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Speaker 1: Welcome, Welcome back to the Bob Left Starts podcasts. My

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Speaker 1: guest today is very Rich Books. You know him as

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Speaker 1: the host of Bloomberg's Master's in Business. You also know

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Speaker 1: them as a financial guru investor. He's got a new book,

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Speaker 1: How Not to Invest?

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Speaker 2: Barry? Why this book? Why now?

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Speaker 3: First of all, let me start out by saying I

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Speaker 3: hate the word guru. Bill Bernstein, who is a neurologist

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Speaker 3: I reference in the book and a money manager, says

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Speaker 3: we use the word guru because people don't know how

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Speaker 3: to spell the word charlatan. So let's start out. I

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Speaker 3: think I have some insights. Guru is not the first

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Speaker 3: word that leaps to mind. Why this book? Why now?

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Speaker 3: I had some friends in some public usures kind of

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Speaker 3: harangue me, Hey, it's been fifteen years since your last book.

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Speaker 3: How about another book? And I was kind of reluctant,

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Speaker 3: and when pressed why, I gave a really honest answer.

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Speaker 3: For the past century, there have been literally tens of

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Speaker 3: thousands of books telling people how to invest, and after

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Speaker 3: all that time, effort and wasted inc people are still

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Speaker 3: pretty mediocre investors. So do we really need yet another

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Speaker 3: tome saying buy this sell that do this, do that.

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Speaker 3: I kind of was very much on the fence. I

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Speaker 3: came back from vacation in the Caribbean. You ever get

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Speaker 3: home in between Christmas and New Year's you have a

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Speaker 3: few days before January twod when the world sort of

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Speaker 3: starts up again. And I just started thumbing through some

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Speaker 3: old research notes I had put together. I had been

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Speaker 3: a columnist for the Washington Post after the financial crisis,

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Speaker 3: and then for Bloomberg for the past decade, and I

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Speaker 3: just started sifting through my history. We do a I

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Speaker 3: do a quarterly call for clients. I started looking at

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Speaker 3: some of my notes from that, and goddamn if every

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Speaker 3: other thing I had written wasn't debunking some sort of

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Speaker 3: financial bullshit or another. And so one of the publishers,

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Speaker 3: Harriman House, I kind of reached out. I liked their

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Speaker 3: editor and their publisher, and I reached out and said,

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Speaker 3: how do you feel about a book debunking financial bullshit?

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Speaker 3: And their answer was, well, Harry Frankfurt wrote a book

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Speaker 3: called on Bullshit and that's sold well. And ever since then,

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Speaker 3: everybody who's used bullshit in a title hasn't done very well.

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Speaker 3: And besides, it's a little broad it's a little crude.

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Speaker 3: You know, the Brits are very proper, but they said

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Speaker 3: keep working so in my office and your listeners won't

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Speaker 3: be able to see this. But I have a giant

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Speaker 3: bulletin board, and I started going through all of the

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Speaker 3: ideas and that I was coming across and revisiting, and

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Speaker 3: I just started putting them on three by five index

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Speaker 3: cards and putting them up on the bulletin board. And

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Speaker 3: you know, I recently learned I wish I would have

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Speaker 3: known about this when I started it. There's a program

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Speaker 3: called Scrivener that allows you to do this virtually. I

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Speaker 3: was using a I was using MindMeister, which is like

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Speaker 3: an organizational chart sort of thing, but you know, more

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Speaker 3: or less did the same thing. And the book didn't

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Speaker 3: exactly self organize. But I started to recognize, well, this,

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Speaker 3: this is a whole bunch of bad ideas. Let me

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Speaker 3: put them together. Look these people are getting the math wrong,

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Speaker 3: they're not understanding this. Let me put that together. And oh,

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Speaker 3: look at this behavior. Really dumb things. And so those

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Speaker 3: three broad category ended up organizing themselves into ninety percent

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Speaker 3: of the book, each category with three subcategories. And you know,

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Speaker 3: the simplest way to break it down is we believe

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Speaker 3: things that are not true. We don't understand the math

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Speaker 3: that underlies so much stuff, but especially investing, and that

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Speaker 3: combination leads us to make bad decisions and engage in

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Speaker 3: bad behavior, and all the above lead to bad outcomes.

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Speaker 3: So I have been fortunate enough to have a gentleman

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Speaker 3: named Charlie Ellis on my podcast multiple times. Ellis is

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Speaker 3: a legend in the industry. He was the chairman of

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Speaker 3: the Yale Endowment, and for a long period of time,

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Speaker 3: the Yell Endowment just beat every other endowment out there.

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Speaker 3: He was on the board of directors of Vanguard Group,

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Speaker 3: now managing nine trillion dollars and the reason indexing has

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Speaker 3: become so popular. He ran Greenwich Associates. He's just a legend.

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Speaker 3: And he wrote a paper in the seventies I want

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Speaker 3: to say the Journal of Portfolio Management, but I can't

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Speaker 3: swear by it called winning the Losers Game, and he

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Speaker 3: likens investing to tennis. By the way, that later gets

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Speaker 3: expanded to a full buck like twenty years later. But

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Speaker 3: you know, tennis is two games and one It's a

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Speaker 3: winner's game and a loser's game. What does that mean, well,

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Speaker 3: if you're part of the zero point one percent who

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Speaker 3: are professional tennis players, you win by scoring points. You

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Speaker 3: hit with power, you hit with accuracy, you serve aces,

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Speaker 3: you hit the ball to where your opponent isn't, you

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Speaker 3: kiss the line. You're able to do things because of

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Speaker 3: your skill set. That's the winners game, and very very

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Speaker 3: few people get to play that game. Most of us hackers,

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Speaker 3: myself included, I've been playing tennis since my fifties. We

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Speaker 3: play the losers game. We don't win by scoring points.

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Speaker 3: We lose through unforced errors. We double fault on a serve,

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Speaker 3: we hit it wide, we hit it into the net,

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Speaker 3: it goes long. We hit the ball right into our

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Speaker 3: opponent's sweet spot, and they're able to put it where

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Speaker 3: we aren't. And so Ellis, who in his brilliance, says,

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Speaker 3: if investors would be more like amateur tennis players and

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Speaker 3: stop having all these unforced errors, just stay within yourself,

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Speaker 3: return the ball, let the other guy beat himself. You're

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Speaker 3: ahead of ninety percent of your peers as investors. And

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Speaker 3: that was really the idea of to take that concept

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Speaker 3: even further than Charlie Ellis did and say, let's rather

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Speaker 3: than tell people what to do. If we could just

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Speaker 3: get them to stop shooting themselves in the foot, they're

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Speaker 3: so much better off than there would have been otherwise.

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Speaker 2: Okay, I'm reading the book and it reminds me of

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Speaker 2: my father's philosophy. My father used to say, you know,

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Speaker 2: when someone's driving expensive car or boasting about where they've been,

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Speaker 2: he goes, there's no miracles. What's the real story? Okay?

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Speaker 2: He had a skepticism, and I find that same skepticism

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Speaker 2: in your book. About two thirds of the book is

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Speaker 2: off a fucked up shit that people are telling people

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Speaker 2: to do, or falling prey before. Ultimately it says, really

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Speaker 2: kind of invest in index funds. To what degree is

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Speaker 2: this skeptical philosophy? You're known as a contrarian. I don't

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Speaker 2: want to go deep into people's perception of you, but

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Speaker 2: to what degree is that result of your upbringing?

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Speaker 3: That's a really interesting question. My dad was a small

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Speaker 3: business owner who became a small business owner because the

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Speaker 3: company he worked for when the founder unexpectedly dropped dead,

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Speaker 3: like right right out of Bill Burr's Dropped Dead Years.

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Speaker 3: The brother in law took over, the place went to hell.

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Speaker 3: He went out and launched his own business, and my

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Speaker 3: mom was a real estate agent, and so I sort

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Speaker 3: of short commerce at a you know, rough and tumble level,

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Speaker 3: and it always felt that you know, you trust would verify,

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Speaker 3: is what Reagan said. Here's the throughout the book, there's

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Speaker 3: all this reference to behavioral economics and academic research. I've

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Speaker 3: always been fascinated by the fact that, you know, early

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Speaker 3: in my career, I would listen to quarterly conference calls

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Speaker 3: and you know, CEOs would talk about how great everything was,

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Speaker 3: and then the stock would go on and get shell

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Speaker 3: act because everything wasn't great. So I think my natural

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Speaker 3: tension and how I was raised is on the one hand,

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Speaker 3: I'm an idiot. I tend to believe when someone looks

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Speaker 3: me in the eye or says to a group of

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Speaker 3: investors things are going great, couldn't be better, Like I

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Speaker 3: believe that shit on the one hand. On the other hands,

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Speaker 3: I've been around the block enough to kind of notice that, hey,

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Speaker 3: a lot of these people say stuff and it turns

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Speaker 3: out not to be true. So you know, the word

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Speaker 3: contrarian gets kicked around a lot. I think investors would

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Speaker 3: be well served if you don't want to just say

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Speaker 3: no to everything but you have to not be gullible.

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Speaker 3: You have to be a little skeptical and less naive.

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Speaker 3: And you know, I peppered the book with lots of

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Speaker 3: quotes from some of my favorite authors, and one of

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Speaker 3: them is Theodore Sturgeon, who is a science fiction writer

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Speaker 3: in the forties and fifties, and he got tired of

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Speaker 3: defending sci fi to accusations that, hey, all the science

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Speaker 3: fiction writing, it's just cheap garbage. And Sturgeon's response now

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Speaker 3: known as Sturgeon's law. Sturgeon's rule is, hey, ninety percent

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Speaker 3: of everything is crap, literally what he said. And in

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Speaker 3: the fields of investing, that's really true. You look at

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Speaker 3: the most hedge funds, most mutual funds, you look at

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Speaker 3: most of the new products that come out, most of

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Speaker 3: the stocks that are out there. However, you want to

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Speaker 3: invest your dollars, you have to recognize that, hey, the

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Speaker 3: odds are I'm being generous one in ten, that you're

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Speaker 3: picking a winner. It's it's you know, it's really challenging

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Speaker 3: to find the needle in the haystack, gets really challenging

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Speaker 3: to identify. We all know who the legendary traders are

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Speaker 3: and who the great investors over time. But that's not

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Speaker 3: helpful knowing that. Hey, you know, if you were to

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Speaker 3: put money with one and Buffing in nineteen seventy, you

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Speaker 3: would have done great or Peter Lynch in nineteen eighty,

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Speaker 3: or will Donoff in eighteen. Like, these guys in the

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Speaker 3: world of finance are no names because there's a couple

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Speaker 3: of dozen of them out of hundreds of thousands, if

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Speaker 3: not millions, of investors, fund managers, traders, et cetera. So

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Speaker 3: they're really the uh, they're really the outlawers. And so

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Speaker 3: my background, my upbringing was having seen my mom go

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Speaker 3: through real estate transactions for decades. It was always like

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Speaker 3: she would tell me, no one, by the way, no

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Speaker 3: one's ever asked me this question. She would say to me,

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Speaker 3: my mom had no filter, and when she was young,

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Speaker 3: she had no filter. When she got older, it was

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Speaker 3: all bets are off. But she would say, everybody in

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Speaker 3: my industry is full of shit, Ma, what do you

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Speaker 3: mean by that. The clients who are looking to buy

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Speaker 3: the house are lying because they don't tell you how

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Speaker 3: much money they really have to spend. The agent on

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Speaker 3: the other side of the transaction is lying because they

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Speaker 3: want to keep the deal for themselves. They want to

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Speaker 3: get both sides of the commission as opposed to sharing

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Speaker 3: it with a buying and selling offer. The sellers are

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Speaker 3: full of crap because they're saying, we can't take a

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Speaker 3: penny less than this, and then you find out it

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Speaker 3: goes for way below it. So you kind of pick

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Speaker 3: up a little bit of all right, if someone's telling

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Speaker 3: you that, look at their motivations, look at what they

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Speaker 3: really want, And that kind of leads me to say.

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Speaker 3: That kind of leads me to say, what are they selling?

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Speaker 3: Find out what's in it for them, and then at

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Speaker 3: least you have a frame of reference to put context

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Speaker 3: for whatever they're saying to you. All Right, The agent

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Speaker 3: wants the bigger commission, the seller wants as much money

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Speaker 3: as they can get for the house, the buyer wants

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Speaker 3: to spend as little as they can, and everybody is

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Speaker 3: playing their cards close to the vest. So look past

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Speaker 3: what they're saying and figure out what are they really doing.

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Speaker 3: By the way, I think that's a Wadsworth quote. My

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Speaker 3: dad used to say to me all the time, I

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Speaker 3: can't hear what you're saying because what you're doing is

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Speaker 3: speaking so loudly. That really applies as well.

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Speaker 2: Okay, since we're this deep, what was your father's business?

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Speaker 3: So he worked initially as a placement hiring officer for

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Speaker 3: a personnel agency specializing in engineers and scientists. So, like

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Speaker 3: I was told from a young age, you're going to

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Speaker 3: be an engineer, I had no idea why. When the

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Speaker 3: business blew up, he ended up opening a local sneaker

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Speaker 3: shop and sporting good shop, and I occasionally worked in

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Speaker 3: there as a kid, and people I have a vivid

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Speaker 3: recollection of people bringing shoe boxes back to return and

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Speaker 3: I would open the box and say, we can't take

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Speaker 3: these back. There's a warrant. No, they're not one you'd

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Speaker 3: hold the bottom of the shoe. Ma'am, don't take this

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Speaker 3: the wrong way. But here's what a new shoe looks like.

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Speaker 3: Here's what your shoe looks like once you wear them outside.

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Speaker 3: They're yours. And my dad, who had lots of repeat

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Speaker 3: customers and everybody loved him. My father would often take

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Speaker 3: stuff back that dad, what the hell you're doing. He's like,

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Speaker 3: she's bought a thousand pair of shoes from us. I'll

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Speaker 3: take this one back. I never understood. I couldn't wrap

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Speaker 3: my head around I was like so offended by the bullshit,

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Speaker 3: like no, you can't return this. So I think that

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Speaker 3: contributed a little bit to me. You know, I just

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Speaker 3: never would have the balls to walk into a store

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Speaker 3: with a pair of shoes that were obviously used and

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Speaker 3: return them. My sister worked in a dress shop in

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Speaker 3: high school. She would tell me, She's like, I know

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Speaker 3: the people coming in buying a dress on a fry

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Speaker 3: and returning it on a Monday. They were it over

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Speaker 3: the weekend. I'm like, what do they do with the

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Speaker 3: this is before the days of the you know, in

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Speaker 3: the magnetic tags and the like, what do they do

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Speaker 3: with the tags? She's like, they tuck it in under

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Speaker 3: the collar and no one sees like that seems to

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Speaker 3: be like really a form of minor theft and kind

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Speaker 3: of egregious. If you can't afford the dress, why are

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Speaker 3: you pretending that you can afford this dress? She's like,

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Speaker 3: that's just how some people are. Some people aren't honest,

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Speaker 3: don't have a good ethical background, and very often are

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Speaker 3: pretending to be something they're not. The related part in

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Speaker 3: finances most of finance, this doesn't exist as much as

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Speaker 3: it used to, but most of the big brokera shops

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Speaker 3: and warehouses had a training program. It was, you know,

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Speaker 3: ostensibly all about markets and inflation and interest rates and bonds,

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Speaker 3: but really it was about a week of modern portfolio

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Speaker 3: theory and fifty one weeks of sales training. And this

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Speaker 3: sort of cocky attitude, this fake it till you make

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Speaker 3: it permeated that sales culture and kind of led a

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Speaker 3: lot of people in the industry to be really full

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Speaker 3: of shit at least during their faked phase. Some of

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Speaker 3: them eventually grow out of it and become legit people,

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Speaker 3: and the industry has very much changed over the past

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Speaker 3: thirty forty years. But that whole thing, that whole attitude,

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Speaker 3: always kind of pissed me off. And so a lot

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Speaker 3: of this shows up in the book.

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Speaker 2: Okay, your father had an independent sporting good shoes store.

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Speaker 2: That business changed dramatically in that sporting good stores became

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Speaker 2: changed towards independence, either sold out or went out of business.

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Speaker 2: In addition, the shoe business became very competitive with Nike

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Speaker 2: and a million other brands. What happened to your father's store.

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Speaker 3: He passed away a long time ago. The the he

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Speaker 3: had partners, the insurance brought him out and it was

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Speaker 3: pretty standard succession planning. Although you know, the really funny

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Speaker 3: thing about to me, the funny thing about that store

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Speaker 3: is he would bring home. So he had Nike, he

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Speaker 3: had New Balance before anyone knew what the hell New

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Speaker 3: Balance was. He had Pony Sak, and he had all

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Speaker 3: these brands that eventually became really big. He said, hey,

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Speaker 3: I want you to try these new Nikes. They're kind

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Speaker 3: of crazy, and they were the Kobe Poison Dart Frog

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Speaker 3: and they're like incredibly collectible now and they go for

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Speaker 3: thousands of dollars. And you know I would. I would

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Speaker 3: occasionally get a new pair of shoes and wear them

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Speaker 3: and never think twice, never forget. It's got to be

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Speaker 3: like twenty years ago. I don't even know how long ago.

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Speaker 3: I'm on the subway and I'm a jeans and sneaker

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Speaker 3: kind of guy, and I'm wearing the Kobe's and I

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Speaker 3: see a young kid looking at my sneakers, and then

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Speaker 3: he looks up at me. He's like, dude, what are

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Speaker 3: you doing? Like just a young you know, a young

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Speaker 3: brother heading to wherever he's having Like, who is this

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Speaker 3: middle aged white guy in a pair of fucking, you know,

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Speaker 3: poison blue darts? Kobe's and I'm like, I go you

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Speaker 3: and shit, if you saw in my closet I had

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Speaker 3: Jordan Ones. I had this like that they were sneakers

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Speaker 3: and you're war them and it's like, I've had these

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Speaker 3: for I don't know since they came out. I never

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Speaker 3: thought twice about it. And he's just hand you know,

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Speaker 3: po facebomb. He was just like ugh, like you could

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Speaker 3: see him thinking what is wrong with these people? And

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Speaker 3: I'm like, you understand it was they were just around, like, Dad,

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Speaker 3: how about can I take a pair of these? Sure,

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Speaker 3: go ahead and knock yourself out. It wasn't like I'm

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Speaker 3: gonna take these and put them away for thirty years.

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Speaker 3: It's like I'm gonna take these and put them on

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Speaker 3: my feet and walk around town. And they were great

301
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Speaker 3: for that. They were like every now and then my

302
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Speaker 3: nephews are now big enough that I give them some

303
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Speaker 3: of my old sneakers and I'll pull something out and

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Speaker 3: I'll say, all right, here's a pair of Lebrons. They're

305
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Speaker 3: brand new in the box. I don't care if they're

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Speaker 3: worth anything. I'm gonna give these to you, but you

307
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Speaker 3: have to wear them. And like three days later, you

308
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Speaker 3: can't imagine the ruck as I caused the school wearing

309
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Speaker 3: the purple and yellow lebrons. It's just, you know, to me,

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Speaker 3: it's funny that a lot of stuff I've done throughout

311
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Speaker 3: my life when and suddenly rentiers middlemen jump in because oh,

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Speaker 3: there's money to be made speculating. It doesn't matter if

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Speaker 3: it's sneakers, if it's fixing up old cars, if it's

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Speaker 3: whatever it happens to be. It's really annoying when people

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Speaker 3: find my favorite hobbies and turn it into a money

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Speaker 3: producing enterprise. The sneakers are kind of laughable, Okay.

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Speaker 2: A great percentage of the book is calling out bullshit.

318
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Speaker 2: Don't trust the people on CNBC or Fox Business or

319
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Speaker 2: even the Wall Street Journal. And you have an amazing

320
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Speaker 2: number of quotes that turned out to be one hundred

321
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Speaker 2: percent wrong. There's a teen spirit in finance. There's a brotherhood.

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Speaker 2: As you said, a lot of these people started out

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Speaker 2: as salespeople. Of course, Michael Lewis, you know lifted the uh,

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Speaker 2: whatever your veil.

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Speaker 3: He lifted the veil with liars poker for sure.

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Speaker 2: Right, But how easy is it for you or difficult

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Speaker 2: for you to have an opinion or have a flow

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Speaker 2: that is different from the majority of the people.

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Speaker 3: It's been. It's so, first of all, I will admit

330
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Speaker 3: to being, you know, a little atypical. I never went

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Speaker 3: through the machinery that most people go through, meaning I

332
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Speaker 3: was never I didn't go to an ivy school. I

333
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Speaker 3: went to a state school. I didn't go to business school.

334
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Speaker 3: I went to law school. Did well in law school,

335
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Speaker 3: cumloudy law of you passed the bar first time out,

336
00:21:42,160 --> 00:21:45,520
Speaker 3: hated the practice of law, and was kind of.

337
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Speaker 2: Well, since you know, since I sort of followed the

338
00:21:48,320 --> 00:21:51,080
Speaker 2: same routine, maybe not for the same reasons. How long

339
00:21:51,119 --> 00:21:52,880
Speaker 2: did you actually practice law?

340
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Speaker 3: Graduated eighty nine, started in finance late ninety five, so

341
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Speaker 3: less than by the way, the rule of thumb that

342
00:22:00,720 --> 00:22:04,320
Speaker 3: I learned in law school seven years post bar exam.

343
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Speaker 3: Fifty percent of lawyers are not practicing law, so I

344
00:22:07,840 --> 00:22:10,919
Speaker 3: was a year or two early. So I just just

345
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Speaker 3: managed to miss that. And you know, the fascinating thing

346
00:22:15,720 --> 00:22:19,560
Speaker 3: is law school is fascinating. I mean, if you go,

347
00:22:19,800 --> 00:22:22,239
Speaker 3: if you're a rabbit hole type of guy, and I

348
00:22:22,400 --> 00:22:29,879
Speaker 3: am learning about the legal doctrine and structure of the

349
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Speaker 3: United States and what made it so unique and why

350
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Speaker 3: it was so special. And really just a fascinating all right,

351
00:22:37,840 --> 00:22:39,800
Speaker 3: does it really need to be three years? It could

352
00:22:39,840 --> 00:22:42,159
Speaker 3: have been two years. The third years kind of a

353
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Speaker 3: tuition grab waste of time. That said, it was just fascinating.

354
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Speaker 3: And then you start practicing and you quickly find out

355
00:22:51,040 --> 00:22:54,560
Speaker 3: talk about bullshit. You quickly find out everybody's full of

356
00:22:54,600 --> 00:22:58,359
Speaker 3: shit if you're doing criminal stuff. The person who swears

357
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Speaker 3: up and down, I don't know where those drugs came from.

358
00:23:00,960 --> 00:23:02,679
Speaker 3: I didn't have any drugs on me. How do you

359
00:23:02,680 --> 00:23:06,080
Speaker 3: have fourteen prior arrest? The prosecutors they don't care. They're

360
00:23:06,119 --> 00:23:08,560
Speaker 3: just looking at their batting average. They want to have

361
00:23:08,600 --> 00:23:11,440
Speaker 3: a good number. The rest of the defense bar, it's

362
00:23:11,480 --> 00:23:14,800
Speaker 3: like they're just especially if you're looking at public defenders

363
00:23:14,800 --> 00:23:16,880
Speaker 3: that wildly overworked, they don't have the time to put

364
00:23:16,920 --> 00:23:20,920
Speaker 3: into this. I will never forget doing a criminal appeal.

365
00:23:21,359 --> 00:23:24,840
Speaker 3: And it's on bank. There are five judges, and you know,

366
00:23:25,000 --> 00:23:27,920
Speaker 3: ninety seconds in, one of the judges, who obviously had

367
00:23:27,920 --> 00:23:32,800
Speaker 3: already decided, just spins his chair round like it's like

368
00:23:32,880 --> 00:23:35,640
Speaker 3: it's you know, America's Got Talent or one of those shows.

369
00:23:35,920 --> 00:23:38,920
Speaker 3: They just turned the chair round and I'm like, hey,

370
00:23:38,920 --> 00:23:41,480
Speaker 3: this son of a bitch is going to jail over here,

371
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Speaker 3: And like it became really clear. So long before the

372
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Speaker 3: current environment came along, I knew the legal system was broken.

373
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Speaker 3: The Supreme Court was corrupt. Everybody was partisan, even though

374
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Speaker 3: they take an oath swearing to faithfully up hold the

375
00:23:59,760 --> 00:24:03,800
Speaker 3: Constitution and not be partisan. And it was like, I

376
00:24:03,840 --> 00:24:09,200
Speaker 3: can't be in the system because because of my own pathologies,

377
00:24:09,280 --> 00:24:11,679
Speaker 3: I will lose my mind with this. I have a

378
00:24:11,920 --> 00:24:18,600
Speaker 3: very heightened awareness of unfairness. And the whole system was just.

379
00:24:19,080 --> 00:24:22,200
Speaker 3: And then once you if you go into the civil side,

380
00:24:22,800 --> 00:24:26,840
Speaker 3: that's even worse because litigation is a cudgel that we

381
00:24:26,880 --> 00:24:30,360
Speaker 3: could use to beat up people with less money than ourselves,

382
00:24:30,600 --> 00:24:33,960
Speaker 3: and we could torture them and basically get what we

383
00:24:34,000 --> 00:24:37,439
Speaker 3: want because we can outlet we're a big company. We

384
00:24:37,480 --> 00:24:41,760
Speaker 3: can you know, we are theoretically perpetual and infinite. They

385
00:24:41,760 --> 00:24:45,160
Speaker 3: have a fire, at the very least, we'll outlast them,

386
00:24:45,280 --> 00:24:47,760
Speaker 3: we'll certainly outspend them, and we'll get what we want.

387
00:24:48,240 --> 00:24:51,240
Speaker 3: And so you come to realize, you know, I once

388
00:24:51,280 --> 00:24:54,400
Speaker 3: had a judge, I once had a senior attorney say

389
00:24:54,400 --> 00:24:58,040
Speaker 3: something very insightful to me, which is I was talking

390
00:24:58,040 --> 00:25:02,119
Speaker 3: about a contract, And he says, Hey, the question isn't

391
00:25:02,119 --> 00:25:04,840
Speaker 3: what's in the contract. The question is do you want

392
00:25:04,880 --> 00:25:09,440
Speaker 3: to do business with that guy? What do you mean, Well,

393
00:25:09,480 --> 00:25:13,479
Speaker 3: a contract is only what a judge will enforce if

394
00:25:13,560 --> 00:25:17,639
Speaker 3: you make everybody stand up and pay attention to the contract.

395
00:25:17,960 --> 00:25:20,520
Speaker 3: After a lot of time and a lot of costs,

396
00:25:20,840 --> 00:25:23,360
Speaker 3: he goes, so that's not that what's in the contract

397
00:25:23,480 --> 00:25:26,159
Speaker 3: isn't the question? The question is do you want to

398
00:25:26,160 --> 00:25:27,960
Speaker 3: get into bed with this person? Do you want to

399
00:25:28,000 --> 00:25:33,320
Speaker 3: have a very significant relationship where if it works out,

400
00:25:33,359 --> 00:25:35,879
Speaker 3: it's great, but if it doesn't work out, you're going

401
00:25:35,920 --> 00:25:39,160
Speaker 3: to spend a long time untying this. And are they

402
00:25:39,200 --> 00:25:42,359
Speaker 3: going to be graceful in saying it didn't work out,

403
00:25:42,560 --> 00:25:46,040
Speaker 3: Let's figure out an exbra way to cut our losses

404
00:25:46,080 --> 00:25:49,200
Speaker 3: and move on, or are they going to make you

405
00:25:49,280 --> 00:25:52,960
Speaker 3: take them to court? Like it's not what you can enforce,

406
00:25:53,480 --> 00:25:57,919
Speaker 3: it's is the other person going to make you enforce it? All?

407
00:25:58,000 --> 00:25:58,160
Speaker 2: Right?

408
00:25:58,240 --> 00:25:58,359
Speaker 1: Like?

409
00:25:58,560 --> 00:26:01,560
Speaker 3: Really, the turn he was saying to me, is that

410
00:26:01,680 --> 00:26:04,000
Speaker 3: a decent person? Are you getting into bed with someone

411
00:26:04,440 --> 00:26:07,160
Speaker 3: who you know? The old joke about the two partners

412
00:26:07,440 --> 00:26:10,000
Speaker 3: are out to lunch and one says, oh my god,

413
00:26:10,040 --> 00:26:11,880
Speaker 3: I left the safe open, and the other one says,

414
00:26:11,920 --> 00:26:14,520
Speaker 3: what do you care? We're both here, like very funny.

415
00:26:14,640 --> 00:26:17,520
Speaker 3: My dad told me that joke, very funny joke about

416
00:26:17,640 --> 00:26:21,800
Speaker 3: partners stealing from each other. So the question is, and

417
00:26:21,880 --> 00:26:26,640
Speaker 3: again it's there was a lot of cynicism, but always

418
00:26:26,680 --> 00:26:30,080
Speaker 3: with a sense of humor. That's the household I grew

419
00:26:30,160 --> 00:26:34,800
Speaker 3: up in, So a little skepticism. Try not to be

420
00:26:34,880 --> 00:26:38,119
Speaker 3: so gullible and naive, and make sure you know what

421
00:26:38,200 --> 00:26:42,240
Speaker 3: the other guy is selling, because it seems like everybody

422
00:26:42,520 --> 00:26:43,600
Speaker 3: is selling something.

