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In Episode 88, we welcome portfolio manager, Eric Clark.\nAs usual, we start with Eric\u2019s background, which spans 25 years in the investment industry. After working for an asset manager, Eric realized he wanted to do something passion-based \u2013 a \u201ctimeless equity strategy.\u201d So, when he felt he had the answer, he created a suite of consumption-based brand strategies.\nMeb asks about these brands and how they play a role in Eric\u2019s portfolio construction.\nEric tells us he tasked himself with identifying some stable, persistent themes he could anchor to (for the purposes of building a portfolio). He tells us that \u201cnothing is more persistent than a consumer\u2019s propensity to spend.\u201d With this in mind, he looked at the U.S. economy, and what drives it. Eric tells us that the consumption component of GDP has annualized at about 3.5% a year for 50 years. And of that, about 70% of our GDP is consumption. Now, take these two pieces together \u2013 \u201cif consumption\u2026is predictable then how do I build a strategy that taps into that?\u201d The answer points toward buying great consumer brands.\nNext, Meb asks about the framework. Eric says you need an index. Therefore, they created the Alpha Brands consumer spending index. The goal was a broad universe, tracking a lifetime of spending. For instance, a Millennial spends differently than someone from GenX. So, the idea was to create an index consisting of the most relevant and recognizable brands that track a lifetime of spending.\nMeb asks how it works going forward? For instance, how would Eric see companies like GE and IBM? Are they great buying opportunities or dead brands?\nEric points toward IBM as a brand they\u2019ll likely hold onto, as it\u2019s still a powerful B-to-B brand. But he tells us the food packaging industry, for example, is coming under pressure. That\u2019s because the type of food we buy is changing. He identifies Kellogg as a company facing challenges.\nThe conversation bounces around a bit, referencing valuation, where this brand-based type of investing fits into a broader portfolio, and how this type of strategy might be expected to hold up during a recession. Eric speaks to this last point by discussing consumer discretionary versus consumer staples, including the risk of rising rates.\nThere\u2019s plenty more in this episode \u2013 where Eric believes the market is going in 2018 (he mentions some thoughts on earnings)\u2026 how international sales affect the brands-strategy\u2026 how the asset management industry seems to be moving toward the commoditization of portfolio construction, where advisors just want to own everything (in response, Eric tells us \u201cI still believe that alpha is available and possible, and beating a benchmark is possible if you understand a bunch of things\u201d).\nWe wrap up with Eric\u2019s most memorable trade. It involves an ill-timed attempt to short banks in July \u201909.\nHear all the details in Episode 88.\nLearn more about your ad choices. Visit megaphone.fm/adchoices