WEBVTT - Barry Ritholtz 0:00:08.640 --> 0:00:13.119 Welcome, Welcome back to the Bob Left Starts podcasts. My 0:00:13.280 --> 0:00:16.560 guest today is very Rich Books. You know him as 0:00:16.600 --> 0:00:20.759 the host of Bloomberg's Master's in Business. You also know 0:00:20.800 --> 0:00:24.599 them as a financial guru investor. He's got a new book, 0:00:24.960 --> 0:00:26.840 How Not to Invest? 0:00:27.200 --> 0:00:29.080 Barry? Why this book? Why now? 0:00:30.560 --> 0:00:33.159 First of all, let me start out by saying I 0:00:33.240 --> 0:00:38.199 hate the word guru. Bill Bernstein, who is a neurologist 0:00:38.240 --> 0:00:41.680 I reference in the book and a money manager, says 0:00:42.240 --> 0:00:45.800 we use the word guru because people don't know how 0:00:45.800 --> 0:00:52.000 to spell the word charlatan. So let's start out. I 0:00:52.040 --> 0:00:54.320 think I have some insights. Guru is not the first 0:00:54.320 --> 0:00:57.240 word that leaps to mind. Why this book? Why now? 0:00:58.280 --> 0:01:01.279 I had some friends in some public usures kind of 0:01:01.280 --> 0:01:04.880 harangue me, Hey, it's been fifteen years since your last book. 0:01:04.959 --> 0:01:08.319 How about another book? And I was kind of reluctant, 0:01:08.520 --> 0:01:13.480 and when pressed why, I gave a really honest answer. 0:01:14.120 --> 0:01:17.120 For the past century, there have been literally tens of 0:01:17.200 --> 0:01:21.640 thousands of books telling people how to invest, and after 0:01:21.720 --> 0:01:26.679 all that time, effort and wasted inc people are still 0:01:26.680 --> 0:01:31.160 pretty mediocre investors. So do we really need yet another 0:01:31.280 --> 0:01:34.600 tome saying buy this sell that do this, do that. 0:01:36.520 --> 0:01:39.440 I kind of was very much on the fence. I 0:01:39.480 --> 0:01:43.080 came back from vacation in the Caribbean. You ever get 0:01:43.120 --> 0:01:45.240 home in between Christmas and New Year's you have a 0:01:45.280 --> 0:01:49.120 few days before January twod when the world sort of 0:01:49.120 --> 0:01:53.680 starts up again. And I just started thumbing through some 0:01:53.880 --> 0:01:56.360 old research notes I had put together. I had been 0:01:56.400 --> 0:02:00.600 a columnist for the Washington Post after the financial crisis, 0:02:00.640 --> 0:02:03.880 and then for Bloomberg for the past decade, and I 0:02:04.000 --> 0:02:08.160 just started sifting through my history. We do a I 0:02:08.360 --> 0:02:12.440 do a quarterly call for clients. I started looking at 0:02:12.480 --> 0:02:15.960 some of my notes from that, and goddamn if every 0:02:16.040 --> 0:02:20.640 other thing I had written wasn't debunking some sort of 0:02:21.160 --> 0:02:25.240 financial bullshit or another. And so one of the publishers, 0:02:26.040 --> 0:02:28.480 Harriman House, I kind of reached out. I liked their 0:02:29.320 --> 0:02:31.359 editor and their publisher, and I reached out and said, 0:02:31.360 --> 0:02:35.919 how do you feel about a book debunking financial bullshit? 0:02:36.680 --> 0:02:40.480 And their answer was, well, Harry Frankfurt wrote a book 0:02:40.520 --> 0:02:43.600 called on Bullshit and that's sold well. And ever since then, 0:02:43.639 --> 0:02:49.320 everybody who's used bullshit in a title hasn't done very well. 0:02:49.360 --> 0:02:52.680 And besides, it's a little broad it's a little crude. 