423
00:26:44,640 --> 00:26:49,119
Speaker 2: Just to wrap this up again, yes, your philosophy in

424
00:26:49,200 --> 00:26:53,320
Speaker 2: your book is atypical in this field. To what degree

425
00:26:53,440 --> 00:26:56,760
Speaker 2: do you get blown back that you're not one of them?

426
00:26:56,920 --> 00:26:57,960
Speaker 2: And how do you cope with that?

427
00:27:00,080 --> 00:27:03,560
Speaker 3: So I'm sure I get blowback. I don't really notice it.

428
00:27:05,560 --> 00:27:08,840
Speaker 3: I kinda don't really give a fuck what other people think.

429
00:27:09,119 --> 00:27:12,040
Speaker 3: I know, you're not supposed to say that, so that's

430
00:27:12,040 --> 00:27:16,720
Speaker 3: only half true. Everybody wants likes. Everybody wants people to

431
00:27:16,760 --> 00:27:20,640
Speaker 3: buy their product. I disclose in the book what I'm selling,

432
00:27:22,440 --> 00:27:26,520
Speaker 3: but you know, so here's the fascinating thing. I have

433
00:27:26,600 --> 00:27:31,040
Speaker 3: this conversation with the younger guys in my office. I've

434
00:27:31,080 --> 00:27:35,200
Speaker 3: been like you, I've been writing in public for Jesus,

435
00:27:35,240 --> 00:27:39,679
Speaker 3: it's almost thirty years. I started on GeoCities in the nineties,

436
00:27:40,240 --> 00:27:43,280
Speaker 3: so in ninety eight, so we're three years away from

437
00:27:43,480 --> 00:27:48,320
Speaker 3: thirty years. Then I moved to WordPress because in two

438
00:27:48,320 --> 00:27:51,159
Speaker 3: thousand and one my office was headquartered in two World Trade.

439
00:27:51,920 --> 00:27:54,159
Speaker 3: During nine to eleven, I got my head trader on

440
00:27:54,200 --> 00:27:57,480
Speaker 3: the phone and he just gave me a running that

441
00:27:57,680 --> 00:28:00,640
Speaker 3: ration of everything was going on until the tower collapsed

442
00:28:00,640 --> 00:28:04,359
Speaker 3: and the cell connection dropped, and I wrote it up,

443
00:28:04,480 --> 00:28:06,520
Speaker 3: sent it to him and said, what do you think

444
00:28:06,560 --> 00:28:08,240
Speaker 3: You're okay if I just throw this up on the

445
00:28:08,280 --> 00:28:12,600
Speaker 3: side to let all our clients know we're okay. He's like, yeah, sure,

446
00:28:12,680 --> 00:28:14,840
Speaker 3: do it, and I wake up the next morning there's

447
00:28:14,880 --> 00:28:19,919
Speaker 3: one thousand emails from people. It was one of the

448
00:28:20,000 --> 00:28:25,119
Speaker 3: earlier first hand reports. I'm convinced that is why typead

449
00:28:25,200 --> 00:28:30,720
Speaker 3: offered me a beta test with their newfangled Wizzywig blogging software.

450
00:28:30,800 --> 00:28:34,040
Speaker 3: From there, I eventually ended up at WordPress. But I've

451
00:28:34,040 --> 00:28:37,840
Speaker 3: been writing publicly for let's call it twenty five years,

452
00:28:37,840 --> 00:28:40,640
Speaker 3: twenty seven years. And one of the things you learn

453
00:28:40,760 --> 00:28:45,400
Speaker 3: when we were younger is if somebody is kind of

454
00:28:45,560 --> 00:28:48,240
Speaker 3: upset at your writing. Well, they have to take a

455
00:28:48,240 --> 00:28:49,960
Speaker 3: sheet of paper and a pen and they have to

456
00:28:50,000 --> 00:28:52,360
Speaker 3: scribble a note and type it up and send it

457
00:28:52,400 --> 00:28:55,080
Speaker 3: into the editor. Then the editors review all these mail

458
00:28:55,120 --> 00:28:58,520
Speaker 3: that comes in, and three weeks later, on page c seventeen,

459
00:28:59,440 --> 00:29:02,040
Speaker 3: Deer ad that Ridoltz is a schmuck and here's why,

460
00:29:02,080 --> 00:29:06,040
Speaker 3: and blah blah blah. There were gatekeepers, There were guardrails.

461
00:29:06,640 --> 00:29:11,040
Speaker 3: It wasn't just hey, I have an Internet connection and

462
00:29:11,080 --> 00:29:15,400
Speaker 3: therefore I'm entitled to shit all over whatever you did.

463
00:29:16,000 --> 00:29:19,360
Speaker 3: And I'll give you. I'll give you example. You mentioned

464
00:29:19,360 --> 00:29:23,800
Speaker 3: Michael Lewis. One of Michael Lewis's books came out. I

465
00:29:23,840 --> 00:29:26,200
Speaker 3: don't remember if it was Flash Boys. I was just

466
00:29:26,240 --> 00:29:29,200
Speaker 3: talking to him Friday. He has a new book out

467
00:29:29,240 --> 00:29:35,320
Speaker 3: now also, so one of his books come out and

468
00:29:35,440 --> 00:29:40,280
Speaker 3: for whatever reason, not controlled by him. This is strictly

469
00:29:40,320 --> 00:29:46,160
Speaker 3: between the publisher and Amazon. The Kindle version doesn't come

470
00:29:46,200 --> 00:29:50,120
Speaker 3: out for thirty days, and a whole bunch of people

471
00:29:50,680 --> 00:29:55,120
Speaker 3: are giving the book one star reviews because the Kindle

472
00:29:55,600 --> 00:29:58,640
Speaker 3: and I just want to slap these people upside their heads.

473
00:29:59,080 --> 00:30:02,719
Speaker 3: And it's like, first of all, most of you are

474
00:30:02,760 --> 00:30:05,760
Speaker 3: not qualified to write reviews. Let's just start there. Most

475
00:30:05,760 --> 00:30:09,040
Speaker 3: of you are bad writers. You're terrible readers, like I'm

476
00:30:09,080 --> 00:30:13,320
Speaker 3: amazed at reading comprehension, a broad indictment of the American

477
00:30:13,440 --> 00:30:18,040
Speaker 3: education system. But then you're winding me up. I'm going

478
00:30:18,040 --> 00:30:22,000
Speaker 3: on a rant. But then it's like, what do you

479
00:30:22,040 --> 00:30:25,120
Speaker 3: have any idea? How much this is my second book,

480
00:30:25,520 --> 00:30:28,479
Speaker 3: like the last one was fifteen years ago. That's how

481
00:30:28,560 --> 00:30:30,960
Speaker 3: much work goes into it. Look look to the sequel

482
00:30:30,960 --> 00:30:33,640
Speaker 3: for this coming in twenty forty. It's a pain in

483
00:30:33,680 --> 00:30:36,120
Speaker 3: the ass to write a book. It's a lot of time,

484
00:30:36,160 --> 00:30:37,720
Speaker 3: it's a lot of effort. It's a lot of work.

485
00:30:37,960 --> 00:30:41,640
Speaker 3: You submit the manuscript and then the editing process starts coming,

486
00:30:41,640 --> 00:30:43,920
Speaker 3: and then you're back. And then once the book has published,

487
00:30:43,920 --> 00:30:47,800
Speaker 3: the promotion and someone some I'm going to curse again.

488
00:30:48,200 --> 00:30:52,240
Speaker 3: Some asshole says I have to wait four weeks for

489
00:30:52,360 --> 00:30:55,640
Speaker 3: the kindle version. Ooh, I'm gonna give it one star.

490
00:30:56,400 --> 00:30:59,280
Speaker 3: It's like I had I had comments on my blog

491
00:30:59,600 --> 00:31:03,280
Speaker 3: during the Golden Age of blogging. At a certain point,

492
00:31:03,360 --> 00:31:05,920
Speaker 3: I just kind of got to reach it. So here's

493
00:31:05,960 --> 00:31:09,640
Speaker 3: the answer to the contrarianism, long winded way. At a

494
00:31:09,680 --> 00:31:12,880
Speaker 3: certain point, I'm like, yeah, this is no longer worth it.

495
00:31:12,880 --> 00:31:16,520
Speaker 3: It's trolls, It's people trying to promote their own bullshit.

496
00:31:17,000 --> 00:31:20,400
Speaker 3: It's spam. It's before we knew what bots were, it

497
00:31:20,480 --> 00:31:23,200
Speaker 3: was bots. I'm like, hey, and I wrote like a

498
00:31:23,240 --> 00:31:27,680
Speaker 3: two thousand word missive here's why I'm shutting the comments down.

499
00:31:28,560 --> 00:31:31,680
Speaker 3: It's a shame, but it's the tragedy of the commons.

500
00:31:31,720 --> 00:31:35,640
Speaker 3: Anytime you have a public space. Most of most people,

501
00:31:35,760 --> 00:31:39,360
Speaker 3: this is the funny takeaway. Most people are kind, decent

502
00:31:39,480 --> 00:31:43,800
Speaker 3: human beings. So if only one percent of the world

503
00:31:44,360 --> 00:31:48,840
Speaker 3: are assholes, hey, there's eight billion people in the world.

504
00:31:48,960 --> 00:31:52,880
Speaker 3: Guess what you know, eight billion people, that's still eighty

505
00:31:52,920 --> 00:31:58,040
Speaker 3: million assholes. That's a lot of assholes. And because they're assholes,

506
00:31:58,080 --> 00:32:01,200
Speaker 3: they spend a lot of time online. And it's you know,

507
00:32:01,280 --> 00:32:04,360
Speaker 3: you saw it happen with Twitter. Twitter. This is long

508
00:32:04,400 --> 00:32:08,280
Speaker 3: before Elmo bought it. Twitter started circling the drain a

509
00:32:08,320 --> 00:32:10,520
Speaker 3: while ago. It just got worse and worse and worse.

510
00:32:10,760 --> 00:32:14,400
Speaker 2: I gotta stop here for one second. You referred to

511
00:32:14,520 --> 00:32:15,040
Speaker 2: mis Elmo.

512
00:32:16,720 --> 00:32:20,600
Speaker 3: Yeah, because I don't like to use his name, because

513
00:32:20,920 --> 00:32:25,320
Speaker 3: I'm convinced somewhere on Twitter, if you mentioned Elon he

514
00:32:25,400 --> 00:32:29,040
Speaker 3: seems to be insecure and vindictive enough that it'll pull

515
00:32:29,160 --> 00:32:33,160
Speaker 3: up something. And I've had a bunch of friends suddenly

516
00:32:33,440 --> 00:32:38,280
Speaker 3: their entire account is downgraded. They could do one post

517
00:32:38,320 --> 00:32:43,120
Speaker 3: to day. Everything is is the free speech talk about

518
00:32:43,120 --> 00:32:47,560
Speaker 3: selling bullshit, free speech absolutist unless you disagree with me,

519
00:32:47,640 --> 00:32:50,840
Speaker 3: and then you're screwed. So it just I used to

520
00:32:50,920 --> 00:32:54,440
Speaker 3: type it, and it's just become. And you know, he's

521
00:32:54,560 --> 00:32:57,840
Speaker 3: kind of like a sesame Street muppet. You know, if

522
00:32:57,880 --> 00:33:01,160
Speaker 3: you know his history, if you know that he didn't

523
00:33:01,200 --> 00:33:05,360
Speaker 3: found PayPal, he didn't found Tesla. He's really good at

524
00:33:05,800 --> 00:33:08,120
Speaker 3: finding a parade and hopping in the front of it.

525
00:33:08,160 --> 00:33:11,360
Speaker 3: He didn't find found Twitter. I'm trying to remember if

526
00:33:11,360 --> 00:33:14,960
Speaker 3: he even found its space sex. He may have been

527
00:33:14,960 --> 00:33:19,560
Speaker 3: there at the beginning. I don't really remember, but you know,

528
00:33:19,800 --> 00:33:23,600
Speaker 3: he And this is to get back to the question

529
00:33:24,720 --> 00:33:27,840
Speaker 3: how you deal with the slings and arrows of other

530
00:33:27,880 --> 00:33:33,160
Speaker 3: people in the industry. The reality is that back in

531
00:33:33,240 --> 00:33:36,760
Speaker 3: the day, listen, when we were growing up, every library

532
00:33:36,800 --> 00:33:39,520
Speaker 3: had that crazy guy outside, whether he had the aluminum

533
00:33:39,520 --> 00:33:42,240
Speaker 3: on his head or not. What the Internet has allowed

534
00:33:42,880 --> 00:33:46,400
Speaker 3: is all the crazies to link up and actually form

535
00:33:46,480 --> 00:33:52,479
Speaker 3: a movement solo kind of wacky people who believed in

536
00:33:52,600 --> 00:33:58,480
Speaker 3: things that weren't true. You know, they they've found each

537
00:33:58,520 --> 00:34:02,160
Speaker 3: other through the Internet. So I've kinda I've kind of

538
00:34:02,200 --> 00:34:06,920
Speaker 3: become quick to dismiss nonsense. I got into a Twitter

539
00:34:07,200 --> 00:34:11,560
Speaker 3: spat with the founder of Chewy who said something very

540
00:34:11,640 --> 00:34:14,720
Speaker 3: ignorant about short sellers. There have been a lot of fraud,

541
00:34:14,719 --> 00:34:18,520
Speaker 3: and his shop is perfectly legitimate, but there have been

542
00:34:18,640 --> 00:34:23,120
Speaker 3: like Overstock and all these companies that had accounting fraud.

543
00:34:23,560 --> 00:34:26,440
Speaker 3: And why is it that everywhere there's fraud. You know,

544
00:34:26,560 --> 00:34:31,239
Speaker 3: short sellers ferret out fraud and identify a mispricing. Hey,

545
00:34:31,280 --> 00:34:33,439
Speaker 3: the market hasn't figured this out. This shouldn't be one hundred,

546
00:34:33,480 --> 00:34:36,439
Speaker 3: this should be twenty. And why is it that every

547
00:34:36,480 --> 00:34:41,239
Speaker 3: time someone complains about short sellers you find out that

548
00:34:41,320 --> 00:34:44,560
Speaker 3: there's some sort of terrible garbage going on in the company.

549
00:34:44,880 --> 00:34:48,760
Speaker 3: So I just think he didn't know better and said something,

550
00:34:48,800 --> 00:34:51,560
Speaker 3: and I kind of mocked it, and he sicked his

551
00:34:51,880 --> 00:34:56,680
Speaker 3: three million, you know, followers on me, and so I

552
00:34:56,680 --> 00:35:00,160
Speaker 3: don't know if I don't think he didn't intentionally. It's

553
00:35:00,239 --> 00:35:04,640
Speaker 3: just that you know, young dumb on the internet. Hey,

554
00:35:04,800 --> 00:35:08,799
Speaker 3: they're entitled to slag me because they paid twenty seven

555
00:35:08,840 --> 00:35:12,160
Speaker 3: dollars a month for an Internet connection. They're experts now,

556
00:35:12,719 --> 00:35:15,200
Speaker 3: and like some of the younger guys, it's like, dude,

557
00:35:15,239 --> 00:35:17,239
Speaker 3: what's going on. I'm like, oh yeah, let me just

558
00:35:17,360 --> 00:35:21,600
Speaker 3: mute that conversation. All right, it doesn't exist guys like us.

559
00:35:21,800 --> 00:35:24,319
Speaker 3: The internet is a room in the house. We go

560
00:35:24,440 --> 00:35:28,560
Speaker 3: into the younger generation. The Internet in real life are

561
00:35:28,600 --> 00:35:32,600
Speaker 3: the same thing. So like you could you could be

562
00:35:33,280 --> 00:35:37,319
Speaker 3: very online, or you could be two online. So I

563
00:35:37,400 --> 00:35:41,680
Speaker 3: think that something happened. Oh so I've been doing a

564
00:35:41,680 --> 00:35:44,839
Speaker 3: bunch of pods and videos and I started going through

565
00:35:44,880 --> 00:35:47,480
Speaker 3: the comments on one of the YouTube videos and I

566
00:35:47,520 --> 00:35:51,480
Speaker 3: started laughing out loud. It's like, this is why I

567
00:35:51,520 --> 00:35:55,280
Speaker 3: think it's like twelve years ago, I turned off comments

568
00:35:55,280 --> 00:35:57,440
Speaker 3: and I had comments off on my Bloomberg and my

569
00:35:57,560 --> 00:36:01,200
Speaker 3: Washington Post column. Not because I don't want to engage

570
00:36:01,239 --> 00:36:05,839
Speaker 3: in spirited debate, but there are rules for debate, and

571
00:36:06,200 --> 00:36:11,200
Speaker 3: there's got to be like a basic fundamental understanding of

572
00:36:12,120 --> 00:36:16,319
Speaker 3: here's what the topic is, here's how you can debate it.

573
00:36:16,719 --> 00:36:19,359
Speaker 3: My I love mixing it up with people now. Moot

574
00:36:19,440 --> 00:36:22,960
Speaker 3: court was my favorite part of law school. I'm very

575
00:36:23,040 --> 00:36:26,719
Speaker 3: happy to debate anything in the book, anything, But then,

576
00:36:27,120 --> 00:36:31,520
Speaker 3: you know, as a friend once said, you know, when

577
00:36:31,600 --> 00:36:35,960
Speaker 3: people are wrapped in a glass and steel vehicle and

578
00:36:36,000 --> 00:36:40,160
Speaker 3: they're protected by five thousand pounds of you know, a

579
00:36:40,239 --> 00:36:43,279
Speaker 3: vehicle moving fifty miles an hour, they'll flip you off,

580
00:36:43,320 --> 00:36:45,080
Speaker 3: they'll give you the finger, they'll tell you to go

581
00:36:45,120 --> 00:36:48,080
Speaker 3: fuck yourself, they'll yell whatever they want out the car.

582
00:36:48,560 --> 00:36:51,239
Speaker 3: You would never do that as a pedestrian or in

583
00:36:51,280 --> 00:36:55,320
Speaker 3: an elevator, probably because you get your ass kicked, but

584
00:36:56,080 --> 00:37:03,800
Speaker 3: also because that sort of screen of safety disappears. The Internet, unfortunately,

585
00:37:03,920 --> 00:37:08,959
Speaker 3: has a tendency to encourage people's very worst behavior. And

586
00:37:09,560 --> 00:37:13,200
Speaker 3: you know, it's not social media. Everybody complains about social media.

587
00:37:13,719 --> 00:37:19,560
Speaker 3: It's algorithmic social media that is designed to reward attention

588
00:37:19,880 --> 00:37:23,919
Speaker 3: and outrage, and they do it by tickling your emotions

589
00:37:23,960 --> 00:37:27,760
Speaker 3: and getting you frustrated and getting you angry. John Stewart

590
00:37:27,840 --> 00:37:33,759
Speaker 3: calls Fox News bullshit Mountain. Algorithmic social media is the

591
00:37:33,800 --> 00:37:38,120
Speaker 3: same way, and the fascinating thing you mentioned Fox News

592
00:37:38,160 --> 00:37:41,920
Speaker 3: and CNBC. It's not all of them. You just have

593
00:37:42,000 --> 00:37:47,520
Speaker 3: to pick what's worthwhile and useful and ignore the rest.

594
00:37:47,800 --> 00:37:54,040
Speaker 3: By the way, CNN MSNBC, Bloomberg TV, Forbes, The Wall

595
00:37:54,040 --> 00:37:56,879
Speaker 3: Street Journal, The New York Times, The Atlantic, go through

596
00:37:56,920 --> 00:37:59,719
Speaker 3: all of them. Some writers are better than others, some

597
00:38:00,000 --> 00:38:03,640
Speaker 3: ideas they're better than others. It would be really, really

598
00:38:03,800 --> 00:38:10,240
Speaker 3: helpful to us as individuals to be better critical thinking

599
00:38:10,600 --> 00:38:16,120
Speaker 3: thinkers have an ability to understand framing and context. The

600
00:38:16,160 --> 00:38:21,360
Speaker 3: world is complicated and filled with shades of gray. Anybody

601
00:38:21,400 --> 00:38:25,000
Speaker 3: who reduces these things to a black and white thumbs

602
00:38:25,040 --> 00:38:29,479
Speaker 3: up or thumbs down binary outcome, they're doing a great

603
00:38:29,520 --> 00:38:33,560
Speaker 3: disservice to themselves and to everybody else. And so why

604
00:38:33,800 --> 00:38:36,839
Speaker 3: why don't I care what other people say? Either they

605
00:38:36,840 --> 00:38:43,680
Speaker 3: don't understand the whole framework, they don't understand the math inside.

606
00:38:44,160 --> 00:38:48,640
Speaker 3: They're not picking up the nuance. More often than not,

607
00:38:48,920 --> 00:38:52,600
Speaker 3: they read the headline and that's what they form their

608
00:38:52,600 --> 00:38:53,279
Speaker 3: opinion on.

609
00:39:01,200 --> 00:39:04,400
Speaker 2: Okay to great Greek except for one company you mentioned, Chewy.

610
00:39:04,880 --> 00:39:09,320
Speaker 2: That's the public. Yeah. I don't know enough about the finance,

611
00:39:09,440 --> 00:39:13,400
Speaker 2: not really my world, but you know there are certain events, Robinhood,

612
00:39:13,520 --> 00:39:16,640
Speaker 2: I don't really know where everybody shows up. Are you

613
00:39:16,760 --> 00:39:20,040
Speaker 2: a pariah? Are you not a member of the group?

614
00:39:21,280 --> 00:39:22,200
Speaker 2: Where do you fit in?

615
00:39:25,920 --> 00:39:30,319
Speaker 3: So I know I'm definitely not a pariah. And you

616
00:39:30,360 --> 00:39:33,680
Speaker 3: could tell by the blurbs in the beginning of the

617
00:39:33,680 --> 00:39:36,480
Speaker 3: book that there are a lot of big hitters who

618
00:39:36,520 --> 00:39:39,520
Speaker 3: seem to put up with me and gave me a nice,

619
00:39:39,560 --> 00:39:45,960
Speaker 3: a nice blurb. I will say the two real, two

620
00:39:46,000 --> 00:39:49,840
Speaker 3: or three things that I did that kind of allowed

621
00:39:49,840 --> 00:39:52,200
Speaker 3: me to throw them out of cocktails but still get

622
00:39:52,239 --> 00:39:58,720
Speaker 3: invited to the parties is first heading into the financial crisis.

623
00:39:59,200 --> 00:40:01,239
Speaker 3: Not a lot of peopleeople were jumping up and down

624
00:40:01,280 --> 00:40:05,359
Speaker 3: and saying, hey, guys, this is a Remember the three

625
00:40:05,440 --> 00:40:08,000
Speaker 3: D posters. You look at them out of focus and

626
00:40:08,040 --> 00:40:11,080
Speaker 3: the dolphin jumps out. That's what was going on in

627
00:40:11,120 --> 00:40:13,719
Speaker 3: the mid two thousands. If you looked at what was

628
00:40:13,760 --> 00:40:16,920
Speaker 3: going on in the economy and the market correctly, it

629
00:40:17,000 --> 00:40:20,840
Speaker 3: was pretty clear shit's about to hit the fan, right

630
00:40:21,000 --> 00:40:25,160
Speaker 3: and it's at the time I was very public about this.

631
00:40:26,239 --> 00:40:30,480
Speaker 3: I went on Cudlow's show after the I don't believe

632
00:40:30,480 --> 00:40:33,839
Speaker 3: in forecasts, but I got into a debate with the

633
00:40:33,960 --> 00:40:37,359
Speaker 3: editor way back then of BusinessWeek, Hey, you're doing your

634
00:40:37,360 --> 00:40:40,879
Speaker 3: big annual forecast issue. Why don't we run a little

635
00:40:40,920 --> 00:40:43,120
Speaker 3: counter programming and talk about how no one's won this

636
00:40:43,160 --> 00:40:45,640
Speaker 3: two years in a row. The outcome is random. You

637
00:40:45,719 --> 00:40:48,960
Speaker 3: move the end date forward or back twenty four hours

638
00:40:49,000 --> 00:40:52,160
Speaker 3: the whole number, order show the whole thing is and

639
00:40:52,200 --> 00:40:56,879
Speaker 3: that the editor says, it's a double issue. We sell

640
00:40:56,880 --> 00:40:59,160
Speaker 3: a shit ton of advertising. Do you want to participate

641
00:40:59,280 --> 00:41:05,040
Speaker 3: or not? So I put in I had written rein

642
00:41:05,120 --> 00:41:08,800
Speaker 3: Hart and Rogoff wrote a piece to academics that Harvard

643
00:41:08,880 --> 00:41:11,280
Speaker 3: and I don't remember whether they're married. I don't remember where.

644
00:41:11,560 --> 00:41:14,560
Speaker 3: Maybe it's Harvard, MIT or Harvard and Boston College, but

645
00:41:15,080 --> 00:41:17,640
Speaker 3: they're married. And they write this piece that looks at

646
00:41:17,760 --> 00:41:24,880
Speaker 3: five financial crises. It's Helsinki, Mexico, the US, Japan. I

647
00:41:25,000 --> 00:41:28,600
Speaker 3: always forget the fifth one, whatever it is. And it

648
00:41:28,680 --> 00:41:34,800
Speaker 3: turns out that if you have a leveraged base financial crisis,

649
00:41:34,840 --> 00:41:39,080
Speaker 3: too much debt and it blows up, real estate has

650
00:41:39,120 --> 00:41:41,600
Speaker 3: a tendency to drop twenty five to thirty five percent.

651
00:41:41,880 --> 00:41:46,560
Speaker 3: By the way, that later that that paper later gets

652
00:41:46,560 --> 00:41:49,880
Speaker 3: expanded into this time is different. Eight hundred years of

653
00:41:49,880 --> 00:41:53,480
Speaker 3: financial folly by them. So I take that, let's take

654
00:41:53,520 --> 00:41:57,160
Speaker 3: thirty percent as the average. What would happen to the

655
00:41:57,520 --> 00:42:01,680
Speaker 3: dow if real estate fell thirty So I write up

656
00:42:01,680 --> 00:42:05,000
Speaker 3: the series Forthstreet dot Com I did it with the

657
00:42:05,040 --> 00:42:07,640
Speaker 3: Dow because the S and P five hundreds, five hundred companies,

658
00:42:07,640 --> 00:42:09,759
Speaker 3: it would have taken forever to do. Hey, I could

659
00:42:09,840 --> 00:42:12,879
Speaker 3: kind of spit all my way through thirty companies. Long

660
00:42:12,880 --> 00:42:15,279
Speaker 3: story short, I come up with a number at the

661
00:42:15,360 --> 00:42:18,280
Speaker 3: time when the Dow is like thirteen thousand and change

662
00:42:18,760 --> 00:42:22,600
Speaker 3: of sixty eight hundred, like down fifty percent or so,

663
00:42:23,280 --> 00:42:27,400
Speaker 3: and so I dutifully. After I hang up the phone,

664
00:42:27,440 --> 00:42:30,040
Speaker 3: I go back to that piece. I pull out those numbers.

665
00:42:30,320 --> 00:42:34,480
Speaker 3: I put it into the Business Week forecast, and Dow

666
00:42:34,600 --> 00:42:37,080
Speaker 3: sixty eight hundred. I don't remember. The SMP was like

667
00:42:37,200 --> 00:42:40,280
Speaker 3: six eighty or six ninety something like that. The NASDAK,

668
00:42:41,160 --> 00:42:43,040
Speaker 3: I can't even remember the numbers. They were so low.

669
00:42:43,520 --> 00:42:46,560
Speaker 3: Cudlow brings me on, and I've been doing his show

670
00:42:46,600 --> 00:42:50,520
Speaker 3: pretty regularly, and he brings me on and basically mocks

671
00:42:50,560 --> 00:42:53,880
Speaker 3: me for twenty minutes, and I'm like, Larry, this is

672
00:42:53,920 --> 00:42:58,360
Speaker 3: a thought experiment, and here's here's what nobody is thinking about.

673
00:42:58,719 --> 00:43:02,080
Speaker 3: This has been a backward real estate driven economy. Normally,

674
00:43:02,680 --> 00:43:05,560
Speaker 3: people get jobs, they get raises, they go buy houses.

675
00:43:06,080 --> 00:43:09,360
Speaker 3: Not Hey, we're cunning rates to zero. Everybody borrow money.

676
00:43:10,239 --> 00:43:12,839
Speaker 3: Anybody who could fog a mier borrow money go buy

677
00:43:12,880 --> 00:43:16,319
Speaker 3: houses and then that stimulates that's backwards. That's not how

678
00:43:16,360 --> 00:43:18,879
Speaker 3: this is supposed to work. And look over here at

679
00:43:18,880 --> 00:43:22,560
Speaker 3: we're selling all these subprime mortgages and collateralizing them. That's

680
00:43:22,600 --> 00:43:25,759
Speaker 3: the poison, that's the toxin getting into the bloodstream. All

681
00:43:25,800 --> 00:43:28,800
Speaker 3: of this ends badly. And he's like, but look, everybody

682
00:43:28,800 --> 00:43:31,240
Speaker 3: else is up here and you're all the way down here.

