Jesse Livermore - Upside Down Markets - Understanding Fiscal and Monetary Policy - [Invest Like the Best, EP.194]

My guest today is Jesse Livermore. I’ve worked with Jesse as part of our research partners program at O’Shaughnessy Asset Management for years now. Whenever there is a huge, important, and complex issue to be studied, I believe he’s among the best minds in the world to tackle it. He did that recently on the topic of what he calls “upside down markets,” which is the topic of this conversation. We seek to answer the simple question: against a horrible economic backdrop, how can the stock market be near all-time highs? Jesse explains in detail the impact that fiscal policy has had on the market and may have in the future. Please enjoy this master class in upside down markets. This episode of Invest Like The Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis. If you’re a professional equity investor and haven’t talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com/Patrick. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag Show Notes (2:29) – (First question) – What is Upside Down Markets (5:44) – Overview on monetary easing and the fed’s role in the markets (9:42) – Why fiscal policy is such an important lever and the impact it has on the economy (15:07) – The impact of stimulus on public companies’ fundamentals (19:25) – The mix of assets in the market due to stimulus (22:13) – What made 1929 so different to how we are reacting today (26:14) – Negative concerns: too much money in the system and the risk of inflation (32:43) – Will the pendulum swing back to labor and higher wages (37:23) – How these changes could impact specific companies or sectors differently (41:34) – How he is applying all of this to his personal investment philosophy (44:25) – Biggest risks still out there (49:51) – Most interesting gap in his knowledge putting together this piece Learn More For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag