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A Chat Between Two of My Investing Heroes

By Dr. Steve Sjuggerud
Friday, November 24, 2017

Most investors have never heard of 'em, but Jason Goepfert and Meb Faber make my short list of favorite investors.
 
They do incredibly good, original work. And they share it with the world on their respective websites: SentimenTrader.com and MebFaber.com.
 
Earlier this month, Meb had Jason as his guest on his excellent podcast.
 
Jason – to me – is THE most knowledgeable and experienced investor when it comes to sentiment.
 
I got permission from Meb to share a few of Jason's comments with you about sentiment – and how it should fit into your thinking about investing.
 
Most investors have no idea how sentiment fits into the big picture. But literally nobody is better to learn from than Jason. Here are a few excerpts from Jason from the podcast...
 
Where does sentiment research fit in relative to valuation and the trend?
 
Like our mutual friend Steve Sjuggerud, he looks for something that's cheap, hated, and in an uptrend. So when you kind of fuse all of them together, I think your odds are much better.

Which is more important, sentiment or the existing trend?
 
Trend is most important. So that always gets the most respect. Clearly, you know, stocks for example, stocks are in an uptrend. So we try to respect that even if we're seeing an optimistic extreme in sentiment. It's usually not a good idea to just go short just because there are sentiment extremes. So there's always a balance between the two.

If you could only use one sentiment indicator, what would it be?
 
It would be nice if there was this one indicator we could all use, one set of rules that we could all use and that would help us all perform. [But] markets aren't easy. That doesn't happen. So I mean, that's the base of it, is respect the trend, and when sentiment hits an extreme, pay attention.

How long is a sentiment extreme useful?
 
For a lot of the indicators that we follow... the most effective time frame is somewhere in that one- to three-month time frame.

How did you get into studying sentiment?
 
I went to school for finance and economics. I was taught that people are rational. [But working in finance, I learned that] people are not rational, at least not all people. And so that really triggered my interest in learning more about the sentiment part of it, just the emotional part of it.

Today's DailyWealth is short and sweet – but Jason's words have an incredible amount of knowledge and research behind them.
 
If you want to know what works in investing, I highly recommend you listen to Meb's podcast, The Meb Faber Show. You can listen to the episode where Jason appeared for free right here. And be sure to regularly check out MebFaber.com and SentimenTrader.com.
 
Those two are sure to make you a better investor...
 
Good investing,
 
Steve




Further Reading:

Earlier this year, Meb shared a simple plan to improving your investment results. "The go-nowhere investments loitering in your portfolio are a very real opportunity cost (and many times, real dollar cost) to your wealth," he writes. Get the full story here: The Zero-Budget Portfolio.
 
Dividend-paying stocks have traditionally been a great place to grow your nest egg over time... right? Meb says this notion is flawed. Read why here: Is This Popular Investing Myth Hurting Your Portfolio?

Market Notes


THE MOBILE-PAYMENTS REVOLUTION RAGES ON

Today, we're featuring a company that helps you pay for anything, anywhere...
 
As regular readers know, Steve believes that no one will carry a wallet in five years. Instead, your smartphone will become the "new normal" way to buy things. The shift to a cashless society is coming faster than you might think... It's already happening in China, and the technology is catching on in the U.S.
 
Right now, we're seeing this concept at work with Square (SQ)... The $18 billion company makes point-of-sale systems for businesses. Vendors use its software to process mobile payments, read chip cards, send invoices, and even track their inventories. Square has thrived with the rising popularity of mobile payments... The company recently reported its third-quarter revenue increased 33% from the same period last year.
 
As you can see in the chart below, shares have soared around 240% since Square's initial public offering (IPO) two years ago. They recently hit new all-time highs. As more people start paying for things with the touch of a button, Square will likely reap the benefits...
 

premium teaser

An overly loved commodity that could jump 15% over the next year...
 
This metal is up nearly 50% over the last year. And now investors are clamoring for it. History tells us this could lead to another 15% in gains over the next year...
 

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