683
00:43:31,640 --> 00:43:34,480
Speaker 3: I'm like, so for about a year I looked like

684
00:43:34,760 --> 00:43:39,040
Speaker 3: a fucking idiot. And I remember going on CNBC with

685
00:43:39,080 --> 00:43:43,439
Speaker 3: my friend Peter Buchfar, He's a market strategist. Elsewhere I'm

686
00:43:43,480 --> 00:43:46,840
Speaker 3: talking about housing and the impact on markets. He's talking

687
00:43:46,880 --> 00:43:50,920
Speaker 3: about rates and the impact on profits, and the anchors literally,

688
00:43:50,960 --> 00:43:54,759
Speaker 3: I want to say. This was like late seven. Our

689
00:43:54,800 --> 00:43:58,000
Speaker 3: offices were downtown forty fourth Street and forty sixth Street.

690
00:43:58,040 --> 00:44:00,840
Speaker 3: We were near each other and Madison and like fifty

691
00:44:00,880 --> 00:44:04,960
Speaker 3: something was the remote CNBC studios, and the anchors laughed

692
00:44:05,000 --> 00:44:08,279
Speaker 3: at us on the air. Peter bookvar please reach out

693
00:44:08,280 --> 00:44:11,319
Speaker 3: to Bob and confirm this, and we kind of we

694
00:44:11,320 --> 00:44:14,719
Speaker 3: were walking back to our offices down Madison and just

695
00:44:14,800 --> 00:44:18,800
Speaker 3: kind of hey, either we're really right or we're really wrong,

696
00:44:19,200 --> 00:44:24,319
Speaker 3: because they just laughed us off the air, like we

697
00:44:24,360 --> 00:44:26,920
Speaker 3: really look like idiots. And I'm like, I don't know

698
00:44:26,920 --> 00:44:29,319
Speaker 3: how much longer this goes. And you kind of see

699
00:44:29,360 --> 00:44:32,800
Speaker 3: it in the movie The Big Short, even though Michael

700
00:44:32,840 --> 00:44:37,120
Speaker 3: Burry makes his clients hundreds of millions of dollars, like,

701
00:44:37,239 --> 00:44:40,680
Speaker 3: the two years heading into the collapse is just torturous

702
00:44:40,680 --> 00:44:44,200
Speaker 3: for him. So I had nothing like that experience, but

703
00:44:44,320 --> 00:44:47,719
Speaker 3: I understood, gee, you know this doesn't make sense. I

704
00:44:47,800 --> 00:44:50,960
Speaker 3: know markets go longer and higher than anyone could expect.

705
00:44:51,360 --> 00:44:54,759
Speaker 3: So the funny part about that was, as soon as

706
00:44:54,760 --> 00:44:56,880
Speaker 3: the shit starts hitting the fan, Larry starts having me

707
00:44:56,920 --> 00:44:59,960
Speaker 3: on every week twice a week, I'm getting called constantly.

708
00:45:00,400 --> 00:45:03,759
Speaker 3: So the fact that I more or less got that right,

709
00:45:04,160 --> 00:45:09,000
Speaker 3: and then on by dumb luck, Henry Blodgett of Business

710
00:45:09,040 --> 00:45:12,480
Speaker 3: Insider and Yahoo invites me on on I had I

711
00:45:12,520 --> 00:45:15,120
Speaker 3: had said to a friend, Hey, the sixty eight hundred

712
00:45:15,200 --> 00:45:19,120
Speaker 3: thing is, you know, a little embarrassing but starting to turn.

713
00:45:19,480 --> 00:45:22,359
Speaker 3: If please, if we get anywhere near that, don't let

714
00:45:22,360 --> 00:45:24,680
Speaker 3: me be that jerk that doubles down and says thirty

715
00:45:24,680 --> 00:45:27,720
Speaker 3: four hundred. So I'm on vacation when we cross sixty

716
00:45:27,719 --> 00:45:31,799
Speaker 3: eight hundred and I get a phone call, So what

717
00:45:31,840 --> 00:45:34,080
Speaker 3: are you doing. I'm like, I'm literally writing the note

718
00:45:34,160 --> 00:45:38,640
Speaker 3: right now. I send it out Henry Blodgett immediately, Hey

719
00:45:38,680 --> 00:45:43,040
Speaker 3: you want to come on Yahoo TV? Sure? So the

720
00:45:43,080 --> 00:45:45,319
Speaker 3: biggest baron Wall Street, the guy who warned you about

721
00:45:45,360 --> 00:45:48,200
Speaker 3: sixty eight hundred, seven thousand points ago. What are you

722
00:45:48,200 --> 00:45:51,080
Speaker 3: seeing now? Hey? Everything we're looking at is this pinned

723
00:45:51,600 --> 00:45:54,279
Speaker 3: negative as it gets. Cover your shorts and go along.

724
00:45:54,360 --> 00:45:54,560
Speaker 2: Here.

725
00:45:54,640 --> 00:45:58,160
Speaker 3: It's it. And this is not how I run money.

726
00:45:58,680 --> 00:46:02,200
Speaker 3: I was at an institutional I had planted a flag

727
00:46:02,239 --> 00:46:05,480
Speaker 3: and it's like, all right, we're down fifty percent. Maybe

728
00:46:05,480 --> 00:46:07,440
Speaker 3: we fall more. I don't know. I'm just going to

729
00:46:07,520 --> 00:46:10,400
Speaker 3: take the win and go home. And by the dumbest

730
00:46:10,440 --> 00:46:13,440
Speaker 3: of dumb luck, the next morning was the bottom and

731
00:46:14,120 --> 00:46:18,520
Speaker 3: markets took off. So I think people in the industry,

732
00:46:18,880 --> 00:46:21,600
Speaker 3: all right, he got that one right, So he's not

733
00:46:21,680 --> 00:46:24,920
Speaker 3: a total idiot. Will will tolerate some of his nonsense

734
00:46:25,280 --> 00:46:28,160
Speaker 3: because anyone who listened to him saved a bunch of money.

735
00:46:28,640 --> 00:46:31,840
Speaker 3: And then, not only had I been blogging for forever,

736
00:46:32,280 --> 00:46:36,600
Speaker 3: but when I moved over to Bloomberg, I told them

737
00:46:36,760 --> 00:46:41,040
Speaker 3: I wanted to fool around with this new fangled podcast thing.

738
00:46:41,160 --> 00:46:43,000
Speaker 3: They're like, what do you mean, Well, I want to

739
00:46:43,040 --> 00:46:47,440
Speaker 3: speak to intelligent, accomplished people and have long form conversations.

740
00:46:47,719 --> 00:46:50,279
Speaker 3: What do you mean long form like ten minutes? No,

741
00:46:50,480 --> 00:46:54,200
Speaker 3: like two hours? And everybody laughed at the time. The

742
00:46:54,200 --> 00:46:57,760
Speaker 3: way I the way I pitched it was Mark Maren's

743
00:46:57,880 --> 00:47:01,160
Speaker 3: WTF meets Charlie Rose And then a few years later

744
00:47:01,200 --> 00:47:05,480
Speaker 3: I had to amend that, but with pants on. So

745
00:47:06,160 --> 00:47:08,200
Speaker 3: Bloomberg came back to me and said, tell you what

746
00:47:08,920 --> 00:47:11,760
Speaker 3: if you get us thirty two minutes, thirty two minutes

747
00:47:11,760 --> 00:47:15,520
Speaker 3: of your content traffic, news, sports, weather, commercials, that's an

748
00:47:15,520 --> 00:47:18,000
Speaker 3: hour of radio. Have at it. Whatever is longer than

749
00:47:18,080 --> 00:47:20,920
Speaker 3: thirty two minutes will put online. No one's going to listen.

750
00:47:21,000 --> 00:47:24,120
Speaker 3: But what the hell? And that was eleven years ago,

751
00:47:24,280 --> 00:47:29,520
Speaker 3: five hundred and fifty episodes ago. And I've kind of

752
00:47:30,280 --> 00:47:34,680
Speaker 3: gotten to meet everybody in the industry. And I'll never

753
00:47:35,280 --> 00:47:39,600
Speaker 3: make someone who's terrible look good. I will give somebody

754
00:47:39,600 --> 00:47:42,759
Speaker 3: an opportunity to say, who are you, how did you

755
00:47:42,800 --> 00:47:46,719
Speaker 3: get that way? What's your investment philosophy? What can we

756
00:47:46,840 --> 00:47:50,560
Speaker 3: learn from you? And so I think I've kind of

757
00:47:51,360 --> 00:47:54,919
Speaker 3: earned my way into a pass, even though I kind

758
00:47:54,960 --> 00:47:58,760
Speaker 3: of you know, let's be honest. For most of its history,

759
00:47:58,880 --> 00:48:03,120
Speaker 3: Wall Street was not Mom and Pop's friends. Wall Street

760
00:48:03,160 --> 00:48:06,680
Speaker 3: existed for the wealthy, by the wealthy. I grew up

761
00:48:06,719 --> 00:48:10,600
Speaker 3: a really middle class kid. I mean, when I was younger,

762
00:48:10,680 --> 00:48:15,200
Speaker 3: my dad was the business he was working for imploded.

763
00:48:15,600 --> 00:48:18,800
Speaker 3: By the time my younger brother was in high school.

764
00:48:18,840 --> 00:48:23,280
Speaker 3: Well by then he had switched careers, launched the store,

765
00:48:23,360 --> 00:48:26,879
Speaker 3: and they were doing well. But I grew up very,

766
00:48:27,080 --> 00:48:29,600
Speaker 3: very middle class. Went to a state school, paid for

767
00:48:29,640 --> 00:48:32,640
Speaker 3: it myself, went to a local law school, paid for

768
00:48:32,719 --> 00:48:37,399
Speaker 3: it myself, working my way through both, and so I

769
00:48:37,440 --> 00:48:40,960
Speaker 3: never intended to go into finance. It was never like,

770
00:48:41,040 --> 00:48:45,200
Speaker 3: there was never a plan here other than that kind

771
00:48:45,239 --> 00:48:48,760
Speaker 3: of looks interesting. I got a tour of my buddy's

772
00:48:48,840 --> 00:48:52,120
Speaker 3: trading room. He's like, why don't you do this? You're

773
00:48:52,120 --> 00:48:54,480
Speaker 3: good with computers, you're good with numbers. You would be

774
00:48:54,520 --> 00:48:57,040
Speaker 3: a natural at this. I'm like, really, do you like

775
00:48:57,120 --> 00:48:59,560
Speaker 3: being a lawyer. No, I hate being a lawyer. Well,

776
00:48:59,600 --> 00:49:03,480
Speaker 3: then try this, and I did, and you know, thirty

777
00:49:03,520 --> 00:49:04,480
Speaker 3: years later, here we are.

778
00:49:05,480 --> 00:49:10,240
Speaker 2: Okay. You mentioned short sellers Hindenburgh, which got the most

779
00:49:10,280 --> 00:49:14,560
Speaker 2: ink and was right shut down. So you say in

780
00:49:14,600 --> 00:49:17,120
Speaker 2: the book there should be word short sellers, even though

781
00:49:17,160 --> 00:49:20,520
Speaker 2: the trend is the Dow and the S and P

782
00:49:20,719 --> 00:49:22,520
Speaker 2: continue to go up, So tell me more about that.

783
00:49:23,640 --> 00:49:27,719
Speaker 3: So you know, we come out of the financial crisis

784
00:49:27,719 --> 00:49:31,520
Speaker 3: in nine and a good rule of thumb, anytime markets

785
00:49:31,560 --> 00:49:35,920
Speaker 3: are cut in half by equities like it's it's you

786
00:49:35,920 --> 00:49:38,600
Speaker 3: shouldn't be market timing, you shouldn't be jumping in and out.

787
00:49:39,040 --> 00:49:42,480
Speaker 3: But down fifty percent on US equities has turned out

788
00:49:42,719 --> 00:49:44,920
Speaker 3: to be a pretty good entry point, all right. If

789
00:49:44,920 --> 00:49:47,400
Speaker 3: you bought in twenty nine down fifty percent, there was

790
00:49:47,440 --> 00:49:51,120
Speaker 3: still another down thirty percent to go. But five years

791
00:49:51,200 --> 00:49:56,280
Speaker 3: later you'll find and ever since then, you won't rarely

792
00:49:56,360 --> 00:49:59,719
Speaker 3: get down fifty percent. We've had we've had the financial

793
00:49:59,760 --> 00:50:03,280
Speaker 3: crime sis, even the dot com implosion where the Nasdaq

794
00:50:03,400 --> 00:50:06,799
Speaker 3: was down where all the technology companies were listed, was

795
00:50:06,840 --> 00:50:08,920
Speaker 3: down eighty one percent, But I want to say the

796
00:50:09,000 --> 00:50:11,000
Speaker 3: S and P five hundred was down something like thirty

797
00:50:11,040 --> 00:50:13,640
Speaker 3: eight or forty per didn't quite get that low. So

798
00:50:13,719 --> 00:50:17,520
Speaker 3: it's really really rare. And yet coming out of the

799
00:50:17,640 --> 00:50:22,520
Speaker 3: financial crisis, all I heard for a long time was

800
00:50:24,520 --> 00:50:28,919
Speaker 3: the FED is repressing assets they've the manipulating markets. They've

801
00:50:28,920 --> 00:50:32,680
Speaker 3: cut rates to zero, they're forcing people into the market.

802
00:50:33,200 --> 00:50:37,200
Speaker 3: And I frequently found myself speaking to people saying, you know,

803
00:50:39,200 --> 00:50:41,920
Speaker 3: over at NYU Start School of Business, around the corner

804
00:50:41,960 --> 00:50:46,440
Speaker 3: on McDougal is Cafe Reggio, and if you're a grad student,

805
00:50:46,560 --> 00:50:50,840
Speaker 3: you can go get some cappuccino, smoke clothes, cigarettes, stroke

806
00:50:50,920 --> 00:50:56,120
Speaker 3: your beard or your goatee, and philosophically debate the propriety

807
00:50:56,239 --> 00:50:59,880
Speaker 3: of what the Fed's doing. But you're an asset manager.

808
00:51:00,160 --> 00:51:03,920
Speaker 3: Your job is to manage your client's assets. If you

809
00:51:03,960 --> 00:51:07,279
Speaker 3: want to fight the FED, well knock yourself out. But

810
00:51:07,800 --> 00:51:10,120
Speaker 3: that's a different job than the one you were hired for.

811
00:51:10,640 --> 00:51:14,600
Speaker 3: And people don't like hearing that, and they especially don't

812
00:51:14,680 --> 00:51:19,800
Speaker 3: like hearing how come everybody who's anti FED has wildly

813
00:51:19,880 --> 00:51:23,839
Speaker 3: underperformed their benchmark for the past fill in a blank one, three, five,

814
00:51:23,960 --> 00:51:28,360
Speaker 3: seven years. It's almost as if whining against the central

815
00:51:28,400 --> 00:51:33,440
Speaker 3: bank is an excuse for poor performance. So stuff like

816
00:51:33,480 --> 00:51:36,839
Speaker 3: that doesn't really win you friends, but it's, you know,

817
00:51:36,960 --> 00:51:40,480
Speaker 3: more or less true. It's uh. I know people who

818
00:51:40,560 --> 00:51:45,759
Speaker 3: are former bank regulators and former Federal Reserve researchers, and

819
00:51:45,800 --> 00:51:49,080
Speaker 3: they've gone into academia. Those are the right people that

820
00:51:49,120 --> 00:51:53,279
Speaker 3: should be debating FED policy, and you know they have

821
00:51:54,640 --> 00:51:56,920
Speaker 3: because that's what they were hired to do. But if

822
00:51:56,960 --> 00:52:01,320
Speaker 3: you're hired to manage someone's bond portfolio, well then shut

823
00:52:01,360 --> 00:52:04,920
Speaker 3: the fuck up and manage the bond portfolio. Whining about

824
00:52:04,960 --> 00:52:09,279
Speaker 3: the FED isn't gonna help your your numbers. So I

825
00:52:09,320 --> 00:52:12,120
Speaker 3: am occasionally a fly in the ointment. I am occasionally

826
00:52:13,440 --> 00:52:17,760
Speaker 3: somebody that can piss people off, But for the most part,

827
00:52:17,960 --> 00:52:23,120
Speaker 3: I have tried to make finance smarter, make it fairer,

828
00:52:24,560 --> 00:52:28,560
Speaker 3: focus people on what matters, Debunk a lot of nonsense,

829
00:52:29,200 --> 00:52:33,400
Speaker 3: and just keep mom and pop investors focused on, you know,

830
00:52:33,600 --> 00:52:37,759
Speaker 3: purposeful investing. What are you saving for and why? Right?

831
00:52:37,840 --> 00:52:41,160
Speaker 3: What's the like money money, more money for money, More

832
00:52:41,160 --> 00:52:45,040
Speaker 3: money's sake doesn't really get you anywhere. But if you're

833
00:52:45,080 --> 00:52:48,280
Speaker 3: saving for a purpose, it could be five point twenty

834
00:52:48,360 --> 00:52:52,400
Speaker 3: nine for kids college, for one K for retirement. Maybe

835
00:52:52,400 --> 00:52:56,400
Speaker 3: you have enough money you're saving for philanthropy or generational

836
00:52:56,400 --> 00:52:59,600
Speaker 3: wealth trener, whatever it is. Once you figure out the

837
00:52:59,640 --> 00:53:03,520
Speaker 3: purpose that you're aiming your investments towards, well then you

838
00:53:03,520 --> 00:53:05,920
Speaker 3: can figure out the best route there. With the least

839
00:53:05,960 --> 00:53:09,279
Speaker 3: taking you know, returns or a function of risk. You

840
00:53:09,320 --> 00:53:13,200
Speaker 3: have to assume some level of risk risk free returns

841
00:53:13,239 --> 00:53:15,360
Speaker 3: or what you get from the ten year treasury because

842
00:53:15,640 --> 00:53:18,960
Speaker 3: you're guaranteed to get your money back now. Yielding four

843
00:53:19,000 --> 00:53:22,120
Speaker 3: percent not a great return when inflation's two and a

844
00:53:22,120 --> 00:53:25,400
Speaker 3: half three percent. Stocks tend to be eight ten percent

845
00:53:25,440 --> 00:53:28,160
Speaker 3: of a long term better return. But as we saw

846
00:53:28,239 --> 00:53:30,319
Speaker 3: last month, they don't just go up. They go up

847
00:53:30,360 --> 00:53:33,440
Speaker 3: and down, and so you have to be prepared for that.

848
00:53:33,960 --> 00:53:36,640
Speaker 3: So if you, you know, if I can get people

849
00:53:36,719 --> 00:53:40,759
Speaker 3: focused on here's how to do this, here's how to

850
00:53:40,800 --> 00:53:43,440
Speaker 3: not shoot yourself in the foot, and here's how to

851
00:53:43,520 --> 00:53:47,160
Speaker 3: manage towards a goal. You know, more for more's sake,

852
00:53:47,400 --> 00:53:50,040
Speaker 3: is not a goal more because I want to leave

853
00:53:50,080 --> 00:53:55,479
Speaker 3: all my money to the Humane Society because I don't

854
00:53:55,520 --> 00:53:58,120
Speaker 3: like how we're treating cats and dogs. Hey, now you

855
00:53:58,160 --> 00:54:00,440
Speaker 3: have a goal, you know how to we know how

856
00:54:00,480 --> 00:54:05,080
Speaker 3: to map a path to that, and you can assume

857
00:54:05,200 --> 00:54:09,680
Speaker 3: the right amount of risk relative to that purpose. And

858
00:54:09,760 --> 00:54:13,400
Speaker 3: so I think I'm sincere about that. Maybe that buys

859
00:54:13,440 --> 00:54:16,280
Speaker 3: me a little bit of goodwill. I've had enough people

860
00:54:16,400 --> 00:54:20,840
Speaker 3: call me an asshole, so I'm clearly pissing some people off.

861
00:54:21,200 --> 00:54:23,520
Speaker 3: And I think as you read the book, you could

862
00:54:23,600 --> 00:54:29,359
Speaker 3: tell so my wife got me this. She's like, now

863
00:54:29,400 --> 00:54:33,279
Speaker 3: you have some fucks to give, because previously I had

864
00:54:33,320 --> 00:54:36,360
Speaker 3: no fucks to give. Oh, you don't, dude, this was

865
00:54:36,400 --> 00:54:41,400
Speaker 3: the cover story you wrote on the cover of Fortune magazine.

866
00:54:41,480 --> 00:54:44,319
Speaker 3: Here's why Cisco is the one stock to own. You

867
00:54:44,440 --> 00:54:47,279
Speaker 3: have to own this. Don't own Microsoft, they say in

868
00:54:47,360 --> 00:54:51,160
Speaker 3: the magazine. Own this one. Don't own Ge they say.

869
00:54:51,200 --> 00:54:53,600
Speaker 3: They turn out to be right about that, but Microsoft,

870
00:54:53,640 --> 00:54:57,319
Speaker 3: they were wildly wrong. And ever since that cover came

871
00:54:57,360 --> 00:55:01,640
Speaker 3: out in May of two thousand, we're twenty five years

872
00:55:01,719 --> 00:55:05,440
Speaker 3: later and that trade is still a loser. It's still

873
00:55:05,480 --> 00:55:10,719
Speaker 3: below where they recommended it. I feel someone should be

874
00:55:10,800 --> 00:55:14,880
Speaker 3: calling out people that put bad ideas out into the ether,

875
00:55:15,600 --> 00:55:21,440
Speaker 3: and people will, unfortunately put money to work based on

876
00:55:21,560 --> 00:55:24,239
Speaker 3: what they're reading, what they're seeing, what they're hearing. And

877
00:55:24,320 --> 00:55:30,480
Speaker 3: so I admittedly cherry picked the most egregious examples, and

878
00:55:30,600 --> 00:55:34,080
Speaker 3: some of the examples in the book are just really

879
00:55:34,560 --> 00:55:39,200
Speaker 3: horrifyingly egregious, But the lesson within the each is still

880
00:55:39,200 --> 00:55:44,080
Speaker 3: the same. Whether it's the idiots who paid their asset

881
00:55:44,160 --> 00:55:49,400
Speaker 3: managers a billion dollars. Two asset managers manage a family

882
00:55:49,440 --> 00:55:54,200
Speaker 3: office for one family and managed to squeeze a billion

883
00:55:54,280 --> 00:55:58,279
Speaker 3: each in fees out. That's egregious. Recip's a locutor. The

884
00:55:58,360 --> 00:56:02,239
Speaker 3: thing speaks for itself. I'm sorry, but I don't care

885
00:56:02,280 --> 00:56:05,360
Speaker 3: how good you are. You shouldn't be getting a billion

886
00:56:05,440 --> 00:56:10,120
Speaker 3: dollars for giving anyone advice, and so I thought that

887
00:56:10,200 --> 00:56:16,839
Speaker 3: was worth calling out. The best selling personal finance book

888
00:56:16,880 --> 00:56:21,000
Speaker 3: of all time is Rich Dad, Poor Dad. Robert Koyasaki

889
00:56:21,040 --> 00:56:24,520
Speaker 3: always mispronounced his name. Thirty two million copies of that

890
00:56:24,600 --> 00:56:28,200
Speaker 3: book sold. I haven't read it, but I've seen him

891
00:56:28,320 --> 00:56:31,759
Speaker 3: on Twitter. In every week he's four care or every

892
00:56:31,840 --> 00:56:37,120
Speaker 3: year he's forecasting an economic crisis and a market crash.

893
00:56:37,600 --> 00:56:41,000
Speaker 3: Literally since two thousand and nine. Somebody else on Twitter

894
00:56:41,239 --> 00:56:44,719
Speaker 3: found all of his tweets stacked him together, and it's like,

895
00:56:45,239 --> 00:56:48,200
Speaker 3: oh my god, this guy has just never recovered from

896
00:56:48,360 --> 00:56:52,239
Speaker 3: eight oh nine. He's been negative and bearish and has

897
00:56:52,360 --> 00:56:56,640
Speaker 3: like two million Twitter followers, which is unfortunate because those

898
00:56:56,680 --> 00:57:00,200
Speaker 3: poor bastards, if they listened to him, they missed what

899
00:57:00,280 --> 00:57:03,879
Speaker 3: was one of the greatest decades in market history. Every

900
00:57:04,000 --> 00:57:07,680
Speaker 3: year he forecasted a crash My favorite forecast of his

901
00:57:07,880 --> 00:57:11,040
Speaker 3: was twenty eighteen, sell residential real estate in the US,

902
00:57:11,120 --> 00:57:15,080
Speaker 3: big housing crash coming. I'm hard pressed to find a

903
00:57:15,239 --> 00:57:19,120
Speaker 3: better time to buy residential real estate in the United

904
00:57:19,160 --> 00:57:22,720
Speaker 3: States than twenty eighteen, even with the dumb luck of

905
00:57:22,760 --> 00:57:27,240
Speaker 3: the pandemic. But here we are. Housing topped out in

906
00:57:27,480 --> 00:57:31,480
Speaker 3: five oh six, we underbuilt single family homes for a decade,

907
00:57:31,920 --> 00:57:35,880
Speaker 3: and by twenty eighteen, forget the pandemic, we were Depending

908
00:57:35,880 --> 00:57:40,040
Speaker 3: on who you listen to, the Architects Association, National Association,

909
00:57:40,080 --> 00:57:44,720
Speaker 3: and Realtors National Builders wear two three four million homes

910
00:57:44,760 --> 00:57:48,640
Speaker 3: short as of twenty eighteen. Because we underbuilt homes for

911
00:57:48,720 --> 00:57:51,960
Speaker 3: a decade. And this guy is telling people sell the

912
00:57:52,080 --> 00:57:55,520
Speaker 3: US real estate. So nobody calls these people out. I

913
00:57:55,600 --> 00:58:00,160
Speaker 3: kind of feel somewhat obligate. That's my neuropathy, is that

914
00:58:00,720 --> 00:58:02,960
Speaker 3: I just can't let the shit go. I have to

915
00:58:03,560 --> 00:58:04,480
Speaker 3: call it out.

916
00:58:13,920 --> 00:58:17,200
Speaker 2: Okay, just to go back what should be happening with

917
00:58:17,280 --> 00:58:18,000
Speaker 2: short selling.

918
00:58:20,200 --> 00:58:23,360
Speaker 3: I'm tough to wrestle into submission, aren't I. So short

919
00:58:23,360 --> 00:58:27,280
Speaker 3: sellers serve a really important purpose. They identify fraud that

920
00:58:27,480 --> 00:58:30,840
Speaker 3: the SEC misses. They're the first ones to buy in

921
00:58:30,880 --> 00:58:34,760
Speaker 3: a market crash because they sold up here the market crashes,

922
00:58:35,040 --> 00:58:40,760
Speaker 3: they're a buyer. Hey, free money. And it's become really

923
00:58:40,880 --> 00:58:45,080
Speaker 3: challenging to do, in part because the modern world has

924
00:58:45,120 --> 00:58:48,000
Speaker 3: become so much more efficient markets are. They used to

925
00:58:48,000 --> 00:58:53,160
Speaker 3: be kind of sort of eventually efficient. Now they're pretty efficient,

926
00:58:53,760 --> 00:58:56,520
Speaker 3: meaning that if there's fraud out there, if there's something

927
00:58:56,600 --> 00:59:01,000
Speaker 3: wrong with a company, forget fraud. If a business model

928
00:59:01,360 --> 00:59:06,880
Speaker 3: is crapping out, short sellers are usually the first ones

929
00:59:06,960 --> 00:59:10,640
Speaker 3: to figure that out. They tend to be negative because

930
00:59:10,680 --> 00:59:14,040
Speaker 3: they're betting on things going down. They tend to see

931
00:59:14,440 --> 00:59:18,160
Speaker 3: the glasses half full. But they serve a useful purpose.

932
00:59:18,280 --> 00:59:21,360
Speaker 3: They are the eyes and ears you know. Short Sellers

933
00:59:21,360 --> 00:59:24,120
Speaker 3: are the one who identified and run as a fraud.

934
00:59:24,520 --> 00:59:27,920
Speaker 3: Short Sellers are the one who identified world com overstuck.

935
00:59:28,600 --> 00:59:30,880
Speaker 3: Go through the list of all the big frauds of

936
00:59:30,920 --> 00:59:34,920
Speaker 3: the past ten twenty thirty years, It wasn't the SEC

937
00:59:34,960 --> 00:59:39,960
Speaker 3: that uncovered most of these. It was typically short sellers.

938
00:59:40,000 --> 00:59:43,840
Speaker 3: In fact, as much as you want to believe the

939
00:59:43,920 --> 00:59:47,600
Speaker 3: SEC is the one who found out about Bernie Madoff,

940
00:59:47,920 --> 00:59:50,240
Speaker 3: a handful of short sellers looked at that and said,

941
00:59:50,480 --> 00:59:54,200
Speaker 3: none of the strategy makes sense. This is clearly a fraud.

942
00:59:54,800 --> 00:59:59,840
Speaker 3: I know three or four people quants that looked at

943
01:00:01,160 --> 01:00:05,160
Speaker 3: that looked Renaissance Technologies. Is a quant that did that.

944
01:00:06,720 --> 01:00:08,960
Speaker 3: I'm drawn a blank on the guy's name. A former

945
01:00:09,320 --> 01:00:14,280
Speaker 3: MIT professor who wrote Beat the Dealer Right. He was

946
01:00:14,320 --> 01:00:17,800
Speaker 3: one of the people there. There were a handful of

947
01:00:18,560 --> 01:00:23,680
Speaker 3: folks who looked at who ed Thorpe, who looked at

948
01:00:23,720 --> 01:00:28,240
Speaker 3: at made off and said, something doesn't smell right with this.

