals his quant research finds and how the best companies to invest in possess certain types of fundamentals. James talks about how people, including financial professional, destroy their own investing returns by relying on their emotions like fear, greed and hope to make irrational decisions. Jason then asks Jim about how his investing methodology differs from conventional value investors like David Einhorn or Bill Ackman and if legendary value investor Benjamin Graham was a quant? James talks about how all the best long term value investors are all very disciplined, can control their emotions and have an extensive checklist of items they need to see in a company before they invest. Next, Jason asks Jim why most investors and money managers underperform in markets? Jim talks about how investors often miss key data or rely on certain data way too much in addition to not controlling their emotions. Next, Jason asks Jim if the current environment for stocks is different than past bull markets or bear markets he has experienced? To wrap up the interview, Jason asks Jim about shorting the stock market and being long gold like George Soros, Carl Icahn, Stanley Druckenmiller and Paul Singer? Also, if he was re-writing his contrarian investment book in 2016 instead of 2006 what investments would be good ones for contrarians now? Please visit the Wall St for Main St website here: http://www.wallstformainst.com/ Follow Jason Burack on Twitter @JasonEBurack Follow Mo Dawoud on Twitter @m0dawoud Follow Wall St for Main St on Twitter @WallStforMainSt Also, please take 5 minutes to leave us a good iTunes review here! https://itunes.apple.com/us/podcast/wall-street-for-main-street/id506204437 If you feel like donating fiat, Bitcoin, Bitgold, gold or silver, Wall St for Main St accepts donations on our main website. Wall St for Main St is also available for personalized investor education and consulting! Please email us to learn more about it!

Comments

1. Good interview and synopsis.  I'm a fan of O'Shaughnessy, he's a great thinker, unfortunately the returns on his funds at OSAM and also Hennessy Funds, have been below their benchmarks quite often.  Fees are just too high to realize the historical returns of his strategies.
2. btw, he is one smooth, book talking salesman
3. gains in gold over the past 15 yrs, even w/ recent multi yr correction, have been anything but de minimis
4. This guy will be absolutely blindsided by the coming collapse. Don't buy any Gold because it leaves more for the rest of us.
5. The freudian slip of 'tragedy' instead of 'strategy', is quite appropriate for long-term treasuries. ;)
6. Obviously James looks at stock characteristics more so than market and economic signals. 1930 was only 1 year so thats only a loss ratio of x percent looking at years up vs down. The fact that the corrections in that time were historic seems to be minimized in his assessment, hence the casino 70% comment. Although he seems to have a bit of a blind spot, the vast bulk of his talk was outstanding, and i found this interview fantastic. Jason, your tack of letting the things you disagree with in his comments,go, can be a good strategy at times, as it allows more time to work on ideas that you do agree on. Excellent work.
7. Weird question but how does one prove that you own a stock when shares trade so quickly between each other?
8. Gold has underperformed in the past because it's been so heavily manipulated. I didn't bring it up to James O'Shaugnessey because I didn't want to get in a long argument with him and I wanted him to do most of the speaking on this interview.
9. You would think his firm would have done the analysis on the stocks that his methods eliminated as long opportunities, for shorting opportunities? Especially when focusing on micro caps!
10. Been saying "short bonds"