0:02:52.800 --> 0:02:55.720 You know, the Brits are very proper, but they said 0:02:57.120 --> 0:03:01.200 keep working so in my office and your listeners won't 0:03:01.200 --> 0:03:02.720 be able to see this. But I have a giant 0:03:02.720 --> 0:03:07.440 bulletin board, and I started going through all of the 0:03:07.600 --> 0:03:12.000 ideas and that I was coming across and revisiting, and 0:03:12.040 --> 0:03:14.800 I just started putting them on three by five index 0:03:14.880 --> 0:03:18.200 cards and putting them up on the bulletin board. And 0:03:18.840 --> 0:03:21.160 you know, I recently learned I wish I would have 0:03:21.240 --> 0:03:24.399 known about this when I started it. There's a program 0:03:24.440 --> 0:03:27.960 called Scrivener that allows you to do this virtually. I 0:03:28.000 --> 0:03:32.320 was using a I was using MindMeister, which is like 0:03:32.360 --> 0:03:37.040 an organizational chart sort of thing, but you know, more 0:03:37.160 --> 0:03:41.200 or less did the same thing. And the book didn't 0:03:41.280 --> 0:03:46.200 exactly self organize. But I started to recognize, well, this, 0:03:46.200 --> 0:03:47.960 this is a whole bunch of bad ideas. Let me 0:03:48.000 --> 0:03:51.200 put them together. Look these people are getting the math wrong, 0:03:51.240 --> 0:03:54.440 they're not understanding this. Let me put that together. And oh, 0:03:54.480 --> 0:03:58.440 look at this behavior. Really dumb things. And so those 0:03:58.560 --> 0:04:04.160 three broad category ended up organizing themselves into ninety percent 0:04:04.200 --> 0:04:09.480 of the book, each category with three subcategories. And you know, 0:04:10.120 --> 0:04:14.680 the simplest way to break it down is we believe 0:04:14.760 --> 0:04:18.239 things that are not true. We don't understand the math 0:04:18.400 --> 0:04:22.320 that underlies so much stuff, but especially investing, and that 0:04:22.440 --> 0:04:26.159 combination leads us to make bad decisions and engage in 0:04:26.360 --> 0:04:30.640 bad behavior, and all the above lead to bad outcomes. 0:04:31.160 --> 0:04:35.560 So I have been fortunate enough to have a gentleman 0:04:35.640 --> 0:04:40.440 named Charlie Ellis on my podcast multiple times. Ellis is 0:04:40.640 --> 0:04:44.080 a legend in the industry. He was the chairman of 0:04:44.120 --> 0:04:47.359 the Yale Endowment, and for a long period of time, 0:04:47.760 --> 0:04:51.200 the Yell Endowment just beat every other endowment out there. 0:04:51.560 --> 0:04:54.200 He was on the board of directors of Vanguard Group, 0:04:54.320 --> 0:04:58.360 now managing nine trillion dollars and the reason indexing has 0:04:58.400 --> 0:05:02.640 become so popular. He ran Greenwich Associates. He's just a legend. 0:05:03.200 --> 0:05:06.920 And he wrote a paper in the seventies I want 0:05:06.920 --> 0:05:09.360 to say the Journal of Portfolio Management, but I can't 0:05:09.360 --> 0:05:14.840 swear by it called winning the Losers Game, and he 0:05:15.800 --> 0:05:19.400 likens investing to tennis. By the way, that later gets 0:05:19.440 --> 0:05:22.640 expanded to a full buck like twenty years later. But 0:05:23.360 --> 0:05:26.520 you know, tennis is two games and one It's a 0:05:26.560 --> 0:05:31.000 winner's game and a loser's game. What does that mean, well, 0:05:31.040 --> 0:05:35.440 if you're part of the zero point one percent who 0:05:35.440 --> 0:05:39.800 are professional tennis players, you win by scoring points. You 