WEBVTT - Learning to Live a Stress-Free From Finances 0:00:02.560 --> 0:00:08.720 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business 0:00:08.800 --> 0:00:13.880 Week with Carol Messer and Tim Steneveek on Bloomberg Radio. 0:00:14.240 --> 0:00:19.960 When you your face will from that will bring everybody down. 0:00:20.480 --> 0:00:25.840 So don't worry big. 0:00:25.079 --> 0:00:25.800 Don't worry. 0:00:28.760 --> 0:00:28.920 Well. 0:00:28.920 --> 0:00:31.680 In Video's rise to three trillion dollars in market cap 0:00:31.960 --> 0:00:34.400 has been swift. It's added two trillion dollars to its 0:00:34.400 --> 0:00:38.839 market value just since November. For some context, Carol, that 0:00:38.920 --> 0:00:41.519 two trillion dollars that it's added is more than the 0:00:41.560 --> 0:00:44.600 market cap of all but seven companies in the S 0:00:44.640 --> 0:00:45.440 and P five hundred. 0:00:45.520 --> 0:00:46.800 That's context and perspective. 0:00:46.880 --> 0:00:49.400 That's just the market cap that it's added in the 0:00:49.479 --> 0:00:52.480 last few months. Great anyone, Some people think it is. 0:00:52.440 --> 0:00:54.520 Although some would say there are fundamentals there too. 0:00:54.640 --> 0:00:54.760 Well. 0:00:54.800 --> 0:00:56.760 Analysts are still really bullish on it. It's got sixty 0:00:56.800 --> 0:00:59.600 five buys seven holds in zero cells according to data 0:00:59.600 --> 0:01:02.920 compile by Bloomberg, So a lot of bulls out there. 0:01:03.360 --> 0:01:05.440 Our next guest not one of them. In fact, he 0:01:05.600 --> 0:01:07.840 likens Nvidia in twenty twenty four to Cisco in the 0:01:07.920 --> 0:01:10.920 year two thousand, just to remind her a little history 0:01:10.959 --> 0:01:14.280 lesson Cisco stock, Dove close to ninety percent in the 0:01:14.319 --> 0:01:15.160 dot com bubble. 0:01:15.280 --> 0:01:17.640 I think Kathy Wood has also written about that in 0:01:17.760 --> 0:01:18.520 terms of Cisco. 0:01:19.200 --> 0:01:22.880 Cisco. Yeah, but right, she got out of in Video 0:01:22.920 --> 0:01:24.039 and she's missed this rough. 0:01:23.959 --> 0:01:25.360 Up she did, all right. So back with us is 0:01:25.440 --> 0:01:27.480 Jared Dillion. He's the editor and publisher of the market 0:01:27.480 --> 0:01:31.640 newsletter The Daily Dirt. N App a former Bloomberg opinion columnist, 0:01:31.720 --> 0:01:34.399 also the author of several books, including his newest No Worries, 0:01:34.440 --> 0:01:36.679 How to Live a Stress Free Financial Life, which we 0:01:36.720 --> 0:01:39.760 have had fun at going through and talking about. He 0:01:39.840 --> 0:01:42.280 joins us in our Bloomberg Interactive Broker Studio. Great to 0:01:42.319 --> 0:01:43.120 have you back. How are you. 0:01:43.200 --> 0:01:44.360 It's great to be back, Thank you. 0:01:44.640 --> 0:01:47.080 So let's start with Nvidia. Why do you think it's 0:01:47.080 --> 0:01:47.480 a bubble? 0:01:48.360 --> 0:01:53.520 Uh g waits, look at the chart, but just because 0:01:53.560 --> 0:01:57.080 the chart goes up, it's gone parabolic. So it's here's 0:01:57.200 --> 0:01:58.960 let me give you something for context. So you said 0:01:59.000 --> 0:02:02.560 Cisco went down nine percent in two thousand, If in 0:02:02.680 --> 0:02:05.560 Video goes down seventy five percent, which I think it 0:02:05.600 --> 0:02:08.160 had close to a drawdown like that before in twenty 0:02:08.240 --> 0:02:11.040 twenty two, if it had a seventy five percent draw down, 0:02:11.120 --> 0:02:13.680 it would still be a seven hundred and fifty billion 0:02:13.720 --> 0:02:18.280 dollar company, which is incredible. So the way I look 0:02:18.320 --> 0:02:22.880 at this is you've had narrowing market leadership. Okay, So 0:02:23.120 --> 0:02:26.200 when I had started my career in nineteen ninety nine, 0:02:26.240 --> 0:02:28.560 I was actually on the