1 00:00:00,440 --> 00:00:03,840 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:04,120 --> 00:00:14,080 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:14,160 --> 00:00:18,239 Speaker 1: What Goes Up, a Bloomberg weekly market podcast on Sarah Ponza, 4 00:00:18,480 --> 00:00:21,520 Speaker 1: reporter on the Cross Asset Team, and I'm Mike Reagan, 5 00:00:21,680 --> 00:00:24,439 Speaker 1: a senior editor on the Markets Team. This week on 6 00:00:24,440 --> 00:00:26,360 Speaker 1: the show, you could say the tone of markets has 7 00:00:26,440 --> 00:00:29,640 Speaker 1: changed all of a sudden. Real yields are rising along 8 00:00:29,640 --> 00:00:33,479 Speaker 1: with the dollar as inflation expectations fall, triggering selling in 9 00:00:33,520 --> 00:00:36,240 Speaker 1: the likes of gold, for example. Cracks have begun to 10 00:00:36,280 --> 00:00:38,360 Speaker 1: show in the credit markets and in the stock market. 11 00:00:38,720 --> 00:00:42,159 Speaker 1: It's economically sensitive areas that have once again turned losers. 12 00:00:42,520 --> 00:00:45,240 Speaker 1: Is this just a blip or is this possibly something more? 13 00:00:45,800 --> 00:00:48,640 Speaker 1: And speaking of something more, we of course will close 14 00:00:48,680 --> 00:00:51,919 Speaker 1: out the episode with our tradition the craziest thing I 15 00:00:52,000 --> 00:00:55,040 Speaker 1: saw in Markets this week? Sarah, I gotta say the 16 00:00:55,080 --> 00:00:57,440 Speaker 1: craziest thing I saw in markets this week. It's actually 17 00:00:57,440 --> 00:00:59,800 Speaker 1: the most disgusting thing I've seen in markets this week too. 18 00:01:00,000 --> 00:01:01,560 Speaker 1: I'm gonna give you a little tease at that, ye 19 00:01:01,680 --> 00:01:02,800 Speaker 1: do we have to wait to the end of the 20 00:01:02,840 --> 00:01:05,640 Speaker 1: show to find out what this most disgusting thing is 21 00:01:05,680 --> 00:01:10,360 Speaker 1: Mike keeping us all on our brace yourself because it's nasty, 22 00:01:10,400 --> 00:01:14,840 Speaker 1: it's crazy and it's nasty. Alright, it's interesting. And if 23 00:01:14,840 --> 00:01:18,120 Speaker 1: you saw anything crazy in markets or even disgusting in 24 00:01:18,160 --> 00:01:19,880 Speaker 1: markets that you want to share with us, give us 25 00:01:19,880 --> 00:01:23,880 Speaker 1: a call on the Bloomberg Podcast hotline six four six 26 00:01:24,240 --> 00:01:28,480 Speaker 1: three to four three four nine zero and leave us 27 00:01:28,480 --> 00:01:31,360 Speaker 1: a voicemail and maybe we'll play it on the show. Also, 28 00:01:31,400 --> 00:01:35,040 Speaker 1: you can tweet to us at podcasts and let us 29 00:01:35,040 --> 00:01:36,840 Speaker 1: know what you think of the show where you've seen 30 00:01:36,880 --> 00:01:39,800 Speaker 1: something crazy. We'd love to hear from you. Sarah, I'm 31 00:01:39,840 --> 00:01:43,720 Speaker 1: excited for this week's guests. Do you know why? You 32 00:01:43,800 --> 00:01:46,240 Speaker 1: must know me well enough to know why my only 33 00:01:46,240 --> 00:01:49,440 Speaker 1: guest would be is is he also from Philly? Mike, now, 34 00:01:49,480 --> 00:01:52,000 Speaker 1: well close enough. He's a Jersey guy. He's a he's 35 00:01:52,000 --> 00:01:54,280 Speaker 1: a Jersey guy like me. I'm from Philly, but I've 36 00:01:54,320 --> 00:01:58,200 Speaker 1: kind of converted to full Jersey guy by now I've defected. 37 00:01:58,720 --> 00:02:00,840 Speaker 1: You've won me over in the Garden State. Eight. Yeah, 38 00:02:01,160 --> 00:02:03,480 Speaker 1: it's all the Italian food won me over. I think 39 00:02:03,680 --> 00:02:08,040 Speaker 1: that's fair enough. Over the Tuesday, but yeah, yeah, it's 40 00:02:08,040 --> 00:02:11,200 Speaker 1: all about the stomach. But glad to have him on 41 00:02:11,240 --> 00:02:13,919 Speaker 1: the show first time on What Goes Up. His name 42 00:02:14,000 --> 00:02:17,400 Speaker 1: is Larry pitt Kowski. He is the co managing partner 43 00:02:17,520 --> 00:02:22,320 Speaker 1: at good Haven Capital Management in good Old Milburn, New Jersey. Larry, 44 00:02:22,360 --> 00:02:24,799 Speaker 1: welcome to the show. Thank you, it's nice to be here. 45 00:02:25,240 --> 00:02:29,080 Speaker 1: O great, So, Larry, I was checking out the good 46 00:02:29,120 --> 00:02:32,840 Speaker 1: Haven Fund before the show. One thing that popped out 47 00:02:32,840 --> 00:02:34,280 Speaker 1: at me. I love to look at sort of the 48 00:02:34,280 --> 00:02:37,680 Speaker 1: asset allocation, and at least as of the end of August, 49 00:02:37,840 --> 00:02:41,680 Speaker 1: equity exposure was about seventy four percent cash and government 50 00:02:41,680 --> 00:02:46,040 Speaker 1: securities making up the rest about a quarter of the fund. So, 51 00:02:46,520 --> 00:02:48,520 Speaker 1: as Sarah will tell you, I'm I'm about to launch 52 00:02:48,520 --> 00:02:53,079 Speaker 1: a twelve part question based on that, probably as I 53 00:02:53,160 --> 00:02:58,880 Speaker 1: usually sit down, say, take take notes on this question now. 54 00:02:59,040 --> 00:03:02,200 Speaker 1: But to me, so that seems like it correct me 55 00:03:02,240 --> 00:03:05,040 Speaker 1: if I'm wrong. But historically, is that sort of a 56 00:03:05,120 --> 00:03:11,080 Speaker 1: low equity exposure for your fund? And you know, depending 57 00:03:11,120 --> 00:03:13,200 Speaker 1: on the f the answer is yes. I'm curious. Does 58 00:03:13,240 --> 00:03:15,640 Speaker 1: it have something to do with this sort of froughthy 59 00:03:15,760 --> 00:03:20,200 Speaker 1: valuations we've seen over the summer, the market getting up 60 00:03:20,240 --> 00:03:22,720 Speaker 1: in in in some cases depending on what index, what 61 00:03:22,840 --> 00:03:26,720 Speaker 1: sector you're looking at almost back to dot com style valuations, 62 00:03:27,240 --> 00:03:31,160 Speaker 1: and if that is a low equity exposure, uh, anything 63 00:03:31,160 --> 00:03:34,560 Speaker 1: in this correction getting you ready to sort of up 64 00:03:34,639 --> 00:03:38,040 Speaker 1: up that equity exposure or or what. I'm just curious 65 00:03:38,040 --> 00:03:40,920 Speaker 1: how you're thinking about that non equity portion of the 66 00:03:41,080 --> 00:03:43,720 Speaker 1: of the fund. You know, Mike, get a good haven. 67 00:03:44,280 --> 00:03:48,680 Speaker 1: The amount of cash and cash equivalence we've got is 68 00:03:48,800 --> 00:03:52,320 Speaker 1: normally a byproduct of finding more or less things to 69 00:03:52,400 --> 00:03:55,160 Speaker 1: do where you know, I don't manage the portfolio too 70 00:03:55,920 --> 00:03:59,720 Speaker 1: Some target cash levels, however, you know, you make a 71 00:03:59,800 --> 00:04:03,680 Speaker 1: fair point. During periods where there's more stress and more bargains, 72 00:04:04,360 --> 00:04:08,480 Speaker 1: cash levels will normally come down, often sometimes dramatically, and 73 00:04:08,520 --> 00:04:11,720 Speaker 1: when there's less to do, cash levels will will build. 