0:05:39.880 --> 0:05:43.279 hit with power, you hit with accuracy, you serve aces, 0:05:43.760 --> 0:05:46.159 you hit the ball to where your opponent isn't, you 0:05:46.279 --> 0:05:50.480 kiss the line. You're able to do things because of 0:05:50.520 --> 0:05:54.360 your skill set. That's the winners game, and very very 0:05:54.400 --> 0:05:58.479 few people get to play that game. Most of us hackers, 0:05:58.680 --> 0:06:03.800 myself included, I've been playing tennis since my fifties. We 0:06:03.880 --> 0:06:07.480 play the losers game. We don't win by scoring points. 0:06:07.960 --> 0:06:12.559 We lose through unforced errors. We double fault on a serve, 0:06:12.680 --> 0:06:14.800 we hit it wide, we hit it into the net, 0:06:15.040 --> 0:06:17.720 it goes long. We hit the ball right into our 0:06:17.760 --> 0:06:20.680 opponent's sweet spot, and they're able to put it where 0:06:20.720 --> 0:06:26.240 we aren't. And so Ellis, who in his brilliance, says, 0:06:27.080 --> 0:06:31.520 if investors would be more like amateur tennis players and 0:06:31.680 --> 0:06:36.240 stop having all these unforced errors, just stay within yourself, 0:06:36.279 --> 0:06:41.160 return the ball, let the other guy beat himself. You're 0:06:41.480 --> 0:06:45.320 ahead of ninety percent of your peers as investors. And 0:06:45.640 --> 0:06:49.280 that was really the idea of to take that concept 0:06:49.839 --> 0:06:53.840 even further than Charlie Ellis did and say, let's rather 0:06:53.880 --> 0:06:57.039 than tell people what to do. If we could just 0:06:57.240 --> 0:07:00.560 get them to stop shooting themselves in the foot, they're 0:07:00.720 --> 0:07:02.840 so much better off than there would have been otherwise. 0:07:03.400 --> 0:07:07.880 Okay, I'm reading the book and it reminds me of 0:07:07.920 --> 0:07:11.560 my father's philosophy. My father used to say, you know, 0:07:11.600 --> 0:07:15.120 when someone's driving expensive car or boasting about where they've been, 0:07:15.160 --> 0:07:19.640 he goes, there's no miracles. What's the real story? Okay? 0:07:19.960 --> 0:07:24.880 He had a skepticism, and I find that same skepticism 0:07:24.960 --> 0:07:27.360 in your book. About two thirds of the book is 0:07:27.400 --> 0:07:30.400 off a fucked up shit that people are telling people 0:07:30.480 --> 0:07:34.440 to do, or falling prey before. Ultimately it says, really 0:07:34.520 --> 0:07:39.000 kind of invest in index funds. To what degree is 0:07:39.080 --> 0:07:43.000 this skeptical philosophy? You're known as a contrarian. I don't 0:07:43.000 --> 0:07:45.680 want to go deep into people's perception of you, but 0:07:45.800 --> 0:07:49.160 to what degree is that result of your upbringing? 0:07:51.880 --> 0:07:55.920 That's a really interesting question. My dad was a small 0:07:55.960 --> 0:07:59.320 business owner who became a small business owner because the 0:07:59.360 --> 0:08:04.840 company he worked for when the founder unexpectedly dropped dead, 0:08:04.960 --> 0:08:09.600 like right right out of Bill Burr's Dropped Dead Years. 