options exchange in San Francisco, 0:02:29.240 --> 0:02:32.240 and you had a number of stocks that were leading, 0:02:32.320 --> 0:02:34.359 and it became narrower and narrower, and you had one 0:02:34.400 --> 0:02:37.120 stock left. It was Cisco. They missed on earnings. I 0:02:37.160 --> 0:02:39.960 think it was like March eleventh of two thousand and 0:02:40.000 --> 0:02:42.800 then it was down from there. Six months ago people 0:02:42.800 --> 0:02:45.919 were talking about the Magnificent seven, and then it became 0:02:46.040 --> 0:02:50.200 the Magnificent four. And now there's one stock left. And 0:02:50.639 --> 0:02:53.560 that's that is the definition of narrowing breath. 0:02:54.760 --> 0:02:54.960 You know. 0:02:55.000 --> 0:02:58.320 The interesting thing about this is that the median pe 0:02:58.600 --> 0:03:02.400 of non tech company is non expensive. If you look 0:03:02.440 --> 0:03:05.040 at the non tech part of the SMP, right, it's 0:03:05.080 --> 0:03:09.200 actually not super expensive. It's the tech part that makes 0:03:09.200 --> 0:03:10.079 it overvalue. 0:03:10.280 --> 0:03:12.720 So, okay, so what would you say to the folks 0:03:12.760 --> 0:03:15.480 who come out and say, well, in Nvidia's got a 0:03:15.520 --> 0:03:19.800 real mode, there's real demand for its chips and what 0:03:19.880 --> 0:03:23.480 it provides. Look no further than the backlog and the 0:03:23.520 --> 0:03:26.600 companies that are lining up to buy it. So there 0:03:26.639 --> 0:03:29.959 is a story there that it's fundamentally worth this much. 0:03:30.000 --> 0:03:33.000 I mean, revenues expected to grow about one hundred percent 0:03:34.160 --> 0:03:36.880 year over year. Yeah, I'm in twenty twenty five, now, 0:03:36.960 --> 0:03:42.160 mind you, in twenty twenty four it was a lot 0:03:42.200 --> 0:03:44.440 more just acts. This is quarter to quarter. But anyway, 0:03:44.560 --> 0:03:47.040 I'm just saying it's still it's a doubling of revenue. 0:03:47.440 --> 0:03:50.200 Yeah, I mean the same was also true of Cisco 0:03:50.240 --> 0:03:53.240 in two thousand and when it got to the peak. 0:03:53.320 --> 0:03:55.520 You had to say how many routers do they have 0:03:55.600 --> 0:03:59.440 to sell in order to make this valuation worthwhile? And 0:03:59.520 --> 0:04:02.440 it was just an astronomical number. So you know what 0:04:03.160 --> 0:04:04.920 the pushback I get an in video. And by the way, 0:04:04.920 --> 0:04:07.880 I'm not short in video. I'm not suicidal, right Like, 0:04:07.920 --> 0:04:09.760 I don't you own it in video? No, I don't 0:04:09.760 --> 0:04:13.720 own it either in an index fund. I guess technically 0:04:13.800 --> 0:04:17.200 I do, Okay. So but the pushback I get all 0:04:17.200 --> 0:04:19.960 the time is revenue growth. Revenue growth, But if you 0:04:19.960 --> 0:04:23.000 look at the second derivative of that, when that turns, 0:04:23.600 --> 0:04:27.480 that's when it's vulnerable. Look when I talk to young people, 0:04:28.240 --> 0:04:31.200 what former students of mine, former intern stuff like that, 0:04:31.320 --> 0:04:34.119 And I ask them what stocks they own. They all 0:04:34.160 --> 0:04:37.359 own in Vidia. It is it is a consensus stock. 0:04:37.520 --> 0:04:40.000 Everybody owns it. You know, I've seen this before. 0:04:40.120 --> 0:04:43.040 Let's worries someme to you. Yeah, Hey, speaking of bubbles, 0:04:43.080 --> 0:04:45.560 You've written a lot on Twitter and in your newsletter 0:04:45.560 --> 0:04:48.920 recently about private equity. You think it's in a bubble. 