74 00:04:11,960 --> 00:04:15,280 Speaker 1: I would say the current cash level we've got, which 75 00:04:15,480 --> 00:04:18,120 Speaker 1: as of you know recently is you know, kind of 76 00:04:18,120 --> 00:04:21,120 Speaker 1: sitting around let's say high teens, is you know, kind 77 00:04:21,160 --> 00:04:24,600 Speaker 1: of probably on average to what we've had over the 78 00:04:24,680 --> 00:04:28,719 Speaker 1: last bunch of years. But it's interesting in this spring, uh, 79 00:04:28,880 --> 00:04:31,719 Speaker 1: during the height of the market swomen you know, March 80 00:04:32,080 --> 00:04:36,400 Speaker 1: of we put about of our then cash to work 81 00:04:36,960 --> 00:04:41,040 Speaker 1: as there were despite the unbelievable uncertainty and the unpredictability 82 00:04:41,080 --> 00:04:42,960 Speaker 1: and something nobody had ever seen as far as in 83 00:04:43,279 --> 00:04:46,440 Speaker 1: you know, an economy that had partially shut down. We 84 00:04:46,480 --> 00:04:48,760 Speaker 1: did put a lot of cash to work and high 85 00:04:48,800 --> 00:04:52,440 Speaker 1: quality things that I think are already turning out to 86 00:04:52,480 --> 00:04:56,360 Speaker 1: be very good buys. And I would say that's how 87 00:04:56,400 --> 00:04:59,560 Speaker 1: we look to behave. We look to behave opportunistically when 88 00:04:59,560 --> 00:05:02,760 Speaker 1: there are lots of things to do. However, I wouldn't 89 00:05:02,760 --> 00:05:05,800 Speaker 1: ever say that I'm sitting around every day, you know, 90 00:05:05,880 --> 00:05:08,440 Speaker 1: making some kind of market prediction by having a little 91 00:05:08,480 --> 00:05:10,480 Speaker 1: bit more a little less cash. I don't know anybody 92 00:05:10,480 --> 00:05:12,640 Speaker 1: who can do that. I certainly can't do it, but 93 00:05:12,880 --> 00:05:14,880 Speaker 1: you make a very good point. It is a often 94 00:05:14,920 --> 00:05:17,640 Speaker 1: a byproduct of finding more or less to do end 95 00:05:17,680 --> 00:05:20,000 Speaker 1: flows of money. You have to be a psychic in 96 00:05:20,080 --> 00:05:22,440 Speaker 1: order to be able to time that, really, especially the 97 00:05:22,440 --> 00:05:25,280 Speaker 1: way markets have been lately, Larry. I was looking through 98 00:05:25,320 --> 00:05:27,320 Speaker 1: your holdings as well, and I noticed that Barrett Gold 99 00:05:27,400 --> 00:05:29,120 Speaker 1: is one of your top holdings. And as I kind 100 00:05:29,120 --> 00:05:33,039 Speaker 1: of mentioned off the bat of the show that lately, 101 00:05:33,120 --> 00:05:35,480 Speaker 1: although we had seen this unbelievable run at least in 102 00:05:35,520 --> 00:05:37,960 Speaker 1: the price of spot gold over the past couple of months, 103 00:05:38,000 --> 00:05:42,200 Speaker 1: that since waned as we've seen inflation expectations come off 104 00:05:42,640 --> 00:05:45,080 Speaker 1: as it looks like we might not get a fiscal 105 00:05:45,120 --> 00:05:49,120 Speaker 1: package from Congress. I wonder is your holding of Barrett 106 00:05:49,200 --> 00:05:52,480 Speaker 1: Gold at all tied to an outlook on growth and 107 00:05:52,520 --> 00:05:54,600 Speaker 1: outlook on inflation, or is there a different reason that 108 00:05:54,640 --> 00:05:58,960 Speaker 1: you're actually interested Barrett Gold. It's a very interesting story. 109 00:05:59,600 --> 00:06:03,960 Speaker 1: We made it a big holding when John Thorne, the 110 00:06:04,000 --> 00:06:06,920 Speaker 1: current executive chairman of the board, came in and really 111 00:06:06,920 --> 00:06:08,920 Speaker 1: started to clean up what had been a prior mess 112 00:06:09,000 --> 00:06:11,440 Speaker 1: under old management where they made an acquisition of a 113 00:06:11,480 --> 00:06:15,120 Speaker 1: copper company with no due diligence and they overlevered themselves. 114 00:06:15,680 --> 00:06:20,440 Speaker 1: And I'm primarily a business analyst. Okay, I'm a securities analyst. 115 00:06:20,480 --> 00:06:23,080 Speaker 1: I'm a business analyst, I'm a stock picker, and I'm 116 00:06:23,080 --> 00:06:28,840 Speaker 1: a risk manager. Lastly our macroeconomic thoughts. So Barreck has 117 00:06:28,880 --> 00:06:32,640 Speaker 1: been an important holding for us for a couple of years. 118 00:06:33,320 --> 00:06:38,560 Speaker 1: And I never minded having the optionality of the exposure 119 00:06:38,600 --> 00:06:42,680 Speaker 1: to gold, which is an alternative currency for all intensive purposes, 120 00:06:42,839 --> 00:06:46,200 Speaker 1: as part of the thesis, as long as the majority 121 00:06:46,240 --> 00:06:48,760 Speaker 1: of the thesis, which was the business. The evaluation we 122 00:06:48,880 --> 00:06:54,120 Speaker 1: paid the management team was really the predominant reason to 123 00:06:54,200 --> 00:06:57,000 Speaker 1: be in it now when Barrick merged with Rangold and 124 00:06:57,040 --> 00:06:59,760 Speaker 1: Mark Bristow took over it because the story got even better, 125 00:07:00,120 --> 00:07:02,240 Speaker 1: okay a couple of years ago, because Wrangled was the 126 00:07:02,240 --> 00:07:04,840 Speaker 1: best managed gold miner I think in the world and 127 00:07:05,279 --> 00:07:10,400 Speaker 1: had unbelievable statistics for creating shareholder value. So as I 128 00:07:10,440 --> 00:07:14,720 Speaker 1: was looking at the portfolio somewhat recently, what you've seen 129 00:07:14,920 --> 00:07:17,920 Speaker 1: since the pandemic as far as money printing increases in 130 00:07:18,000 --> 00:07:20,280 Speaker 1: debt and that goes you know, in the US and 131 00:07:20,280 --> 00:07:24,720 Speaker 1: around the world, it does lead one to be even 132 00:07:24,760 --> 00:07:28,120 Speaker 1: happier to have some exposure and material exposure to an 133 00:07:28,160 --> 00:07:31,920 Speaker 1: alternative currency. The thing to keep in mind about these 134 00:07:31,920 --> 00:07:35,000 Speaker 1: types of things, you know, after the OAIT financial crisis, 135 00:07:35,080 --> 00:07:38,640 Speaker 1: the number of people who were thoughtful and you know, 136 00:07:38,800 --> 00:07:40,720 Speaker 1: really had a strong view that we were about to 137 00:07:40,800 --> 00:07:43,560 Speaker 1: enter a period of hyper inflation and the stuff done 138 00:07:43,640 --> 00:07:47,160 Speaker 1: during the Great Financial Crisis to create certain bailouts was 139 00:07:47,200 --> 00:07:50,320 Speaker 1: going to create a weeker dollar and runaway inflation, all 140 00:07:50,400 --> 00:07:53,160 Speaker 1: kinds of problems. There were strong views about that, and instead, 141 00:07:53,240 --> 00:07:56,560 Speaker 1: over the next nine years we had deflation and a 142 00:07:56,600 --> 00:07:59,160 Speaker 1: stronger dollar. So you gotta be very careful because these 143 00:07:59,200 --> 00:08:02,560 Speaker 1: are very difficult things. But from where I sit today, 144 00:08:02,960 --> 00:08:06,720 Speaker 1: Barrick is a we We have an enormous unrealized gain 145 00:08:06,800 --> 00:08:09,440 Speaker 1: in it. The thesis and how they're running the company 146 00:08:09,520 --> 00:08:13,720 Speaker 1: keeps getting better, and it's hard not to look at 147 00:08:13,760 --> 00:08:19,600 Speaker 1: what's happening as far as printing of money deficits stimulus, 148 00:08:19,880 --> 00:08:23,040 Speaker 1: you know, negative real interest rates. The Federal Reserve is 149 00:08:23,440 --> 00:08:25,280 Speaker 1: very clear that they want to keep rates low for 150 00:08:25,320 --> 00:08:28,000 Speaker 1: a long long time, and and feel that it's nice 151 00:08:28,040 --> 00:08:32,520 Speaker 1: to have something in the portfolio that has some potential 152 00:08:32,559 --> 00:08:37,000 Speaker 1: exposure positively to all those things, but wrapped around what 153 00:08:37,120 --> 00:08:39,520 Speaker 1: appears to be a well run company. And it's not 154 00:08:39,559 --> 00:08:42,640 Speaker 1: an easy business to be in. You know, mining is 155 00:08:42,640 --> 00:08:46,440 Speaker 1: is not There's not an enormous number of companies in 156 00:08:46,440 --> 00:08:48,920 Speaker 1: that business that have created a lot of long term value. 157 00:08:48,920 --> 00:08:53,000 Speaker 1: But Mark Bristow has done it. At at Wrangled were 158 00:08:53,080 --> 00:08:55,440 Speaker 1: forever grateful for John Thorn for having come in and 159 00:08:55,480 --> 00:08:57,440 Speaker 1: really right in this ship. And so that's how we 160 00:08:57,480 --> 00:09:00,640 Speaker 1: think about that position and how it he came where 161 00:09:00,679 --> 00:09:03,520 Speaker 1: it is today. It's funny I always think back on 162 00:09:03,559 --> 00:09:06,160 Speaker 1: that there was that famous open letter to the Fed 163 00:09:06,400 --> 00:09:10,600 Speaker 1: that like thirty forty investors and fund managers signed warning 164 00:09:10,640 --> 00:09:14,840 Speaker 1: of you know, Zimbabwe like inflation from quantitative using and 165 00:09:15,120 --> 00:09:17,199 Speaker 1: I guess a lesson there. Larry has never saw in 166 00:09:17,280 --> 00:09:21,120 Speaker 1: your your name to a letter like that predicting dire outcomes. 