(upbeat music)
It's important to understand the economic story
behind any of our results.
With something like value,
I mean, it's had a disappointing run for quite a while now,
but for me personally, next to the equity premium itself,
it's the single-factor premium
that I am most confident in going forward.
And the reason is purely economic.
As soon as I accept that there's differences
in expected returns across stocks,
I know that it's hard for me to come up with a world
in which there isn't an expected value premium.
High discount rates get expected,
it get expressed as lower prices
and so mechanically lower price stocks on averages
tilt towards those with higher expected returns.