949
01:00:28,800 --> 01:00:32,200
Speaker 3: It wasn't. And he managed to skate through the dot

950
01:00:32,240 --> 01:00:36,480
Speaker 3: com implosion, but he couldn't skate through the financial crisis.

951
01:00:37,000 --> 01:00:40,240
Speaker 3: The SEC didn't figure it out. It was the market

952
01:00:40,280 --> 01:00:42,840
Speaker 3: crash that you know, the tide went out and he

953
01:00:42,920 --> 01:00:46,000
Speaker 3: was naked and everybody saw what was going on. So

954
01:00:47,320 --> 01:00:50,960
Speaker 3: short sellers serve a really important purpose. It's become really

955
01:00:51,080 --> 01:00:55,600
Speaker 3: challenging to do. People have been abusive with litigation. The SEC.

956
01:00:56,280 --> 01:00:58,880
Speaker 3: You know, they don't like being shown up. You would

957
01:00:58,880 --> 01:01:04,280
Speaker 3: think they would work with short sellers to reveal to

958
01:01:04,440 --> 01:01:09,680
Speaker 3: uncover fraud, but instead it's that they haven't been especially nice.

959
01:01:09,680 --> 01:01:11,480
Speaker 3: And the way to make money, there's two ways to

960
01:01:11,480 --> 01:01:16,040
Speaker 3: make money as a short seller. So the way it

961
01:01:16,080 --> 01:01:18,920
Speaker 3: works is I borrow stock from you and then I

962
01:01:19,080 --> 01:01:21,400
Speaker 3: sell it, and when I buy it back lower, I

963
01:01:21,520 --> 01:01:24,160
Speaker 3: return the shares to you. Right, That's how and I

964
01:01:24,160 --> 01:01:26,520
Speaker 3: pay you a fee for that. That's how short selling works.

965
01:01:26,800 --> 01:01:29,240
Speaker 3: So that's one way to make money as a short seller.

966
01:01:29,320 --> 01:01:32,960
Speaker 3: The other way is to write up research reports. But

967
01:01:33,720 --> 01:01:36,960
Speaker 3: that whole business, that side of the business. You know,

968
01:01:37,160 --> 01:01:39,280
Speaker 3: back in the old days, when you would trade, it

969
01:01:39,280 --> 01:01:42,960
Speaker 3: would cost you fifteen to twenty cents a share. Then

970
01:01:43,000 --> 01:01:44,960
Speaker 3: it was ten cents a share, then it was five cents.

971
01:01:45,520 --> 01:01:49,560
Speaker 3: And the way research shops would make money is, Hey,

972
01:01:49,640 --> 01:01:51,560
Speaker 3: run all your trading through us. We'll give you all

973
01:01:51,600 --> 01:01:55,640
Speaker 3: our research for free, soft dollar. And so at five

974
01:01:55,680 --> 01:01:58,440
Speaker 3: cents a share, people doing tens of millions of shares

975
01:01:58,480 --> 01:02:01,360
Speaker 3: trading a day. Hey, it adds up to you know,

976
01:02:01,800 --> 01:02:05,160
Speaker 3: ten million here, ten million there. Pretty soon it's real money.

977
01:02:06,000 --> 01:02:10,520
Speaker 3: That business is really shrunk dramatically, so the you know,

978
01:02:10,720 --> 01:02:14,200
Speaker 3: there is a need for newspapers that business says, and

979
01:02:14,280 --> 01:02:19,000
Speaker 3: local reporting that's shrunk. The fascinating thing about the Internet

980
01:02:19,160 --> 01:02:23,200
Speaker 3: and digital and modern technology is a lot of the

981
01:02:23,360 --> 01:02:27,280
Speaker 3: institutional building block blocks of our society have had their

982
01:02:27,360 --> 01:02:30,800
Speaker 3: legs cut out from on them. Between Craigslist and eBay

983
01:02:31,320 --> 01:02:33,360
Speaker 3: and then all the dating apps, and then all the

984
01:02:33,760 --> 01:02:37,840
Speaker 3: bring a trailer and cars and bids like and Zillow.

985
01:02:38,480 --> 01:02:43,640
Speaker 3: Each of these were giant real estate, giant newspaper advertising sections,

986
01:02:43,680 --> 01:02:49,520
Speaker 3: the classifieds, garage sales, used cars, house listings. That's all gone,

987
01:02:50,120 --> 01:02:55,480
Speaker 3: and you know, you lose newspapers and democracy suffers. Well,

988
01:02:55,560 --> 01:02:58,400
Speaker 3: the same thing happens in the market. The business of

989
01:02:58,600 --> 01:03:03,280
Speaker 3: short selling has becomeing recently difficult. Trading is essentially free

990
01:03:03,280 --> 01:03:06,200
Speaker 3: these days, so it's really hard. It's one thing to say,

991
01:03:06,200 --> 01:03:09,240
Speaker 3: we have to trade, all right, run it, give some

992
01:03:09,400 --> 01:03:11,080
Speaker 3: to him and some to her and some to them,

993
01:03:11,120 --> 01:03:13,600
Speaker 3: and you know, well, that's how we'll pay for our research,

994
01:03:14,120 --> 01:03:16,760
Speaker 3: as opposed to, oh, trading's free. I got to write

995
01:03:16,760 --> 01:03:19,080
Speaker 3: a check for a quarter million dollars. I don't think

996
01:03:19,120 --> 01:03:21,480
Speaker 3: I want to do that. And so that business has

997
01:03:21,520 --> 01:03:25,560
Speaker 3: become really, really challenging. And it's unfortunate because they served

998
01:03:25,600 --> 01:03:28,120
Speaker 3: an important purpose in the market.

999
01:03:28,800 --> 01:03:33,919
Speaker 2: Okay, you take down Susie Orman and Dave Ramsey. Dave,

1000
01:03:34,040 --> 01:03:38,400
Speaker 2: of course, is really all over TikTok and Instagram wheels.

1001
01:03:38,760 --> 01:03:40,120
Speaker 2: Can you go into that a little bit.

1002
01:03:41,120 --> 01:03:45,520
Speaker 3: So, look, they both serve a purpose, and I every

1003
01:03:45,560 --> 01:03:47,520
Speaker 3: now and then they just kind of cross the line

1004
01:03:47,640 --> 01:03:51,280
Speaker 3: and it makes me a little crazy. So if you

1005
01:03:51,840 --> 01:03:55,280
Speaker 3: and Dave Ramsey, bless him. He's built a great business.

1006
01:03:55,280 --> 01:03:58,880
Speaker 3: Good for him. Susie Orman. Also, finally, now there's a

1007
01:03:58,880 --> 01:04:01,400
Speaker 3: woman or there has a woman on that saying the

1008
01:04:01,400 --> 01:04:07,520
Speaker 3: same thing, telling people how to deploy fundamental budgeting. Right,

1009
01:04:07,560 --> 01:04:10,800
Speaker 3: there's a need for that. I'm not like anti Susie

1010
01:04:10,880 --> 01:04:14,360
Speaker 3: Orman or anti Dave Ramsey. It's when they start saying

1011
01:04:14,720 --> 01:04:19,200
Speaker 3: stuff that's just clickbait kind of nonsense. It pisses me off,

1012
01:04:19,480 --> 01:04:23,720
Speaker 3: all right, so I get so let me sum up,

1013
01:04:23,800 --> 01:04:28,760
Speaker 3: Dave Ramsey, Hey, get your personal budget together. Spend less

1014
01:04:28,800 --> 01:04:32,200
Speaker 3: than you earn, don't run up credit card debt, invest

1015
01:04:32,240 --> 01:04:36,640
Speaker 3: in yourself via education or whatever. Invest in your long

1016
01:04:36,720 --> 01:04:40,600
Speaker 3: term by saving for the future. This is really, you know,

1017
01:04:40,640 --> 01:04:43,240
Speaker 3: the sort of stuff we should be teaching in high school,

1018
01:04:43,680 --> 01:04:45,880
Speaker 3: you know, back in the day when there was home ech,

1019
01:04:47,080 --> 01:04:49,520
Speaker 3: family budgeting. A lot of this stuff is pretty basic,

1020
01:04:49,880 --> 01:04:53,440
Speaker 3: and some people really need to hear this over and

1021
01:04:53,480 --> 01:04:57,440
Speaker 3: over again. Where it starts to get a little crazy

1022
01:04:57,720 --> 01:05:02,240
Speaker 3: is what I call the spending skolds, and it's never

1023
01:05:02,280 --> 01:05:05,040
Speaker 3: buy a sports car, don't spend a lot of money

1024
01:05:05,120 --> 01:05:07,840
Speaker 3: on a boat, don't do this, and they leave out

1025
01:05:07,960 --> 01:05:11,480
Speaker 3: the last part of the sentence, which is if you

1026
01:05:11,680 --> 01:05:16,240
Speaker 3: can't afford it. Right, I'm a boater. My first boat

1027
01:05:16,280 --> 01:05:21,080
Speaker 3: was like a forty dollars row boat, and then a kayak,

1028
01:05:21,120 --> 01:05:24,560
Speaker 3: and then eventually a little thing with a little outboard,

1029
01:05:24,600 --> 01:05:29,000
Speaker 3: and now I have During the financial crisis, I bought

1030
01:05:29,040 --> 01:05:30,880
Speaker 3: a boat that was a short sale. The guy was

1031
01:05:30,880 --> 01:05:34,120
Speaker 3: about to lose it to the bank, and you can negotiate.

1032
01:05:34,160 --> 01:05:38,160
Speaker 3: So I've had that c Ray for twenty years. But

1033
01:05:38,240 --> 01:05:42,960
Speaker 3: the takeaway is I could afford it. If you're buying

1034
01:05:43,000 --> 01:05:47,040
Speaker 3: something as a flex, well, you're wasting your money, nobody.

1035
01:05:47,120 --> 01:05:51,520
Speaker 3: And that's the flip side of Instagram and TikTok. You know,

1036
01:05:51,600 --> 01:05:53,440
Speaker 3: you just see the tip of the iceberg. You don't

1037
01:05:53,480 --> 01:05:56,080
Speaker 3: see the two thirds that are below the waterline. You

1038
01:05:56,120 --> 01:05:59,560
Speaker 3: see a big house or a fancy car, or jewelry

1039
01:05:59,640 --> 01:06:03,320
Speaker 3: or watch whatever. You're only seeing the asset. You're not

1040
01:06:03,360 --> 01:06:06,280
Speaker 3: seeing the liability on the other side of that. You're

1041
01:06:06,280 --> 01:06:08,360
Speaker 3: not seeing Hey, it's nice that you have a two

1042
01:06:08,400 --> 01:06:11,520
Speaker 3: million dollar house. How much is your mortgage? Two million dollars?

1043
01:06:11,720 --> 01:06:14,040
Speaker 3: All right, so you have nothing. Here's the asset, here's

1044
01:06:14,040 --> 01:06:17,840
Speaker 3: the mortgage. They offset right, that's a very different experience.

1045
01:06:18,240 --> 01:06:21,640
Speaker 3: And when I see people flexing and buying things that

1046
01:06:22,160 --> 01:06:26,560
Speaker 3: they can't afford, that's where D Dave Ramsey and Stusie

1047
01:06:26,600 --> 01:06:29,440
Speaker 3: Orman one hundred percent right, where I kind of get

1048
01:06:29,440 --> 01:06:32,720
Speaker 3: a little pissed. Is you know, if you buy a latte,

1049
01:06:32,800 --> 01:06:36,520
Speaker 3: you're pissing away millions of dollars. Hey, not for nothing.

1050
01:06:36,560 --> 01:06:38,360
Speaker 3: I don't want to be a top ten percent or

1051
01:06:38,400 --> 01:06:41,880
Speaker 3: a top one percenter. If a five dollars latte is

1052
01:06:41,920 --> 01:06:46,160
Speaker 3: the difference between a comfortable retirement or not. You're doing

1053
01:06:46,240 --> 01:06:50,000
Speaker 3: something else wrong. You're just doing something else wrong, no matter.

1054
01:06:50,600 --> 01:06:54,200
Speaker 3: And there's a concept called denominator blindness where you just

1055
01:06:54,280 --> 01:06:58,120
Speaker 3: see the numerator but not the denominator. All right, So

1056
01:06:58,480 --> 01:07:03,600
Speaker 3: five dollars, I guess over thirty years, you could say

1057
01:07:03,600 --> 01:07:07,120
Speaker 3: it extrapolates out to hundreds of thousands of dollars. That's

1058
01:07:07,160 --> 01:07:11,360
Speaker 3: before you inflation adjusted. But hey, over that same thirty

1059
01:07:11,440 --> 01:07:14,520
Speaker 3: year period, how much is your earning going to go

1060
01:07:14,680 --> 01:07:16,600
Speaker 3: up if you're not buying a latte for the next

1061
01:07:16,640 --> 01:07:20,800
Speaker 3: thirty years because you're only making one hundred grand now, well,

1062
01:07:20,840 --> 01:07:23,640
Speaker 3: thirty years from now, you're not still making one hundred grand.

1063
01:07:24,080 --> 01:07:27,440
Speaker 3: You're probably making closer to eight hundred grand. And again,

1064
01:07:27,760 --> 01:07:31,280
Speaker 3: who cares about a five dollars latte? When the funny

1065
01:07:31,320 --> 01:07:35,320
Speaker 3: thing is, when when all the latte crap came out,

1066
01:07:35,760 --> 01:07:40,000
Speaker 3: we were looking at about thirty years of no increase

1067
01:07:40,040 --> 01:07:44,320
Speaker 3: in wages for the bottom sixty percent of earners in America.

1068
01:07:44,960 --> 01:07:48,800
Speaker 3: And to me, rather than waste my time scolding people

1069
01:07:48,960 --> 01:07:52,360
Speaker 3: not to buy a latte, I think you should look

1070
01:07:52,440 --> 01:07:55,760
Speaker 3: at Hey, how come nobody's income in the bottom on

1071
01:07:55,880 --> 01:07:59,400
Speaker 3: a half of society is keeping up with inflation. We're

1072
01:07:59,440 --> 01:08:01,520
Speaker 3: watching hell health care go up nine percent a year

1073
01:08:01,560 --> 01:08:04,440
Speaker 3: for the past twenty five years. We're watching education go

1074
01:08:04,600 --> 01:08:09,240
Speaker 3: up that much. Wages are badly lagging for pick a number,

1075
01:08:09,320 --> 01:08:13,160
Speaker 3: bottom forty fifty sixty percent of society. I don't think

1076
01:08:13,280 --> 01:08:16,360
Speaker 3: lecturing those people about five dollars lattes is going to

1077
01:08:16,400 --> 01:08:19,439
Speaker 3: help them. What would really help them is trying to

1078
01:08:19,479 --> 01:08:24,559
Speaker 3: figure out why we are not keeping up wages. And

1079
01:08:24,600 --> 01:08:29,559
Speaker 3: that was the great irony of the pandemic is suddenly,

1080
01:08:29,640 --> 01:08:33,639
Speaker 3: not only was there a giant fiscal stimulus that made

1081
01:08:33,640 --> 01:08:37,719
Speaker 3: its way into everybody's pockets, but a lot of companies

1082
01:08:37,800 --> 01:08:42,160
Speaker 3: quickly realized, oh, we're competing for a modest pool of workers,

1083
01:08:42,720 --> 01:08:44,680
Speaker 3: and the only way we're going to be able to

1084
01:08:44,760 --> 01:08:48,080
Speaker 3: keep find the people we need is by giving them

1085
01:08:48,120 --> 01:08:51,000
Speaker 3: a salary increase. I know a lot of folks aren't

1086
01:08:51,000 --> 01:08:57,120
Speaker 3: thrilled with Amazon and Bezos and the crapification of the site,

1087
01:08:57,520 --> 01:09:01,880
Speaker 3: but I think it was around twenty sixteen they realized, hey,

1088
01:09:01,920 --> 01:09:03,439
Speaker 3: we have a shit ton of money. We don't pay

1089
01:09:03,439 --> 01:09:06,920
Speaker 3: taxes because we don't show a profit. So they raised

1090
01:09:06,920 --> 01:09:11,439
Speaker 3: their minimum wage to fifteen dollars nationwide and scooped up

1091
01:09:11,560 --> 01:09:14,439
Speaker 3: all these people. And for a couple of years you

1092
01:09:14,439 --> 01:09:17,160
Speaker 3: would go through a Walmart and it looked like crap.

1093
01:09:17,760 --> 01:09:22,160
Speaker 3: They couldn't hire enough people and their incentives were really misaligned.

1094
01:09:22,640 --> 01:09:26,000
Speaker 3: So over the past let's call it ten years, there's

1095
01:09:26,040 --> 01:09:29,799
Speaker 3: been a pretty big catchup for a lot of people.

1096
01:09:29,960 --> 01:09:32,799
Speaker 3: I think medium wage is up to like eighty thousand

1097
01:09:32,840 --> 01:09:36,320
Speaker 3: dollars now in the United States from like forty three.

1098
01:09:37,080 --> 01:09:40,920
Speaker 3: Not that much. That not that far. I'll go. Let's

1099
01:09:41,000 --> 01:09:42,920
Speaker 3: just take a quick look to see where we are.

1100
01:09:45,840 --> 01:09:50,960
Speaker 3: I mean, eleven ninety two per week, that's that's not bad.

1101
01:09:52,400 --> 01:09:55,960
Speaker 3: So when I see people complaining about five dollar lattes

1102
01:09:56,080 --> 01:09:59,040
Speaker 3: or don't buy a sports car. Yeah, if you can't

1103
01:09:59,080 --> 01:10:01,760
Speaker 3: afford it, don't buy it. But if that's something that

1104
01:10:01,760 --> 01:10:03,280
Speaker 3: floats your boat and you want to go do it,

1105
01:10:03,320 --> 01:10:05,360
Speaker 3: and you're going to hang out with friends, you're gonna

1106
01:10:05,400 --> 01:10:07,920
Speaker 3: have fun going on road trips. And you know the

1107
01:10:07,960 --> 01:10:10,320
Speaker 3: thing about the I had a conversation with one of

1108
01:10:10,320 --> 01:10:12,200
Speaker 3: the people I work with who has a lake house.

1109
01:10:12,240 --> 01:10:15,679
Speaker 3: He lives in Michigan, and he, you know, is debating

1110
01:10:15,760 --> 01:10:20,360
Speaker 3: getting a small boat and he could easily afford it

1111
01:10:20,920 --> 01:10:24,920
Speaker 3: and kind of was hesitant because of the scolding. And

1112
01:10:24,960 --> 01:10:27,880
Speaker 3: I'm like, the problem isn't never buy a boat. By

1113
01:10:27,880 --> 01:10:30,799
Speaker 3: the way, the boat is the least expensive part of boating.

1114
01:10:31,200 --> 01:10:34,240
Speaker 3: Then there's repairs and gas and maintenance and dock fees

1115
01:10:34,280 --> 01:10:37,680
Speaker 3: and winter storage and beer, and like, the boat is

1116
01:10:37,680 --> 01:10:40,880
Speaker 3: the cheapest part of boating. If you can afford this

1117
01:10:41,479 --> 01:10:43,720
Speaker 3: and you want to spend time with your family and

1118
01:10:43,720 --> 01:10:45,800
Speaker 3: your kids will go out and you'll you know, have

1119
01:10:45,840 --> 01:10:49,479
Speaker 3: great experiences and create memories, knock yourself out. And he

1120
01:10:49,560 --> 01:10:52,760
Speaker 3: bought the boat and it's been a blast. It's not

1121
01:10:53,120 --> 01:10:57,120
Speaker 3: about it's just too lazy and easy to always say no.

1122
01:10:57,600 --> 01:10:59,320
Speaker 3: I don't think you should just say no. I think

1123
01:10:59,360 --> 01:11:02,160
Speaker 3: you have to think these things through and put it

1124
01:11:02,160 --> 01:11:05,800
Speaker 3: into some context and find some nuance, and hey, if

1125
01:11:05,800 --> 01:11:08,639
Speaker 3: you can't buy it, afford a boat or a latte.

1126
01:11:08,760 --> 01:11:11,840
Speaker 3: If you can't afford it, don't buy it. But if

1127
01:11:11,880 --> 01:11:15,000
Speaker 3: you understand the costs and what goes into it, like

1128
01:11:15,360 --> 01:11:19,439
Speaker 3: someone did, someone did something, Never buy a beach house.

1129
01:11:20,240 --> 01:11:22,679
Speaker 3: Why don't you want to go to the beach and

1130
01:11:23,240 --> 01:11:25,960
Speaker 3: relax over the summer. The most fun I have had

1131
01:11:26,439 --> 01:11:29,200
Speaker 3: is hanging out reading a book, listening to the ocean.

1132
01:11:29,600 --> 01:11:32,880
Speaker 3: Why should I not buy a beach house? Well, it's expensive,

1133
01:11:32,880 --> 01:11:36,639
Speaker 3: and there are maintenance costs and this and that. Listen,

1134
01:11:37,080 --> 01:11:39,720
Speaker 3: you could buy a two hundred thousand dollars shack, you

1135
01:11:39,760 --> 01:11:43,479
Speaker 3: could buy a forty million dollar mansion and everything in between.

1136
01:11:44,160 --> 01:11:46,879
Speaker 3: Just saying no kind of seems lazy.

1137
01:11:47,400 --> 01:11:49,840
Speaker 2: Okay, I want to go a little bit deeper into

1138
01:11:49,840 --> 01:11:54,520
Speaker 2: the latte because you talk about the enumenterator and denominated

1139
01:11:54,520 --> 01:11:59,040
Speaker 2: be very specific that the latte. I think it's Susie

1140
01:11:59,120 --> 01:12:02,559
Speaker 2: Orman extra lates to this incredible payment in the future,

1141
01:12:02,960 --> 01:12:06,160
Speaker 2: And you dig down and say, she's assuming a rate

1142
01:12:06,200 --> 01:12:11,960
Speaker 2: of return that's actually twice of what one might expect.

1143
01:12:12,160 --> 01:12:16,320
Speaker 3: So first it's non inflation adjusted so that's number one.

1144
01:12:16,439 --> 01:12:19,280
Speaker 3: That's where you end up with a part of it. Second,

1145
01:12:19,320 --> 01:12:21,679
Speaker 3: if I'm remembering it correctly, I'm doing this for memory,

1146
01:12:21,760 --> 01:12:24,880
Speaker 3: it was either twelve percent or fourteen percent. You know,

1147
01:12:24,920 --> 01:12:28,799
Speaker 3: you should really look for about ten percent over long periods,

1148
01:12:28,840 --> 01:12:31,160
Speaker 3: So that that was a believe it or not, two

1149
01:12:31,160 --> 01:12:34,800
Speaker 3: percent after thirty years adds up to about thirty five

1150
01:12:34,840 --> 01:12:39,000
Speaker 3: percent of the total returns. It's a huge, huge, outsized impact.

1151
01:12:39,360 --> 01:12:43,000
Speaker 3: And then it also ignored the other side of the equation.

1152
01:12:44,680 --> 01:12:47,280
Speaker 3: If you're also seeing your income go up and you're

1153
01:12:47,320 --> 01:12:52,360
Speaker 3: seeing you know, you're every time you bump up your salary,

1154
01:12:52,400 --> 01:12:54,040
Speaker 3: you put more money into your four oh one k.

1155
01:12:56,000 --> 01:12:59,479
Speaker 3: It worked out to be net of everything about what

1156
01:12:59,600 --> 01:13:03,639
Speaker 3: a car would cost, assuming there's still cars thirty years

1157
01:13:03,640 --> 01:13:08,160
Speaker 3: from now. So here's your choice. Never have another Starbucks

1158
01:13:08,640 --> 01:13:13,479
Speaker 3: or Blue Bottle or whatever your favorite local coffee brewer is.

1159
01:13:13,600 --> 01:13:16,320
Speaker 3: Never have another one of their four five six dollars lattes,

1160
01:13:16,840 --> 01:13:19,439
Speaker 3: and thirty years from now it'll pay for a car

1161
01:13:19,560 --> 01:13:22,599
Speaker 3: or so right not, I'm going to bet thirty years

1162
01:13:22,600 --> 01:13:26,280
Speaker 3: from now they're probably not selling cars, or they're selling

1163
01:13:26,320 --> 01:13:29,800
Speaker 3: self driving cars and everybody is ubering everywhere, or not

1164
01:13:29,960 --> 01:13:33,479
Speaker 3: I have no idea, but it's not millions of dollars.

1165
01:13:33,560 --> 01:13:38,559
Speaker 3: You're not retiring. And I use the example of hey,

1166
01:13:38,640 --> 01:13:41,840
Speaker 3: the median income thirty years ago was twenty three thousand dollars.

1167
01:13:41,920 --> 01:13:45,400
Speaker 3: Now it's twenty six thousand dollars. Now it's eighty something thousand.

1168
01:13:45,800 --> 01:13:49,639
Speaker 3: And the median home price was like forty five thousand,

1169
01:13:49,640 --> 01:13:52,719
Speaker 3: and now it's four hundred thousand. So now that's thirty

1170
01:13:52,800 --> 01:13:57,280
Speaker 3: years ago. So extrapola thirty years forward, and these hundreds

1171
01:13:57,320 --> 01:14:01,920
Speaker 3: of thousands of dollars in Latte save, it's really insignificant

1172
01:14:01,960 --> 01:14:04,840
Speaker 3: to homes that are going to be ten twenty million

1173
01:14:04,880 --> 01:14:08,040
Speaker 3: dollars in the future, and relative to salaries that are

1174
01:14:08,040 --> 01:14:10,720
Speaker 3: going to be half a million a million just for

1175
01:14:10,800 --> 01:14:13,800
Speaker 3: the meeting and salary thirty forty years from now. So

1176
01:14:14,200 --> 01:14:19,240
Speaker 3: by just showing you half of the equation, you really

1177
01:14:19,240 --> 01:14:22,599
Speaker 3: miss it. I'll give you another example that I love

1178
01:14:23,680 --> 01:14:27,120
Speaker 3: and you by the way, there is a Twitter feed

1179
01:14:27,320 --> 01:14:31,960
Speaker 3: called TikTok Investors, and this guy goes out and picks

1180
01:14:32,000 --> 01:14:38,200
Speaker 3: out the dumbest, most ridiculous investment advice and financial advice

1181
01:14:38,360 --> 01:14:44,960
Speaker 3: on TikTok. You know, how do we maintain our lifestyle?

1182
01:14:45,080 --> 01:14:49,200
Speaker 3: We day traded Home says this handsome couple, what's their secret?

1183
01:14:49,560 --> 01:14:52,320
Speaker 3: We only buy stocks that go up. If they don't

1184
01:14:52,320 --> 01:14:54,639
Speaker 3: go up, we don't buy them. And I'm like, are

1185
01:14:54,640 --> 01:14:58,320
Speaker 3: they purposefully channeling Will Rogers? Do they have any idea

1186
01:14:58,800 --> 01:15:04,200
Speaker 3: ps pandemic crash happens in twenty twenty two, they move

1187
01:15:04,240 --> 01:15:07,120
Speaker 3: into real estate. They're done with done with stocks. Hey,

1188
01:15:07,160 --> 01:15:10,000
Speaker 3: if you're on a boat on April fifteenth, you don't

1189
01:15:10,000 --> 01:15:14,040
Speaker 3: know any taxes, really, the IRS will beg to diff

1190
01:15:14,120 --> 01:15:16,519
Speaker 3: with you. In fact, the IRS had to put out

1191
01:15:16,560 --> 01:15:20,679
Speaker 3: a fact sheet forty two things that are on social

1192
01:15:20,720 --> 01:15:24,360
Speaker 3: media that are not true being in international waters. If

1193
01:15:24,360 --> 01:15:27,519
Speaker 3: you're a US citizen, you still owe taxes. It's not

1194
01:15:27,680 --> 01:15:31,960
Speaker 3: a So one of the memes that he identified cracked

1195
01:15:32,040 --> 01:15:37,960
Speaker 3: me up. Somebody took the bag of groceries that Kevin

1196
01:15:38,080 --> 01:15:41,920
Speaker 3: from Home Alone bought, and way back then it was

1197
01:15:42,040 --> 01:15:45,080
Speaker 3: like twenty dollars and ninety cents. I think Home Alone

1198
01:15:45,160 --> 01:15:47,840
Speaker 3: was nineteen ninety or nineteen ninety three, something like that,

1199
01:15:48,240 --> 01:15:50,760
Speaker 3: so it was twenty dollars. The same bag of groceries

1200
01:15:50,760 --> 01:15:54,680
Speaker 3: today is fifty seven dollars. Oh my god, look at

1201
01:15:54,680 --> 01:15:57,880
Speaker 3: how much worse the American dollar is done. It's like,

1202
01:15:58,000 --> 01:16:01,639
Speaker 3: wait a second. When I go to buy groceries today,

1203
01:16:02,120 --> 01:16:04,840
Speaker 3: I'm not using money I put aside in nineteen ninety.

