Ben Felix Is Mostly Right, But Where He Isn't Is Extremely Dangerous!!!

Value Investing with Sven Carlin, Ph.D.•Sep 25, 2026

Summary

Sven provides a critical analysis of the 'investing is solved' thesis popularized by Ben Felix. Sven contends that while passive investing has performed well over the last 17 years due to specific monetary conditions and bull markets, relying solely on index funds ignores the potential for long-term stagnation or severe market contractions. Sven believes that investors should not aim to outperform or underperform, but rather focus on personal financial goals by owning high-quality businesses at fair prices.

Sven highlights several key disagreements with the passive investing philosophy:

**AAPL**: Sven views Apple as an investment to avoid at its current price. Sven calculates an intrinsic value of approximately $128 using a standard discount rate, which is significantly lower than the current market price of $348. Because the valuation does not provide the safety margin Sven requires to reach specific financial goals, Sven opts not to purchase it.

**S&P 500**: Sven characterizes the S&P 500 as a passive, mindless robot that lacks protection against extreme downside events. Sven argues that historical returns have been highly cyclical and that future returns may face significant pressure due to current high valuations, potentially leading to long periods of zero or negative performance if mean reversion occurs.

**Berkshire Hathaway**: Sven uses Berkshire Hathaway as a case study to prove that active management can succeed despite the difficult environment for value investors over the last two decades. Sven notes that while Berkshire Hathaway may have appeared to underperform the S&P 500, it significantly increased its earnings per share compared to the index since the 2000 bubble, proving that fundamental business performance is more critical than market-based performance metrics.

Sven warns that academia and passive strategies work until they encounter a systemic crisis where reality clashes with theoretical models. Sven advocates for 'cost-effective hedging' and a focus on the lower bound of wealth to ensure survival across all market cycles, rather than betting everything on a single, optimistic distribution of future outcomes.

Mentioned Stocks

AAPL

Sentiment: SELL

Reasoning: Sven explains that based on an intrinsic value calculation, the fair price is around $128. Since the current stock price is $348, Sven views this as too risky and states clearly that Sven does not invest in it.

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S&P 500

Sentiment: SELL

Reasoning: Sven argues against mindless passive investment in the S&P 500, noting that current high valuations create a poor distribution of outcomes for the next 30 years and offer no protection against systemic shocks.

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