0:08:10.680 --> 0:08:13.240 The brother in law took over, the place went to hell. 0:08:13.320 --> 0:08:15.480 He went out and launched his own business, and my 0:08:15.560 --> 0:08:19.280 mom was a real estate agent, and so I sort 0:08:19.360 --> 0:08:24.760 of short commerce at a you know, rough and tumble level, 0:08:25.280 --> 0:08:29.640 and it always felt that you know, you trust would verify, 0:08:29.800 --> 0:08:34.240 is what Reagan said. Here's the throughout the book, there's 0:08:34.280 --> 0:08:40.600 all this reference to behavioral economics and academic research. I've 0:08:40.720 --> 0:08:44.640 always been fascinated by the fact that, you know, early 0:08:44.720 --> 0:08:47.640 in my career, I would listen to quarterly conference calls 0:08:47.840 --> 0:08:51.920 and you know, CEOs would talk about how great everything was, 0:08:51.960 --> 0:08:54.080 and then the stock would go on and get shell 0:08:54.120 --> 0:08:58.880 act because everything wasn't great. So I think my natural 0:08:59.559 --> 0:09:02.840 tension and how I was raised is on the one hand, 0:09:04.000 --> 0:09:06.360 I'm an idiot. I tend to believe when someone looks 0:09:06.360 --> 0:09:08.440 me in the eye or says to a group of 0:09:08.440 --> 0:09:11.679 investors things are going great, couldn't be better, Like I 0:09:11.720 --> 0:09:15.040 believe that shit on the one hand. On the other hands, 0:09:15.520 --> 0:09:18.960 I've been around the block enough to kind of notice that, hey, 0:09:19.000 --> 0:09:22.280 a lot of these people say stuff and it turns 0:09:22.320 --> 0:09:25.880 out not to be true. So you know, the word 0:09:25.960 --> 0:09:30.880 contrarian gets kicked around a lot. I think investors would 0:09:30.920 --> 0:09:34.880 be well served if you don't want to just say 0:09:34.920 --> 0:09:38.679 no to everything but you have to not be gullible. 0:09:38.720 --> 0:09:41.920 You have to be a little skeptical and less naive. 0:09:42.679 --> 0:09:47.120 And you know, I peppered the book with lots of 0:09:47.200 --> 0:09:50.680 quotes from some of my favorite authors, and one of 0:09:50.720 --> 0:09:54.640 them is Theodore Sturgeon, who is a science fiction writer 0:09:54.760 --> 0:09:57.800 in the forties and fifties, and he got tired of 0:09:57.840 --> 0:10:01.800 defending sci fi to accusations that, hey, all the science 0:10:01.800 --> 0:10:06.680 fiction writing, it's just cheap garbage. And Sturgeon's response now 0:10:06.720 --> 0:10:10.880 known as Sturgeon's law. Sturgeon's rule is, hey, ninety percent 0:10:10.920 --> 0:10:14.800 of everything is crap, literally what he said. And in 0:10:14.840 --> 0:10:19.079 the fields of investing, that's really true. You look at 0:10:19.080 --> 0:10:23.000 the most hedge funds, most mutual funds, you look at 0:10:23.120 --> 0:10:25.679 most of the new products that come out, most of 0:10:25.720 --> 0:10:29.080 the stocks that are out there. However, you want to 0:10:29.160 --> 0:10:33.480 invest your dollars, you have to recognize that, hey, the 0:10:33.520 --> 0:10:37.400 odds are I'm being generous one in ten, that you're 0:10:37.440 --> 0:10:42.400 picking a winner. It's it's you know, it's really challenging 0:10:42.480 --> 0:10:45.160 to find the needle in the haystack, gets really challenging 0:10:45.640 --> 0:10:49.280 to identify. We all know who the legendary traders are 0:10:49.320 --> 0:10:55.120 and who the great investors over time. But that's not 0:10:55.800 --> 0:10:58.319 helpful knowing that. Hey, you know, if you were to 0:10:58.360 --> 0:11:01.480 put money with one and Buffing in nineteen seventy, you 0:11:01.480 --> 0:11:04.400 would have done great or Peter Lynch in nineteen eighty, 0:11:04.480 --> 0:11:07.760 or will Donoff in eighteen. Like, these guys in the 0:11:07.800 --> 0:11:12.320 world