167 00:09:21,320 --> 00:09:24,480 Speaker 1: The lesson is is that trying to put together a 168 00:09:24,720 --> 00:09:28,880 Speaker 1: portfolio using macroeconomic predictions is really, really hard. There's a 169 00:09:28,920 --> 00:09:30,720 Speaker 1: couple of people in the world that have done it well, 170 00:09:30,760 --> 00:09:33,160 Speaker 1: you know, there's Soros and drugcon Miility. But I think 171 00:09:33,200 --> 00:09:36,400 Speaker 1: a lot of investors you should you should really try 172 00:09:36,760 --> 00:09:42,400 Speaker 1: to steer clear of having that be the thing that is, uh, 173 00:09:42,440 --> 00:09:45,440 Speaker 1: you know, the driving force and how you're picking stocks 174 00:09:45,480 --> 00:09:47,920 Speaker 1: for your portfolio, because it's very, very hard, and very 175 00:09:47,960 --> 00:09:50,400 Speaker 1: few people get that kind of stuff right. So I'm 176 00:09:50,440 --> 00:09:53,200 Speaker 1: and again the interesting thing also, but Barrick is, you know, 177 00:09:53,280 --> 00:09:55,240 Speaker 1: it's become over the last few months, a lot of 178 00:09:55,240 --> 00:09:57,920 Speaker 1: people have become interested in this sector and it's and 179 00:09:58,000 --> 00:10:01,440 Speaker 1: it's interesting. And of course with golden nineteen hundred bucks 180 00:10:01,480 --> 00:10:03,360 Speaker 1: there cash flow is a lot more than when gold 181 00:10:03,400 --> 00:10:05,400 Speaker 1: is a thirteen hundred bucks. But you know, when we 182 00:10:05,840 --> 00:10:07,880 Speaker 1: made it a bigger holding a couple of years ago, 183 00:10:08,360 --> 00:10:10,120 Speaker 1: you know, nobody was calling me up saying, oh, that's 184 00:10:10,160 --> 00:10:11,840 Speaker 1: really interesting you made that a bigger holding. I was 185 00:10:11,840 --> 00:10:13,840 Speaker 1: getting more you know, polite, like what the heck are 186 00:10:13,880 --> 00:10:16,320 Speaker 1: you thinking? And you know what are you doing? And 187 00:10:16,400 --> 00:10:19,600 Speaker 1: you know and and things that I wouldn't repeat on 188 00:10:19,760 --> 00:10:23,240 Speaker 1: your very high class Uh you know, a podcast so 189 00:10:23,320 --> 00:10:25,720 Speaker 1: high class, Larry, I'm sure people are people are writing 190 00:10:25,760 --> 00:10:28,280 Speaker 1: in like why Gold? Why not Apple? But yeah, I'm 191 00:10:28,320 --> 00:10:30,880 Speaker 1: so flattered that you called this high class. I think 192 00:10:30,920 --> 00:10:35,079 Speaker 1: Mike's a bit surprised. I think he might best probably 193 00:10:35,960 --> 00:10:38,920 Speaker 1: I think he he dialed into the wrong but I 194 00:10:38,960 --> 00:10:59,959 Speaker 1: gotta go. But but Larry, you make a great point. 195 00:11:00,040 --> 00:11:02,880 Speaker 1: I mean, I think a lot of investors struggle to 196 00:11:02,920 --> 00:11:06,200 Speaker 1: wear that micro and macro cap at the same time. 197 00:11:06,760 --> 00:11:09,760 Speaker 1: And Sarah and I appreciate being able to talk individual 198 00:11:09,840 --> 00:11:11,280 Speaker 1: names like this. I don't know how many guests we 199 00:11:11,280 --> 00:11:13,560 Speaker 1: have on We're like, I'm not allowed to talk about 200 00:11:13,559 --> 00:11:16,680 Speaker 1: individual stocks, so it's it's refreshing for us. So I 201 00:11:16,720 --> 00:11:19,439 Speaker 1: just I want to talk about the biggest holding um 202 00:11:19,480 --> 00:11:21,800 Speaker 1: at least as of the the end of last month, 203 00:11:22,360 --> 00:11:26,600 Speaker 1: Berkshire Hathaway. Maybe a few listeners have heard of that company, Larry, 204 00:11:26,679 --> 00:11:29,720 Speaker 1: kind of an obscure one there, But uh, are you 205 00:11:30,000 --> 00:11:33,520 Speaker 1: are you a buffetologist, I assume, and I guess the 206 00:11:33,520 --> 00:11:36,720 Speaker 1: the big question I have is, you know, eventually we're 207 00:11:36,720 --> 00:11:39,480 Speaker 1: gonna get this passing of the reins from Buffett to 208 00:11:39,640 --> 00:11:43,400 Speaker 1: his successor. Is that a buying opportunity or a selling opportunity? 209 00:11:43,679 --> 00:11:47,360 Speaker 1: Do you think I've you know, owned you know, Berkshire 210 00:11:47,480 --> 00:11:51,800 Speaker 1: on and off in different sizes for many decades. And 211 00:11:52,120 --> 00:11:55,080 Speaker 1: the interesting thing is that, which I wrote about in 212 00:11:55,800 --> 00:11:58,640 Speaker 1: a last shareholder letter, is that, you know, I find 213 00:11:58,840 --> 00:12:02,920 Speaker 1: that many people who are you know, supposed to be 214 00:12:03,040 --> 00:12:06,240 Speaker 1: you know, professional investors, have very strange ways of thinking 215 00:12:06,280 --> 00:12:09,480 Speaker 1: about Berkshire. Some you know, there's some form of worship 216 00:12:09,559 --> 00:12:12,360 Speaker 1: without really you know, doing any real, you know, deep 217 00:12:12,400 --> 00:12:15,360 Speaker 1: analytical work and thinking about it as a business. And 218 00:12:15,480 --> 00:12:18,360 Speaker 1: some just you know, there's never ending joy in a 219 00:12:18,480 --> 00:12:21,360 Speaker 1: kind of a gotcha kind of moment of finding anything 220 00:12:21,360 --> 00:12:24,120 Speaker 1: that Berkshire does wrong with just like, oh, I told 221 00:12:24,160 --> 00:12:27,160 Speaker 1: you that's so good. So, you know, neither of those 222 00:12:27,200 --> 00:12:30,640 Speaker 1: two extremes are logical ways to think if you're trying 223 00:12:30,679 --> 00:12:35,719 Speaker 1: to make logical decisions with with money. So from my 224 00:12:35,880 --> 00:12:39,280 Speaker 1: perspective when I looked at them, by the way in 225 00:12:39,320 --> 00:12:43,160 Speaker 1: the in you know, March March April, during the height 226 00:12:43,240 --> 00:12:48,400 Speaker 1: of the market collapse, I basically doubled our exposure to Berkshire. So, 227 00:12:49,160 --> 00:12:51,560 Speaker 1: you know what, what was I thinking? I was thinking, well, 228 00:12:51,920 --> 00:12:55,400 Speaker 1: you know, we have an economy that is shut down 229 00:12:55,720 --> 00:12:57,880 Speaker 1: to a great extent. Here's a company that has a 230 00:12:57,920 --> 00:13:01,320 Speaker 1: hundred forty billion dollars of of cash. Here's a company 231 00:13:01,320 --> 00:13:07,360 Speaker 1: that has a long history of great shareholder returns. Their 232 00:13:07,440 --> 00:13:11,240 Speaker 1: main business is property and casualty insurance in a couple 233 00:13:11,240 --> 00:13:15,600 Speaker 1: of different sectors. My feeling was that property and casualty insurance, 234 00:13:15,640 --> 00:13:20,400 Speaker 1: the market for pricing in terms is improving claims from 235 00:13:20,480 --> 00:13:22,000 Speaker 1: the and they would be able to deal with the 236 00:13:22,040 --> 00:13:25,400 Speaker 1: you know, COVID nineteen claims, and there's some noise around 237 00:13:25,559 --> 00:13:28,360 Speaker 1: some of that. And the stock price was I thought, 238 00:13:28,400 --> 00:13:31,520 Speaker 1: selling at a very attractive price really kind of approached 239 00:13:31,520 --> 00:13:35,760 Speaker 1: the book value. The optionality for them to put money 240 00:13:35,800 --> 00:13:39,200 Speaker 1: to work in different rescue financing and transactions existed, though 241 00:13:39,200 --> 00:13:41,920 Speaker 1: they may or may not do it, and I think 242 00:13:42,000 --> 00:13:45,080 Speaker 1: it's unfortunately a certainty that at some point Mr Buffet 243 00:13:45,080 --> 00:13:48,000 Speaker 1: and Mrmonger won't be you know, calling the shots anymore, 244 00:13:48,120 --> 00:13:51,400 Speaker 1: I think, and I have some knowledge the bench at 245 00:13:51,440 --> 00:13:56,240 Speaker 1: Berkshire is much more talented and deeper, uh than I 246 00:13:56,240 --> 00:13:59,280 Speaker 1: think people really give it credit for. And I think 247 00:13:59,280 --> 00:14:02,680 Speaker 1: Berkshire twenty years ago was really, you know, a holding 248 00:14:02,679 --> 00:14:05,000 Speaker 1: company with a securities portfolio. I think it's much more 249 00:14:05,000 --> 