Dan Rasmussen, the founder of Verdad Advisers, has carved a niche in the investment world with his data-driven, historically-informed, and often contrarian perspectives. Drawing from his background in history and literature, Rasmussen approaches markets with a unique lens, emphasizing quantitative analysis while remaining deeply aware of the behavioral biases that can lead investors astray. His writings and interviews are a treasure trove of insights on value investing, crisis investing, private equity, and the importance of intellectual humility.

On Investment Philosophy and Humility

  1. "Investing is not a game of analysis, it's a game of meta-analysis. It doesn't matter what you think, it matters what you think relative to what everyone else thinks."
  2. "The best places to make money in markets is where others are too confident in their forecasts." [1]
  3. "My argument in The Humble Investor is that the one thing that we know, that perhaps everybody else doesn't, is that the world is much more unpredictable than people think. So what we want to do is bet against hubris, bet against consensus."
  4. "Investment strategies should be logical, they should follow a logic, and they should back test well. You should be able to prove that they work empirically." [2][3]
  5. "If you're really a brilliant investor you're right six times out of 10." [4]
  6. "You'll quickly find out that you're not as smart as you think that you are." [4]
  7. "My business today requires separating truth from narrative and using evidence to falsify or confirm different investment theories." [5]
  8. "When you know your principles, it's not the decisions that are hard, it's the consequences." [6]

On Value Investing

  1. "Value investing is an arbitrage of betting against the hubris of other people's predictions." [7]
  2. "Yes, value hasn't worked in the US, but it's worked fine internationally. And so if you've been a value investor in Japan or a value investor in Europe, you've actually done quite well relative to the market." [7][8]
  3. "The true power of value investing lies in market unpredictability." [9]
  4. "If you want to own value, you're also getting small size, almost inevitably, because that's where all the really cheap stuff is." [9]
  5. "Deep value...is all about getting these crises right. You want to buy in at the bottom of a crisis and hold on in that early stage of the cycle." [10]
  6. "Value times leverage is a good thing, if you like value and you like small cap." [11]

On Crisis Investing

  1. "One problem with bubbles is you never know when you're in one, but you always know when you're in a crisis." [8]
  2. "The time to buy is when there's blood in the streets." [5]
  3. "In a high-yield crisis, if you buy into small-cap value, the smaller the companies you buy, and the cheaper the companies you buy, the bigger will be the rally when the economy recovers." [12]
  4. "Equity factors are about 4x as much predictive power during crises. Because there are so many behavioral biases at play, these systematic, rational ways of making decisions work better." [8]
  5. "When developed markets go into crisis, they recover the vast majority of the time... But you start to go into the emerging markets... the probability of recovery is meaningfully lower." [8]
  6. "The optimal thing to buy is small-cap value stocks... the cheapest, most illiquid scary things that everyone's panicked about are the things that you should be going to buy in the middle of a recession, because they are on sale." [3]

On Private Equity

  1. "The crown jewel of the alternative universe is private equity." [13]
  2. "Fundamentally what [private equity] is, is financial engineering on micro-cap companies." [4]
  3. "Private equity is a money trap... the money's gone in, it's just not going to come out." [14]
  4. "The valuations today in private equity are actually higher than public markets." [7]
  5. "To take 40% of your portfolio and put it in these very small, very levered, very risky companies is a very, very risky decision to do." [7]
  6. "The three myths of private equity are: one, that it's about operational improvement; two, that it's about long-term investing; and three, that it's about alignment of interests." [15]

On International Investing & Japan

  1. "I find the value opportunity is better internationally, and so that's where I've been focused." [16]
  2. "Japan, everything is cheap in Japan." [9]
  3. "The government has identified there's a problem, and the problem is that Japanese stocks are too cheap." [9]
  4. "Everybody believes Japan's a horrible place to invest...it's almost certain that there are some attractive bargains there." [17]
  5. "There's probably over a thousand Japanese public companies that trade at half tangible book." [4]
  6. "If you want quality, you got to go to Europe. And that's where you're able to buy really high quality businesses for cheap." [11]
  7. "I am a permabear on emerging markets. I think emerging markets stay emerging." [3]

