Episode 384: Mamdouh Medhat - A Profitability Retrospective, and Private Fund Performance
The Rational Reminder Podcast · 2025-11-20 · 1h 21m
Episode notes
In this episode, we're joined by Mamdouh Medhat, VP and Senior Researcher at Dimensional Fund Advisors, for an exceptionally deep, exceptionally nerdy exploration of factor investing - focusing on profitability, value, defensive equity, and the persistent misunderstandings that surround them. Mamdouh walks us through his retrospective paper (co-authored with Robert Novy-Marx) on the profitability premium, why profitability subsumes a wide range of quality metrics, and why it dramatically clarifies how we should think about defensive/low-volatility strategies. He also explains the role of profitability in value's US underperformance since 2007, why price-to-book remains a remarkably effective valuation metric, and how Dimensional incorporates these insights into portfolio construction. In the second half of the conversation, we shift to private markets.