1204
01:16:05,160 --> 01:16:08,800
Speaker 3: I'm using money I earned in twenty twenty five. So

1205
01:16:08,920 --> 01:16:12,679
Speaker 3: let's compare the groceries went up this much, how much

1206
01:16:13,040 --> 01:16:16,719
Speaker 3: have salaries gone up? And it turns out that salaries

1207
01:16:16,760 --> 01:16:20,439
Speaker 3: have gone up about ten percent more than the groceries

1208
01:16:20,479 --> 01:16:24,160
Speaker 3: went up. So in reality, the groceries are a little

1209
01:16:24,200 --> 01:16:28,719
Speaker 3: bit cheaper. But that's if you're just using your wages.

1210
01:16:29,280 --> 01:16:32,960
Speaker 3: If Kevin would have taken the money he spent on

1211
01:16:33,120 --> 01:16:37,360
Speaker 3: groceries and invested in the market, well from nineteen ninety

1212
01:16:37,400 --> 01:16:42,200
Speaker 3: today it's worth two thousand dollars or some crazy number.

1213
01:16:42,800 --> 01:16:45,120
Speaker 3: I detail it in the book. He could have bought

1214
01:16:45,160 --> 01:16:48,920
Speaker 3: the groceries and still had, you know, ten x left over.

1215
01:16:49,560 --> 01:16:53,639
Speaker 3: The purpose of money is not a store of value.

1216
01:16:53,680 --> 01:16:57,679
Speaker 3: It's amazing people don't understand this. The purpose of money

1217
01:16:57,800 --> 01:17:01,439
Speaker 3: is a median medium of exchange change. You get paid

1218
01:17:01,439 --> 01:17:04,400
Speaker 3: in dollars. You use those dollars to pay your rent

1219
01:17:04,520 --> 01:17:09,639
Speaker 3: or your mortgage, to buy the basic necessities of life, food, medicine, clothing,

1220
01:17:11,200 --> 01:17:17,599
Speaker 3: to pay your taxes, to occasionally buy entertainment, travel, movies, whatever, music, whatever,

1221
01:17:18,040 --> 01:17:20,040
Speaker 3: and to invest. You can start a business, you can

1222
01:17:20,040 --> 01:17:22,559
Speaker 3: put in the market. That's it. And when you look

1223
01:17:22,640 --> 01:17:26,800
Speaker 3: at money ten twenty thirty years later that's been invested,

1224
01:17:27,240 --> 01:17:31,000
Speaker 3: it's gone up appreciably. I always cracked up every time

1225
01:17:31,080 --> 01:17:34,479
Speaker 3: someone says, you know, the dollar has lost ninety six

1226
01:17:34,520 --> 01:17:38,479
Speaker 3: percent of its value over the past hundred years. Why

1227
01:17:38,520 --> 01:17:41,080
Speaker 3: the fuck would you hold on to a dollar bill

1228
01:17:41,680 --> 01:17:46,080
Speaker 3: for one hundred years. Money only has value when it's

1229
01:17:46,280 --> 01:17:49,559
Speaker 3: in motion, when it's being put to work. If you

1230
01:17:49,640 --> 01:17:53,120
Speaker 3: want to sit on a dollar bill or one hundred

1231
01:17:53,280 --> 01:17:57,400
Speaker 3: dollars or one thousand dollars for a century and miss

1232
01:17:57,439 --> 01:18:01,639
Speaker 3: the opportunity to let it compound over time, time, that's on. You.

1233
01:18:01,720 --> 01:18:04,519
Speaker 3: Don't blame the dollar. My job is to get the

1234
01:18:04,600 --> 01:18:06,840
Speaker 3: dollars out of my hands as fast as I can.

1235
01:18:07,160 --> 01:18:09,920
Speaker 3: The money comes in, I pay all my bills, and

1236
01:18:10,120 --> 01:18:12,960
Speaker 3: I put money into my four oh one k anything

1237
01:18:13,040 --> 01:18:15,880
Speaker 3: that's left and I pay my taxes anything that's left over.

1238
01:18:15,960 --> 01:18:18,280
Speaker 3: After that, now I have to figure out what am

1239
01:18:18,280 --> 01:18:20,560
Speaker 3: I going to do with this dollar that's going to

1240
01:18:20,640 --> 01:18:23,880
Speaker 3: either bring me or my family joy or bring someone

1241
01:18:23,960 --> 01:18:28,160
Speaker 3: else joy, or keep up with inflation and off that's

1242
01:18:28,160 --> 01:18:31,360
Speaker 3: the purpose of a dollar not sitting in a mason

1243
01:18:31,479 --> 01:18:34,960
Speaker 3: jar in someone's backyard for a hundred years. But that's

1244
01:18:35,080 --> 01:18:38,559
Speaker 3: kind of and coming back to the original question, you know,

1245
01:18:38,600 --> 01:18:42,200
Speaker 3: what are they selling? Well, they're selling gold bullion, they're

1246
01:18:42,240 --> 01:18:47,680
Speaker 3: selling bitcoin, They're selling something. And the only way the story,

1247
01:18:47,760 --> 01:18:53,879
Speaker 3: the narrative works is if you realize dollars are not valuable.

1248
01:18:54,120 --> 01:18:56,040
Speaker 3: You know, I speak at a lot of public events

1249
01:18:56,520 --> 01:18:59,760
Speaker 3: and we open it up for Q and A, and

1250
01:18:59,800 --> 01:19:03,880
Speaker 3: in variably someone says, you know, what's your views on

1251
01:19:03,920 --> 01:19:06,040
Speaker 3: the collapse of the dollar? But by the way, the

1252
01:19:06,120 --> 01:19:09,639
Speaker 3: dollar over the past six months has been pretty close

1253
01:19:09,720 --> 01:19:14,200
Speaker 3: to all time highs relative to other currencies. Remembered currency

1254
01:19:14,280 --> 01:19:16,439
Speaker 3: is always relative. Where else are you gonna go? You're

1255
01:19:16,439 --> 01:19:19,280
Speaker 3: gonna go to the Japanese yen? No, the Euro they

1256
01:19:19,320 --> 01:19:23,400
Speaker 3: have structural problems, the Chinese wand please don't make me

1257
01:19:23,479 --> 01:19:26,479
Speaker 3: laugh that we are the cleanest shirt in the hamper.

1258
01:19:26,720 --> 01:19:29,120
Speaker 3: There's no other way to describe it. So whenever and

1259
01:19:29,160 --> 01:19:32,240
Speaker 3: I get that question, I'm like, yes, you're right, dollars

1260
01:19:32,320 --> 01:19:37,599
Speaker 3: are worthless. Their fiat currency has collapsed. My office, my firm,

1261
01:19:37,640 --> 01:19:42,559
Speaker 3: offers a very free service. Send me all your worthless dollars,

1262
01:19:42,560 --> 01:19:45,640
Speaker 3: and we will dispose of them properly. You don't have

1263
01:19:45,720 --> 01:19:50,000
Speaker 3: to worry about being weighted down by all that useless

1264
01:19:50,120 --> 01:19:54,120
Speaker 3: Fiat currency. And everybody kind of snickers. But the point

1265
01:19:54,240 --> 01:19:57,639
Speaker 3: is you get paid in dollars, You spend your dollars,

1266
01:19:57,680 --> 01:20:00,599
Speaker 3: you pay your taxes, and invest in dollars. That's all

1267
01:20:00,640 --> 01:20:04,000
Speaker 3: it's supposed to do. It was never supposed to be

1268
01:20:04,160 --> 01:20:09,040
Speaker 3: a store of value. And it's shocking how obvious it

1269
01:20:09,120 --> 01:20:10,880
Speaker 3: is if you just think about it for a second.

1270
01:20:11,439 --> 01:20:14,040
Speaker 3: And these guys have been getting away with this bullshit

1271
01:20:14,680 --> 01:20:17,400
Speaker 3: for decades. I've heard that that was one of the

1272
01:20:17,400 --> 01:20:20,200
Speaker 3: things in the book. That man that was like I

1273
01:20:20,240 --> 01:20:23,160
Speaker 3: stubbed my toe on that twenty five years ago, and

1274
01:20:23,200 --> 01:20:26,479
Speaker 3: it's just slowly festered, and finally it all came out

1275
01:20:26,479 --> 01:20:26,960
Speaker 3: in the book.

1276
01:20:34,800 --> 01:20:37,759
Speaker 2: Let's back up, and let's look at it from a distance.

1277
01:20:37,760 --> 01:20:40,880
Speaker 2: If you look at the book in general, you say,

1278
01:20:41,640 --> 01:20:46,480
Speaker 2: everybody's full of shit. Nobody can forecast, whether it be CNBC,

1279
01:20:46,800 --> 01:20:51,519
Speaker 2: any other outlet, anybody. You said earlier, of course that

1280
01:20:52,120 --> 01:20:55,599
Speaker 2: they're selling something, they're getting paid in some way, right,

1281
01:20:55,840 --> 01:21:00,720
Speaker 2: do not trust them. Two, do not believe that you

1282
01:21:00,760 --> 01:21:04,519
Speaker 2: can pick stocks if for no other reason. Only a

1283
01:21:04,680 --> 01:21:10,120
Speaker 2: very small number of stocks actually are profitable. Three have

1284
01:21:10,200 --> 01:21:12,920
Speaker 2: a plan, which you referenced earlier, You want to go.

1285
01:21:13,680 --> 01:21:18,519
Speaker 2: Four put your money in index funds. So if we

1286
01:21:18,720 --> 01:21:23,760
Speaker 2: look at that from the beginning, let's start with the forecast.

1287
01:21:23,840 --> 01:21:27,519
Speaker 2: The advice are you used to in even research? Are

1288
01:21:27,560 --> 01:21:29,800
Speaker 2: you saying, really we should ignore all of that?

1289
01:21:30,400 --> 01:21:33,920
Speaker 3: No? No, And I talk about in the book you

1290
01:21:34,040 --> 01:21:38,160
Speaker 3: need to find people who are worthy of your time

1291
01:21:38,200 --> 01:21:42,200
Speaker 3: and attention. Right I create, I listed my personal all

1292
01:21:42,200 --> 01:21:44,920
Speaker 3: star team and a few names off the top of

1293
01:21:44,920 --> 01:21:48,960
Speaker 3: my head. Jason Zwig of The Wall Street Journal edited

1294
01:21:49,040 --> 01:21:53,000
Speaker 3: Danny Konneman's book Thinking Fast and Slow just has great

1295
01:21:53,040 --> 01:21:56,920
Speaker 3: insights into how people behave around money and the bad

1296
01:21:56,960 --> 01:21:59,600
Speaker 3: things they do and what we can learn from them.

1297
01:21:59,640 --> 01:22:04,920
Speaker 3: Sam Row writes about market structure and super insight insightful.

1298
01:22:04,960 --> 01:22:08,840
Speaker 3: My friend Jonathan Miller, my go to guy about real estate.

1299
01:22:08,880 --> 01:22:12,960
Speaker 3: Everything he writes about real estate is data driven, is

1300
01:22:13,080 --> 01:22:17,759
Speaker 3: based in reality, and he's been studying real estate for forty years,

1301
01:22:18,200 --> 01:22:20,400
Speaker 3: and on and on. I go through through the list

1302
01:22:20,439 --> 01:22:26,120
Speaker 3: of people who I find have some things in common.

1303
01:22:26,720 --> 01:22:31,920
Speaker 3: First of all, they've all they're all little seasons. They've

1304
01:22:31,920 --> 01:22:34,639
Speaker 3: been through cycles before, they know how the movie ends.

1305
01:22:34,680 --> 01:22:38,560
Speaker 3: They know you know this too, shell pass, So that's helpful.

1306
01:22:38,760 --> 01:22:42,639
Speaker 3: They have a defendable process. They're not just throwing darts.

1307
01:22:42,680 --> 01:22:46,000
Speaker 3: They're not just getting lucky. They think about markets from

1308
01:22:46,080 --> 01:22:51,080
Speaker 3: a broad perspective, and their insights and way of analyzing

1309
01:22:51,160 --> 01:22:56,439
Speaker 3: things and sharing that information is incredibly useful. But like

1310
01:22:56,520 --> 01:22:59,479
Speaker 3: Sturgeon's law, you know, ninety percent of the stuff coming

1311
01:22:59,560 --> 01:23:05,640
Speaker 3: out really isn't isn't useful. So the people on my

1312
01:23:05,880 --> 01:23:09,679
Speaker 3: All Star list, and you know I had a limited

1313
01:23:09,760 --> 01:23:14,559
Speaker 3: to ten. Who's writing about music, it's Bob left Sets

1314
01:23:14,560 --> 01:23:18,840
Speaker 3: and Ted Goya. Those are the people that I can

1315
01:23:18,920 --> 01:23:22,360
Speaker 3: rely on that I'm getting somebody who knows their industry,

1316
01:23:22,439 --> 01:23:25,439
Speaker 3: who knows the ups and downs, who's seen all the

1317
01:23:25,600 --> 01:23:30,080
Speaker 3: wartz in it, and basically can give you some insight

1318
01:23:30,200 --> 01:23:34,880
Speaker 3: into that, you know the fact that something's on TV

1319
01:23:36,280 --> 01:23:40,320
Speaker 3: on CNBC. I'm a big fan of Bob Pasani and

1320
01:23:40,400 --> 01:23:45,240
Speaker 3: Carl Kantonia. They're rational, they make sense. They could take,

1321
01:23:45,800 --> 01:23:50,120
Speaker 3: you know, what could be very emotional challenging things and

1322
01:23:50,200 --> 01:23:52,680
Speaker 3: put it into context. My partner Josh Brown is on

1323
01:23:52,760 --> 01:23:56,200
Speaker 3: CNBC two or three times a week, and I could

1324
01:23:56,200 --> 01:23:58,879
Speaker 3: always rely on him to be a voice of reason

1325
01:23:59,280 --> 01:24:02,360
Speaker 3: when everybody's running around with their hair on fire. But

1326
01:24:02,560 --> 01:24:05,280
Speaker 3: there's a bunch of people I could give you more

1327
01:24:05,280 --> 01:24:10,960
Speaker 3: people from CNBC. Santoli used to be over at Barons.

1328
01:24:10,960 --> 01:24:15,479
Speaker 3: He's at CNBC. Very very Mike Santoli, very rational guy.

1329
01:24:16,120 --> 01:24:20,000
Speaker 3: I like the way he thinks about the world. It's historical,

1330
01:24:20,120 --> 01:24:24,719
Speaker 3: it's analytical, and you know, you could go through sector

1331
01:24:24,760 --> 01:24:28,799
Speaker 3: bi sector. Dana Telsey has been covering retail for forever.

1332
01:24:29,280 --> 01:24:32,800
Speaker 3: Nobody understands the retail world better than her. So my

1333
01:24:32,920 --> 01:24:35,439
Speaker 3: advice to people is not to just say, hey, it

1334
01:24:35,479 --> 01:24:38,920
Speaker 3: all sucks, turn it off, because again, the world isn't

1335
01:24:38,960 --> 01:24:41,559
Speaker 3: black and white, it's nuanced. You have to be a

1336
01:24:41,600 --> 01:24:44,800
Speaker 3: little selective. You have to choose people who you know

1337
01:24:45,360 --> 01:24:47,920
Speaker 3: have a good track record. It's not just dumb luck.

1338
01:24:48,280 --> 01:24:52,720
Speaker 3: They're thoughtful, they're experienced, and they add value. There are

1339
01:24:52,760 --> 01:24:56,360
Speaker 3: lots of things out there. I had to stop my

1340
01:24:56,479 --> 01:24:59,839
Speaker 3: list at ten. I probably could have made it one hundred.

1341
01:25:00,240 --> 01:25:02,680
Speaker 3: There are so many great substacks out there. There's so

1342
01:25:02,720 --> 01:25:07,920
Speaker 3: many great sources. You'll as you go through the book,

1343
01:25:07,960 --> 01:25:13,320
Speaker 3: you'll find I'm coding everybody from Derek Thompson to trunk

1344
01:25:13,400 --> 01:25:17,360
Speaker 3: fan to on and on people with an expertise in

1345
01:25:17,400 --> 01:25:21,360
Speaker 3: a specific area that I've been watching them for years

1346
01:25:21,960 --> 01:25:26,799
Speaker 3: and realizing, oh, these guys are or girls are onto something.

1347
01:25:27,360 --> 01:25:31,760
Speaker 3: They're consistently more right than wrong. So I don't when

1348
01:25:31,840 --> 01:25:34,280
Speaker 3: it comes to you know, I don't want to just

1349
01:25:34,320 --> 01:25:38,120
Speaker 3: say turn off the TV, never open a newspaper, magazine again,

1350
01:25:38,720 --> 01:25:43,440
Speaker 3: just read nonfiction and books and novels. I think that's overstating,

1351
01:25:43,439 --> 01:25:49,040
Speaker 3: and I think you just have to be a little skeptical,

1352
01:25:49,280 --> 01:25:54,840
Speaker 3: be critical, and when you do decide to read someone

1353
01:25:54,880 --> 01:25:58,320
Speaker 3: on a regular basis and trust what they're saying, make

1354
01:25:58,400 --> 01:26:01,719
Speaker 3: sure they're worthy of your trust. I don't want to say, hey,

1355
01:26:01,760 --> 01:26:04,640
Speaker 3: everybody's full of shit and everybody's wrong, because I know

1356
01:26:04,800 --> 01:26:07,719
Speaker 3: that's not true, but enough people are full of shit

1357
01:26:07,840 --> 01:26:10,479
Speaker 3: and so many people have been wrong. You have to

1358
01:26:10,520 --> 01:26:14,840
Speaker 3: really be a little selective into who you're following, who

1359
01:26:14,920 --> 01:26:20,400
Speaker 3: you're taking advice from, and TikTok and Instagram Are you

1360
01:26:20,520 --> 01:26:24,280
Speaker 3: are you kidding me? Every It's not just the irs.

1361
01:26:24,760 --> 01:26:29,120
Speaker 3: I just got something from a friend. One of the

1362
01:26:29,200 --> 01:26:34,080
Speaker 3: journals of psychology has said had a whole article that

1363
01:26:34,320 --> 01:26:38,200
Speaker 3: all of this advice on how to manage ADHD on

1364
01:26:38,280 --> 01:26:45,040
Speaker 3: Twitter and TikTok. It's mostly wrong. It's not quite vaccine denial,

1365
01:26:45,439 --> 01:26:47,720
Speaker 3: but it's mostly wrong. And if you listen to this,

1366
01:26:48,240 --> 01:26:50,800
Speaker 3: you will it will not serve you well. And so

1367
01:26:50,960 --> 01:26:54,759
Speaker 3: this comes up on a regular basis. I talk about

1368
01:26:54,800 --> 01:26:58,040
Speaker 3: the Dunning Kruger effect in the book, which is our

1369
01:26:58,160 --> 01:27:03,559
Speaker 3: ability to evovaluate our own skill set, and we end up,

1370
01:27:04,720 --> 01:27:08,960
Speaker 3: as it turns out, that is a discrete skill, separate

1371
01:27:09,000 --> 01:27:12,559
Speaker 3: from the underlying skill. And so we have a tendency

1372
01:27:12,600 --> 01:27:16,800
Speaker 3: to think we have an ability to do something when

1373
01:27:16,880 --> 01:27:20,720
Speaker 3: often we don't. And then the next adjacent step to

1374
01:27:20,800 --> 01:27:25,200
Speaker 3: that is something called epistemic trespass when somebody is an

1375
01:27:25,240 --> 01:27:28,280
Speaker 3: expert in this area and they're like, what the hell,

1376
01:27:28,320 --> 01:27:30,280
Speaker 3: I'm an expert in this, I'm going to try my

1377
01:27:30,360 --> 01:27:34,640
Speaker 3: expertise in that field adjacent field When all right, you

1378
01:27:34,680 --> 01:27:37,880
Speaker 3: spent thirty years researching, writing, studying about this. You have

1379
01:27:37,960 --> 01:27:39,759
Speaker 3: a point of view, and you have a good track record.

1380
01:27:39,800 --> 01:27:43,560
Speaker 3: That's great in field A field B is wholly unrelated.

1381
01:27:43,800 --> 01:27:45,920
Speaker 3: Why would you imagine you have an expertise in that?

1382
01:27:46,439 --> 01:27:50,799
Speaker 3: But that's how us humans are. We step over the line,

1383
01:27:50,880 --> 01:27:53,080
Speaker 3: and you know, I give a lot of examples of

1384
01:27:53,120 --> 01:27:57,880
Speaker 3: people who are great real estate investors but terrible economic forecasters,

1385
01:27:58,320 --> 01:28:02,360
Speaker 3: and so epistemic trespasses is just another one of those examples.

1386
01:28:02,640 --> 01:28:05,880
Speaker 3: So if you find people who know what their skills are,

1387
01:28:06,040 --> 01:28:10,160
Speaker 3: stay within that, like the tennis, operate within their own

1388
01:28:10,200 --> 01:28:14,000
Speaker 3: abilities by all means, subscribe to their substracts, watch them

1389
01:28:14,040 --> 01:28:18,000
Speaker 3: on TV. But you have to go through that, you know,

1390
01:28:18,160 --> 01:28:23,360
Speaker 3: information hygiene process, that filtering process to get to the

1391
01:28:23,400 --> 01:28:26,519
Speaker 3: good stuff, because there's so much let's just call it

1392
01:28:26,760 --> 01:28:30,720
Speaker 3: noise that's distraction and doesn't help you get to where

1393
01:28:30,760 --> 01:28:31,320
Speaker 3: you have to go.

1394
01:28:31,640 --> 01:28:34,439
Speaker 2: Okay, let's go to the other end. So what I've

1395
01:28:34,520 --> 01:28:38,559
Speaker 2: learned is don't invest in pull my money out or

1396
01:28:38,560 --> 01:28:41,599
Speaker 2: put my money down on a whim. Put my money

1397
01:28:42,040 --> 01:28:46,640
Speaker 2: in index funds forgetting the super wealthy, forgetting people who

1398
01:28:46,720 --> 01:28:51,400
Speaker 2: have complicated income in the States and other things. Is

1399
01:28:51,439 --> 01:28:54,519
Speaker 2: that generally the advice and how does one do it?

1400
01:28:55,120 --> 01:28:58,519
Speaker 3: So that's the advice from Larren Buffett. He said, Hey,

1401
01:28:58,520 --> 01:29:02,200
Speaker 3: if you're not in, if you didn't participate in Berkshire

1402
01:29:02,240 --> 01:29:06,200
Speaker 3: Hathaway way back when, just buy the broad index. So

1403
01:29:06,640 --> 01:29:09,000
Speaker 3: you can do this with the S and P five hundred.

1404
01:29:09,920 --> 01:29:12,160
Speaker 3: You could do it with a broader index like the

1405
01:29:12,280 --> 01:29:15,840
Speaker 3: Vanguard Total Market, which is a little more diverse and

1406
01:29:15,920 --> 01:29:19,240
Speaker 3: a little less volatile, and that should be the core

1407
01:29:19,520 --> 01:29:23,040
Speaker 3: of your investment portfolio. I don't care if it's fifty

1408
01:29:23,520 --> 01:29:27,759
Speaker 3: sixty percent. Having some broad index, so you're at least

1409
01:29:27,800 --> 01:29:31,120
Speaker 3: going to get what the market gives you. That's your

1410
01:29:31,160 --> 01:29:34,559
Speaker 3: starting point if you are compelled, if this is the

1411
01:29:34,640 --> 01:29:37,080
Speaker 3: sort of thing that you really want to do, and

1412
01:29:37,160 --> 01:29:41,519
Speaker 3: you want to decorate the tree, says two Jews talking

1413
01:29:41,560 --> 01:29:46,400
Speaker 3: about finance, Well, the index is the tree, The ornaments,

1414
01:29:46,439 --> 01:29:49,400
Speaker 3: the lights, the garland, those were all the little seasonings.

1415
01:29:49,840 --> 01:29:52,920
Speaker 3: If you want to buy a tech fund, or if

1416
01:29:52,960 --> 01:29:57,000
Speaker 3: you want to add a shareholder yield fund or something

1417
01:29:57,040 --> 01:30:00,320
Speaker 3: like that, sure you could put whatever stink you on

1418
01:30:00,479 --> 01:30:03,680
Speaker 3: it knock yourself out, as long as you're starting from

1419
01:30:03,760 --> 01:30:07,920
Speaker 3: a core point of I'm not market timing, I'm not stockpicking.

1420
01:30:08,120 --> 01:30:10,040
Speaker 3: I'm just gonna buy the whole market and let it

1421
01:30:10,120 --> 01:30:14,040
Speaker 3: do its thing. History has told us that's the best

1422
01:30:14,040 --> 01:30:17,799
Speaker 3: way to accumulate wealth. When we look at the data,

1423
01:30:18,040 --> 01:30:22,000
Speaker 3: and there's there are a number of The SPIVA, which

1424
01:30:22,040 --> 01:30:26,040
Speaker 3: is the SNP Investor Analysis. Each year they do an

1425
01:30:26,040 --> 01:30:29,759
Speaker 3: annual report and they tell you how many mutual fund

1426
01:30:29,800 --> 01:30:34,120
Speaker 3: managers beat the index, beat their benchmark, and in any

1427
01:30:34,160 --> 01:30:37,960
Speaker 3: given year about half of them, a little more than

1428
01:30:38,040 --> 01:30:40,720
Speaker 3: half of them fail to beat the benchmark. So you're

1429
01:30:40,720 --> 01:30:44,240
Speaker 3: not even a fifty percent in year one, you go

1430
01:30:44,400 --> 01:30:48,479
Speaker 3: five years out net A fees, it's eighty three percent

1431
01:30:48,520 --> 01:30:52,360
Speaker 3: of them fail to beat the Plane Jain Boring index.

1432
01:30:52,800 --> 01:30:56,960
Speaker 3: You go ten years and you're in ninetieth percentile, and

1433
01:30:57,000 --> 01:30:59,960
Speaker 3: by the time you're twenty years out, it's essentially no,

1434
01:31:00,000 --> 01:31:04,320
Speaker 3: oh buddy. A handful of people, the Warren Buffets, the

1435
01:31:04,360 --> 01:31:08,000
Speaker 3: Peter Lynches of the world their household names because there's

1436
01:31:08,040 --> 01:31:11,599
Speaker 3: so few of them. But for those couple of guys,

1437
01:31:12,120 --> 01:31:14,840
Speaker 3: and even Warren Buffett will tell you the bulk of

1438
01:31:14,880 --> 01:31:18,439
Speaker 3: his outperformance was in the early part of his career.

1439
01:31:18,520 --> 01:31:21,479
Speaker 3: The latter part, you probably would have been better off

1440
01:31:21,479 --> 01:31:27,120
Speaker 3: in an index than Berkshire Hathaway. That's just the academic research,

1441
01:31:27,200 --> 01:31:30,840
Speaker 3: that's just the math. Start out, and you know, our

1442
01:31:30,880 --> 01:31:36,839
Speaker 3: whole business is so asked backwards. I started attracting capital

1443
01:31:36,840 --> 01:31:39,639
Speaker 3: from people because I would say, here's how you should invest.

1444
01:31:39,680 --> 01:31:42,120
Speaker 3: You could do it yourself. Buy a broad index. You

1445
01:31:42,160 --> 01:31:44,280
Speaker 3: want to diversify a little bit. Okay, you can own

1446
01:31:44,280 --> 01:31:47,600
Speaker 3: a little overseas assets, you can own some momentum, you

1447
01:31:47,600 --> 01:31:52,120
Speaker 3: can own shareholder yield India and Japan, look interest, whatever

1448
01:31:52,160 --> 01:31:56,240
Speaker 3: you wanna tag onto that. Knock yourself out, but start

1449
01:31:56,280 --> 01:31:59,800
Speaker 3: with this. Rebalance it every three years to whatever you're

1450
01:31:59,800 --> 01:32:02,479
Speaker 3: starting numbers are supposed to be. You know, if it's

1451
01:32:02,479 --> 01:32:05,320
Speaker 3: supposed to be sixty percent, it's run away, and it's

1452
01:32:05,320 --> 01:32:08,040
Speaker 3: now eighty percent of your portfolio. Right, cut a little back,

1453
01:32:08,479 --> 01:32:11,320
Speaker 3: put some of that into other the other holdings you have,

1454
01:32:11,920 --> 01:32:16,000
Speaker 3: and that's it. You're good for the next thirty forty years.