00:14:09,360 Speaker 1: than that today. The magic of Berkshire is the generation 250 00:14:09,400 --> 00:14:13,160 Speaker 1: of insurance float at no cost, which then can be 251 00:14:13,200 --> 00:14:16,120 Speaker 1: invested and helped to drive book value growth. And a 252 00:14:16,160 --> 00:14:21,440 Speaker 1: couple of very large businesses, the railroad business, the utility business, uh, 253 00:14:21,560 --> 00:14:24,680 Speaker 1: the insurance business, and an investment portfolio that one has 254 00:14:24,720 --> 00:14:26,640 Speaker 1: to make a judgment of. So when you when you 255 00:14:26,640 --> 00:14:29,360 Speaker 1: put that all in the mix, I thought, at the 256 00:14:29,440 --> 00:14:32,960 Speaker 1: prices that were available in the spring, I thought these 257 00:14:32,960 --> 00:14:36,120 Speaker 1: were really dirt cheap prices, and so we what an 258 00:14:36,200 --> 00:14:40,080 Speaker 1: enormous amount. And you know, I think that it is 259 00:14:40,120 --> 00:14:44,680 Speaker 1: playing out reasonably well. The negative on Berkshire, which is material, 260 00:14:44,760 --> 00:14:46,680 Speaker 1: it's just size. It's hard to move the needle. You know, 261 00:14:46,680 --> 00:14:49,560 Speaker 1: it's five billion dollar market cap and they do something 262 00:14:49,680 --> 00:14:51,600 Speaker 1: very clever and they make a billion dollars. It doesn't 263 00:14:51,640 --> 00:14:55,400 Speaker 1: really move the needle that much. But if you buy 264 00:14:55,400 --> 00:14:57,840 Speaker 1: back more stock or you know, at some point you 265 00:14:58,040 --> 00:15:01,120 Speaker 1: distribute more money, you know, that's a lovable problem. So 266 00:15:01,760 --> 00:15:04,520 Speaker 1: One of the keys I found over over all the 267 00:15:04,600 --> 00:15:08,160 Speaker 1: years is just to try and be rational and not 268 00:15:08,600 --> 00:15:11,720 Speaker 1: you know, get caught up in too much emotional drama 269 00:15:11,760 --> 00:15:14,840 Speaker 1: about how you think about any holding. You know, so Berkshire. 270 00:15:14,840 --> 00:15:17,320 Speaker 1: I may change my mind one day, but I thought 271 00:15:17,320 --> 00:15:20,080 Speaker 1: it was a very good thing to increase our exposure 272 00:15:20,160 --> 00:15:23,080 Speaker 1: to dramatically in this spring. And as it turns out, 273 00:15:23,160 --> 00:15:26,200 Speaker 1: you know, a lot of the criticism lately of Berkshire 274 00:15:26,320 --> 00:15:29,080 Speaker 1: had been, oh, you know, it's a it's a lot 275 00:15:29,120 --> 00:15:31,800 Speaker 1: of old economy assets. Will meanwhile, you know, something like 276 00:15:32,480 --> 00:15:37,480 Speaker 1: the portfolio is Apple and they've been too inactive. Well, 277 00:15:38,200 --> 00:15:41,960 Speaker 1: you know, shortly after all that criticism, they made a 278 00:15:42,000 --> 00:15:45,080 Speaker 1: ten billion dollar deal from some you know, natural gas 279 00:15:45,080 --> 00:15:49,200 Speaker 1: distribution assets from Dominion. Uh, you know, so there, and 280 00:15:49,240 --> 00:15:52,000 Speaker 1: they've done plenty of other things over the last month 281 00:15:52,120 --> 00:15:55,040 Speaker 1: or so, so you know, and you had a board member, actually, 282 00:15:55,040 --> 00:15:57,640 Speaker 1: Meryl Whitmer, who's well respected investors on the board, who 283 00:15:57,640 --> 00:16:00,360 Speaker 1: bought I think two million dollars worth is in the 284 00:16:00,360 --> 00:16:02,960 Speaker 1: open market for herself and her family in the spring. 285 00:16:03,040 --> 00:16:06,360 Speaker 1: So you know, but again we'll just try. You know, 286 00:16:07,400 --> 00:16:12,280 Speaker 1: I'm ably assisted here in in uh doing the analysis 287 00:16:12,280 --> 00:16:15,560 Speaker 1: and running a good haven on the portfolio side. Uh, 288 00:16:15,640 --> 00:16:18,160 Speaker 1: you know, by ARTI quak and we'll just continue to 289 00:16:18,360 --> 00:16:21,080 Speaker 1: you know, crunch through the numbers and and think about, 290 00:16:21,280 --> 00:16:23,680 Speaker 1: you know, where the business or the company has headed 291 00:16:23,720 --> 00:16:43,480 Speaker 1: over time. I kept thinking back during the turmoil in 292 00:16:43,520 --> 00:16:47,040 Speaker 1: the spring. I kept thinking back to the financial crisis, 293 00:16:47,280 --> 00:16:51,600 Speaker 1: when they made those really well timed investments, uh with 294 00:16:51,680 --> 00:16:53,680 Speaker 1: the preferred shares and in some of the banks that 295 00:16:53,720 --> 00:16:57,440 Speaker 1: were struggling back then. I was kind of expecting something 296 00:16:57,480 --> 00:17:00,400 Speaker 1: like that this time. I wonder if it's know, if 297 00:17:00,400 --> 00:17:03,520 Speaker 1: it tells you anything. You know, Buffett calls it his 298 00:17:03,840 --> 00:17:06,919 Speaker 1: elephant hunting gun. All that cash, you know, he like 299 00:17:07,000 --> 00:17:09,439 Speaker 1: you said, he's he's fired a few shots from it, 300 00:17:09,520 --> 00:17:13,560 Speaker 1: but still kind of holding fire with all that cash 301 00:17:13,640 --> 00:17:15,720 Speaker 1: through all all of this. Does that tell you anything 302 00:17:15,760 --> 00:17:21,040 Speaker 1: about perhaps how just uncertain and risky this environment is 303 00:17:21,440 --> 00:17:24,000 Speaker 1: where where Buffett doesn't seem to be comfortable really writing 304 00:17:24,000 --> 00:17:27,080 Speaker 1: a giant check for for some distressed asset right now. 305 00:17:27,840 --> 00:17:31,920 Speaker 1: I think in the March and April time frame, one 306 00:17:31,920 --> 00:17:35,399 Speaker 1: of the things that I think got in the way 307 00:17:35,560 --> 00:17:38,080 Speaker 1: of Berkshire potentially doing some rescue finance was the FED 308 00:17:38,200 --> 00:17:41,680 Speaker 1: coming in so fast and in such an extreme way 309 00:17:42,040 --> 00:17:45,600 Speaker 1: into the credit markets, which I think allowed a lot 310 00:17:45,680 --> 00:17:49,719 Speaker 1: of bar words that were viable and interesting but on 311 00:17:49,760 --> 00:17:53,600 Speaker 1: somewhat shaky ground to access. The fixed income markets are 312 00:17:53,600 --> 00:17:57,440 Speaker 1: the equity markets, and you saw the you know, the 313 00:17:57,520 --> 00:18:00,720 Speaker 1: number of underwriting is done by across the investment banking spectrum. 314 00:18:00,720 --> 00:18:04,040 Speaker 1: And I think, you know, if not for that massive 315 00:18:04,040 --> 00:18:08,359 Speaker 1: FED intervention, some of those companies would have been knocking 316 00:18:08,400 --> 00:18:11,320 Speaker 1: on Berkshire's door, you know, but you know again, you know, 317 00:18:11,400 --> 00:18:15,000 Speaker 1: they they have not been. Thursday morning, Berkshire announced a 318 00:18:15,040 --> 00:18:18,360 Speaker 1: deal with Scripts which was a you know, a preferred 319 00:18:18,400 --> 00:18:21,400 Speaker 1: with some warrants on very attractive terms, you know, kind 320 00:18:21,400 --> 00:18:25,160 Speaker 1: of of smaller size, but a very typical Berkshire deal. 321 00:18:25,240 --> 00:18:28,200 Speaker 1: And you know they did by, you know, recently a 322 00:18:28,240 --> 00:18:31,040 Speaker 1: slug of all the Japanese the five or six major 323 00:18:31,119 --> 00:18:34,040 Speaker 1: Japanese trading houses, and you know, so but they were 324 00:18:34,119 --> 00:18:37,320 Speaker 1: less active at that period. And you know, again, I 325 00:18:37,400 --> 00:18:39,840 Speaker 1: think there were a couple of reasons. And and Mr 326 00:18:39,840 --> 00:18:42,880 Speaker 1: buffin May very well and Deputies May very very well 327 00:18:42,880 --> 00:18:47,240 Speaker 1: looked at, uh, you know, a shutdown economy and said, well, 328 00:18:47,359 --> 00:18:50,280 Speaker 1: you know, let's you know, let's tread gingerly a little bit. 329 00:18:50,320 --> 00:18:52,159 Speaker 1: But I think the FED intervention and the ability of 330 00:18:52,200 --> 00:18:55,960 Speaker 1: companies to access traditional financing so quickly. It was very 331 00:18:55,960 --> 00:18:59,080 Speaker 1: different than if you remember the the global financial crisis. 