In this episode of Beyond the Tickers, Paul Johnson, a leading expert in value investing, shares his journey from tech investing to academia. He discusses his investing philosophy, emphasizing the importance of mental models, earnings power value, and market implied value. Johnson also explores the role of passive investing in today's market, the impact of AI on finance, and the intersection of growth and value investing. He concludes with practical advice for young investors and insights from his extensive experience in the field.
takeaways
- Paul Johnson transitioned from tech investing to value investing after realizing the importance of valuation during the internet crash.
- He emphasizes the significance of mental models in understanding market dynamics and stock valuation.
- Earnings Power Value (EPV) is a key concept that helps investors assess a company's steady-state cash flows.
- Market Implied Value of Growth is derived from the difference between enterprise value and earnings power value.
- Passive investing is a major driver of market dynamics today, influencing stock prices significantly.
- AI can enhance the efficiency of analysts but won't replace the human element in investing.
- Value investing should focus on not overpaying for growth, distinguishing between cash flow growth and revenue growth.
- Understanding the duration of cash flows is crucial for assessing investment risks.
- Investors should prioritize long-term absolute performance over relative performance against indices.
- Young investors are encouraged to be curious, ask questions, and continuously learn about the market.
Links for Paul's recent webinars
1. Apple Webinar - https://shorturl.at/7pV2y
2. Chipotle Webinar - https://shorturl.at/t7hTz
3. YouTube Channel - https://shorturl.at/TtlZw