0:04:49.360 --> 0:04:51.600 You recently wrote that you don't think private equity will 0:04:51.600 --> 0:04:53.480 be the cause of the next crisis, but it will 0:04:53.520 --> 0:04:57.000 greatly exacerbate it and prolong the pain over a period 0:04:57.000 --> 0:04:59.200 of years. What are you seeing in private equity that 0:04:59.360 --> 0:05:00.480 you don't think others see. 0:05:00.960 --> 0:05:04.440 You know, private equity made sense in the twenty tens 0:05:04.720 --> 0:05:08.960 when you could buy companies at four or five times 0:05:09.000 --> 0:05:11.840 and interest rates were zero. I mean, it made sense 0:05:11.839 --> 0:05:14.599 to buy cheap companies and lever up. But now they're 0:05:14.640 --> 0:05:17.599 buying companies at ten to twelve times and interest rates 0:05:17.600 --> 0:05:19.800 are five and a half percent. It makes a lot 0:05:19.880 --> 0:05:24.440 less sense. There are seventeen thousand, three hundred private equity 0:05:24.480 --> 0:05:27.840 firms in the United States, and they're all competing for deals. 0:05:27.839 --> 0:05:32.080 They're rolling up every asset imaginable, whether it's pizza parlors 0:05:32.160 --> 0:05:36.080 or bowling alleys or minor league baseball teams. It's really 0:05:36.160 --> 0:05:39.560 reached the point of saturation and there's so much competition 0:05:39.640 --> 0:05:42.480 for deals that they're getting more and more overvalued. Plus 0:05:42.560 --> 0:05:45.760 there's no exits. People have written about that before. There's 0:05:46.200 --> 0:05:50.000 no IPOs, there's no acquisitions, there's no exits. There was 0:05:50.000 --> 0:05:52.960 an article written the other day about I can't remember 0:05:53.080 --> 0:05:56.360 the context, but basically someone in private equity said they 0:05:56.400 --> 0:05:58.560 predicted the next decade is going to be pretty rough. 0:05:58.680 --> 0:06:02.280 Scott Climban Apollo GA Managements. Scott climent said the private 0:06:02.279 --> 0:06:06.160 equity industry must face up to the reality of lower evaluations. 0:06:06.200 --> 0:06:08.520 Everything is not going to be okay. And that was 0:06:08.560 --> 0:06:10.480 our Bloomberg story that he put out there. He did 0:06:10.520 --> 0:06:13.280 a session at Super Return International in Berlin, so like 0:06:13.320 --> 0:06:15.400 they've been weighing in on this. I mean, it is 0:06:15.480 --> 0:06:17.960 kind of interesting, right, what works in a zero rate environment. 0:06:17.960 --> 0:06:20.120 It's like when the tide goes out, right, Yeah, you 0:06:20.160 --> 0:06:22.200 get to see everything. And I mean we have been 0:06:22.240 --> 0:06:25.279 spoiled for what two decades or so of really cheap 0:06:25.480 --> 0:06:29.160 no cost in terms of leveraging up right, money has 0:06:29.200 --> 0:06:31.919 been so cheap it's very different in an environment that 0:06:32.000 --> 0:06:37.279 even if historically it's low percentage wise, it's still a 0:06:37.360 --> 0:06:38.960 different investing environment. 0:06:39.080 --> 0:06:42.120 It's a completely different investing environment. And you know, I 0:06:42.120 --> 0:06:44.679 don't know the path of interest rates in the future, 0:06:45.040 --> 0:06:48.680 but private equity is very vulnerable to rising interest rates. 0:06:49.000 --> 0:06:52.120 Let's say we had in you know, after the election, 0:06:52.320 --> 0:06:54.960 we have a resurgence of inflation, Inflation goes back to 0:06:55.000 --> 0:06:57.760 six percent, ten year yields go from four and a 0:06:57.800 --> 0:07:00.240 half to five and a half or six. You're going 0:07:00.320 --> 0:07:02.360 to see the big private equity firms they'll be down 0:07:02.440 --> 0:07:04.200 thirty percent on that because. 0:07:03.960 --> 0:07:06.279 Of taking markdowns in their investments, or just because of 0:07:06.320 --> 0:07:09.239 companies that just can't survive in a higher rate environment. 