332 00:18:59,160 --> 00:19:04,200 Speaker 1: That's not that that process took months. You know that, 333 00:19:04,480 --> 00:19:07,280 Speaker 1: you know, FED intervention and go for you know that, 334 00:19:07,359 --> 00:19:10,880 Speaker 1: and it gave Berkshire an opportunity to you know, put 335 00:19:10,960 --> 00:19:13,760 Speaker 1: some capital to work. It does feel as though, I 336 00:19:13,760 --> 00:19:16,560 Speaker 1: mean policy response, but everything this year has almost just 337 00:19:16,600 --> 00:19:19,800 Speaker 1: happened at warp speed. Um. You mentioned earlier on the 338 00:19:19,960 --> 00:19:22,679 Speaker 1: Larry how Berkshire is a really big company. Um, so 339 00:19:22,720 --> 00:19:24,600 Speaker 1: something has to happen to really move the needle. And 340 00:19:24,640 --> 00:19:26,159 Speaker 1: I'm just gonna make my way down the list and 341 00:19:26,200 --> 00:19:28,199 Speaker 1: looking at the portfolio, and I see you also have 342 00:19:28,240 --> 00:19:31,040 Speaker 1: Alphabet as another one of your top holdings, which is 343 00:19:31,080 --> 00:19:33,479 Speaker 1: also a large company. And I'm also going to preface 344 00:19:33,480 --> 00:19:35,520 Speaker 1: this by saying it's my turn now, Mike to ask 345 00:19:35,560 --> 00:19:40,560 Speaker 1: a twelve part question. Uh, but one I want to 346 00:19:40,600 --> 00:19:43,200 Speaker 1: ask you. I know, Uh, there's a lot of talk 347 00:19:43,240 --> 00:19:45,479 Speaker 1: about how some people when they think of value investing, 348 00:19:45,480 --> 00:19:47,760 Speaker 1: they think about it in the wrong way that some 349 00:19:47,840 --> 00:19:51,640 Speaker 1: think of value investing, and you're leaving out possible ways 350 00:19:51,640 --> 00:19:54,560 Speaker 1: to value a company. You know, especially this year, a 351 00:19:54,600 --> 00:19:57,119 Speaker 1: lot of people have brought up conversations about how to 352 00:19:57,200 --> 00:20:00,520 Speaker 1: price the likes of intangible assets, and I just wonder 353 00:20:00,560 --> 00:20:03,600 Speaker 1: how you work this into your thinking um and your 354 00:20:03,640 --> 00:20:07,120 Speaker 1: process when you're looking at companies to put in your portfolio, 355 00:20:07,200 --> 00:20:11,359 Speaker 1: and how Alphabet might fit into that that process as well. 356 00:20:11,920 --> 00:20:13,239 Speaker 1: By the way, Mike, I don't know how to tell 357 00:20:13,280 --> 00:20:15,159 Speaker 1: you this, but that's my favorite question so far that 358 00:20:15,240 --> 00:20:18,679 Speaker 1: Sarah just asked. So well, thank you. Don't take this 359 00:20:18,720 --> 00:20:23,000 Speaker 1: the wrong way, you know, Sarah, you raised a really 360 00:20:23,000 --> 00:20:26,760 Speaker 1: interesting point. And in my last shareholder letter, I attached 361 00:20:26,920 --> 00:20:32,080 Speaker 1: a letter I had written to then clients talking about 362 00:20:32,119 --> 00:20:37,800 Speaker 1: how owning good businesses with high returns on capital that 363 00:20:38,000 --> 00:20:41,960 Speaker 1: had some defensible mode of some sort, that were well 364 00:20:42,040 --> 00:20:46,720 Speaker 1: managed quality is not inconsistent with value investing. And it's 365 00:20:46,720 --> 00:20:49,719 Speaker 1: one of the things that I think is, uh, you know, 366 00:20:49,880 --> 00:20:52,399 Speaker 1: here at good Haven, as I took control of the 367 00:20:52,440 --> 00:20:55,800 Speaker 1: firm recently, we we needed to hearken back to a 368 00:20:55,840 --> 00:21:01,640 Speaker 1: little bit more our history and owning Alphabet for instance, Uh, 369 00:21:02,000 --> 00:21:06,920 Speaker 1: you know, purchases were mostly made after a bunch of 370 00:21:07,000 --> 00:21:10,040 Speaker 1: years ago, after they had uh you know, they had 371 00:21:10,080 --> 00:21:13,600 Speaker 1: shortly bought YouTube and there was all kinds of noise, 372 00:21:13,640 --> 00:21:15,840 Speaker 1: people saying, oh my god, you know you paid whatever 373 00:21:15,880 --> 00:21:17,879 Speaker 1: it was, a billion, six billion eight to YouTube and 374 00:21:18,000 --> 00:21:23,080 Speaker 1: that's an insane evaluation. And the companies a one tricked pony, 375 00:21:23,240 --> 00:21:27,359 Speaker 1: and you know, paid searches is peaking. And I think 376 00:21:27,680 --> 00:21:30,640 Speaker 1: that you make a very good point, Sarah. I think, 377 00:21:30,680 --> 00:21:33,440 Speaker 1: first of all, in the world of technology, for those 378 00:21:33,440 --> 00:21:35,080 Speaker 1: of us that have been around a long time, one 379 00:21:35,119 --> 00:21:39,040 Speaker 1: of the problems with investing in technology many years ago, Okay, 380 00:21:39,040 --> 00:21:41,399 Speaker 1: in my my recent letter, I talked about how in 381 00:21:42,080 --> 00:21:44,560 Speaker 1: two of somebody come to and said, look, half the 382 00:21:45,359 --> 00:21:47,760 Speaker 1: you know, half the world, you know in ten or 383 00:21:47,760 --> 00:21:49,639 Speaker 1: fifteen years is going to have a PC. You know, 384 00:21:49,680 --> 00:21:51,160 Speaker 1: you want to put a big chunk of your net 385 00:21:51,160 --> 00:21:53,359 Speaker 1: worth in the top three PC companies. And they were 386 00:21:53,400 --> 00:21:55,679 Speaker 1: then Commodore, Tandy and Whang. And if you would have 387 00:21:55,680 --> 00:21:57,359 Speaker 1: done that, you would have lost a lot of money. Right. 388 00:21:57,760 --> 00:21:59,520 Speaker 1: It was a very hard business to see the future 389 00:21:59,520 --> 00:22:02,840 Speaker 1: because it was aging so rapidly. However, if you looked 390 00:22:02,840 --> 00:22:05,440 Speaker 1: at you know, Alphabet six seven, eight years ago, I 391 00:22:05,480 --> 00:22:08,120 Speaker 1: think you would have seen something selling it a relatively 392 00:22:08,760 --> 00:22:11,879 Speaker 1: attractive p ratio, maybe not eight times earnings, maybe was 393 00:22:11,920 --> 00:22:15,119 Speaker 1: low teens or mid teens and growing rapidly. And then 394 00:22:15,160 --> 00:22:16,639 Speaker 1: you had to do some research and you had to 395 00:22:16,640 --> 00:22:20,480 Speaker 1: say to yourself, Okay, you know the snowball of advertising 396 00:22:20,520 --> 00:22:23,359 Speaker 1: budgets moving digital from non digital. You know where is 397 00:22:23,359 --> 00:22:25,320 Speaker 1: it is? The ninth inning is at the second ending? 398 00:22:25,400 --> 00:22:27,600 Speaker 1: Is it's still growing? And and how are they going 399 00:22:27,640 --> 00:22:30,840 Speaker 1: to allocate capital? And what about these new things they 400 00:22:30,880 --> 00:22:34,520 Speaker 1: just bought YouTube? Is it sensible? And I think if 401 00:22:34,560 --> 00:22:37,600 Speaker 1: one would have come to a sensible conclusion, I think 402 00:22:37,640 --> 00:22:41,760 Speaker 1: the earnings and Alphabet's case, I think the earnings growth 403 00:22:42,320 --> 00:22:45,199 Speaker 1: over the last six or seven years has you know, 404 00:22:45,320 --> 00:22:48,199 Speaker 1: very much told the story of the underlying intrinsic value growth. 