of finance are no names because there's a couple 0:11:12.360 --> 0:11:15.199 of dozen of them out of hundreds of thousands, if 0:11:15.200 --> 0:11:19.559 not millions, of investors, fund managers, traders, et cetera. So 0:11:19.840 --> 0:11:24.600 they're really the uh, they're really the outlawers. And so 0:11:25.920 --> 0:11:30.319 my background, my upbringing was having seen my mom go 0:11:30.400 --> 0:11:35.680 through real estate transactions for decades. It was always like 0:11:36.480 --> 0:11:39.760 she would tell me, no one, by the way, no 0:11:39.800 --> 0:11:42.240 one's ever asked me this question. She would say to me, 0:11:43.320 --> 0:11:46.800 my mom had no filter, and when she was young, 0:11:46.880 --> 0:11:48.600 she had no filter. When she got older, it was 0:11:48.720 --> 0:11:51.600 all bets are off. But she would say, everybody in 0:11:51.640 --> 0:11:53.719 my industry is full of shit, Ma, what do you 0:11:53.760 --> 0:11:56.280 mean by that. The clients who are looking to buy 0:11:56.280 --> 0:11:58.120 the house are lying because they don't tell you how 0:11:58.200 --> 0:12:02.440 much money they really have to spend. The agent on 0:12:02.520 --> 0:12:04.920 the other side of the transaction is lying because they 0:12:04.920 --> 0:12:06.760 want to keep the deal for themselves. They want to 0:12:06.760 --> 0:12:09.679 get both sides of the commission as opposed to sharing 0:12:09.720 --> 0:12:12.520 it with a buying and selling offer. The sellers are 0:12:12.559 --> 0:12:14.560 full of crap because they're saying, we can't take a 0:12:14.640 --> 0:12:16.760 penny less than this, and then you find out it 0:12:16.800 --> 0:12:19.960 goes for way below it. So you kind of pick 0:12:20.040 --> 0:12:23.040 up a little bit of all right, if someone's telling 0:12:23.080 --> 0:12:26.880 you that, look at their motivations, look at what they 0:12:26.960 --> 0:12:30.319 really want, And that kind of leads me to say. 0:12:31.720 --> 0:12:34.360 That kind of leads me to say, what are they selling? 0:12:34.600 --> 0:12:37.240 Find out what's in it for them, and then at 0:12:37.320 --> 0:12:40.920 least you have a frame of reference to put context 0:12:41.280 --> 0:12:44.040 for whatever they're saying to you. All Right, The agent 0:12:44.120 --> 0:12:47.880 wants the bigger commission, the seller wants as much money 0:12:47.920 --> 0:12:50.200 as they can get for the house, the buyer wants 0:12:50.200 --> 0:12:54.200 to spend as little as they can, and everybody is 0:12:54.480 --> 0:12:57.600 playing their cards close to the vest. So look past 0:12:57.679 --> 0:13:01.080 what they're saying and figure out what are they really doing. 0:13:01.200 --> 0:13:04.080 By the way, I think that's a Wadsworth quote. My 0:13:04.360 --> 0:13:06.920 dad used to say to me all the time, I 0:13:07.000 --> 0:13:09.480 can't hear what you're saying because what you're doing is 0:13:09.520 --> 0:13:12.760 speaking so loudly. That really applies as well. 0:13:13.679 --> 0:13:17.120 Okay, since we're this deep, what was your father's business? 