1455
01:32:16,680 --> 01:32:20,960
Speaker 3: Our whole business really grew from that because enough people said, yeah,

1456
01:32:21,000 --> 01:32:22,880
Speaker 3: that makes sense, but I don't trust myself, and I

1457
01:32:22,880 --> 01:32:25,479
Speaker 3: don't have the time or the interest. You do it,

1458
01:32:26,080 --> 01:32:30,160
Speaker 3: and so we started managing money for people kind of

1459
01:32:30,160 --> 01:32:32,640
Speaker 3: that way. The core is a broad index. Some of

1460
01:32:32,680 --> 01:32:38,000
Speaker 3: it's US, some of its overseas. We add certain flavors

1461
01:32:38,040 --> 01:32:41,639
Speaker 3: to it. Here's a little here's a little momentum, here's

1462
01:32:41,680 --> 01:32:47,120
Speaker 3: a little emerging market small cap value. Ultimately, ten twenty

1463
01:32:47,200 --> 01:32:49,200
Speaker 3: years down the road, you kind of end up in

1464
01:32:49,200 --> 01:32:52,160
Speaker 3: the same place. Anyway, we want to reduce a little

1465
01:32:52,240 --> 01:32:54,559
Speaker 3: volatility for our clients. We want to get to the

1466
01:32:54,560 --> 01:32:57,840
Speaker 3: same place, but without the crazy swings like we've seen

1467
01:32:58,520 --> 01:33:01,880
Speaker 3: the past few weeks. But it almost doesn't matter what

1468
01:33:01,920 --> 01:33:07,120
Speaker 3: the portfolio is. What matters is your behavior, because we

1469
01:33:07,160 --> 01:33:10,439
Speaker 3: see time and time again, if you just whatever that

1470
01:33:10,479 --> 01:33:12,639
Speaker 3: portfolio is, if you just let it do its thing

1471
01:33:13,080 --> 01:33:16,680
Speaker 3: for a few decades, it'll compound and add up to

1472
01:33:16,760 --> 01:33:22,360
Speaker 3: a shock shockingly large amount of money over the decades. Instead,

1473
01:33:22,960 --> 01:33:24,920
Speaker 3: we try and get in the way. I don't like

1474
01:33:25,040 --> 01:33:27,479
Speaker 3: this president, I don't like the way this market looks.

1475
01:33:27,520 --> 01:33:29,880
Speaker 3: I don't like I mean, I use the examples of

1476
01:33:29,960 --> 01:33:34,479
Speaker 3: Bush and Obama and Biden and Trump, and you know,

1477
01:33:34,479 --> 01:33:39,120
Speaker 3: there are some studies that have shown when a president

1478
01:33:39,320 --> 01:33:43,040
Speaker 3: of one party gets elected and you're looking at zip

1479
01:33:43,080 --> 01:33:46,320
Speaker 3: codes by how that zip code voted, if they didn't

1480
01:33:46,400 --> 01:33:49,519
Speaker 3: vote for that president, they end up selling a lot

1481
01:33:49,520 --> 01:33:54,599
Speaker 3: of equities by zip code and missing the ongoing rally.

1482
01:33:55,120 --> 01:33:59,800
Speaker 3: And it happened with Bush, it happened with Obama, it

1483
01:33:59,800 --> 01:34:04,519
Speaker 3: happened with Trump one, it happens with Biden, and it

1484
01:34:04,600 --> 01:34:08,559
Speaker 3: happened again with Trump two. That the fact that you

1485
01:34:08,600 --> 01:34:13,960
Speaker 3: don't like this guy's politics leads you to sell stocks.

1486
01:34:14,560 --> 01:34:16,559
Speaker 3: And you know, you go back to I think it's

1487
01:34:16,640 --> 01:34:21,200
Speaker 3: nineteen fifty, right. If you invest a dollar when Democrats

1488
01:34:21,240 --> 01:34:25,000
Speaker 3: were president, it turns into something like fifty two dollars.

1489
01:34:25,040 --> 01:34:28,360
Speaker 3: If you only invested when Republicans were president, it turns

1490
01:34:28,400 --> 01:34:31,120
Speaker 3: out to be forty eight dollars, And if you invested

1491
01:34:31,200 --> 01:34:34,679
Speaker 3: the whole time, it's two thousand dollars. So markets don't

1492
01:34:34,720 --> 01:34:37,759
Speaker 3: really give a crap about presidents. Now, if you're retiring

1493
01:34:37,840 --> 01:34:42,120
Speaker 3: next year and you're unhappy about all this volatility, Monday,

1494
01:34:42,120 --> 01:34:45,640
Speaker 3: there are tariffs Tuesday, they're off Wednesday. This we're recording

1495
01:34:45,640 --> 01:34:49,120
Speaker 3: on a day where a market scream hire because over

1496
01:34:49,200 --> 01:34:53,000
Speaker 3: the weekend Trump said, you know, maybe we'll reduce some

1497
01:34:53,120 --> 01:34:54,960
Speaker 3: of the tariffs and we'll make it more focused and

1498
01:34:55,040 --> 01:34:57,080
Speaker 3: it won't be as crazy, and like it was an

1499
01:34:57,120 --> 01:34:59,840
Speaker 3: offhand remark, and the next thing, you know, the markets

1500
01:35:00,200 --> 01:35:03,360
Speaker 3: to the races. So if you sold last week, you

1501
01:35:03,439 --> 01:35:09,840
Speaker 3: missed all of this. It's impossible to time his sort

1502
01:35:09,880 --> 01:35:14,439
Speaker 3: of crazy, erratic comments. And so I understand if you

1503
01:35:14,479 --> 01:35:16,760
Speaker 3: need the money in the next year or two, this

1504
01:35:16,920 --> 01:35:19,479
Speaker 3: is really disconcerting. But if you don't need the money

1505
01:35:19,520 --> 01:35:22,559
Speaker 3: for ten years, you have to look past the other

1506
01:35:22,680 --> 01:35:26,760
Speaker 3: side of this. Presidency, just as you had to look

1507
01:35:26,840 --> 01:35:30,280
Speaker 3: past the Biden presidency where stocks did really well, and

1508
01:35:30,320 --> 01:35:33,200
Speaker 3: you had to look past the first Trump presidency where

1509
01:35:33,240 --> 01:35:37,160
Speaker 3: stocks actually did even better despite the pandemic and everything.

1510
01:35:37,600 --> 01:35:41,439
Speaker 3: Trump had one of the best stop market returns from

1511
01:35:41,720 --> 01:35:45,320
Speaker 3: when he took office from twenty seventeen until when he

1512
01:35:45,400 --> 01:35:50,320
Speaker 3: left in a cloud from January sixth. It's not whose president.

1513
01:35:50,360 --> 01:35:53,639
Speaker 3: The presidents get way too much credit when the markets

1514
01:35:53,680 --> 01:35:56,519
Speaker 3: are doing well, and they get way too much blame

1515
01:35:56,560 --> 01:35:59,840
Speaker 3: when the economy and the markets are doing poorly. It's

1516
01:35:59,880 --> 01:36:03,160
Speaker 3: not just who's in the White House. It's a whole

1517
01:36:03,200 --> 01:36:07,080
Speaker 3: lot of moving parts. Politics is really just a teeny

1518
01:36:07,160 --> 01:36:07,680
Speaker 3: part of it.

1519
01:36:15,720 --> 01:36:19,599
Speaker 2: Okay, leaving finance out. Sure, there's a thought that, well,

1520
01:36:19,640 --> 01:36:21,400
Speaker 2: you know, the Democrats is going to be election in

1521
01:36:21,439 --> 01:36:24,719
Speaker 2: twenty twenty six, going to be election in twenty twenty eight,

1522
01:36:25,240 --> 01:36:28,040
Speaker 2: and you know, we'll see what happens, will roll the dice.

1523
01:36:28,600 --> 01:36:33,000
Speaker 2: Then there's a contrary thought that, well, no, we're moving

1524
01:36:33,040 --> 01:36:35,559
Speaker 2: into autocracy. This is a whole new error. W we're

1525
01:36:35,560 --> 01:36:40,080
Speaker 2: in a constitutional crisis. Two things, are you saying that

1526
01:36:40,240 --> 01:36:44,400
Speaker 2: the market exists outside of all of this, or you

1527
01:36:44,680 --> 01:36:49,160
Speaker 2: choose not to pay attention, or is it possible that

1528
01:36:49,360 --> 01:36:52,760
Speaker 2: we're entering a new era? You know.

1529
01:36:54,320 --> 01:36:56,840
Speaker 3: A little bit of all the above, and let me

1530
01:36:56,960 --> 01:37:01,880
Speaker 3: unpack each of those. So first I tell people tune

1531
01:37:01,880 --> 01:37:04,680
Speaker 3: out the noise. Right. I wrote a blog post a

1532
01:37:04,720 --> 01:37:07,120
Speaker 3: couple of weeks ago, Hey, listen, if you don't need

1533
01:37:07,160 --> 01:37:08,960
Speaker 3: your money for the next four years, you have to

1534
01:37:08,960 --> 01:37:13,320
Speaker 3: look through the Trump presidency to the other side. And

1535
01:37:13,479 --> 01:37:17,920
Speaker 3: regardless of what you think of him and the markets,

1536
01:37:18,400 --> 01:37:22,400
Speaker 3: you can't make investments based on what he's doing. You

1537
01:37:22,479 --> 01:37:26,800
Speaker 3: just can't. It's unpredictable, it's unforeseeable, and you can't just

1538
01:37:26,920 --> 01:37:30,800
Speaker 3: assume that whatever he does goes to hell. Now the

1539
01:37:30,920 --> 01:37:33,839
Speaker 3: narrative has changed in a couple of ways, because initially

1540
01:37:33,880 --> 01:37:38,360
Speaker 3: it was hey, tax cuts, Hey deregulation, business friendly environment.

1541
01:37:38,760 --> 01:37:43,560
Speaker 3: Markets ran up in anticipation of that, right up until

1542
01:37:43,600 --> 01:37:47,800
Speaker 3: February twenty twenty five, where oh, this guy's serious about

1543
01:37:47,840 --> 01:37:51,120
Speaker 3: these twenty five percent tariffs? What the hell? Then they

1544
01:37:51,160 --> 01:37:53,720
Speaker 3: were on again, off again, on again, off again, And

1545
01:37:54,040 --> 01:37:57,080
Speaker 3: the sentiment today seems to be, all right, this is

1546
01:37:57,160 --> 01:37:59,800
Speaker 3: all you know what, China hasn't treated us fairly. Maybe

1547
01:37:59,800 --> 01:38:03,519
Speaker 3: this should be more tariffs, but we're gonna definitely take

1548
01:38:03,560 --> 01:38:06,519
Speaker 3: it down a couple of notches. So those two things

1549
01:38:06,520 --> 01:38:10,280
Speaker 3: are right. I am not comfortable with a lot of

1550
01:38:10,320 --> 01:38:14,559
Speaker 3: the autocratic things we're reading about. And you know, if

1551
01:38:14,600 --> 01:38:21,200
Speaker 3: you read jv. Last and the Bulwark, he's pretty negative

1552
01:38:21,320 --> 01:38:26,160
Speaker 3: about the outcome of all this. The debate is will

1553
01:38:26,360 --> 01:38:31,240
Speaker 3: or won't Trump follow what court's rule? Is the rule

1554
01:38:31,280 --> 01:38:35,840
Speaker 3: of loss still in effect. After January sixth, I wrote

1555
01:38:35,920 --> 01:38:38,480
Speaker 3: up an analysis and kind of came to the conclusion

1556
01:38:38,560 --> 01:38:41,360
Speaker 3: that how is it possible that the US is four

1557
01:38:41,400 --> 01:38:46,240
Speaker 3: percent of the world's population, Right, we're about twenty percent

1558
01:38:46,479 --> 01:38:51,160
Speaker 3: of global GDP, but we're like fifty something percent of

1559
01:38:51,200 --> 01:38:54,719
Speaker 3: the total market cap of all the publicly traded stocks

1560
01:38:54,760 --> 01:38:59,040
Speaker 3: in the world. And the answer was three things, so

1561
01:38:59,400 --> 01:39:06,040
Speaker 3: sanctity of personal property, sanctity of contracts, and rule of law.

1562
01:39:06,200 --> 01:39:09,360
Speaker 3: And I kind of spitballed. That's worth about twenty five

1563
01:39:09,720 --> 01:39:13,920
Speaker 3: trillion dollars, right, And so that was the problem with

1564
01:39:14,040 --> 01:39:18,719
Speaker 3: January sixth was there's a whole political and partisan issue.

1565
01:39:19,920 --> 01:39:23,240
Speaker 3: There's a whole debate about the pardons. I don't really

1566
01:39:23,240 --> 01:39:26,240
Speaker 3: think there should be any debate there. There's a whole

1567
01:39:26,360 --> 01:39:28,680
Speaker 3: lot of stuff that's going on that a lot of

1568
01:39:28,800 --> 01:39:33,160
Speaker 3: thoughtful people are really unhappy with, regardless of party affiliation.

1569
01:39:35,200 --> 01:39:39,040
Speaker 3: But the real question is, hey, is there is there

1570
01:39:39,640 --> 01:39:42,599
Speaker 3: still going to be a rule of law? And some

1571
01:39:42,800 --> 01:39:45,200
Speaker 3: people are very negative and think that a lot of

1572
01:39:45,240 --> 01:39:50,280
Speaker 3: these things. We've seen some deportations and some issues. You

1573
01:39:50,640 --> 01:39:54,760
Speaker 3: had John Roberts, Chief Justice of the Supreme Court, who

1574
01:39:54,800 --> 01:39:59,200
Speaker 3: had an embarrassingly laughable, you know, dread Scott type of

1575
01:39:59,240 --> 01:40:09,520
Speaker 3: a opinion about the personal exemption from criminal liability for presidents,

1576
01:40:10,439 --> 01:40:13,599
Speaker 3: even if they're not quite doing their jobs, if they're

1577
01:40:13,720 --> 01:40:18,280
Speaker 3: sort of operating outside of that, Like law students centuries

1578
01:40:18,280 --> 01:40:22,400
Speaker 3: from now are gonna mock every jackass justice that signed that.

1579
01:40:22,920 --> 01:40:28,479
Speaker 3: Their whatever reputation they had flushed down the toilet. But

1580
01:40:28,680 --> 01:40:33,120
Speaker 3: now you have John Roberts coming out and rebooking, rebuking

1581
01:40:33,360 --> 01:40:38,320
Speaker 3: Trump for implying that courts don't apply to him, judges

1582
01:40:38,360 --> 01:40:42,080
Speaker 3: don't apply to him. I am not thrilled with how

1583
01:40:42,120 --> 01:40:45,559
Speaker 3: many you know, the Camelot and the Kennedy's were the

1584
01:40:45,560 --> 01:40:49,479
Speaker 3: best and the brightest. I'm not all that keen about uh,

1585
01:40:50,280 --> 01:40:53,559
Speaker 3: the worst and the dumbest that he surrounded himself with.

1586
01:40:54,240 --> 01:40:58,439
Speaker 3: And I can't disagree with friends who say he's doing

1587
01:40:58,560 --> 01:41:01,599
Speaker 3: permanent damage to a man in society, to the government.

1588
01:41:02,560 --> 01:41:05,720
Speaker 3: Michael Loui we talked about Michael Lewis's new book, Who

1589
01:41:05,800 --> 01:41:10,240
Speaker 3: Is Government. The stories in the book about what functions

1590
01:41:10,320 --> 01:41:14,840
Speaker 3: governments perform, the US government performs, and how crucial it

1591
01:41:14,920 --> 01:41:19,479
Speaker 3: is for the successful functioning of the US society is

1592
01:41:20,560 --> 01:41:24,200
Speaker 3: so perfectly timed. He just has a knack for skating

1593
01:41:24,200 --> 01:41:28,680
Speaker 3: to where the puck is. And it's really disheartening to

1594
01:41:28,760 --> 01:41:32,080
Speaker 3: see a lot of these things that what this is

1595
01:41:32,160 --> 01:41:37,439
Speaker 3: really a mass rapid privatization of the public commons. Here

1596
01:41:37,439 --> 01:41:40,639
Speaker 3: we are back to the tragedy of the commons. Somebody

1597
01:41:40,640 --> 01:41:43,840
Speaker 3: has figured out how to capture a lot of the

1598
01:41:43,920 --> 01:41:47,160
Speaker 3: value of the US government and bring for the private site.

1599
01:41:47,360 --> 01:41:51,720
Speaker 3: So that's the negative, that's the downside risk the positive,

1600
01:41:51,720 --> 01:41:54,200
Speaker 3: and it's always hard to be positive. You go back

1601
01:41:54,240 --> 01:41:57,720
Speaker 3: through history and you had the Red Scare and McCarthy,

1602
01:41:57,760 --> 01:42:01,120
Speaker 3: and you had, you know, the Japanese internment during World

1603
01:42:01,120 --> 01:42:03,240
Speaker 3: War Two, and then you had prohibition, and you had

1604
01:42:04,800 --> 01:42:06,800
Speaker 3: you know, to say nothing of the Civil War, and

1605
01:42:06,840 --> 01:42:11,760
Speaker 3: then all of the parts of the South that you know,

1606
01:42:12,320 --> 01:42:16,479
Speaker 3: never quite got over the Civil War and put a

1607
01:42:16,520 --> 01:42:21,120
Speaker 3: lot of laws into place that were just overtly unfair

1608
01:42:21,120 --> 01:42:26,719
Speaker 3: and overtly racist. And so we've come through a whole

1609
01:42:26,760 --> 01:42:30,080
Speaker 3: lot of problems in the United States, and it always

1610
01:42:30,120 --> 01:42:33,519
Speaker 3: feels terrible, it always looks terrible. I want to be

1611
01:42:33,600 --> 01:42:35,839
Speaker 3: a glass half full and not a glass half empty

1612
01:42:35,880 --> 01:42:40,160
Speaker 3: sort of guy and say, on the one hand, the

1613
01:42:40,240 --> 01:42:43,320
Speaker 3: United States has survived all these things. And then the

1614
01:42:43,400 --> 01:42:46,759
Speaker 3: second part of that is, and there's so much money

1615
01:42:46,880 --> 01:42:51,360
Speaker 3: at risk that I can't imagine that, you know, all right,

1616
01:42:51,360 --> 01:42:53,200
Speaker 3: a couple, a couple of the big law firms have

1617
01:42:53,280 --> 01:42:57,799
Speaker 3: knuckled under, and that's always disappointing to see. Paul Weiss

1618
01:42:57,800 --> 01:43:03,160
Speaker 3: in particular, is getting slagged these days for really whimping out.

1619
01:43:03,240 --> 01:43:07,160
Speaker 3: But they are part of the judicial system. They're part

1620
01:43:07,200 --> 01:43:11,880
Speaker 3: of the legal system, I think, and I'm hopeful that

1621
01:43:12,240 --> 01:43:17,280
Speaker 3: the financial system. You know, you saw what happened. He

1622
01:43:17,439 --> 01:43:21,439
Speaker 3: was acting erradically and saying wacky things and doing crazy

1623
01:43:21,840 --> 01:43:25,240
Speaker 3: shit with tariffs, and the market said, hold my beer,

1624
01:43:25,400 --> 01:43:27,519
Speaker 3: we don't want anything to do with this, and it

1625
01:43:27,600 --> 01:43:30,840
Speaker 3: started selling off. I don't think in my entire thirty

1626
01:43:30,920 --> 01:43:35,000
Speaker 3: years in finance, I have heard so much angst and

1627
01:43:35,240 --> 01:43:40,160
Speaker 3: anguish and complaints about a ten percent drop, you know,

1628
01:43:40,360 --> 01:43:43,760
Speaker 3: ten percent happens twice every three years, about once every

1629
01:43:43,760 --> 01:43:47,519
Speaker 3: eighteen months. It's not clockwork, but you look over a century,

1630
01:43:47,560 --> 01:43:51,960
Speaker 3: that's about the average. And so I think the takeaway

1631
01:43:52,400 --> 01:43:55,360
Speaker 3: is and I think, what the reason we had those

1632
01:43:55,880 --> 01:44:00,479
Speaker 3: constructive comments from him? He tweeted, once the Dow is

1633
01:44:00,520 --> 01:44:04,200
Speaker 3: down a thousand points in two days. Any president that

1634
01:44:04,280 --> 01:44:08,320
Speaker 3: has that should be impeached. Well, bad news. Don the

1635
01:44:08,400 --> 01:44:11,080
Speaker 3: Dow has been down a lot more than that on

1636
01:44:11,960 --> 01:44:15,559
Speaker 3: a short number of days. Your own standard is, hey,

1637
01:44:15,560 --> 01:44:18,800
Speaker 3: you're screwing up. If the market is your measure, and

1638
01:44:18,920 --> 01:44:22,360
Speaker 3: I know he looks at the market, it's pretty well understood.

1639
01:44:22,800 --> 01:44:25,439
Speaker 3: So I think that's a little bit of a check

1640
01:44:25,920 --> 01:44:29,720
Speaker 3: on his worst impulses, because if he does stuff and

1641
01:44:29,760 --> 01:44:34,040
Speaker 3: the market says, oh no, this won't stand that scene.

1642
01:44:34,040 --> 01:44:35,439
Speaker 3: I don't know if the courts are going to be

1643
01:44:35,439 --> 01:44:41,000
Speaker 3: a check on him. Certainly, unlike he's the president forty seven.

1644
01:44:41,280 --> 01:44:45,120
Speaker 3: When he was president forty five, there were pe adults

1645
01:44:45,160 --> 01:44:49,240
Speaker 3: around him that kind of restrained his worst impulses. He

1646
01:44:49,320 --> 01:44:52,759
Speaker 3: does not have that now. Now he's surrounded by people

1647
01:44:52,800 --> 01:44:56,519
Speaker 3: who were of the same ILKs and gold, to say

1648
01:44:56,600 --> 01:45:03,080
Speaker 3: nothing of the unelected Elmo doing his thing. So that's

1649
01:45:03,120 --> 01:45:06,840
Speaker 3: a real risk. It's a genuine risk. The follow up

1650
01:45:07,400 --> 01:45:12,479
Speaker 3: post to Lose the Noise was seven potential errors, and

1651
01:45:12,560 --> 01:45:19,640
Speaker 3: I named recession, market crash, dollars, geopolitical chaos. I went

1652
01:45:19,680 --> 01:45:22,760
Speaker 3: through like seven things and said, hey, four months ago,

1653
01:45:22,960 --> 01:45:27,519
Speaker 3: these were really low. Now they're still kind of low,

1654
01:45:27,720 --> 01:45:32,040
Speaker 3: but they're somewhat higher than where they were before January twentieth,

1655
01:45:32,560 --> 01:45:35,439
Speaker 3: and so I don't see a recession imminent. I don't

1656
01:45:35,439 --> 01:45:38,240
Speaker 3: see a market crash imminent. I don't see a collapse

1657
01:45:38,280 --> 01:45:43,200
Speaker 3: of the US dollar happening anytime soon. But all of

1658
01:45:43,240 --> 01:45:47,960
Speaker 3: those things are now higher probabilities of occurring than they

1659
01:45:48,000 --> 01:45:52,920
Speaker 3: were before the noise. I don't you know, people think

1660
01:45:52,960 --> 01:45:56,599
Speaker 3: they know my politics, They really don't. My favorite thing

1661
01:45:56,640 --> 01:45:59,280
Speaker 3: about Biden was I didn't have to hear from him

1662
01:45:59,280 --> 01:46:05,519
Speaker 3: every day, and the constant noise out of this White

1663
01:46:05,560 --> 01:46:10,840
Speaker 3: House will see if it kind of fades. So if

1664
01:46:10,880 --> 01:46:15,320
Speaker 3: you remember in twenty sixteen, when Trump was elected but

1665
01:46:15,520 --> 01:46:19,360
Speaker 3: not inaugurated until January twenty of twenty seventeen, he was

1666
01:46:19,400 --> 01:46:23,760
Speaker 3: tweeting at people, he was calling them names. I love

1667
01:46:23,840 --> 01:46:27,400
Speaker 3: Tim Apple, Tim Cook of Apple was Tim Apple, And

1668
01:46:27,880 --> 01:46:29,720
Speaker 3: the first couple of months of him doing this. Every

1669
01:46:29,760 --> 01:46:33,519
Speaker 3: time he would single out a company, the stock would

1670
01:46:33,560 --> 01:46:36,080
Speaker 3: get shellacked. For a couple of days, it would get whacked,

1671
01:46:36,400 --> 01:46:39,280
Speaker 3: and then people kind of figured out, oh, this is

1672
01:46:39,439 --> 01:46:42,200
Speaker 3: just paper tiger stuff. He's not going off after any

1673
01:46:42,240 --> 01:46:46,439
Speaker 3: of these companies, unlike China where they're unhappy with a

1674
01:46:46,479 --> 01:46:50,080
Speaker 3: couple of companies and they disappear the CEOs for a

1675
01:46:50,080 --> 01:46:54,240
Speaker 3: few years. We still have contract rights, property rights, rule

1676
01:46:54,240 --> 01:46:57,360
Speaker 3: of law, and it's worth tens of trillions of dollars.

1677
01:46:57,760 --> 01:47:01,760
Speaker 3: So he hasn't been doing as much of that nonsense

1678
01:47:01,880 --> 01:47:04,960
Speaker 3: as he did last time. I think he's been focused

1679
01:47:05,000 --> 01:47:09,840
Speaker 3: on a different agenda. So I don't again it's nuanced.

1680
01:47:09,880 --> 01:47:11,840
Speaker 3: I don't want to just say tune it out, because

1681
01:47:11,840 --> 01:47:15,479
Speaker 3: you really can't, but you have to put it into context. Then,

1682
01:47:15,520 --> 01:47:18,080
Speaker 3: one of the things I wrote in Tune out the

1683
01:47:18,120 --> 01:47:22,120
Speaker 3: Noise was, Hey, it's been three weeks of tariff stuff.

1684
01:47:22,280 --> 01:47:26,360
Speaker 3: Tariff stuff. Tariffs were on, tarafts were off, tariffs with

1685
01:47:26,400 --> 01:47:30,160
Speaker 3: Canada and Mexico, and then Canada and Mexico agreed to

1686
01:47:30,200 --> 01:47:33,320
Speaker 3: do shit they were already doing. Then the tarafts were off,

1687
01:47:33,560 --> 01:47:35,360
Speaker 3: Then the taraffs came back, and then this taffs for

1688
01:47:35,439 --> 01:47:41,679
Speaker 3: Europe and taraffs for China. China is a much savvy,

1689
01:47:42,280 --> 01:47:46,800
Speaker 3: savvyer geopolitical player than I think a lot of people

1690
01:47:46,880 --> 01:47:51,240
Speaker 3: give them credit for. And so China turned around and said,

1691
01:47:51,720 --> 01:47:55,120
Speaker 3: what are the reddest of the red districts? Great, we're

1692
01:47:55,120 --> 01:47:58,200
Speaker 3: not buying your soybeans. You're gonna put tariffs on us.

1693
01:47:58,400 --> 01:48:00,799
Speaker 3: We're not buying your soy beans, We're not buying your cars,

1694
01:48:00,840 --> 01:48:03,960
Speaker 3: we're not buying your liths. And they're going to say,

1695
01:48:04,040 --> 01:48:06,400
Speaker 3: you want to tarif us, We're going to tarify you back.

1696
01:48:06,960 --> 01:48:11,679
Speaker 3: Same thing kind of with Canada. What are you talking

1697
01:48:11,720 --> 01:48:17,520
Speaker 3: about Canada? Like when you build a car in North America.

1698
01:48:17,840 --> 01:48:22,160
Speaker 3: By the way, forty five negotiated the More North American

1699
01:48:22,160 --> 01:48:26,240
Speaker 3: Trade Agreement, which forty seven criticized. It's like, dude, that

1700
01:48:26,360 --> 01:48:29,439
Speaker 3: was yours. What do you mean? So parts are made

1701
01:48:29,520 --> 01:48:32,400
Speaker 3: in some places, they're shipped to other places, they're assembled,

1702
01:48:32,760 --> 01:48:37,120
Speaker 3: they get chipped into other places. The tariffs that were

1703
01:48:37,160 --> 01:48:40,840
Speaker 3: proposed would have raised the cost of US cars. I

1704
01:48:40,880 --> 01:48:44,559
Speaker 3: think it was something like twelve grand, and Japanese cars

1705
01:48:44,600 --> 01:48:48,559
Speaker 3: something like eight grand. Even the Japanese cars made in

1706
01:48:48,680 --> 01:48:51,880
Speaker 3: all the plants. There's Honda plants here there's Tiota plants here,

1707
01:48:52,200 --> 01:48:56,720
Speaker 3: just as there's Mercedes and BMW plants. They didn't go

1708
01:48:56,840 --> 01:48:59,679
Speaker 3: to the Midwest. They went to the union free places

1709
01:49:00,120 --> 01:49:02,880
Speaker 3: like Alabama, and you look at all these different places

1710
01:49:02,880 --> 01:49:08,200
Speaker 3: where these cars are made. I'm this is wishful thinking

1711
01:49:08,240 --> 01:49:10,719
Speaker 3: on my part. I don't know how this plays out.

1712
01:49:11,200 --> 01:49:14,680
Speaker 3: I don't imagine it goes on forever. I don't even

1713
01:49:14,720 --> 01:49:18,559
Speaker 3: think it goes on for four years. I think two.

1714
01:49:18,640 --> 01:49:22,519
Speaker 3: I'm hopeful that two years from now, you know, Obama

1715
01:49:22,560 --> 01:49:25,920
Speaker 3: got elected, big swing to the left. What happens during

1716
01:49:25,960 --> 01:49:29,840
Speaker 3: the midterm elections, swings back and now you have to

1717
01:49:29,880 --> 01:49:32,719
Speaker 3: reach a course the isle and negotiate the way every

1718
01:49:32,760 --> 01:49:37,320
Speaker 3: president is done for for forever. Hopefully we see a

1719
01:49:37,320 --> 01:49:41,559
Speaker 3: little more of that, a little more negotiation. A lot

1720
01:49:41,640 --> 01:49:46,120
Speaker 3: of Republican congressmen have been afraid of getting primaried from

1721
01:49:46,160 --> 01:49:49,040
Speaker 3: the right, and what we've been seeing in these deep

1722
01:49:49,080 --> 01:49:53,040
Speaker 3: red states. And this isn't Antifa showing up, this isn't

1723
01:49:53,400 --> 01:49:56,799
Speaker 3: Democrats showing up. These are Republicans showing up and booing

1724
01:49:56,800 --> 01:50:00,559
Speaker 3: their congressmen. I think they should start to get worried

1725
01:50:00,920 --> 01:50:04,240
Speaker 3: about being primaried from the middle right. They're not going

1726
01:50:04,280 --> 01:50:06,920
Speaker 3: to be primaried from the left and the far right.