405 00:22:48,680 --> 00:22:51,639 Speaker 1: I think that, Sarah, your question raises a you know, 406 00:22:51,720 --> 00:22:54,399 Speaker 1: kind of an interesting point. Was some of the differences 407 00:22:54,440 --> 00:22:57,119 Speaker 1: in today and looking at a company like an Alphabet 408 00:22:57,200 --> 00:23:00,880 Speaker 1: or an Apple. First, of all, these companies they take 409 00:23:01,000 --> 00:23:04,400 Speaker 1: very little capital to run. I mean many many years ago. 410 00:23:04,440 --> 00:23:06,719 Speaker 1: If you look at general motors are Bethlehem Steel or 411 00:23:07,280 --> 00:23:09,679 Speaker 1: a ust you know, it takes an enormous amount of 412 00:23:09,720 --> 00:23:13,639 Speaker 1: actual physical you know, plant equipment to an inventory to 413 00:23:13,680 --> 00:23:16,320 Speaker 1: make these things run. Digital companies are are different, and 414 00:23:16,400 --> 00:23:19,680 Speaker 1: often you know, there's less capital spending, but there's more 415 00:23:19,800 --> 00:23:22,560 Speaker 1: run through the income statements. So you make a very 416 00:23:22,600 --> 00:23:25,959 Speaker 1: good point that one has to consider such things as 417 00:23:26,000 --> 00:23:30,160 Speaker 1: intangible assets and and returns on capital and think about 418 00:23:30,160 --> 00:23:34,240 Speaker 1: it all differently. I don't think that one wants to 419 00:23:34,320 --> 00:23:39,760 Speaker 1: wade into starting to veer into you know, metrics, you know, 420 00:23:41,200 --> 00:23:43,520 Speaker 1: is all about having they eyeballs. I don't think that 421 00:23:43,520 --> 00:23:47,240 Speaker 1: that's necessary of a way to think about valuation. To 422 00:23:47,359 --> 00:23:51,880 Speaker 1: have found some of the big tech companies where Alphabet 423 00:23:51,960 --> 00:23:55,040 Speaker 1: or Facebook attractive investments at different points over the last six, 424 00:23:55,080 --> 00:23:57,840 Speaker 1: seven or eight or eight years, and I think it 425 00:23:57,840 --> 00:24:01,840 Speaker 1: it is important for value of people, you know, to 426 00:24:02,840 --> 00:24:06,960 Speaker 1: not forget that owning quality is perfectly consistent with value. 427 00:24:07,000 --> 00:24:09,360 Speaker 1: The other thing that I think you're raising a good 428 00:24:09,440 --> 00:24:11,720 Speaker 1: question is if you own something of such good quality 429 00:24:12,200 --> 00:24:15,040 Speaker 1: and it grows very well, you should be very loath 430 00:24:15,200 --> 00:24:17,920 Speaker 1: to sell it just because the valuation is no longer 431 00:24:18,000 --> 00:24:21,719 Speaker 1: dirt cheap. That's a second issue. But anyway, that's all right. 432 00:24:21,760 --> 00:24:24,159 Speaker 1: I think we've gotten most of the top holdings, but 433 00:24:24,280 --> 00:24:27,240 Speaker 1: one more before we get to the crazy things. Jeffries, uh, 434 00:24:27,320 --> 00:24:30,000 Speaker 1: Jeffreys Financial Group, tell us what you like about them? Well, 435 00:24:31,040 --> 00:24:37,320 Speaker 1: Jeffreys reported earnings Thursday morning that we're you know, stellar. 436 00:24:37,960 --> 00:24:40,320 Speaker 1: You know, I can think of a few more even, 437 00:24:40,880 --> 00:24:45,679 Speaker 1: you know, even more positive words. Jeffries is a investment 438 00:24:45,760 --> 00:24:49,200 Speaker 1: bank that came together through the merger of Old Jeffreys 439 00:24:49,240 --> 00:24:53,560 Speaker 1: and Leucadia. Rich Handler runs the place very well and 440 00:24:53,560 --> 00:24:57,800 Speaker 1: owns an enormous amount of stock. The price, even after 441 00:24:58,560 --> 00:25:02,960 Speaker 1: you know some recent gains is probably uh, let's call 442 00:25:03,000 --> 00:25:06,000 Speaker 1: it eighteen bucks. I think tangible book values twenty six bucks. 443 00:25:06,600 --> 00:25:09,959 Speaker 1: They're improving the return on equity. They're good at what 444 00:25:10,000 --> 00:25:13,080 Speaker 1: they do, they're good at protecting book value. And in 445 00:25:13,119 --> 00:25:17,400 Speaker 1: a world where bargains are not easy to find, I 446 00:25:17,440 --> 00:25:21,880 Speaker 1: think something at that valuation with that kind of talented 447 00:25:21,920 --> 00:25:25,439 Speaker 1: management team, and again, you know, the earnings that you 448 00:25:25,520 --> 00:25:28,399 Speaker 1: have seen you both Thursday morning and in the recent 449 00:25:28,400 --> 00:25:30,200 Speaker 1: couple of quarters, I think should tell you that they're 450 00:25:30,240 --> 00:25:33,160 Speaker 1: on the right track. You know. I I always expected 451 00:25:33,200 --> 00:25:36,240 Speaker 1: them to get rolled up by another bank. Um, I 452 00:25:36,280 --> 00:25:38,520 Speaker 1: wonder what what the story is there. Maybe Handler just 453 00:25:38,600 --> 00:25:41,840 Speaker 1: as wants no part of that right now. I don't know. 454 00:25:42,480 --> 00:25:45,760 Speaker 1: That's that's something you'll have to ask him. But you know, 455 00:25:45,800 --> 00:25:49,560 Speaker 1: I think I think from as an owner, I think 456 00:25:50,320 --> 00:25:53,600 Speaker 1: as long as they continue to, you know, to build value. 457 00:25:54,240 --> 00:25:56,480 Speaker 1: I think everything will you know, the rest of it 458 00:25:56,520 --> 00:25:58,640 Speaker 1: will take care of them, will take care of itself. 459 00:25:58,880 --> 00:26:02,720 Speaker 1: So all right, fair enough, Sarah. We'll have to get uh, 460 00:26:02,960 --> 00:26:05,200 Speaker 1: have to get Rich Handler on the show and UH 461 00:26:05,520 --> 00:26:07,560 Speaker 1: explain it all to us. Something that'll be the next ask. 462 00:26:10,560 --> 00:26:13,680 Speaker 1: All right, it's that time. It's it's the time you've 463 00:26:13,680 --> 00:26:16,160 Speaker 1: been waiting for the craziest things we saw in markets 464 00:26:16,160 --> 00:26:19,720 Speaker 1: this week. Stand clear of the craziest things we saw 465 00:26:19,760 --> 00:26:23,400 Speaker 1: in markets this week. I'm gonna go first, Sara, Yeah, 466 00:26:23,400 --> 00:26:25,320 Speaker 1: because we've been waiting on our toes just because we 467 00:26:25,359 --> 00:26:27,640 Speaker 1: want to hear what's gross that you have to tell us. Mike, 468 00:26:28,000 --> 00:26:31,760 Speaker 1: I've been waiting with bated brev as you can probably guess. 469 00:26:32,160 --> 00:26:34,760 Speaker 1: I am a big fan of of the alternative at 470 00:26:35,080 --> 00:26:41,119 Speaker 1: Alternative Alternative Asset UH marketplace, and Sarah does not get 471 00:26:41,160 --> 00:26:44,600 Speaker 1: any more alternative than this. And I should give a 472 00:26:44,680 --> 00:26:46,840 Speaker 1: plug to the terminal. If you have a Bloomberg terminal 473 00:26:47,400 --> 00:26:52,320 Speaker 1: type in NI space, auction go and you'll you can 474 00:26:52,320 --> 00:26:54,440 Speaker 1: follow along with the crazy things I find on there, 475 00:26:54,480 --> 00:26:58,159 Speaker 1: because there's always something crazy being auctioned UH in the 476 00:26:58,200 --> 00:27:02,800 Speaker 1: alternative asset space and this is really alternative, Sarah, so 477 00:27:03,040 --> 00:27:05,240 Speaker 1: and I auction though you just gave up your sweet sauce. 478 00:27:05,520 --> 00:27:07,000 Speaker 1: I did, I know, and I got other I have 479 00:27:07,040 --> 00:27:08,840 Speaker 1: other tricks. I have other tricks, though, So I I 480 00:27:09,359 --> 00:27:11,320 Speaker 1: throw the bone. Throw the bone to people a little bit. 481 00:27:12,240 --> 00:27:15,920 Speaker 1: As you probably know, UH, there's a robust market for 482 00:27:16,240 --> 00:27:19,440 Speaker 1: Michael Jackson memorabilia. You know, if you could get your 483 00:27:19,480 --> 00:27:22,119 Speaker 1: hands on one of his old gloves or one of 484 00:27:22,119 --> 00:27:26,240 Speaker 1: those loafers he moon walked in worth of fortune. This 485 00:27:26,280 --> 00:27:30,240 Speaker 1: one shocked me. Though. Someone is auctioning off I should 486 00:27:30,240 --> 00:27:32,560 Speaker 1: preps this. As you may remember, Michael Jackson had some 487 00:27:32,560 --> 00:27:35,840 Speaker 1: some problems with drug abuse towards the end there, and 488 00:27:35,960 --> 00:27:39,960 Speaker 1: he was right before he died, he was actually hooked 489 00:27:40,040 --> 00:27:44,399 Speaker 1: up to UH and I V that would administer these 490 00:27:44,440 --> 00:27:47,720 Speaker 1: these painkiller drugs to him. It's a tragic story too. 491 00:27:47,720 --> 00:27:49,439 Speaker 1: I'm kind of now, I'm kind of feeling bad I 492 00:27:49,440 --> 00:27:52,239 Speaker 1: even brought this up. Anyway, it better be worth it. 493 00:27:52,440 --> 00:27:56,679 Speaker 1: Someone in is auctioning off the final I V Bag 494 00:27:56,960 --> 00:28:00,960 Speaker 1: that he was hooked up to, and it comes complete 495 00:28:01,080 --> 00:28:04,879 Speaker 1: with Michael Jackson's blood stains on the I V bag. 496 