On Markets, Cycles, and Forecasting

  1. "Markets are primarily driven by credit and liquidity." [3]
  2. "The high-yield spread... remains the best indicator... It's pretty hard to manipulate that. That's real lending activity, real investor dollars." [10]
  3. "A lot of these regime changes happen around recessions and crises." [12]
  4. "The future, in fact, is so discontinuous from the past." [6]
  5. "Maybe next quarter's earnings is all anyone can predict... maybe there's actually no alpha past a quarter." [14]
  6. "This question of cycles is so intellectually interesting... I imagine I'll have a different view a year from now." [4]
  7. "There's 80% to 95% of market volatility that is not explainable by the fundamental data that should be in theory driving market pricing." [4]

On Strategy and Portfolio Construction

  1. "Most investors should have the majority of their money in low-cost, passive equity index funds." [3][18]
  2. "I don't have as much of a strong view on the size factor... what's more interesting to me about small caps is that there are so many more small caps than large caps." [8]
  3. "Inflation hedges tend to be bad long-term buy and hold investments." [3]
  4. "Be very wary of illiquid asset classes." [8]
  5. "If your strategy is to change your fundamental beliefs every two or three years, you're definitely going to get destroyed." [9]
  6. "You have to be okay with periods where you are going to feel dumb... because you're underperforming whatever the thing is that's hot." [6]
  7. "The 'fool's yield' of private credit... people are reaching for yield, they're being fooled by the yield, and they're getting drawn into underpricing the default risk."
  8. "You have to buy them, you have to understand that they're going to be volatile and risky, and you have to own them for the long term and that's the key to success." [19]
  9. "Competition neglect... we don't realize that the same things are driving us to make decisions are driving everyone else to make decisions." [6]
  10. "A large empirical understanding of the world would lead you to say that most investors should have the majority of their money in low-cost, passive equity index funds." [3][18]

Learn more:

  1. The Humble Investor: How to find a winning edge in a surprising world - Goodreads
  2. Dan Rasmussen: Investing Lessons From Ray Dalio | The Acquirer's Multiple®
  3. Building a Balanced Portfolio w/ Daniel Rasmussen - The Investor's Podcast Network
  4. Dan Rasmussen on Market Outlook, International Value & "Fool's Yield" Strategy - YouTube
  5. CRISIS INVESTING: HOW TO MAXIMIZE RETURN DURING MARKET PANICS - Squarespace
  6. The Power of Humility in Investing with Dan Rasmussen - YouTube
  7. The Long View: Daniel Rasmussen: 'Be Very Wary of Illiquid Asset Classes' - YouTube
  8. Daniel Rasmussen: 'Be Very Wary of Illiquid Asset Classes' - Morningstar
  9. VALUE: After Hours (S06 E03): Verdad's Dan Rasmussen on Quant Small, Cheap, Levered Stocks-US and Japan | The Acquirer's Multiple®
  10. (Ep.112) The Acquirers Podcast: Dan Rasmussen – Countercyclical: Small-Caps, Crisis And A Cycle-Driven Approach To Asset Allocation
  11. Dan Rasmussen on Investing in Europe, Japan, US Small Value and The Humble Investor | V:AH S07 E01
  12. Episode #294: Dan Rasmussen, Verdad Advisers, “A Lot Of These Regime Changes Happen Around Recessions And Crises” - Meb Faber Research - Stock Market and Investing Blog
  13. Episode #90: Dan Rasmussen, Verdad, “The Crown Jewel Of The Alternative Universe Is Private Equity” - Meb Faber Research - Stock Market and Investing Blog
  14. The Bubble No One Can Sell | Dan Rasmussen on the Private Equity Trap - YouTube
  15. Dan Rasmussen - Private Equity…–Invest Like the Best with Patrick O'Shaughnessy - Apple Podcasts
  16. VALUE: After Hours (S07 E01): Dan Rasmussen on Investing in Europe, Japan, US Small Value and The Humble Investor | The Acquirer's Multiple®
  17. Why Buffett is Doubling Down on Japan w/ Dan Rasmussen (TIP565) - YouTube
  18. Building a Balanced Portfolio w/ Daniel Rasmussen (MI161) - YouTube
  19. The Humble Investor with Daniel Rasmussen - YouTube