I listen to many investing and finance podcasts (I follow around 20). Even a finance nerd like me can become overwhelmed and buried in the abundance of beautiful pods. It can be a real drag on your time. So, I am going to start to “dive on the grenade” and provide you, dear reader (or future self), with one podcast per week that may be worth a listen.
This week’s “pod of the week” is the 100th episode of The Meb Faber Show, with special guest Professor Elroy Dimson. This is a pretty timely discussion for us, as Professor Dimson is among the foremost researchers of world financial history, asset pricing, and the historical experiences of investors in various asset classes around the globe. A fair amount of the discussion concerns relative valuations around the world and there is even a little CAPE-fu.
Professor Dimson, et. al., publish an annual compendium of historical asset class performance that, while pricey, is really great to have in your library. See Triumph of the Optimists: 101 Years of Global Investment Returns.
Another interesting facet of the podcast discussion was Professor Dimson’s interpretation of his own study of data concerning the historical performance of housing around the world as an asset class. The study has been cited as supporting the interpretation that “housing has been the best performing asset class in history.”
We recently published a related post about one of the participants in the industry promoting this view (although, I think Roofstock was the company specifically referencing the study in the advertising…maybe even on Meb’s podcast). Our take was that we should be skeptical and probably have a general principle of avoiding investments which are promoted in similar fashion.
I wish Meb and Prof. Dimson had been able to spend more time on this aspect of their conversation, but it comes up only toward the conclusion. My interpretation (he was speaking British, after all) was that Professor Dimson said that the housing appreciation data needs to be severely adjusted to account for maintenance, improvement and other costs (he gave the example of a cottage he owns that is several hundred years old, which has required material investments to add indoor plumbing and where the laundry was cleaned in an iron cauldron over the fire).
I am not sure he would firmly conclude that housing appreciation only matches inflation, as Professor Shiller has stated (concerning only U.S. housing data). It does, however, seem that the two agree that the benefits of housing, based upon their research, are largely psychic and one’s residence should probably be viewed through the lens of consumption rather than as an investment.
Let me know in the comments if you follow any great “off the path” investment or finance podcasts and I will add them to my pile-o-pods. Thanks for reading!