00:28:06,880 --> 00:28:09,760 Speaker 1: I'm ashamed of myself. I can see our producer. She's 497 00:28:09,800 --> 00:28:13,160 Speaker 1: like she's covering her face. She's so ashamed of this, 498 00:28:13,359 --> 00:28:15,680 Speaker 1: of this crazy thing. Okay, this is ridiculous, but I'm 499 00:28:15,720 --> 00:28:19,159 Speaker 1: also I can't say I'm not curious for what this 500 00:28:19,240 --> 00:28:22,360 Speaker 1: is going for. Well, let's I was going to get 501 00:28:22,359 --> 00:28:25,520 Speaker 1: to that. Let's let's play prices right now. And here's 502 00:28:25,520 --> 00:28:27,320 Speaker 1: where the value comes in, I think is if it 503 00:28:27,400 --> 00:28:30,280 Speaker 1: is stained with his blood. I mean you could maybe 504 00:28:30,280 --> 00:28:32,600 Speaker 1: clone Michael Jackson. I'm just throwing that out there to 505 00:28:32,720 --> 00:28:35,880 Speaker 1: the buyers out there. If some if some crazy mad 506 00:28:35,960 --> 00:28:38,400 Speaker 1: scientists looking guy in a lab coat and wild hair 507 00:28:38,440 --> 00:28:40,600 Speaker 1: shows up at this auction, I think we know where 508 00:28:40,640 --> 00:28:42,800 Speaker 1: this is going. That's the only one should be able 509 00:28:42,840 --> 00:28:46,520 Speaker 1: to go. Let's play prices, right, Sarah, what would you 510 00:28:46,560 --> 00:28:50,360 Speaker 1: expect to bid for the winning bid to be for 511 00:28:50,360 --> 00:28:53,479 Speaker 1: for this item? I'm lost. I I don't even have 512 00:28:53,520 --> 00:28:57,080 Speaker 1: anything to base this off of. I have no single comparison. 513 00:28:57,280 --> 00:29:00,720 Speaker 1: But I'm gonna go ahead and I'm going I guess 514 00:29:01,800 --> 00:29:09,200 Speaker 1: to k Oh, I've got a lot of lousy poker 515 00:29:09,240 --> 00:29:11,959 Speaker 1: face on that one. Larry, uh So, Larry, you can 516 00:29:12,000 --> 00:29:14,280 Speaker 1: probably you can probably read my poker face there. And 517 00:29:14,400 --> 00:29:16,520 Speaker 1: and let's hear your prices are right. I don't know. 518 00:29:16,600 --> 00:29:18,320 Speaker 1: I kind of liked I kind of like the range 519 00:29:18,320 --> 00:29:23,560 Speaker 1: of Sarah's price. Yeah, yeah, Tift. I so think the 520 00:29:23,600 --> 00:29:28,160 Speaker 1: guys it's some memorabilia merchant in Las Vegas who is 521 00:29:28,200 --> 00:29:30,960 Speaker 1: in charge of this auction. They're saying they're they're hoping 522 00:29:31,000 --> 00:29:35,120 Speaker 1: to get I agree that that's slow. I don't know 523 00:29:35,120 --> 00:29:38,560 Speaker 1: about two. Unless you can actually clone Michael Jackson, then 524 00:29:38,760 --> 00:29:41,400 Speaker 1: you know, then what what prices? At least I got 525 00:29:41,440 --> 00:29:45,320 Speaker 1: the base right, but I look I I as soon 526 00:29:45,360 --> 00:29:49,240 Speaker 1: as I said it, I knew I likely overshot, but 527 00:29:53,720 --> 00:29:58,440 Speaker 1: nothing to compare. Well, you know, maybe they're low ball 528 00:29:58,440 --> 00:30:01,760 Speaker 1: in here, and and someone as enthusiastic of a collector 529 00:30:01,840 --> 00:30:04,720 Speaker 1: is Sarah Ponza will show up and and bid two two. 530 00:30:05,520 --> 00:30:07,320 Speaker 1: I am a big Michael Jackson music fan. I must 531 00:30:07,320 --> 00:30:09,640 Speaker 1: say that's there you go, there you go. So I 532 00:30:09,680 --> 00:30:12,120 Speaker 1: apologize to anyone who's grossed out by that. I'm kind 533 00:30:12,120 --> 00:30:14,400 Speaker 1: of grossed out myself about the about that one, but 534 00:30:15,080 --> 00:30:18,080 Speaker 1: I wanted to. I wanted to show you how strange 535 00:30:18,240 --> 00:30:21,520 Speaker 1: and how crazy the alternative asset space can go. Sara, 536 00:30:21,600 --> 00:30:24,480 Speaker 1: you talked to a lot of allocation experts. Maybe you 537 00:30:24,600 --> 00:30:27,240 Speaker 1: can throw that in there. What sort of allocations should 538 00:30:27,240 --> 00:30:31,600 Speaker 1: you should you have to celebrity I v bags. Yeah, 539 00:30:31,600 --> 00:30:34,000 Speaker 1: the next time I'm on the phone with a multi 540 00:30:34,000 --> 00:30:37,800 Speaker 1: asset strategist or investor, I'm gonna suggest this, say, you know, 541 00:30:37,800 --> 00:30:41,000 Speaker 1: and instead of adding to your gold that's in your portfolio, 542 00:30:41,560 --> 00:30:44,120 Speaker 1: you should run an I auction on the terminal and uh, 543 00:30:44,240 --> 00:30:48,680 Speaker 1: see what you can get better bang for your buck. Look, 544 00:30:48,760 --> 00:30:51,960 Speaker 1: Larry's Larry's fund has a decent amount of cash. It 545 00:30:51,960 --> 00:30:56,800 Speaker 1: out there, all right, Sarah, what do you gut? Can 546 00:30:56,800 --> 00:30:59,280 Speaker 1: you top that? I don't think I can stop it, 547 00:30:59,360 --> 00:31:02,040 Speaker 1: to be honest, but let's go ahead with it anyway. 548 00:31:02,160 --> 00:31:05,320 Speaker 1: So we've been talking a lot about trying to figure 549 00:31:05,320 --> 00:31:08,520 Speaker 1: out the right way to value a company and knowing 550 00:31:08,600 --> 00:31:12,160 Speaker 1: a company that you owned. Well, this week there was 551 00:31:12,200 --> 00:31:14,360 Speaker 1: just a bit of a funny I guess I'm gonna 552 00:31:14,360 --> 00:31:19,840 Speaker 1: call it a kerfuffle. Um that uh didn't really make sense. 553 00:31:19,840 --> 00:31:22,040 Speaker 1: So at the beginning of the week, there were these 554 00:31:22,040 --> 00:31:26,120 Speaker 1: reports that Amazon was partnering with Echelon Fitness to make 555 00:31:26,160 --> 00:31:29,479 Speaker 1: a five hundred dollar fitness bike, and it immediately tanked 556 00:31:29,520 --> 00:31:34,360 Speaker 1: Peloton's stock price. Because everyone knows that when Amazon enters 557 00:31:34,400 --> 00:31:37,640 Speaker 1: your space, Um, not the best thing for you as 558 00:31:37,640 --> 00:31:41,480 Speaker 1: a company. Well, the next day, it didn't take very long. 559 00:31:41,800 --> 00:31:44,520 Speaker 1: Amazon came out and denied that they were in partnership 560 00:31:44,600 --> 00:31:47,560 Speaker 1: for this bike at all. They told Echelon to stop 561 00:31:47,640 --> 00:31:50,680 Speaker 1: selling the bike. Supposedly this was being called the X 562 00:31:50,840 --> 00:31:55,160 Speaker 1: Prime bike, and an Amazon spokeswoman had to come out 563 00:31:55,720 --> 00:31:58,680 Speaker 1: and basically say the bike wasn't related to Amazon, and 564 00:31:58,720 --> 00:32:03,200 Speaker 1: Echelon then blamed the it in on quote unquote miscommunication. Um, 565 00:32:03,240 --> 00:32:05,240 Speaker 1: and it really makes me think, like I wonder if 566 00:32:05,240 --> 00:32:07,280 Speaker 1: this was just a ploy for them to get their 567 00:32:07,360 --> 00:32:10,320 Speaker 1: name out there for me to be thinking, Oh, I 568 00:32:10,360 --> 00:32:12,960 Speaker 1: think this. I think Echelon has made this really cheap 569 00:32:13,000 --> 00:32:15,280 Speaker 1: bike in partnership with Amazon, even if it's not true. 570 00:32:15,680 --> 00:32:18,520 Speaker 1: But you know, the price of name recognition is pretty high. 571 00:32:19,120 --> 00:32:22,200 Speaker 1: That's a pretty good one. Has anyone contacted that woman 572 00:32:22,280 --> 00:32:25,480 Speaker 1: from the Peloton commercials that that everyone was outraged about that? 573 00:32:26,080 --> 00:32:29,080 Speaker 1: Not that I know of, that last she'll sign on 574 00:32:29,120 --> 00:32:30,720 Speaker 1: with that, she needs to sign on with that, That 575 00:32:30,760 --> 00:32:33,560 Speaker 1: would that would seal the deal from me. That's a 576 00:32:33,560 --> 00:32:35,680 Speaker 1: pretty good one, Sarah, I gotta admit that's a good one. 577 00:32:36,160 --> 00:32:38,600 Speaker 1: It's no Michael Jackson, I v bag, but I took 578 00:32:38,640 --> 00:32:41,440 Speaker 1: my hat to you on that one. Larry, how about you. 579 00:32:41,440 --> 00:32:45,240 Speaker 1: Have you seen anything crazy in markets this week? Well, 580 00:32:45,440 --> 00:32:47,840 