1727
01:50:07,040 --> 01:50:11,320
Speaker 3: People are unhappy about Wait, my social security is getting cut.

1728
01:50:11,479 --> 01:50:14,160
Speaker 3: I have to call the Social Security office. You fired

1729
01:50:14,200 --> 01:50:17,280
Speaker 3: all the people to answer the phones. Like. It's kind

1730
01:50:17,280 --> 01:50:23,640
Speaker 3: of fascinating watching all these groups suddenly realize, Hey, we

1731
01:50:23,680 --> 01:50:25,840
Speaker 3: should have been a little more skeptical, we should have

1732
01:50:25,880 --> 01:50:28,599
Speaker 3: been a little less gullible, we should have thought about

1733
01:50:28,680 --> 01:50:32,519
Speaker 3: this a little more critically before we cast our vote,

1734
01:50:32,520 --> 01:50:36,280
Speaker 3: because this isn't what we were voting for. And so

1735
01:50:37,400 --> 01:50:40,160
Speaker 3: I don't care if it's politics or investing or what

1736
01:50:40,320 --> 01:50:45,440
Speaker 3: have you. You really have to think about things intelligently,

1737
01:50:45,680 --> 01:50:49,960
Speaker 3: not just make emotional decisions off the seat of your pants,

1738
01:50:50,680 --> 01:50:54,160
Speaker 3: because you end up either with a portfolio you're unhappy

1739
01:50:54,200 --> 01:50:57,840
Speaker 3: with or a Congress you're unhappy with. And you know

1740
01:50:58,640 --> 01:51:01,920
Speaker 3: what is today, we're recording the towards the end of March,

1741
01:51:02,520 --> 01:51:09,400
Speaker 3: so we're barely two months into this presidency. I can't

1742
01:51:09,439 --> 01:51:12,479
Speaker 3: imagine the sort of mayhem is going to keep up forever.

1743
01:51:12,960 --> 01:51:16,559
Speaker 3: I kinda I'm hoping that they settle into a groove,

1744
01:51:17,200 --> 01:51:20,480
Speaker 3: the noise level comes down and some of the volatility

1745
01:51:20,520 --> 01:51:24,320
Speaker 3: goes away. But truth be told, that's wishful thinking I

1746
01:51:24,360 --> 01:51:26,240
Speaker 3: have no idea what's going to happen.

1747
01:51:26,280 --> 01:51:30,440
Speaker 2: Okay, let's go back. Let's say I'm just an individual

1748
01:51:32,120 --> 01:51:35,120
Speaker 2: and I buy an index. Fun is it set it

1749
01:51:35,360 --> 01:51:38,680
Speaker 2: and forget it like wrong for Peal? Or do I

1750
01:51:38,760 --> 01:51:42,240
Speaker 2: have to like anybody else three, four or five years ago,

1751
01:51:42,400 --> 01:51:44,320
Speaker 2: I have to do my own rebalancing.

1752
01:51:46,200 --> 01:51:48,479
Speaker 3: You know, it depends on how much money you're starting with,

1753
01:51:48,600 --> 01:51:52,240
Speaker 3: and how what your age is. If you're a twenty

1754
01:51:52,280 --> 01:51:55,439
Speaker 3: something thirty something and you're throwing a couple of hundred

1755
01:51:55,479 --> 01:51:58,800
Speaker 3: bucks into the market every month, one hundred bucks every

1756
01:51:58,800 --> 01:52:02,760
Speaker 3: other paycheck, whatver it is, you don't really have to

1757
01:52:02,800 --> 01:52:04,599
Speaker 3: pay a lot of attention to it. You can let

1758
01:52:04,640 --> 01:52:08,160
Speaker 3: it do its thing. If you're coming up on retirement,

1759
01:52:08,760 --> 01:52:11,519
Speaker 3: well then you probably want to have a mix of

1760
01:52:11,600 --> 01:52:14,879
Speaker 3: stocks and bonds. You probably don't want to be pure equity.

1761
01:52:15,920 --> 01:52:19,800
Speaker 3: We used to talk about the sixty forty portfolio. You

1762
01:52:19,880 --> 01:52:23,799
Speaker 3: run into a longevity problem with that because when social

1763
01:52:23,800 --> 01:52:27,280
Speaker 3: security was set up, Hey, you'd retire at sixty five,

1764
01:52:27,640 --> 01:52:30,080
Speaker 3: you'd play a few rounds of golf, you drop dead.

1765
01:52:30,200 --> 01:52:30,519
Speaker 2: That's it.

1766
01:52:30,600 --> 01:52:34,519
Speaker 3: You're done. If you make it today, the odds are

1767
01:52:34,560 --> 01:52:37,360
Speaker 3: if you make it to sixty five today, and I

1768
01:52:37,400 --> 01:52:40,200
Speaker 3: just saw with the Bill Burr Special, so drop dead

1769
01:52:40,520 --> 01:52:43,080
Speaker 3: years just kind of is stuck in my head. But

1770
01:52:43,680 --> 01:52:45,559
Speaker 3: if you make it to sixty five, the odds are

1771
01:52:45,560 --> 01:52:47,760
Speaker 3: you're going to make it to eighty eighty five, maybe

1772
01:52:47,800 --> 01:52:51,120
Speaker 3: even ninety, And so your money has to last that

1773
01:52:51,280 --> 01:52:56,160
Speaker 3: much longer than it used to, and so sixty forty

1774
01:52:56,280 --> 01:52:59,639
Speaker 3: might not be enough equity to cover that. So maybe

1775
01:53:00,080 --> 01:53:04,720
Speaker 3: you stay with a seventy thirty portfolio until you're pick

1776
01:53:04,760 --> 01:53:07,920
Speaker 3: a number seventy five, and then you can throttle back

1777
01:53:08,000 --> 01:53:11,320
Speaker 3: the equity and have a little less volatility. But when

1778
01:53:11,320 --> 01:53:14,640
Speaker 3: I say rebalance, what I mean is if your portfolio

1779
01:53:14,840 --> 01:53:21,040
Speaker 3: is sixty percent Vanguard Total Market and five percent whatever

1780
01:53:21,120 --> 01:53:25,000
Speaker 3: the next eight things, over the course of time, those

1781
01:53:25,080 --> 01:53:28,400
Speaker 3: numbers will get out of whack, and every couple of

1782
01:53:28,439 --> 01:53:31,920
Speaker 3: years you should. By the way, the software, I don't

1783
01:53:31,960 --> 01:53:34,720
Speaker 3: care if you're with Fidelity or Schwab or Think or

1784
01:53:34,720 --> 01:53:40,280
Speaker 3: Swim or what or Morgansteen, whatever e Trade, whatever online

1785
01:53:40,280 --> 01:53:43,360
Speaker 3: broker you're using. There you push your button and it

1786
01:53:43,400 --> 01:53:47,040
Speaker 3: automatically you can set your portfolio up to say here's

1787
01:53:47,080 --> 01:53:50,200
Speaker 3: my portfolio. I want to rebalance this every three years,

1788
01:53:51,040 --> 01:53:53,400
Speaker 3: or I want a notification when it gets more than

1789
01:53:54,000 --> 01:53:58,360
Speaker 3: five percent away from my starting percentages. The technology has

1790
01:53:58,400 --> 01:54:01,599
Speaker 3: made it really simple to do that. It's not eight

1791
01:54:01,640 --> 01:54:05,479
Speaker 3: guys in green visors in the basement working around the clock,

1792
01:54:06,040 --> 01:54:08,920
Speaker 3: it's the software just makes it fast and easy to do.

1793
01:54:09,439 --> 01:54:15,320
Speaker 2: Okay, generally speaking, should I buy the dip? I'm talking

1794
01:54:15,360 --> 01:54:19,120
Speaker 2: about significant when the market is off ten percent and

1795
01:54:19,160 --> 01:54:22,400
Speaker 2: we've already established the average person doesn't know what to

1796
01:54:22,520 --> 01:54:25,160
Speaker 2: buy and there was only a few stocks that will

1797
01:54:25,160 --> 01:54:26,760
Speaker 2: pay them a long difference. But if you say, well,

1798
01:54:26,800 --> 01:54:29,360
Speaker 2: you know, stock down ten percent, I should buy Microsoft

1799
01:54:29,360 --> 01:54:32,400
Speaker 2: and Apple and a Nvidia.

1800
01:54:32,560 --> 01:54:35,640
Speaker 3: So here's the way I look at the world. And

1801
01:54:35,840 --> 01:54:37,920
Speaker 3: by the way, I love this question. Here's the way

1802
01:54:37,960 --> 01:54:39,480
Speaker 3: I look at the world. You go back, you look

1803
01:54:39,480 --> 01:54:42,360
Speaker 3: at the math. How often are we down ten percent? Hey,

1804
01:54:42,440 --> 01:54:45,920
Speaker 3: twice every three years? Are you better off buying the dip?

1805
01:54:45,960 --> 01:54:49,840
Speaker 3: Are you better off making regular contributions come hell or

1806
01:54:49,920 --> 01:54:54,600
Speaker 3: high water every month dollar cost averaging? We've done studies

1807
01:54:54,600 --> 01:54:57,440
Speaker 3: about this. If you have a windfall and a lump

1808
01:54:57,520 --> 01:54:59,760
Speaker 3: sum of money, are you better off putting the money

1809
01:54:59,800 --> 01:55:02,480
Speaker 3: all and it wants? You're better off spreading it out.

1810
01:55:03,880 --> 01:55:06,360
Speaker 3: So there are a lot of variations on this But

1811
01:55:07,920 --> 01:55:09,960
Speaker 3: the first thing is I have to ask the question,

1812
01:55:10,440 --> 01:55:12,720
Speaker 3: do you really want to pay that close attention to

1813
01:55:12,760 --> 01:55:16,000
Speaker 3: the market? Do you want to buy every ten, twenty percent,

1814
01:55:16,040 --> 01:55:18,120
Speaker 3: thirty percent down? Is that something? Is that how you

1815
01:55:18,120 --> 01:55:20,960
Speaker 3: want to spend your time. If the answer is yes,

1816
01:55:21,040 --> 01:55:24,040
Speaker 3: I really like tracking the market in the economy, and

1817
01:55:24,120 --> 01:55:27,879
Speaker 3: I could manage my own behavior and I feel comfortable

1818
01:55:27,920 --> 01:55:30,800
Speaker 3: doing this, then here's what I would say to people. Hey,

1819
01:55:30,840 --> 01:55:33,040
Speaker 3: you should be putting money into your four to oh

1820
01:55:33,080 --> 01:55:36,600
Speaker 3: one K or your portfolio every month. The little money

1821
01:55:36,600 --> 01:55:39,640
Speaker 3: comes out of your paycheck every month to do this.

1822
01:55:40,800 --> 01:55:44,440
Speaker 3: Anytime the market's down ten percent, you want to double

1823
01:55:44,560 --> 01:55:47,520
Speaker 3: up and throw a little more money in. Great, the

1824
01:55:47,560 --> 01:55:49,560
Speaker 3: odds are that's going to work out in your favor.

1825
01:55:50,360 --> 01:55:54,600
Speaker 3: Anytime the market is down twenty percent, guess what. Well,

1826
01:55:54,680 --> 01:55:58,920
Speaker 3: Now that happens even less frequently we get down twenty percent,

1827
01:55:59,560 --> 01:56:02,120
Speaker 3: I want to say, once every four or five years,

1828
01:56:03,160 --> 01:56:07,000
Speaker 3: step up, increase that cash flow even more into the market.

1829
01:56:07,240 --> 01:56:10,560
Speaker 3: What about down thirty percent? Hey, we were down thirty

1830
01:56:10,560 --> 01:56:14,400
Speaker 3: four percent in twenty twenty. We were down much more

1831
01:56:14,440 --> 01:56:17,560
Speaker 3: than thirty percent in eight oh nine, we were down

1832
01:56:17,720 --> 01:56:22,480
Speaker 3: thirty percent in two thousand. You go back to nineteen

1833
01:56:22,520 --> 01:56:25,320
Speaker 3: eighty seven, the crash was just twenty two percent. For

1834
01:56:25,360 --> 01:56:27,560
Speaker 3: the whole year, you were from peak to trough, you

1835
01:56:27,600 --> 01:56:31,080
Speaker 3: were down over thirty percent. Anytime markets in the US

1836
01:56:31,280 --> 01:56:34,320
Speaker 3: go back to nineteen twenty nine, anytime you're down thirty percent,

1837
01:56:35,560 --> 01:56:39,080
Speaker 3: back up the truck. Buy as much as you can afford.

1838
01:56:39,160 --> 01:56:41,920
Speaker 3: Don't borrow money to do this. But if you have

1839
01:56:41,960 --> 01:56:47,120
Speaker 3: spare cash, absolutely down thirty percent, buy the caveat is under.

1840
01:56:48,400 --> 01:56:51,520
Speaker 3: For the vast, vast majority of people, it will be

1841
01:56:51,600 --> 01:56:55,040
Speaker 3: the most difficult thing in their life to fight the

1842
01:56:55,040 --> 01:56:59,360
Speaker 3: negative hair headlines, to fight the panic, and actually be

1843
01:56:59,440 --> 01:57:02,600
Speaker 3: a contral and do the opposite of what most of

1844
01:57:02,600 --> 01:57:06,480
Speaker 3: the crowd is doing, which is panic selling ps. Down

1845
01:57:06,560 --> 01:57:09,400
Speaker 3: thirty percent doesn't mean you're not gonna end up down

1846
01:57:09,440 --> 01:57:13,040
Speaker 3: forty or fifty percent. Uh eight oh nine, you were

1847
01:57:13,080 --> 01:57:16,400
Speaker 3: down fifty six percent, seventy three, seventy four, down fifty

1848
01:57:16,400 --> 01:57:21,760
Speaker 3: seven percent. It happens all too frequently, and you just

1849
01:57:21,840 --> 01:57:24,320
Speaker 3: have to be prepared. Hey, I'm gonna throw a little

1850
01:57:24,320 --> 01:57:26,520
Speaker 3: more money in down ten percent, a little more down

1851
01:57:26,520 --> 01:57:30,720
Speaker 3: twenty into broad index funds. If you're picking a stock,

1852
01:57:31,320 --> 01:57:34,800
Speaker 3: you got to make sure that down forty percent you're

1853
01:57:34,800 --> 01:57:38,480
Speaker 3: not buying a Lehman Brothers or Silicon Valley Bank or

1854
01:57:39,080 --> 01:57:41,320
Speaker 3: you know, an en Run. So when you buy a

1855
01:57:41,360 --> 01:57:43,840
Speaker 3: broad index, you don't have to worry about it going

1856
01:57:43,840 --> 01:57:46,600
Speaker 3: to zero. You have to worry about it doing poorly

1857
01:57:46,840 --> 01:57:52,040
Speaker 3: for a decade or so. And the if buying down

1858
01:57:52,080 --> 01:57:55,120
Speaker 3: thirty percent is hard. You look at market history and

1859
01:57:55,160 --> 01:57:58,320
Speaker 3: you see nineteen sixty six to nineteen eighty two the

1860
01:57:58,400 --> 01:58:01,680
Speaker 3: Dow kissed one thousand and ninety sixty six. It didn't

1861
01:58:01,680 --> 01:58:04,600
Speaker 3: get over that on a permanent basis till nineteen eighty two,

1862
01:58:05,160 --> 01:58:08,720
Speaker 3: and that's before we start talking about inflation. So sixteen

1863
01:58:08,840 --> 01:58:13,520
Speaker 3: years your return is effectively zero. Then you adjusted for inflation,

1864
01:58:13,680 --> 01:58:17,160
Speaker 3: your turn is down sixty or seventy percent, and inflation

1865
01:58:17,240 --> 01:58:20,760
Speaker 3: adjusted returns. But if you diligently put money in the

1866
01:58:20,760 --> 01:58:24,880
Speaker 3: market every month over those miserable sixteen years, well from

1867
01:58:24,920 --> 01:58:27,320
Speaker 3: eighty two to two thousand the market was up one

1868
01:58:27,320 --> 01:58:31,640
Speaker 3: thousand percent, and that's where you know you really kill it.

1869
01:58:31,800 --> 01:58:35,040
Speaker 3: So the fact that markets go through these long periods

1870
01:58:35,080 --> 01:58:38,120
Speaker 3: of time where and I don't believe we're in one

1871
01:58:38,160 --> 01:58:40,840
Speaker 3: of those periods. Now, they'll go through a secular bear

1872
01:58:40,960 --> 01:58:44,400
Speaker 3: market where it's flat to negative for ten fifteen years.

1873
01:58:45,120 --> 01:58:48,160
Speaker 3: That's an opportunity to save. It's going to feel terrible,

1874
01:58:48,480 --> 01:58:50,080
Speaker 3: but when you're on the other side of it, it

1875
01:58:50,120 --> 01:58:55,360
Speaker 3: feels great. So long answer cut down to short a

1876
01:58:55,400 --> 01:59:00,200
Speaker 3: little at ten twenty thirty percent. But even buying down

1877
01:59:00,240 --> 01:59:02,600
Speaker 3: thirty percent is no guarantee that the market bottoms and

1878
01:59:02,640 --> 01:59:07,600
Speaker 3: turns around. Every generation we see a down fifty percent,

1879
01:59:08,080 --> 01:59:13,320
Speaker 3: and that's an amazing buying opportunity. Nineteen twenty nine being

1880
01:59:13,360 --> 01:59:16,480
Speaker 3: the exception. Down fifty percent. Hey, you still had a

1881
01:59:16,680 --> 01:59:21,280
Speaker 3: whole lot way to go before the market's recovered. But

1882
01:59:21,360 --> 01:59:24,400
Speaker 3: it's a different world. It's a different market than it

1883
01:59:24,520 --> 01:59:31,600
Speaker 3: was a century ago.

1884
01:59:33,960 --> 01:59:39,480
Speaker 4: Okay, left Field, Steve Cone, the SEC cracks down, he

1885
01:59:39,560 --> 01:59:44,040
Speaker 4: turns it into a family office. That period of time expires.

1886
01:59:44,600 --> 01:59:48,760
Speaker 4: He says that he's getting these amazing returns. Is he

1887
01:59:49,080 --> 01:59:52,680
Speaker 4: just brilliant lucky or is it fraud?

1888
01:59:52,920 --> 01:59:57,080
Speaker 3: So I don't think it's fraud. He's just been doing

1889
01:59:57,120 --> 02:00:01,400
Speaker 3: it too long with too many employees. You know, if

1890
02:00:01,480 --> 02:00:08,400
Speaker 3: you read the book by Ryan Holiday about conspiracy about

1891
02:00:08,400 --> 02:00:11,600
Speaker 3: the Hulk Holgan thing, two people knew and they couldn't

1892
02:00:11,680 --> 02:00:14,920
Speaker 3: keep it a secret. So the thing that always cracks

1893
02:00:14,960 --> 02:00:18,680
Speaker 3: me up about the moon landing was faked. They're like

1894
02:00:18,960 --> 02:00:22,320
Speaker 3: forty thousand people working at NASA, how on Earth? And

1895
02:00:22,920 --> 02:00:29,440
Speaker 3: ten thousand worked on the lunar Apollo missions. How you

1896
02:00:29,480 --> 02:00:31,240
Speaker 3: going to get ten thousand people to keep a secret

1897
02:00:31,240 --> 02:00:33,520
Speaker 3: if you can't get three people to keep a secret.

1898
02:00:33,960 --> 02:00:37,320
Speaker 3: So I don't think there's any fraud there. It would

1899
02:00:37,320 --> 02:00:42,720
Speaker 3: have come out number one, number two. He is one

1900
02:00:42,760 --> 02:00:48,200
Speaker 3: of those Michael Jordan type gifted mutants that does things

1901
02:00:48,280 --> 02:00:52,000
Speaker 3: that the average person simply cannot do. And you can

1902
02:00:52,120 --> 02:00:55,600
Speaker 3: name a bunch of them, Renaissance technologies in Jim Simon's

1903
02:00:55,680 --> 02:01:00,080
Speaker 3: d E Shaw, David Shaw, there are Jane Street Tray.

1904
02:01:00,600 --> 02:01:05,320
Speaker 3: There are a handful of these companies that have just

1905
02:01:05,680 --> 02:01:10,480
Speaker 3: shot the lights out for decades. They don't want your money.

1906
02:01:10,760 --> 02:01:13,720
Speaker 3: You don't have enough money to give them. And if

1907
02:01:13,720 --> 02:01:16,400
Speaker 3: you have a billion dollars maybe they'll talk to you.

1908
02:01:16,920 --> 02:01:19,080
Speaker 3: But and even then they don't want to put you

1909
02:01:19,120 --> 02:01:22,640
Speaker 3: in their flagship funds because they tend not to do

1910
02:01:22,720 --> 02:01:25,640
Speaker 3: as well. They tend to do really well, and they

1911
02:01:25,640 --> 02:01:28,040
Speaker 3: don't do as well when too much money flows in.

1912
02:01:28,600 --> 02:01:31,760
Speaker 3: So yeah, if you have the opportunity to be in

1913
02:01:32,160 --> 02:01:37,880
Speaker 3: a top ten funds by all means. Jim Chano said this,

1914
02:01:37,960 --> 02:01:39,880
Speaker 3: and I'm pretty sure I put this in the book,

1915
02:01:40,080 --> 02:01:42,840
Speaker 3: but I'm in quoting it for forever. He was a

1916
02:01:42,880 --> 02:01:46,200
Speaker 3: short seller and a hedge fund manager. He's semi retired

1917
02:01:46,760 --> 02:01:50,800
Speaker 3: and ran Kinnekosa Associates, and he said, when I started

1918
02:01:50,840 --> 02:01:53,840
Speaker 3: forty years ago in the nineteen eighties, there were one

1919
02:01:53,920 --> 02:01:57,960
Speaker 3: hundred hedge fund managers, and all of them produced alpha,

1920
02:01:58,080 --> 02:02:01,920
Speaker 3: all of them beat the market, They produced amazing returns.

1921
02:02:02,360 --> 02:02:05,360
Speaker 3: Now there's ten thousand hedge funds, it's kind of the

1922
02:02:05,400 --> 02:02:11,200
Speaker 3: same one hundred guys still producing great returns. The problem,

1923
02:02:11,360 --> 02:02:14,600
Speaker 3: as we've expanded to three trillion dollars in hedge funds

1924
02:02:15,000 --> 02:02:18,120
Speaker 3: and I think it's eleven thousand funds now, is you

1925
02:02:18,240 --> 02:02:22,880
Speaker 3: dilute the talent. It makes the market more efficient. The

1926
02:02:22,920 --> 02:02:25,440
Speaker 3: way a lot of these funds make their money is

1927
02:02:25,480 --> 02:02:31,160
Speaker 3: they identify an inefficiency and they sort of, you know,

1928
02:02:31,480 --> 02:02:37,360
Speaker 3: mine that vein until it's exhausted. And as an inefficient market,

1929
02:02:37,440 --> 02:02:40,800
Speaker 3: as the price is closed, the inefficiency goes away. So

1930
02:02:40,920 --> 02:02:45,120
Speaker 3: Renaissance Technologies, Jim Simon's just passed away a few years ago,

1931
02:02:45,640 --> 02:02:48,800
Speaker 3: was head of He was a codebreaker for the NSA

1932
02:02:49,480 --> 02:02:53,480
Speaker 3: disagreed with them about Vietnam and left. He eventually, I

1933
02:02:53,480 --> 02:02:56,040
Speaker 3: think he started an MIT, ended up at Sonny Stonybrook

1934
02:02:56,040 --> 02:02:59,839
Speaker 3: where I went to college, eventually led the math department,

1935
02:02:59,840 --> 02:03:04,840
Speaker 3: and then he launched Renaissance. And they have like they

1936
02:03:04,880 --> 02:03:07,680
Speaker 3: don't hire people from Wall Street. They have hundreds and

1937
02:03:07,760 --> 02:03:14,360
Speaker 3: hundreds of applied physics and coders and math whizzes, and

1938
02:03:14,400 --> 02:03:19,840
Speaker 3: they're using computer technology long before most other firms were

1939
02:03:20,480 --> 02:03:25,680
Speaker 3: to identify these little anomalies to capture whatever the gap

1940
02:03:25,800 --> 02:03:30,200
Speaker 3: is and to close the trade out quickly. They supposedly

1941
02:03:30,280 --> 02:03:32,760
Speaker 3: I think it was Greg Zuckerman's book, The Man Who

1942
02:03:32,800 --> 02:03:35,840
Speaker 3: Beat the Markets. It's really the man who figured out

1943
02:03:37,320 --> 02:03:41,800
Speaker 3: how to trade on a very profitable basis. Nobody's even

1944
02:03:41,880 --> 02:03:44,160
Speaker 3: close to them. They put up like sixty percent a

1945
02:03:44,280 --> 02:03:47,920
Speaker 3: year for forty years. The numbers are just mind blowing.

1946
02:03:48,400 --> 02:03:52,640
Speaker 3: And it's not anyone fund. It's an entire organization that

1947
02:03:52,720 --> 02:03:57,000
Speaker 3: deploys hundreds and hundreds of different strategies, and as long

1948
02:03:57,040 --> 02:04:01,440
Speaker 3: as each strategy generates enough return, they keep doing it,

1949
02:04:01,480 --> 02:04:04,840
Speaker 3: and they keep tweaking this when they their core fund,

1950
02:04:04,880 --> 02:04:08,920
Speaker 3: the medallion funds, when they opened it, so after a

1951
02:04:08,960 --> 02:04:12,720
Speaker 3: few years they essentially kicked out all their outside investors,

1952
02:04:12,760 --> 02:04:15,360
Speaker 3: returned their money and said, this is just for us

1953
02:04:15,720 --> 02:04:18,200
Speaker 3: because it worked if it had, you know, a billion

1954
02:04:18,240 --> 02:04:20,200
Speaker 3: dollars in it, When it had three or four billion,

1955
02:04:21,280 --> 02:04:24,920
Speaker 3: you couldn't generate those sort of returns. It's the inefficiencies

1956
02:04:24,960 --> 02:04:27,480
Speaker 3: are that small, all right. And when I say a

1957
02:04:27,480 --> 02:04:31,960
Speaker 3: billion dollars is small, US equity markets are fifty sixty seven.

1958
02:04:32,080 --> 02:04:35,720
Speaker 3: It depends on what we close today. Trillion dollars A

1959
02:04:35,760 --> 02:04:41,120
Speaker 3: billion dollars is pocket change, but at sixty percent compounded,

1960
02:04:41,160 --> 02:04:45,200
Speaker 3: it's just an astonishing amount of money. That was one

1961
02:04:45,400 --> 02:04:50,320
Speaker 3: organizational approach to Shaw is a very specific quantitative approach.

1962
02:04:51,160 --> 02:04:56,360
Speaker 3: Jane Street Trading has figured out Citadel Millennium. There's like,

1963
02:04:56,360 --> 02:04:58,120
Speaker 3: like I know the names off the top of my

1964
02:04:58,200 --> 02:05:01,800
Speaker 3: Head's cause year in, year out, these guys are at

1965
02:05:01,840 --> 02:05:04,400
Speaker 3: the top of the league charts. They're putting out numbers.

1966
02:05:04,720 --> 02:05:10,760
Speaker 3: They all have outside investors, they're all audited sacks. Steve

1967
02:05:10,840 --> 02:05:15,360
Speaker 3: Cohen's original funds became a family office and now it's

1968
02:05:15,480 --> 02:05:19,760
Speaker 3: point seventy two. They have, you know, mainstream auditors. People

1969
02:05:19,840 --> 02:05:22,320
Speaker 3: are looking at the books. I would be stunned if

1970
02:05:22,360 --> 02:05:25,920
Speaker 3: any of them were doing anything you know, way too

1971
02:05:25,960 --> 02:05:32,080
Speaker 3: far off the reservation, and people figure out ways to

1972
02:05:32,200 --> 02:05:37,640
Speaker 3: identify these little inefficiencies. Citadel Ken Griffin runs Citadel. They

1973
02:05:37,640 --> 02:05:41,640
Speaker 3: were one of the earliest high frequency traders. They figured out,

1974
02:05:41,760 --> 02:05:46,680
Speaker 3: as the Nasdaq and the NYC, we're moving to electronic trading,

1975
02:05:47,320 --> 02:05:50,760
Speaker 3: how can we do this cheaper, faster, better than everybody

1976
02:05:50,840 --> 02:05:55,960
Speaker 3: else and capture you know, the market does hundreds of

1977
02:05:56,080 --> 02:05:59,560
Speaker 3: billions of shares a day. If you can find out

1978
02:06:00,720 --> 02:06:03,400
Speaker 3: we want to buy buy this at a dollar fifty

1979
02:06:03,440 --> 02:06:05,800
Speaker 3: seven and sell it at a dollar fifty eight to

1980
02:06:06,160 --> 02:06:08,920
Speaker 3: make a market for somebody. If you could do that

1981
02:06:09,120 --> 02:06:12,680
Speaker 3: billions and billions of time, it adds up. So that

1982
02:06:12,840 --> 02:06:16,760
Speaker 3: was their genius high frequency training. Each one of these

1983
02:06:17,040 --> 02:06:21,640
Speaker 3: giant funds, giant hedge funds that have been so successful,

1984
02:06:21,880 --> 02:06:25,360
Speaker 3: they've all like the six blind men describing the elephant.