0:07:09.279 --> 0:07:11.520 So when they go to refinance or whatever, they're like, 0:07:11.600 --> 0:07:12.160 I can't do this. 0:07:12.880 --> 0:07:15.720 Okay, play this out for us though, And maybe someone 0:07:15.760 --> 0:07:17.640 listening or watching right now would say, you know what 0:07:17.680 --> 0:07:20.760 if a private equity firm, or if private equity goes bust, 0:07:21.200 --> 0:07:24.360 that doesn't really affect me because I don't own any 0:07:24.400 --> 0:07:27.520 private equity. I don't have a portion of my portfolio 0:07:27.560 --> 0:07:30.520 in private equity. What are the implications of you think 0:07:30.560 --> 0:07:31.680 a bubble in private equity? 0:07:31.760 --> 0:07:33.840 Well, one of the things you started off with. You 0:07:33.920 --> 0:07:36.000 read from my newsletter and you said, I said that 0:07:36.080 --> 0:07:38.440 private equity wouldn't be the cause of the downturn, but 0:07:38.480 --> 0:07:44.440 it would exacerbate it. Private valuations should mirror public valuations. 0:07:44.720 --> 0:07:47.600 So if we have say a twenty percent draw down 0:07:47.600 --> 0:07:51.280 in the SMP, then correspondingly there should be a twenty 0:07:51.320 --> 0:07:55.960 percent draw down in private valuations. So the question is 0:07:55.960 --> 0:07:59.520 is that whether with ten year lockups private equity can 0:07:59.560 --> 0:08:03.360 earn that now over time, right or or there is 0:08:03.360 --> 0:08:05.640 a liquidity event. And the one thing about markets is 0:08:05.640 --> 0:08:07.320 that liquidity always finds a way. 0:08:07.520 --> 0:08:09.440 Well, it's also if you're working like we did the 0:08:09.520 --> 0:08:12.960 story about you know, the plumber who sold out this 0:08:13.280 --> 0:08:15.480 kind of the star plumber in UK, you sold out 0:08:15.520 --> 0:08:17.640 to a private equity fund, made a lot of money, 0:08:18.040 --> 0:08:20.240 but kind of sorry that he did it. And ultimately 0:08:20.280 --> 0:08:22.080 we talk about you know, private equity kind of going 0:08:22.080 --> 0:08:24.440 into all these markets. But if a company in a 0:08:24.520 --> 0:08:27.600 zero rate environment or cheap you know, cost of money 0:08:27.680 --> 0:08:30.920 environment versus where we are today higher for longer or 0:08:31.000 --> 0:08:34.040 high for longer, you know, if that business can't survive, well, 0:08:34.080 --> 0:08:37.400 then you think about the business closing down, people losing jobs, like, 0:08:37.559 --> 0:08:40.160 that's what I think about, like, right, the shutting down 0:08:40.160 --> 0:08:42.959 of businesses that starts to have a serious economic impact. 0:08:43.200 --> 0:08:44.880 By the way, the first, the first time I really 0:08:44.920 --> 0:08:47.760 heard about this was my brother has a very interesting job. 0:08:48.240 --> 0:08:52.480 He is a broker for dental practices. So he helps 0:08:52.600 --> 0:08:55.959 dentists transition when they're retiring and a young dentist will 0:08:55.960 --> 0:08:59.000 buy the practice. As of about five years ago, he 0:08:59.160 --> 0:09:02.040 was selling all of it practices to private equity and 0:09:02.080 --> 0:09:05.440 they were paying like twelve times for dental practices. And 0:09:05.520 --> 0:09:08.319 since interest rates went up, valuations have come down a 0:09:08.360 --> 0:09:11.280 little bit, but there's still like ten times for dental practices. 0:09:11.520 --> 0:09:12.959 So, well you think about it. 0:09:13.000 --> 0:09:15.360 I hope those private equity guys notfl cavities, That's all 0:09:15.360 --> 0:09:15.800 I'm saying. 0:09:16.320 --> 0:09:17.959 No, but you do think, right, they look at the balance, 0:09:18.000 --> 0:09:20.080 you right, the money coming in the insurance, and like 0:09:20.240 --> 0:09:23.000 I get kind of why they find it interesting. 0:09:22.640 --> 0:09:26.840 Right, Yeah, absolutely, Yeah. 0:09:25.520 --> 0:09:28.000 Hey, we got thirty seconds and then we're going to 0:09:28.040 --> 0:09:30.080 come back with you give us thirty seconds on why 0:09:30.120 --> 0:09:32.960 you think payrolls are going to be a bad are 0:09:33.000 --> 0:09:33.880 going to come in under dem. 0:09:34.000 --> 0:09:36.200 We've had kind of a run of bad data, especially 0:09:36.280 --> 0:09:38.280 the labor market. Data. I mean the Jolts was kind 0:09:38.280 --> 0:09:41.719 of a mess, and I mean Chicago pm I was 0:09:41.760 --> 0:09:42.959 a complete what's that. 0:09:43.000 --> 0:09:43.679 We're going to debate? 