It was my great pleasure to be asked by Jake Taylor at Farnam Street Investors to come on his weekly video interview show “Five Good Questions.”
The premise of the show is that he asks authors writing about value investing and related topics to answer five questions about their book.
Jake started out with the following questions, but we ended up talking a lot about our framework for assessing the value of companies:
- Many value investors may feel like options are dangerous, I know I did. Why was I wrong to be fearful and how can options be a useful tool for an investor?
- Assuming your analysis leads you to believe a company is undervalued, why might options be better expression than just buying and holding? What about the element of timing that options introduce?
- If you don’t believe in the Efficient Market Hypothesis, why should you be especially attracted to options investing?
- What is delta, and what can it tell us about Mr. Market?
- What are LEAPS and are they a good first step for a traditional value investor to dip their toe in the options water? How would address the concern that an investor might feel about getting comfortable with the relative trade-offs of premium price vs. tenor and strike price?
After you are finished with my video, please poke around Jake’s site! He has had some really interesting and distinguished people on his show, and I was honored to be among that group.