Financial Issues Forum Hosts Famed Investor Robert Arnott in Conversation with Legendary Financial Journalist Consuelo Mack

Featured Events | Nov 06, 2023 | Gabelli School of Business

Pair Discussed Debunking Myths and Seizing Opportunities in Uncertain Markets

On October 24, 2023, during a Financial Issues Forum fireside chat presented by the Gabelli Center for Global Security Analysis, the Museum of American Finance and the CFA Society New York, Robert Arnott, founder and chairman of the board of Research Affiliates, was interviewed by Consuelo Mack, executive producer of Public Television’s Consuelo Mack’s WealthTrack. The pair dove deep into conversation about myths in the uncertain markets and how to seize new financial opportunities, even in these tumultuous times.

Arnott acknowledged the extraordinary circumstances we are facing today, as well as in the near future, focusing particularly on the post-pandemic financial environment and the conflicts raging in the Middle East and Ukraine—both of which can have a profound impact on the U.S. and global economy. While he and Mack agree that this is a dangerous time, the discussion stressed the fact that financial opportunities are often created in times of uncertainty. Their exchange shed light on perceived risks and myths in the market, as viewed through the lens of what lessons were learned during previously tumultuous times in history.

One myth was that inflation is going to be transitory. “Don’t pop the champagne yet,” said Mack, in a nod to a recent paper authored by Arnott with the same title. While the inflation rate is currently around 3.7%, Arnott indicated that a rise in the coming months would not be a surprise. Additionally, he acknowledged, history has shown that inflation can be difficult to control, sometimes taking years to rein in.

Arnott and Mack also discussed another myth—value investing is dead. This, Arnott explained, can also be challenged when viewed in relation to previous market trends. He asserted that in reality, “Value stocks are just growth stocks that died.” He noted the opportunity of value investing during times of higher inflation and asserted that while value investing has another 50 per cent outperformance relative to growth to get back to historic levels, this can be the time to take advantage.

The last myth they covered was the supposedly passive nature of index funds. Arnott shared his view on how they can be leveraged as markets continue to weather the storm. “While markets are shrugging off bad news and headwinds, the risk of a bear market would pull down stocks that don’t have that margin of safety,” he stated.

The discussion closed with a question from the audience about what advice the speakers have for students as they embark on business careers during uncertain times. “Enjoy life and have fun,” Arnott said with a warm smile. “And never give up on curiosity.” Sage advice when it is hard to predict what will come next.

Watch the full video here: https://bit.ly/3QuhbsG

Co-authored by: Michelle Miller, associate director of communications and Paola Curcio-Kleinman, senior director of marketing and communications, Gabelli School of Business