0:09:43.760 --> 0:09:46.560 Keep out, Okay, I mean Chicago pm I was completely 0:09:46.640 --> 0:09:48.679 I would say over the last two weeks the data 0:09:48.720 --> 0:09:50.640 has become significantly. 0:09:50.000 --> 0:09:51.880 Softer, softer, but not more. 0:09:53.200 --> 0:09:55.600 The Chicago PMI was pretty much a mess. Thirty five 0:09:55.640 --> 0:09:59.240 point four is like deep recession territory. So I'm a bear. 0:09:59.360 --> 0:10:01.960 Sorry, Okay, okay, I mean we have had an inverted 0:10:02.000 --> 0:10:03.320 yilkart for a long time. 0:10:03.559 --> 0:10:05.040 Yes, for two years. 0:10:05.120 --> 0:10:07.880 So look at some point, I'm gonna I'm in between 0:10:07.880 --> 0:10:10.120 you guys. I'm gonna let this continue. After we do 0:10:10.280 --> 0:10:13.000 some news. We're talking to Jered Dillion of The Daily 0:10:13.040 --> 0:10:14.560 Dirt down Balls and the author of No Worries, How 0:10:14.559 --> 0:10:16.360 to Live a Stress Free Financial Life. 0:10:16.400 --> 0:10:18.120 I want to get back to our guests. Jared Dillion 0:10:18.160 --> 0:10:19.880 is still with us. He's the editor and publisher of 0:10:19.920 --> 0:10:22.160 the market newsletter. It is called The Daily Dirt app. 0:10:22.400 --> 0:10:25.400 He's a former Bloomberg opinion columnist, also the author of 0:10:25.480 --> 0:10:29.240 several books, including his newest No Worries, How to Live 0:10:29.280 --> 0:10:32.240 a Stress Free Financial Life, which we have talked about 0:10:32.240 --> 0:10:34.080 in the past, and we highly recommend you check out 0:10:34.120 --> 0:10:37.600 our podcast feed for that conversation. Jared, we were talking 0:10:37.600 --> 0:10:39.720 about before we took a break to do some news 0:10:40.400 --> 0:10:43.160 about the job market and your expectations. We talked earlier 0:10:43.240 --> 0:10:47.000 with our Rich Miller, who pointed out that the US 0:10:47.120 --> 0:10:48.960 job market may be a lot less vibrant than the 0:10:48.960 --> 0:10:52.719 FED believes to seem to think it is, and he 0:10:52.760 --> 0:10:55.480 talked about the quarterly senses of employment and wages, these 0:10:55.520 --> 0:10:59.120 new figures that have come out that says maybe payrolls 0:10:59.520 --> 0:11:02.240 have grown about sixty thousand less per month on average 0:11:02.280 --> 0:11:05.080 last year than the roughly two hundred and fifty thousand 0:11:05.120 --> 0:11:07.720 run rates. So there's some debate about whether or not 0:11:07.760 --> 0:11:11.800 these statistics are actually showing the labor market that maybe 0:11:11.800 --> 0:11:13.719 it's not really as strong as it is. Talk a 0:11:13.720 --> 0:11:16.920 little bit more about your concerns or specifically why you 0:11:17.040 --> 0:11:19.440 think the labor market is maybe starting to come undone. 0:11:19.480 --> 0:11:23.640 Well, I think do you remember back during the pandemic 0:11:23.679 --> 0:11:26.600 when we had the labor shortages right, Well, you would 0:11:26.640 --> 0:11:28.679 go into a restaurant and they would only be serving 0:11:28.800 --> 0:11:31.200 like four tables because people weren't showing up to work, 0:11:31.240 --> 0:11:34.000 like there was just so many jobs available versus the 0:11:34.080 --> 0:11:37.680 number of job seekers, and that was a distortion that 0:11:37.800 --> 0:11:40.079 was caused as a result of the massive amount of 0:11:40.120 --> 0:11:43.160 stimulus that we pumped into the economy. And I think 0:11:43.240 --> 0:11:47.040 what's happening is that has taken four years to unwind, 0:11:47.520 --> 0:11:51.120 and I think it's finally unwinding after four years. So 0:11:51.640 --> 0:11:53.920 if you look at the chart of job openings, so. 0:11:53.880 --> 0:11:55.760 The shortages are finally unwinding. 