0:13:17.800 --> 0:13:26.319 So he worked initially as a placement hiring officer for 0:13:26.960 --> 0:13:33.079 a personnel agency specializing in engineers and scientists. So, like 0:13:33.160 --> 0:13:35.800 I was told from a young age, you're going to 0:13:35.840 --> 0:13:39.200 be an engineer, I had no idea why. When the 0:13:39.280 --> 0:13:44.360 business blew up, he ended up opening a local sneaker 0:13:44.400 --> 0:13:47.640 shop and sporting good shop, and I occasionally worked in 0:13:47.679 --> 0:13:51.520 there as a kid, and people I have a vivid 0:13:51.559 --> 0:13:56.320 recollection of people bringing shoe boxes back to return and 0:13:56.360 --> 0:13:58.480 I would open the box and say, we can't take 0:13:58.520 --> 0:14:01.120 these back. There's a warrant. No, they're not one you'd 0:14:01.160 --> 0:14:03.880 hold the bottom of the shoe. Ma'am, don't take this 0:14:03.960 --> 0:14:06.600 the wrong way. But here's what a new shoe looks like. 0:14:06.679 --> 0:14:10.000 Here's what your shoe looks like once you wear them outside. 0:14:10.120 --> 0:14:13.760 They're yours. And my dad, who had lots of repeat 0:14:13.800 --> 0:14:19.800 customers and everybody loved him. My father would often take 0:14:19.840 --> 0:14:23.320 stuff back that dad, what the hell you're doing. He's like, 0:14:23.440 --> 0:14:26.640 she's bought a thousand pair of shoes from us. I'll 0:14:26.680 --> 0:14:30.160 take this one back. I never understood. I couldn't wrap 0:14:30.200 --> 0:14:33.560 my head around I was like so offended by the bullshit, 0:14:34.120 --> 0:14:37.840 like no, you can't return this. So I think that 0:14:38.040 --> 0:14:43.080 contributed a little bit to me. You know, I just 0:14:43.200 --> 0:14:46.200 never would have the balls to walk into a store 0:14:46.600 --> 0:14:50.680 with a pair of shoes that were obviously used and 0:14:50.800 --> 0:14:54.120 return them. My sister worked in a dress shop in 0:14:54.200 --> 0:14:57.440 high school. She would tell me, She's like, I know 0:14:57.560 --> 0:15:00.360 the people coming in buying a dress on a fry 0:15:00.640 --> 0:15:03.360 and returning it on a Monday. They were it over 0:15:03.360 --> 0:15:05.480 the weekend. I'm like, what do they do with the 0:15:05.600 --> 0:15:07.720 this is before the days of the you know, in 0:15:07.760 --> 0:15:10.560 the magnetic tags and the like, what do they do 0:15:10.640 --> 0:15:13.280 with the tags? She's like, they tuck it in under 0:15:13.360 --> 0:15:16.640 the collar and no one sees like that seems to 0:15:16.680 --> 0:15:21.560 be like really a form of minor theft and kind 0:15:21.600 --> 0:15:24.920 of egregious. If you can't afford the dress, why are 0:15:24.960 --> 0:15:27.760 you pretending that you can afford this dress? She's like, 0:15:27.800 --> 0:15:31.120 that's just how some people are. Some people aren't honest, 0:15:31.240 --> 0:15:34.840 don't have a good ethical background, and very often are 0:15:34.920 --> 0:15:40.080 pretending to be something they're not. The related part in 0:15:40.200 --> 0:15:45.240 finances most of finance, this doesn't exist as much as 0:15:45.240 --> 0:15:48.280 it used to, but most of the big brokera shops 0:15:48.280 --> 0:15:52.920 and warehouses had a training program. It was, you know, 0:15:53.040 --> 0:15:57.720 ostensibly all about markets and inflation and interest rates and bonds, 0:15:58.120 --> 0:16:01.200 but really it was about a week of modern portfolio 0:16:01.280 --> 0:16:05.480 theory and fifty one weeks of sales training. And this 0:16:05.600 --> 0:16:09.920 sort of cocky attitude, this fake it till you make 0:16:09.960 --> 0:16:15.120 it permeated that sales culture and kind of led a 0:16:15.120 --> 0:16:17.680 lot of people in the industry to be really full 0:16:17.680 --> 0:16:22.600 of