This episode explores the challenges of investing in an increasingly uncertain global environment. Against the backdrop of rising global uncertainty, the conversation highlights the limitations of traditional mean reversion investment strategies, particularly in the US, where investors were historically spoiled by a predictable economy. More significantly, the discussion delves into the intertwining of politics and investing, exemplified by Tesla's valuation and its relationship with the current administration, forcing investors to consider political factors in their analysis. For instance, the impact of trade wars on companies' revenue growth and margins is discussed. The rise of passive investing and its effect on price discovery, particularly for smaller companies, is also examined. Ultimately, the podcast emphasizes the importance of diversification in a volatile market, suggesting that investors should increase the number of stocks in their portfolios to mitigate risk, and that a flexible dividend policy is crucial for companies in uncertain times. This means investors need to adapt their strategies to account for increased uncertainty and consider a more diversified approach.