0:11:56.120 --> 0:11:58.480 Yes, yes, So if you look at a chart of 0:11:58.559 --> 0:12:01.520 job openings, you're seeing its coming back down to pre 0:12:01.679 --> 0:12:05.520 pandemic levels. So I think, really the equilibrium rate for 0:12:05.679 --> 0:12:08.720 the unemployment rate is four and a half to five percent, 0:12:09.360 --> 0:12:11.920 and I think we'll get there over the next six 0:12:11.920 --> 0:12:12.720 to twelve months. 0:12:14.559 --> 0:12:15.840 You want to talk private credit. 0:12:17.880 --> 0:12:18.960 I do want to talk private credit. 0:12:19.000 --> 0:12:20.080 I'm gonna give you a chance to do this. 0:12:20.400 --> 0:12:22.160 I get to my So we talked a lot about 0:12:22.160 --> 0:12:23.400 private equity and your career. 0:12:23.679 --> 0:12:25.040 Ask question private. 0:12:24.760 --> 0:12:28.079 Credit, Tim, And I know, like we've you know, been 0:12:28.120 --> 0:12:31.400 at Milkin and it's like everybody's in private credit. It's 0:12:31.400 --> 0:12:34.400 all good. The risk is spread around. What do you 0:12:34.440 --> 0:12:36.640 think why. 0:12:36.480 --> 0:12:40.600 I am thinking about here's the thing. We haven't really 0:12:40.720 --> 0:12:43.840 had a credit cycle. The down half of a credit 0:12:43.880 --> 0:12:46.720 cycle since two thousand and eight. We had a credit 0:12:46.720 --> 0:12:48.319 bear market in two thousand and two, we had a 0:12:48.360 --> 0:12:50.960 credit bear market in two thousand and eight. We almost 0:12:51.000 --> 0:12:53.640 had one during the pandemic, but the FED started buying 0:12:53.720 --> 0:12:58.200 corporate bond ETFs and they basically jawbone the credit markets higher. 0:12:58.559 --> 0:13:00.760 So we really haven't had a down turning credit in 0:13:00.920 --> 0:13:06.120 sixteen years. And bear markets and credit are awesome. They're 0:13:06.280 --> 0:13:09.680 great if you are an income investor. You can get 0:13:09.720 --> 0:13:13.120 investment grade bonds at eight to ten percent yields, you 0:13:13.160 --> 0:13:16.720 can get high yield at fourteen percent yields. It is 0:13:17.080 --> 0:13:19.280 like I've been waiting for an environment like that for 0:13:19.320 --> 0:13:22.600 a long time. And I think that if private credit 0:13:22.840 --> 0:13:25.560 comes on glued, you know, like I said before about 0:13:25.559 --> 0:13:29.600 private equity, correspondingly it should match with the public markets. 0:13:29.600 --> 0:13:31.199 I think we might get that opportunity. 0:13:31.320 --> 0:13:35.840 So what is that unwinding or what does that scenario 0:13:35.920 --> 0:13:38.560 look like? Does it look like a GFC? What does 0:13:38.600 --> 0:13:39.120 it look like? 0:13:39.240 --> 0:13:41.440 I don't know what it looks like. No, I don't 0:13:41.440 --> 0:13:45.480 think it looks like a financial crisis. But you know, 0:13:45.640 --> 0:13:49.400 like we if we are overdue for a bear market 0:13:49.440 --> 0:13:51.640 and credit, like you we have built up a lot 0:13:51.640 --> 0:13:52.880 of excesses over. 0:13:52.800 --> 0:13:55.160 Time, so there's a lot of money. There's still a 0:13:55.160 --> 0:13:56.400 lot of liquidity out there. 0:13:56.640 --> 0:13:59.440 One point eight trillion in private credit. It's a lot. 0:14:01.320 --> 0:14:07.800 Okay, talk stop, sith Gil, It's gonna do a YouTube tomorrow. 0:14:08.440 --> 0:14:11.440 He is, yes, Yes, this is breaking in the last 0:14:11.440 --> 0:14:12.040 couple hours. 0:14:12.120 --> 0:14:12.520 Okay. 0:14:12.800 --> 0:14:14.920 So you argue that what's happening when it comes to 0:14:14.960 --> 0:14:17.840 GameStop is market manipulation. You acknowledge you're not a lawyer, 0:14:17.840 --> 0:14:21.520 but you think that Roaring Kitty what he's doing should 0:14:21.520 --> 0:14:22.640 be looked at by regulators. 