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In Episode 89, we welcome legendary market veteran, Blair Hull.\nWe start per usual, with our guest\u2019s background. In this case, long-time Meb Faber Show listeners may think they\u2019ve heard it before. That\u2019s because Blair\u2019s background shares an interesting similarity with that of Ed Thorp \u2013 the card game, Blackjack.\nIt turns out Blair made a considerable sum of money playing Blackjack after reading Ed\u2019s writings on the game. Blair tells us you needed an advantage, and then you need to stay in the game. That\u2019s why he played with a team. More hands played according to their system tilted the odds in his favor. This is a fun part of the podcast you\u2019ll want to listen to for all the details, including Meb\u2019s foray into card counting with a partner that botched the system after drinking too many Bloody Mary\u2019s.\nEventually, Blair took his winnings and used them to get a seat on the Pacific Exchange, where he became a market maker and began trading options. Blair tells us he was intrigued with market timing, resulting in a paper he wrote which concluded that you can time the market.\nMeb asks about the genesis of Blair\u2019s market timing strategies.\nBlair points back to Blackjack \u2013 each different card provides an idea about the future. In a similar way, various indicators provide an idea about a market\u2019s future. So, part of the challenge is which indicators do you consider and what weights do you put on them?\nNext, Meb digs deeper, asking for more specifics of Blair\u2019s strategy, inquiring about the indicators.\nBlair mentions one indicator that piqued his interest \u2013 the Federal Reserve Bank Loan Officer Survey. They found the correlations with 6-month returns was about 30%, which is a fairly high correlation for an indicator. He then took this indicator and combined it with a few others and ran a regression with no forward-looking bias to see if they could exceed the returns of the S&P. What were the results? You\u2019ll have to listen.\nThe conversation bounces around a bit before Blair mentions how valuation is one of their key variables. He tells us his valuation method combines three different aspects: CAPE, cyclically adjusted dividend yield including buybacks, and book-to-price.\nThe guys spend a while discussing the various inputs in Blair\u2019s model before discussing sentiment (which Meb calls \u201csquishy). Both guys like sentiment, with Blair even having invested in two different firms that are using Twitter feeds so he can get a better handle on sentiment.\nNext, Meb asks about AI, and how machines may affect investing going forward. Blair has a proprietary trading firm that operates on a high frequency basis, so he gives us his thoughts, noting that a key to maximizing wealth is to use an optimal-sized bet.\nMeb changes direction, asking what Blair is excited about today.\nIt turns out Blair is focusing on the stigma of market timing. He believes it will be irresponsible not to be involved in market timing over the next 30 years. That\u2019s because when we have correlations that really go to \u201c1\u201d when we have a disaster, getting an edge in the market is critical.\xa0\nThere are a couple quick questions \u2013 Blair\u2019s favorite indicator, and Blair\u2019s advice to young quants looking to get into quant finance today, but then we turn to Blair\u2019s most memorable trade.\nThis is a great one involving the crash in \u201987, when Blair was a market maker. Don\u2019t miss it.\xa0\nThere\u2019s plenty more in this great episode featuring a true market legend, including why Blair tells us \u201cEmotions will kill you in this game.\u201d\nThat and far more in Episode 89.\nLearn more about your ad choices. Visit megaphone.fm/adchoices