1985
02:06:25,600 --> 02:06:32,480
Speaker 3: They've all figured out different ways to identify something that

1986
02:06:32,520 --> 02:06:37,320
Speaker 3: the market doesn't understand. First, get in there, capture the profit,

1987
02:06:37,400 --> 02:06:40,160
Speaker 3: and get out and then move on to the next thing.

1988
02:06:40,600 --> 02:06:44,600
Speaker 3: And I mean that's really a gross oversimplification, but they've

1989
02:06:44,600 --> 02:06:48,200
Speaker 3: been so consistent over you know, at least the top

1990
02:06:48,320 --> 02:06:52,200
Speaker 3: twenty have been so consistent over time. It's kind of shocking.

1991
02:06:52,480 --> 02:06:54,480
Speaker 3: Every now and then they have a bad year, they

1992
02:06:54,480 --> 02:06:59,200
Speaker 3: have an off year. But and that's kind of makes

1993
02:06:59,240 --> 02:07:03,360
Speaker 3: me hopeful because I don't imagine these guys are going

1994
02:07:03,440 --> 02:07:07,480
Speaker 3: to allow the guys in DC to mess it up.

1995
02:07:07,880 --> 02:07:10,879
Speaker 3: They just have too much money at risk. Steve Cohen

1996
02:07:11,040 --> 02:07:13,360
Speaker 3: just bought the New York Knicks. What do you mean

1997
02:07:13,400 --> 02:07:16,560
Speaker 3: You're gonna put tariffs on this stuff? Like, I'm hopeful that,

1998
02:07:17,280 --> 02:07:19,800
Speaker 3: you know, I can't say I've been the world's biggest

1999
02:07:19,800 --> 02:07:23,480
Speaker 3: fan of the point one percent. I'm hoping that for

2000
02:07:23,600 --> 02:07:28,520
Speaker 3: a change, the point one percent's interest now aligns with

2001
02:07:28,560 --> 02:07:32,720
Speaker 3: the rest of Americas. And Hey, we want a functioning economy,

2002
02:07:32,760 --> 02:07:35,200
Speaker 3: we want to functioning market, we want the rule of law.

2003
02:07:35,600 --> 02:07:38,640
Speaker 3: This is important. Please don't let this go to help.

2004
02:07:38,800 --> 02:07:42,120
Speaker 2: Okay, just to be clear, it's the Mets, not the Knicks.

2005
02:07:42,160 --> 02:07:44,640
Speaker 3: The Mets, the Mets. The Cohen bought the What did

2006
02:07:44,680 --> 02:07:45,600
Speaker 3: I say? Did I say?

2007
02:07:45,880 --> 02:07:47,320
Speaker 2: You said the Knicks? I just want to be coming.

2008
02:07:47,400 --> 02:07:49,520
Speaker 3: I'm going to a Nick game tomorrow. But it was

2009
02:07:49,600 --> 02:07:50,600
Speaker 3: the New York Mets.

2010
02:07:50,600 --> 02:07:55,080
Speaker 2: Oh, okay, you've done all of these interviews. Name two

2011
02:07:55,240 --> 02:08:01,360
Speaker 2: people who you liked interviewing best. Either because their personalities

2012
02:08:01,480 --> 02:08:04,600
Speaker 2: or the charisma or what they had to say. Two

2013
02:08:04,680 --> 02:08:05,520
Speaker 2: most memorable.

2014
02:08:05,880 --> 02:08:07,680
Speaker 3: You want music people, I have.

2015
02:08:07,640 --> 02:08:09,320
Speaker 2: Some No no, no, no no no. I want to

2016
02:08:09,400 --> 02:08:14,120
Speaker 2: flatten the landscape, just period the two that stick out.

2017
02:08:14,920 --> 02:08:20,840
Speaker 3: There's so many that stick out. So Ken Feinberg was

2018
02:08:20,880 --> 02:08:24,760
Speaker 3: the special master for the nine to eleven Victims Fund

2019
02:08:25,280 --> 02:08:27,320
Speaker 3: for the Gulf of Are we still calling it Golf

2020
02:08:27,360 --> 02:08:31,400
Speaker 3: of Mexico? The Gulf of Mexico BP oil spill. He's

2021
02:08:31,440 --> 02:08:34,560
Speaker 3: done so many of these, and for the most part,

2022
02:08:34,560 --> 02:08:36,960
Speaker 3: Bloomberg lets me bring in whoever I want to interview,

2023
02:08:37,480 --> 02:08:42,800
Speaker 3: Steve Miller, Lawrence Juber, Don Felder, like any John Pizarelli,

2024
02:08:43,040 --> 02:08:46,160
Speaker 3: anytime I like meet somebody who's kind of interesting, Hey,

2025
02:08:46,160 --> 02:08:48,480
Speaker 3: you want to come on Bloomberg. They kind of leave

2026
02:08:48,560 --> 02:08:53,080
Speaker 3: me alone. But Ken Feinberg, what does he have to

2027
02:08:53,120 --> 02:08:56,960
Speaker 3: do with finance? What's this about? And I'm like, well,

2028
02:08:57,000 --> 02:09:00,800
Speaker 3: not for nothing, but the insurance industry. And nine to

2029
02:09:00,840 --> 02:09:03,360
Speaker 3: eleven was focused on Wall Street and then what went

2030
02:09:03,400 --> 02:09:08,160
Speaker 3: on in the Gulf, and like I had a fight

2031
02:09:08,280 --> 02:09:11,480
Speaker 3: to get that on, not just Bloomberg, Like some of

2032
02:09:11,520 --> 02:09:13,160
Speaker 3: the guys I work with, what are you doing? My

2033
02:09:13,320 --> 02:09:17,120
Speaker 3: research assistant at the time was like, what the hell

2034
02:09:17,160 --> 02:09:19,640
Speaker 3: does this have to do with what we do? And

2035
02:09:21,200 --> 02:09:23,960
Speaker 3: of course he comes on and he's this thick New

2036
02:09:24,000 --> 02:09:28,880
Speaker 3: York accent, soft spoken guy American hero, talk about a

2037
02:09:28,920 --> 02:09:33,840
Speaker 3: thankless task, taking this giant victim's fund and having to

2038
02:09:33,880 --> 02:09:38,120
Speaker 3: get everybody who lost someone in the nine to eleven

2039
02:09:38,120 --> 02:09:42,440
Speaker 3: attacks to sign up for it, right, So that's every family,

2040
02:09:42,680 --> 02:09:47,800
Speaker 3: every spouse, every whatever. And then explain, Hey, I don't

2041
02:09:47,800 --> 02:09:50,440
Speaker 3: think it's right that the guy who jumped out of

2042
02:09:50,440 --> 02:09:54,920
Speaker 3: the hundredth floor, the bond trader who landed on the

2043
02:09:54,960 --> 02:09:58,200
Speaker 3: firemen and they both died. I don't think it's right

2044
02:09:58,280 --> 02:10:01,520
Speaker 3: that his family is getting more money than the fireman's family.

2045
02:10:02,840 --> 02:10:06,640
Speaker 3: But that's what Congress has forced me to do, is

2046
02:10:06,720 --> 02:10:11,000
Speaker 3: to make these payments based on economic loss. My hands

2047
02:10:11,000 --> 02:10:14,520
Speaker 3: are tied. If you want, you could go to court

2048
02:10:14,720 --> 02:10:18,160
Speaker 3: and maybe in ten years you get something, or you

2049
02:10:18,320 --> 02:10:20,160
Speaker 3: take the money now. And by the way, it was,

2050
02:10:20,600 --> 02:10:23,880
Speaker 3: this was all like decent chunks of money. Put this,

2051
02:10:24,320 --> 02:10:28,720
Speaker 3: start grief, wrap up the grieving process, put this behind you,

2052
02:10:29,120 --> 02:10:32,800
Speaker 3: and start living your life instead of being stuck in court.

2053
02:10:33,080 --> 02:10:37,120
Speaker 3: Like so, I the person who told me this is

2054
02:10:37,120 --> 02:10:40,040
Speaker 3: a terrible idea. What are you doing on that much

2055
02:10:40,160 --> 02:10:43,680
Speaker 3: So broadcast over the weekend. That Monday, I go into

2056
02:10:43,680 --> 02:10:46,040
Speaker 3: the office and I get a hug and he's like,

2057
02:10:46,080 --> 02:10:49,200
Speaker 3: you're a son of a bitch. First podcast that made

2058
02:10:49,240 --> 02:10:52,440
Speaker 3: me cry. He's an American hero. I'm like, right, it's

2059
02:10:53,320 --> 02:10:55,640
Speaker 3: by the way, you can't listen to that without having

2060
02:10:56,200 --> 02:10:58,920
Speaker 3: the hair on the back of your next stand up.

2061
02:10:59,280 --> 02:11:01,280
Speaker 3: I have a hundred, but I'm going to give you

2062
02:11:01,320 --> 02:11:07,080
Speaker 3: a recent one that stands out because you know, most

2063
02:11:07,120 --> 02:11:11,000
Speaker 3: of these people are successful and smart and accomplished, and like, wow,

2064
02:11:11,040 --> 02:11:14,040
Speaker 3: that guy's really interesting. Every now and then you meet

2065
02:11:14,080 --> 02:11:19,200
Speaker 3: someone and it's just like what the so I've been

2066
02:11:19,320 --> 02:11:21,640
Speaker 3: kind of I was scheduled to have him on during

2067
02:11:21,640 --> 02:11:24,960
Speaker 3: the pandemic. Then the pandemic hit, and so I finally

2068
02:11:25,080 --> 02:11:27,880
Speaker 3: got him back, like years later, finally got to him.

2069
02:11:28,240 --> 02:11:32,720
Speaker 3: David Rubinstein of the Carlisle Group is just one of

2070
02:11:32,760 --> 02:11:38,680
Speaker 3: these human beings that everything he touches is better for

2071
02:11:38,800 --> 02:11:42,280
Speaker 3: his involvement. And let me just give you and all

2072
02:11:42,320 --> 02:11:45,720
Speaker 3: this stuff is you know, none of this is off

2073
02:11:45,760 --> 02:11:47,560
Speaker 3: the record. All this stuff was sent on the air.

2074
02:11:48,120 --> 02:11:51,400
Speaker 3: So I used to think he stole my gig at Bloomberg.

2075
02:11:51,480 --> 02:11:55,640
Speaker 3: I'm like, God, damn chairman of founder of Carlisle Group.

2076
02:11:55,880 --> 02:11:59,080
Speaker 3: It's doing my podcast stuff on. Like I used to

2077
02:11:59,160 --> 02:12:02,320
Speaker 3: jokingly to someone who worked for him, your boss stole

2078
02:12:02,400 --> 02:12:05,000
Speaker 3: my gig and I finally he had a book. So

2079
02:12:05,040 --> 02:12:07,760
Speaker 3: it's always a great opportunity to get people when a

2080
02:12:07,840 --> 02:12:11,680
Speaker 3: book comes out. So he comes on the show and

2081
02:12:11,800 --> 02:12:15,080
Speaker 3: he just starts talking about, you know, I have a

2082
02:12:15,360 --> 02:12:17,800
Speaker 3: we do deep dive a lot of research, and I

2083
02:12:17,800 --> 02:12:23,560
Speaker 3: start asking him questions. So they started in DC and

2084
02:12:23,600 --> 02:12:27,720
Speaker 3: it was a pretty successful business right from the out

2085
02:12:27,720 --> 02:12:31,400
Speaker 3: of the gate forty years ago. And he started holding

2086
02:12:31,520 --> 02:12:36,120
Speaker 3: these I don't even know what to call them, just conversations.

2087
02:12:36,600 --> 02:12:39,800
Speaker 3: He would get somebody who was an expert in a

2088
02:12:39,880 --> 02:12:45,520
Speaker 3: space and he would interview them. But the audience were

2089
02:12:45,680 --> 02:12:51,720
Speaker 3: closed door. Senators and congressmen across the aisle, no party affiliation.

2090
02:12:52,000 --> 02:12:56,440
Speaker 3: Everybody was there just to hear this conversation and becomes

2091
02:12:56,480 --> 02:13:01,520
Speaker 3: smarter and better elected officials. He's just doing that. It's

2092
02:13:01,960 --> 02:13:05,040
Speaker 3: there's no record, there's no broadcast, there's no book. It's

2093
02:13:05,040 --> 02:13:09,160
Speaker 3: all on the side. And and that's what he did.

2094
02:13:09,240 --> 02:13:16,480
Speaker 3: And then he like everything he touches. So the Washington

2095
02:13:17,320 --> 02:13:22,320
Speaker 3: Monument in DC starting to crumble, they get occasional earthquakes.

2096
02:13:22,640 --> 02:13:26,120
Speaker 3: Wasn't built to last forever. It's not an Egyptian pyramid,

2097
02:13:26,480 --> 02:13:30,920
Speaker 3: but it's still an American, you know, part of American icography.

2098
02:13:31,360 --> 02:13:37,040
Speaker 3: It's absolutely a landmark. He goes to Congress and says, hey,

2099
02:13:37,080 --> 02:13:40,080
Speaker 3: you guys, this has falling apart. You know you're gonna

2100
02:13:40,080 --> 02:13:42,920
Speaker 3: be embarrassed if the Washington Monument comes down on your

2101
02:13:42,960 --> 02:13:46,880
Speaker 3: watch and the like. Nobody wants to do anything, so

2102
02:13:47,040 --> 02:13:51,480
Speaker 3: he like they they the budgeting argument, whatever, it just

2103
02:13:52,080 --> 02:13:54,080
Speaker 3: no one can get the shit together. And he turns

2104
02:13:54,120 --> 02:13:56,360
Speaker 3: around and said, all right, I'm gonna start the ball rolling.

2105
02:13:56,400 --> 02:13:58,280
Speaker 3: You guys will figure out a way to pay for it.

2106
02:13:58,720 --> 02:14:01,320
Speaker 3: And he just goes a couple of buddies, Hey, I

2107
02:14:01,320 --> 02:14:03,600
Speaker 3: need a couple of million dollars, and everybody throws money

2108
02:14:03,600 --> 02:14:06,240
Speaker 3: in the kiddy, and he hires an architect and an

2109
02:14:06,280 --> 02:14:09,240
Speaker 3: engineer and they figure out how to shore up the

2110
02:14:09,320 --> 02:14:14,200
Speaker 3: Washington Monument, and eventually Congress comes through and does the bulk,

2111
02:14:14,600 --> 02:14:17,160
Speaker 3: but he goes deep out of pocket. And then he

2112
02:14:17,240 --> 02:14:22,080
Speaker 3: starts looking around the country and Monticello with Thomas Jefferson

2113
02:14:22,120 --> 02:14:25,080
Speaker 3: and just all these monuments no one's taken care of,

2114
02:14:25,480 --> 02:14:29,800
Speaker 3: and then all these the Constitution, the Declaration of Independence.

2115
02:14:29,800 --> 02:14:32,520
Speaker 3: There are multiple copies of this. He buys them and

2116
02:14:32,600 --> 02:14:36,360
Speaker 3: donates them to the Smithsonian. So it's not in Bill

2117
02:14:36,440 --> 02:14:40,400
Speaker 3: Gates's layer. It's there for the American people. And he

2118
02:14:40,480 --> 02:14:43,920
Speaker 3: grew up in Baltimore, a city that's kind of hard scrabble,

2119
02:14:44,280 --> 02:14:48,720
Speaker 3: and he buys the Baltimore Orioles and essentially promises the town,

2120
02:14:49,000 --> 02:14:52,080
Speaker 3: I'll build a new stadium, probably the best stadium in

2121
02:14:52,680 --> 02:14:56,920
Speaker 3: Major League Baseball, and I'll keep the Orioles here, and

2122
02:14:57,000 --> 02:14:59,839
Speaker 3: I'm gonna keep hot dogs two dollars and beer four dollars,

2123
02:15:00,120 --> 02:15:03,200
Speaker 3: and this will be a core part of the waterfront revival.

2124
02:15:03,360 --> 02:15:07,320
Speaker 3: Like wherever he goes, it's not I'm going to buy

2125
02:15:07,400 --> 02:15:11,240
Speaker 3: a baseball team as a flex. It's all right. Someone

2126
02:15:11,280 --> 02:15:13,560
Speaker 3: has to do something otherwise the Orioles are out of here.

2127
02:15:13,600 --> 02:15:16,040
Speaker 3: You know, Baltimore is suffering. Let's see if we can

2128
02:15:16,080 --> 02:15:19,360
Speaker 3: lock them here for ten or twenty years. And like,

2129
02:15:20,000 --> 02:15:23,760
Speaker 3: as I'm having the interview, like, I don't know what

2130
02:15:23,840 --> 02:15:27,520
Speaker 3: you think about me. As we're talking, hopefully you're saying, oh,

2131
02:15:27,600 --> 02:15:29,200
Speaker 3: he seems to know what he's talking about. And he's

2132
02:15:29,280 --> 02:15:32,520
Speaker 3: kind of amusing and Jesus Fucking this guy babbled. But

2133
02:15:33,840 --> 02:15:37,000
Speaker 3: you know that's kind of the perspective you come away from.

2134
02:15:37,360 --> 02:15:40,880
Speaker 3: I'm with him for an hour in change, and I'm like,

2135
02:15:41,440 --> 02:15:45,840
Speaker 3: Jesus Christ, everything this guy touches is not just a

2136
02:15:45,880 --> 02:15:50,280
Speaker 3: little better, it's so much better. And I'm just like

2137
02:15:50,400 --> 02:15:52,240
Speaker 3: four or five things off the top of my head.

2138
02:15:52,680 --> 02:15:54,920
Speaker 3: We spoke for like just that sort of stuff. We

2139
02:15:54,960 --> 02:15:58,880
Speaker 3: spoke for twenty minutes, and that that's the most recent

2140
02:15:59,000 --> 02:16:02,720
Speaker 3: one that has stood out with me, like, oh there

2141
02:16:02,760 --> 02:16:06,480
Speaker 3: are You know, it's very easy to become when you're

2142
02:16:06,480 --> 02:16:09,920
Speaker 3: looking at how not to invest that how bad a

2143
02:16:09,960 --> 02:16:14,320
Speaker 3: lot of stuff is. It's easy to let yourself become cynical.

2144
02:16:14,720 --> 02:16:17,560
Speaker 3: And that's why I really tried to say, don't just

2145
02:16:17,600 --> 02:16:21,000
Speaker 3: say no to everything. Find the best in each and

2146
02:16:21,560 --> 02:16:25,240
Speaker 3: that's your team. Like, you see a person like that,

2147
02:16:26,920 --> 02:16:30,520
Speaker 3: and it's inspiring and it kind of gives you hope. Hey,

2148
02:16:30,640 --> 02:16:34,680
Speaker 3: not everybody is an asshole out for themselves and running

2149
02:16:34,760 --> 02:16:37,880
Speaker 3: rough shot and doesn't give a shit over what happens.

2150
02:16:37,920 --> 02:16:43,040
Speaker 3: There are people, including some with assets and resources and

2151
02:16:43,200 --> 02:16:47,120
Speaker 3: abilities that are making things better. So that kind of

2152
02:16:47,120 --> 02:16:48,320
Speaker 3: makes me a little hopeful.

2153
02:16:48,920 --> 02:16:55,440
Speaker 2: Okay, finally, you hated practicing law forgetting the podcast and

2154
02:16:55,480 --> 02:16:59,200
Speaker 2: the blogging and the column and the Washington Post. What

2155
02:16:59,520 --> 02:17:01,880
Speaker 2: do you like about finance?

2156
02:17:04,680 --> 02:17:09,800
Speaker 3: It's this giant puzzle, It really is, so so I

2157
02:17:09,840 --> 02:17:12,240
Speaker 3: have a tendency to go down the rabbit hole really

2158
02:17:12,280 --> 02:17:16,280
Speaker 3: deep on anything I do, and sometimes it's something just

2159
02:17:16,360 --> 02:17:22,320
Speaker 3: as as stupid as film or music or you know.

2160
02:17:22,440 --> 02:17:26,400
Speaker 3: I still create. I can't help myself. I still create

2161
02:17:26,440 --> 02:17:32,600
Speaker 3: playlists for different events. I included the scene the line

2162
02:17:32,680 --> 02:17:38,959
Speaker 3: from a High Fidelity that there are rules in the book,

2163
02:17:39,040 --> 02:17:43,959
Speaker 3: but I find finance to be this fascinating puzzle. And

2164
02:17:44,040 --> 02:17:47,440
Speaker 3: I mentioned the six blind guys describing the elephant. But

2165
02:17:47,800 --> 02:17:50,600
Speaker 3: there is no one black of white answer. There is

2166
02:17:50,640 --> 02:17:55,360
Speaker 3: no one, you know, definitive response. It's a little art,

2167
02:17:55,520 --> 02:18:01,120
Speaker 3: it's a little science. The reason I use bad ideas, numbers,

2168
02:18:01,160 --> 02:18:05,200
Speaker 3: and behavior because those are three different ways to describe

2169
02:18:05,720 --> 02:18:09,440
Speaker 3: how humans go through the world. We you know, we

2170
02:18:09,480 --> 02:18:12,440
Speaker 3: grow up, we get jobs, we live our lives, and

2171
02:18:12,520 --> 02:18:16,240
Speaker 3: we consume a lot of ideas and very often we

2172
02:18:16,760 --> 02:18:20,440
Speaker 3: ignore the data and the numbers that either confirm or

2173
02:18:20,480 --> 02:18:24,279
Speaker 3: deny those ideas, and that combination leads us to making

2174
02:18:24,320 --> 02:18:28,119
Speaker 3: certain decisions and behaving in a certain way, and sometimes

2175
02:18:28,440 --> 02:18:30,640
Speaker 3: if it's based on either a bad idea or not

2176
02:18:30,800 --> 02:18:34,560
Speaker 3: understanding the numbers and data around it, the behavior leads

2177
02:18:34,600 --> 02:18:39,000
Speaker 3: to a bad outcome. And so the concept of gee,

2178
02:18:39,000 --> 02:18:41,959
Speaker 3: this is a giant wordle puzzle. How do I put

2179
02:18:41,959 --> 02:18:45,320
Speaker 3: this together? How do I figure out? You know, how comes?

2180
02:18:45,440 --> 02:18:49,720
Speaker 3: Sometimes stocks are cheap and other times stocks are expensive,

2181
02:18:49,800 --> 02:18:54,080
Speaker 3: and in how come cheap stocks sometimes go down? It's

2182
02:18:54,120 --> 02:18:56,000
Speaker 3: sort of the opposite word to od it. Oh, don't

2183
02:18:56,040 --> 02:19:01,720
Speaker 3: buy expensive stocks. Expensive stocks keep going up. How can

2184
02:19:01,760 --> 02:19:05,600
Speaker 3: we spend so much time on these aspects of investing

2185
02:19:06,160 --> 02:19:11,360
Speaker 3: when really it's irrelevant. It doesn't matter. It really doesn't

2186
02:19:11,400 --> 02:19:16,080
Speaker 3: matter if five percent of your portfolio is in shareholder

2187
02:19:16,160 --> 02:19:20,840
Speaker 3: yield that's dividends and buybacks or momentum. In the long run,

2188
02:19:20,920 --> 02:19:23,560
Speaker 3: it kind of all comes out in the wash. It

2189
02:19:23,680 --> 02:19:27,920
Speaker 3: kind of all evens up. Yeah, maybe this portfolio will

2190
02:19:27,920 --> 02:19:31,360
Speaker 3: outperform that portfolio a little bit. But when you run

2191
02:19:31,560 --> 02:19:35,600
Speaker 3: the numbers and it's a you know, look at all

2192
02:19:35,600 --> 02:19:40,039
Speaker 3: these different simulations or a rolling ten year returns, you

2193
02:19:40,160 --> 02:19:44,240
Speaker 3: find out, Hey, you know, I was really lucky to

2194
02:19:44,320 --> 02:19:47,760
Speaker 3: be born in a part of the world where whatever

2195
02:19:47,879 --> 02:19:52,879
Speaker 3: skills I had, and certainly to quote Professor gall Scott

2196
02:19:52,920 --> 02:19:56,039
Speaker 3: Galloway lucky to be born in the US as a

2197
02:19:56,080 --> 02:20:00,360
Speaker 3: straight white male in the nineteen sixties. Like you, you

2198
02:20:00,560 --> 02:20:04,160
Speaker 3: already won the lottery. When we look at how people's

2199
02:20:04,240 --> 02:20:08,480
Speaker 3: portfolios return, there's an awful lot on randomness. There's an

2200
02:20:08,520 --> 02:20:14,520
Speaker 3: awful lot of luck. If you start investing in a recession,

2201
02:20:15,560 --> 02:20:18,440
Speaker 3: it feels terrible, but you're gonna end up doing really well.

2202
02:20:18,760 --> 02:20:23,760
Speaker 3: You start investing in the late nineties, hey, you're gonna

2203
02:20:23,760 --> 02:20:26,560
Speaker 3: feel it for a couple of years. And some of

2204
02:20:26,560 --> 02:20:29,640
Speaker 3: the data shows that when people pan exel out of markets,

2205
02:20:30,640 --> 02:20:33,600
Speaker 3: thirty one percent of them never you know, that's stock market.

2206
02:20:33,600 --> 02:20:36,600
Speaker 3: It's not for me, and that's really hard to save

2207
02:20:36,720 --> 02:20:39,640
Speaker 3: for retirement over long periods of time. So to me,

2208
02:20:40,200 --> 02:20:44,680
Speaker 3: what's most interesting about the markets is trying to tease

2209
02:20:44,800 --> 02:20:48,800
Speaker 3: out this. It's not just that it's a puzzle, but

2210
02:20:48,920 --> 02:20:52,560
Speaker 3: it's a dynamic puzzle that constantly changes. This is never

2211
02:20:52,640 --> 02:20:56,760
Speaker 3: a solution. You think you figured out the solution, and

2212
02:20:56,800 --> 02:21:00,360
Speaker 3: then the market shifts and the market changes, and it's

2213
02:21:00,360 --> 02:21:04,040
Speaker 3: a never ending thing. And it's kind of the most

2214
02:21:04,160 --> 02:21:06,600
Speaker 3: to me of all the things I look at. And

2215
02:21:06,600 --> 02:21:10,360
Speaker 3: I have a lot of different interests. It's the most

2216
02:21:10,400 --> 02:21:16,960
Speaker 3: fascinating game in town. If your intellectual curiosity moves in

2217
02:21:17,000 --> 02:21:21,160
Speaker 3: that direction, if you're good with numbers, if you understand

2218
02:21:21,240 --> 02:21:25,480
Speaker 3: the human factors and the psychology of it, it's fascinating.

2219
02:21:26,760 --> 02:21:29,920
Speaker 2: Okay, we've come to the end of the feeling we've known.

2220
02:21:29,959 --> 02:21:32,880
Speaker 2: I've been talking to Barry Ridtholts. You see them everywhere

2221
02:21:33,480 --> 02:21:38,039
Speaker 2: Bloomberg Online. It's got a new book, How Not to Invest.

2222
02:21:38,120 --> 02:21:40,800
Speaker 2: If you're the type of person who's playing in the market,

2223
02:21:41,200 --> 02:21:43,520
Speaker 2: or you're the type of person who's afraid of the market,

2224
02:21:43,800 --> 02:21:48,119
Speaker 2: you should definitely read it. Get your head set on straight. Barry.

2225
02:21:48,240 --> 02:21:50,600
Speaker 2: I want to thank you so much for taking the

2226
02:21:50,640 --> 02:21:51,680
Speaker 2: time with my audience.

2227
02:21:52,320 --> 02:21:56,240
Speaker 3: Bob, thank you so much. You know, full disclosure, I've

2228
02:21:56,280 --> 02:21:59,080
Speaker 3: been reading you for a million years, and I've been

2229
02:21:59,120 --> 02:22:02,040
Speaker 3: publishing you on my website. Yes, I want to say,

2230
02:22:02,040 --> 02:22:06,360
Speaker 3: it's got to be like fifteen years about that's insane.

2231
02:22:06,400 --> 02:22:09,080
Speaker 3: And I've I've had every time one of your pieces

2232
02:22:09,160 --> 02:22:12,680
Speaker 3: come up, One's coming up Sunday, that just came up

2233
02:22:12,720 --> 02:22:16,640
Speaker 3: Sunday Disruption. Someone always says to me, where'd you find

2234
02:22:16,680 --> 02:22:20,320
Speaker 3: this guy? He's really interesting, And it's like, you know,

2235
02:22:21,200 --> 02:22:23,879
Speaker 3: if you know a certain group of people. Bob is

2236
02:22:23,879 --> 02:22:25,320
Speaker 3: a legend in that space.

2237
02:22:26,840 --> 02:22:27,080
Speaker 1: You know.

2238
02:22:27,320 --> 02:22:29,959
Speaker 2: Thank you very much. I'll leave it at that till

2239
02:22:30,120 --> 02:22:32,440
Speaker 2: next time. This is Bob left set