0:14:22.880 --> 0:14:26.680 So the pushback I get from people on this is, well, 0:14:26.720 --> 0:14:30.080 he's not really doing anything different than Bill Ackman or 0:14:30.160 --> 0:14:33.120 Muddy Waters or Hindenberg. He builds up a position, he 0:14:33.160 --> 0:14:36.280 announces the position, and then it moves in his favor. Right. 0:14:36.760 --> 0:14:38.920 But the way I look at this is that it 0:14:38.960 --> 0:14:41.680 really comes down to intent. You know, when Bill Ackman 0:14:41.720 --> 0:14:43.840 does it, there is an investment thesis behind it. There's 0:14:43.840 --> 0:14:46.960 like a core investment thesis that's based on fundamentals and facts. 0:14:47.440 --> 0:14:51.560 His intent is specifically to manipulate the stock higher. So, 0:14:52.520 --> 0:14:54.480 like I said, I'm not a lawyer, I don't really 0:14:54.600 --> 0:14:58.920 understand securities law. But if if the SEC allowed this 0:14:59.040 --> 0:15:02.720 to happen, just you know, just like from a just 0:15:02.760 --> 0:15:06.120 from a philosophical standpoint, imagine that there were one hundred 0:15:06.160 --> 0:15:09.120 people doing this or a thousand people doing this and 0:15:09.240 --> 0:15:12.120 the market was manipulated in many different ways. Like, that's 0:15:12.320 --> 0:15:14.560 not really a result that you would want to have. 0:15:14.960 --> 0:15:17.800 So could he not just be buying it because he 0:15:17.960 --> 0:15:18.320 likes it? 0:15:19.160 --> 0:15:21.240 I mean, that would if if that would be his 0:15:21.320 --> 0:15:23.680 defense for sure. I mean, and that's that's what he 0:15:23.720 --> 0:15:26.640 said in front of Congress when he was when he 0:15:26.680 --> 0:15:29.600 was zooming in to that congressional hearing, he said, I 0:15:29.760 --> 0:15:32.800 like the stock, and that was that was basically his defense, 0:15:33.080 --> 0:15:33.280 you know. 0:15:33.480 --> 0:15:37.160 But I mean, where's everybody else who's following you know, 0:15:37.360 --> 0:15:40.360 are they doing their institutional research or fundamental research? Because 0:15:40.400 --> 0:15:43.040 some would say the institutional guys got involved because they 0:15:43.040 --> 0:15:45.440 were like wanted a piece of the action. Now were 0:15:45.480 --> 0:15:48.440 they doing their fundamental research when they were potentially chasing it? 0:15:48.560 --> 0:15:49.160 Absolutely not. 0:15:49.560 --> 0:15:51.160 So it's like, where do you go with this? 0:15:51.600 --> 0:15:56.080 Yeah, I mean good for game stop obviously, but ninety 0:15:56.120 --> 0:15:57.880 percent of the people who follow him will end up 0:15:57.920 --> 0:15:58.560 losing money. 0:15:58.800 --> 0:16:01.520 So I want to spend a couple of minutes on 0:16:01.520 --> 0:16:03.680 the book. Oh yeah, you have a couple of minutes left. 0:16:03.760 --> 0:16:03.920 Yep. 0:16:03.960 --> 0:16:06.200 If you joined this last time or heard last time, 0:16:06.240 --> 0:16:09.320 you know that Jared and his wife have separate bank accounts. 0:16:09.320 --> 0:16:11.440 They keep everything separated. It's the key too happy marriage. 0:16:11.480 --> 0:16:14.520 Never lend money to family members. These are just a 0:16:14.520 --> 0:16:17.000 couple of the lessons in the book which both Carol 0:16:17.000 --> 0:16:19.280 and I loved. I don't think we talked about the 0:16:19.280 --> 0:16:23.000 awesome portfolio last and you were on, yeah, talk about 0:16:23.000 --> 0:16:26.280 what this is. It's this portfolio construction that you say 0:16:26.400 --> 0:16:28.240 is kind of bulletproof. 