Meet with PWL Capital: https://calendly.com/d/cpwsjypznp

In this episode, we sit down with Professor Valentin Haddad to unpack the intricacies of market elasticity, passive investing, and the dynamic nature of financial markets. Valentin is an Associate Professor of Finance at UCLA Anderson School of Management and a research fellow for the National Bureau of Economic Research’s Asset Pricing Program. His research
focuses on how financial institutions trade, and manage risk, and their impact on market prices and the broader economy. Notably, his work challenges traditional assumptions, such as the perceived safety of life insurance companies' investments in Treasuries. In our conversation, we
delve into the impact of index funds on the market, stock market bubbles around the development of new technology, and the response of investmentgrade corporate bonds to the COVID19 crisis. Discover the definition of demand elasticity, strategic interaction, and how market elasticity has changed over time. Explore how he defines a market bubble, ways stock
market bubbles are related to new technology, and how to measure the value of innovation. We also discuss the impact of COVID19 on investmentgrade corporate bonds, the Federal Reserve’s response, the implications for bond safety, and much more. Tune in and join us as we uncover the mess of the market with Professor Valentin Haddad!

Timestamps:

0:00:00 Intro
0:03:45 How substantial the shift toward passive investing has been over the last 20 years
0:07:30 Strategic interactions between investors
0:12:43 Why active investors would be limited in their strategic response
0:17:25 Defining the aggregate elasticity of an individual stock
0:23:56 How aggregate elasticities have changed over time in Valentin's sample
0:27:10 The implications of Valentin's findings for how passive investing is affecting asset prices
0:32:44 Whether Valentin's findings support the concept of a bubble in large stocks due to flows into index funds
0:38:26 The regulatory interventions that make sense to address the impact that passive investors may be having on demand elasticity
0:42:41 What investors should do with this information
0:46:14 How Valentin defines bubbles in his research
0:50:20 How the market value of innovation changes during bubbles
0:56:55 The implications of this research for innovation policy
1:02:42 What happened in the US investment grade corporate bond market in March of 2020
1:09:20 Why market participants weren’t stepping in to buy bonds as their prices crashed
1:12:10 The effect did the Fed’s intervention had
1:20:48 Valentin defines success in his life

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t....
Rational Reminder Website — https://rationalreminder.ca/
Rational Reminder on Instagram —   / rationalreminder  
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on YouTube —    / channel  
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/ben...
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn —   / benjaminwfelix  
Cameron Passmore — https://www.pwlcapital.com/profile/ca...
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn —   / cameronpassmore  
Professor Valentin Haddad — https://sites.google.com/site/valenti...
Professor Valentin Haddad on LinkedIn —   / valentinhaddad0056843  
Professor Valentin Haddad Email — [email protected]
UCLA Anderson School of Management — https://www.anderson.ucla.edu/
National Bureau of Economic Research (NBER) — https://www.nber.org/
Episode 212: Prof. Ralph Koijen — https://rationalreminder.ca/podcast/212

Papers From Today’s Episode:

‘How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing’ — https://dx.doi.org/10.2139/ssrn.3821263
‘Concentrated Ownership and Equilibrium Asset Prices’ — https://www.stern.nyu.edu/sites/defau... Haddad Concentrated ownership.pdf
‘Bubbles and the Value of Innovation’ — https://drive.google.com/file/d/
1tnvZ5L_zUcehn5hR720Nl1vtsTv4VgK0/view
‘When selling becomes viral: Disruptions in debt markets in the COVID19 crisis and the Fed’s response’ — https://doi.org/10.1093/rfs/hhaa145
‘How Speculation Affects the Market and OutcomeBased