Horizon Kinetics is one of the mutual funds that follow the value investing strategy. In this episode, we invited one of its Co-Portfolio Managers James Davolos. James first explained how he entered value investing: everyone can read a list and see what the cheapest stock price is. But why it’s cheap, and how does that apply to your portfolio? That’s the million-dollar question. James then talked about inflation, and how to invest in inflationary periods. Dan asked James about the downside of passive investing (aka indexing), and James said it so well: the problem with indexing is that for the past decade, millions, if not billions of dollars got thrown into the same pot. Using the S&P 500 as an example: Apple, Microsoft, Amazon, Meta, and Alphabet constitute 23% of the index, and the tech sector overall was 29% of the index by the end of 2021. And yet, energy, one of the most important things in our daily life – especially during inflationary periods – only constitute less than 5% of the index. James also discussed crypto, and Kinetics’s largest investment: Texas Pacific Land (TPL), and why it’s a great investment during inflation. Overall, if you are interested in investing, and want to learn more about value investing, you will enjoy this episode.