0:16:29.040 --> 0:16:32.840 So the conventional wisdom for retail investors is that you 0:16:32.880 --> 0:16:34.440 put all your money in the S and P five 0:16:34.560 --> 0:16:38.480 hundred and you ride out the volatility and at the 0:16:38.600 --> 0:16:41.200 end you have a big pile of money. Right. The 0:16:41.280 --> 0:16:44.400 problem is when you invest in an index, you get 0:16:44.400 --> 0:16:46.720 the returns of the index, which are very very good, 0:16:47.120 --> 0:16:50.440 but you also get the volatility of the index. Yea 0:16:50.640 --> 0:16:53.000 SMP five hundred is very volatile, Like in an average year, 0:16:53.000 --> 0:16:56.120 it'll move fifteen to twenty percent up and down. So 0:16:56.520 --> 0:16:59.680 what that causes you over a forty year investing career 0:17:00.320 --> 0:17:02.320 is a lot of ups and down. Sometimes a lot 0:17:02.360 --> 0:17:06.960 of heartache. And you you know, sometime in that forty 0:17:07.040 --> 0:17:10.160 year investing career you will have a bear market that 0:17:10.320 --> 0:17:13.159 exceeds fifty percent or more. Right, you will see your 0:17:13.200 --> 0:17:16.359 life savings cut in half. Now, what the Awesome Portfolio 0:17:16.440 --> 0:17:20.240 does is it takes five asset classes stocks, bonds, gold, cash, 0:17:20.280 --> 0:17:23.639 and real estate and it splits them into twenty percent portions. 0:17:24.359 --> 0:17:29.119 This portfolio returns about a percent less than the S 0:17:29.160 --> 0:17:32.120 and P five hundred with almost half the volatility. 0:17:32.200 --> 0:17:33.920 Well that's a big change, and the draw. 0:17:33.760 --> 0:17:37.000 Downs are much lower. So the worst draw down in 0:17:37.040 --> 0:17:40.520 the history of the Awesome Portfolio has been twelve percent. Okay, 0:17:40.600 --> 0:17:42.840 in two thousand and eight, the S and P five 0:17:42.920 --> 0:17:46.119 hundred was down thirty eight percent. The Awesome Portfolio is 0:17:46.160 --> 0:17:48.920 down nine percent. So if you say the worst year 0:17:49.000 --> 0:17:51.920 I can possibly have in my investing career is down 0:17:51.960 --> 0:17:54.919 twelve percent, that is the kind of volatility you can 0:17:55.000 --> 0:17:55.360 ride out. 0:17:55.480 --> 0:17:57.560 So is that actuality or just back testing you just 0:17:57.560 --> 0:17:57.960 got about? 0:17:58.359 --> 0:18:00.760 No, that's historical. That's that's historical. 0:18:02.760 --> 0:18:05.080 There's a whole chapter in the book about the Austin Portfolio. 0:18:05.160 --> 0:18:06.720 This is why we wanted to bring him back. It's 0:18:06.760 --> 0:18:09.240 just such fun to get his perspective. Jared, thank you 0:18:09.280 --> 0:18:09.600 so much. 0:18:09.600 --> 0:18:10.360 Thank you very much. 0:18:10.480 --> 0:18:13.080 Jared Dillion, editor and publisher of the Market newsletter at 0:18:13.080 --> 0:18:16.199 The Daily Dirt napp his book No Worries, How to 0:18:16.320 --> 0:18:19.679 Live a stress Free Financial life, Separate bank Accounts to 0:18:20.240 --> 0:18:20.720 husband and. 0:18:20.680 --> 0:18:23.240 Wife, the key to a happy marriage. According to Jared, 0:18:23.520 --> 0:18:24.560 this is Bloomberg. 0:18:26.560 --> 0:18:30.960 This is Bloomberg Business Week inside from the reporters and 0:18:31.119 --> 0:18:34.719 editors who bring you America's most trusted business magazine, plus 0:18:34.800 --> 0:18:38.719 global business, finance and tech news as it happens. Bloomberg 0:18:38.760 --> 0:18:43.879 Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio. 0:18:44.760 --> 0:18:46.879 It is Bloomberg Business Week. Carol, I don't know if 0:18:46.880 --> 0:18:49.199 you saw this. Maybe you had time to read it 0:18:49.200 --> 0:18:53.840 on your two hour trip from JFK home yesterday. 0:18:53.920 --> 0:18:56.240 I could have knitted everybody a sweater in that time. 0:18:56.560 --> 0:18:59.400 New York Magazine's curbed was out with the piece. Last 0:18:59.440 --> 0:19:01.760 week had a right headline, the private helicopter to the 0:19:01.760 --> 0:19:04.720