Speaker 1: you know who could who could who could come up 581 00:32:47,840 --> 00:32:50,760 Speaker 1: with anything that says, uh, you know, off the chart 582 00:32:50,800 --> 00:32:53,720 Speaker 1: says that Michael Jackson, I back, Mike, I'm an instant, 583 00:32:54,000 --> 00:32:59,400 Speaker 1: you know. I mean, look at this, Larry, I I 584 00:33:00,400 --> 00:33:06,120 Speaker 1: Mike's tapping himself on the back. Yeah, that's true. Look. 585 00:33:06,160 --> 00:33:09,360 Speaker 1: The wonderful thing about the markets that's fascinating me for 586 00:33:09,520 --> 00:33:12,280 Speaker 1: you know, forever and ever is you know, there's always 587 00:33:12,320 --> 00:33:16,240 Speaker 1: you know, uh, you know, dramatic swings and volatility and 588 00:33:16,400 --> 00:33:20,520 Speaker 1: opportunities on either end. And you know it never, you know, 589 00:33:20,640 --> 00:33:23,840 Speaker 1: human nature never ceases to amaze one. You know, when 590 00:33:23,840 --> 00:33:28,520 Speaker 1: everything's doing well, everybody's uh uh you know, feeling optimistic, 591 00:33:28,640 --> 00:33:32,560 Speaker 1: and when there were bargains and and and things to do, 592 00:33:32,720 --> 00:33:35,240 Speaker 1: people are you know, hiding under the desk. You know 593 00:33:35,320 --> 00:33:37,280 Speaker 1: as a as a smart as a smart friend of 594 00:33:37,320 --> 00:33:39,240 Speaker 1: mine said, you can have you can have good headlines 595 00:33:39,280 --> 00:33:41,600 Speaker 1: or cheap stock prices. You just cana at the same time, 596 00:33:41,680 --> 00:33:45,440 Speaker 1: so so and and and and and that continues. So 597 00:33:45,640 --> 00:33:49,560 Speaker 1: you know, human emotion will always and it's and every 598 00:33:49,600 --> 00:33:51,400 Speaker 1: you know, you don't have to wait very long to 599 00:33:51,480 --> 00:33:54,200 Speaker 1: see those extremes, and the markets of today you don't 600 00:33:54,200 --> 00:33:56,400 Speaker 1: have to wait very long to see those extremes. And 601 00:33:56,760 --> 00:33:58,960 Speaker 1: you know, I'm just waking up every day trying to 602 00:33:59,400 --> 00:34:01,880 Speaker 1: you know, you those extremes to the advantage of me 603 00:34:01,960 --> 00:34:04,720 Speaker 1: and my you know, fellow investors. So you know, I 604 00:34:04,760 --> 00:34:08,879 Speaker 1: don't have anything is esoteric is your thing, But I'll 605 00:34:08,880 --> 00:34:13,640 Speaker 1: continue to enjoy, uh, watching how emotions swing around and 606 00:34:13,680 --> 00:34:16,120 Speaker 1: just try and make the most sense. Yeah, and you know, 607 00:34:16,200 --> 00:34:19,520 Speaker 1: make a good point. I feel like the sentiment at 608 00:34:19,520 --> 00:34:22,800 Speaker 1: the beginning of September is just remarkable, isn't it. Well, 609 00:34:23,040 --> 00:34:25,560 Speaker 1: you know, it's unbelievable. Don't and don't forget where you know, 610 00:34:25,560 --> 00:34:27,400 Speaker 1: where markets were in March and April, and what the 611 00:34:27,440 --> 00:34:30,480 Speaker 1: outlook was, you know, and you know, and uh, you know, 612 00:34:30,480 --> 00:34:33,120 Speaker 1: putting cash to work there was you know, you know, 613 00:34:33,160 --> 00:34:36,120 Speaker 1: it was not easy. But you know it's, uh, for 614 00:34:36,160 --> 00:34:37,799 Speaker 1: those of us have been around for a long time, 615 00:34:37,840 --> 00:34:39,680 Speaker 1: that was a very unusual period. But you know, I've 616 00:34:39,680 --> 00:34:42,640 Speaker 1: seen such periods before and they're never exactly the same. 617 00:34:42,800 --> 00:34:46,200 Speaker 1: And but I think, you know, it's it's it's never 618 00:34:46,280 --> 00:34:50,880 Speaker 1: more important to keep one's wits about one when there's 619 00:34:51,400 --> 00:34:54,000 Speaker 1: you know, when there's such extreme volatility, and I think 620 00:34:54,040 --> 00:34:56,399 Speaker 1: it served this well at you know Good Haven, where 621 00:34:56,960 --> 00:35:00,960 Speaker 1: you know we're ranking is improving dramatically versus our peers, 622 00:35:01,080 --> 00:35:05,279 Speaker 1: and we're happy to be, uh, you know, continuing to 623 00:35:05,280 --> 00:35:07,920 Speaker 1: try and you know, build the track record. You know. 624 00:35:07,960 --> 00:35:10,000 Speaker 1: All this talk about emotion makes me realize. I think 625 00:35:10,000 --> 00:35:12,759 Speaker 1: the reason I guess two K, Mike, is because I 626 00:35:12,760 --> 00:35:16,120 Speaker 1: think we've all just been embedded in this world in 627 00:35:16,160 --> 00:35:18,520 Speaker 1: which the term has been stocks only go up, and 628 00:35:18,560 --> 00:35:20,759 Speaker 1: we've seen asset prices rise, and I just think that 629 00:35:20,840 --> 00:35:27,480 Speaker 1: anything days, especially in ivy bag of Michael Jackson's blood um, 630 00:35:27,680 --> 00:35:31,160 Speaker 1: could go for a high price. Why not. Yep, it's 631 00:35:31,200 --> 00:35:33,920 Speaker 1: it's a frothy it's a frothy market, Sarah. I can 632 00:35:33,920 --> 00:35:38,160 Speaker 1: see where you where you overvalued the ivy bag. We'll see, 633 00:35:38,200 --> 00:35:41,240 Speaker 1: we'll see maybe maybe you'll win. Maybe when the final 634 00:35:41,280 --> 00:35:44,239 Speaker 1: auction is amount is known, you'll be you'll you'll have 635 00:35:44,280 --> 00:35:46,680 Speaker 1: won the prices right on this, We'll have to check back, 636 00:35:47,160 --> 00:35:49,280 Speaker 1: check back, because I do think they were low balling. 637 00:35:49,800 --> 00:35:52,880 Speaker 1: You know. Look, when you're auctioning something and you're talking 638 00:35:52,880 --> 00:35:55,239 Speaker 1: to the press, you should high ball it. Right, You're like, oh, 639 00:35:55,280 --> 00:35:58,520 Speaker 1: we're hoping to get five million. I don't know why 640 00:35:58,560 --> 00:36:01,640 Speaker 1: they low balled. Yeah, this isn't over. This isn't over. 641 00:36:01,880 --> 00:36:03,759 Speaker 1: I think we'll have to circle back to this. It 642 00:36:03,760 --> 00:36:06,200 Speaker 1: makes me wonder, makes me wonder if Sarah is actually 643 00:36:06,200 --> 00:36:08,239 Speaker 1: the seller. Makes me wonder if Sarah is actually the 644 00:36:08,280 --> 00:36:09,880 Speaker 1: seller of the item and she's trying to get the 645 00:36:09,880 --> 00:36:14,319 Speaker 1: price up. Sarah, are you secretly the seller? Right? All right? 646 00:36:14,600 --> 00:36:17,400 Speaker 1: There was I'm not supposed to mention that Larry. Larry 647 00:36:17,440 --> 00:36:20,360 Speaker 1: clearly unveiled the mystery of the show. I am the seller, 648 00:36:20,640 --> 00:36:25,080 Speaker 1: but unfortunately we are going to have to leave it there. 649 00:36:25,160 --> 00:36:27,760 Speaker 1: Larry Pittkowski, thank you so much for joining us today, 650 00:36:28,280 --> 00:36:38,799 Speaker 1: my pleasure, thank you for having me. What goes up? 651 00:36:38,880 --> 00:36:42,080 Speaker 1: We'll be back next week. Until then, you can find 652 00:36:42,160 --> 00:36:45,320 Speaker 1: us on the Bloomberg Terminal website and app or wherever 653 00:36:45,400 --> 00:36:48,040 Speaker 1: you get your podcasts. We'd love it if you took 654 00:36:48,040 --> 00:36:50,040 Speaker 1: the time to rate and review the show on Apple 655 00:36:50,080 --> 00:36:53,279 Speaker 1: Podcasts so more listeners can find us. And you can 656 00:36:53,280 --> 00:36:56,520 Speaker 1: find us on Twitter, follow me at at Sara pant Zack, 657 00:36:56,840 --> 00:37:00,000 Speaker 1: Mike is that reaganonymous, And you can also follow Bloomberg 658 00:37:00,080 --> 00:37:04,080 Speaker 1: Podcasts at podcasts. Also thank you to Charlie Pellett of 659 00:37:04,080 --> 00:37:06,439 Speaker 1: Bloomberg Radio and the voice of the New York City 660 00:37:06,520 --> 00:37:10,080 Speaker 1: subway system. What Goes Up is produced by Jordan Gospore. 661 00:37:10,520 --> 00:37:14,320 Speaker 1: The head of Bloomberg Podcast is Francesco Levie. Thanks for listening, 662 00:37:14,520 --> 00:37:15,319 Speaker 1: See you next time.