shit at least during their faked phase. Some of 0:16:22.640 --> 0:16:27.080 them eventually grow out of it and become legit people, 0:16:27.120 --> 0:16:30.360 and the industry has very much changed over the past 0:16:30.400 --> 0:16:34.000 thirty forty years. But that whole thing, that whole attitude, 0:16:34.120 --> 0:16:37.960 always kind of pissed me off. And so a lot 0:16:38.000 --> 0:16:40.640 of this shows up in the book. 0:16:48.280 --> 0:16:53.280 Okay, your father had an independent sporting good shoes store. 0:16:54.040 --> 0:16:59.360 That business changed dramatically in that sporting good stores became 0:16:59.560 --> 0:17:03.800 changed towards independence, either sold out or went out of business. 0:17:03.840 --> 0:17:08.240 In addition, the shoe business became very competitive with Nike 0:17:08.400 --> 0:17:11.600 and a million other brands. What happened to your father's store. 0:17:13.600 --> 0:17:17.320 He passed away a long time ago. The the he 0:17:17.400 --> 0:17:20.320 had partners, the insurance brought him out and it was 0:17:20.400 --> 0:17:25.439 pretty standard succession planning. Although you know, the really funny 0:17:25.440 --> 0:17:28.560 thing about to me, the funny thing about that store 0:17:29.200 --> 0:17:31.359 is he would bring home. So he had Nike, he 0:17:31.400 --> 0:17:34.199 had New Balance before anyone knew what the hell New 0:17:34.240 --> 0:17:37.040 Balance was. He had Pony Sak, and he had all 0:17:37.080 --> 0:17:42.600 these brands that eventually became really big. He said, hey, 0:17:42.840 --> 0:17:45.640 I want you to try these new Nikes. They're kind 0:17:45.680 --> 0:17:51.119 of crazy, and they were the Kobe Poison Dart Frog 0:17:51.840 --> 0:17:55.560 and they're like incredibly collectible now and they go for 0:17:55.720 --> 0:17:59.040 thousands of dollars. And you know I would. I would 0:17:59.040 --> 0:18:01.880 occasionally get a new pair of shoes and wear them 0:18:01.880 --> 0:18:04.639 and never think twice, never forget. It's got to be 0:18:04.680 --> 0:18:07.240 like twenty years ago. I don't even know how long ago. 0:18:07.440 --> 0:18:11.200 I'm on the subway and I'm a jeans and sneaker 0:18:11.280 --> 0:18:16.600 kind of guy, and I'm wearing the Kobe's and I 0:18:16.720 --> 0:18:23.040 see a young kid looking at my sneakers, and then 0:18:23.080 --> 0:18:26.479 he looks up at me. He's like, dude, what are 0:18:26.480 --> 0:18:29.480 you doing? Like just a young you know, a young 0:18:29.600 --> 0:18:32.520 brother heading to wherever he's having Like, who is this 0:18:32.600 --> 0:18:35.600 middle aged white guy in a pair of fucking, you know, 0:18:36.920 --> 0:18:41.320 poison blue darts? Kobe's and I'm like, I go you 0:18:41.440 --> 0:18:44.000 and shit, if you saw in my closet I had 0:18:44.280 --> 0:18:47.960 Jordan Ones. I had this like that they were sneakers 0:18:48.359 --> 0:18:51.800 and you're war them and it's like, I've had these 0:18:51.800 --> 0:18:54.400 for I don't know since they came out. I never 0:18:54.560 --> 0:18:58.199 thought twice about it. And he's just hand you know, 0:18:58.560 --> 0:19:02.320 po facebomb. He was just like ugh, like you could 0:19:02.359 --> 0:19:05.119 see him thinking what is wrong with these people? And 0:19:05.160 --> 0:19:08.360 I'm like, you understand it was they were just around, like, Dad, 0:19:08.400 --> 0:19:10.320 how about can I take a pair of these? Sure, 0:19:10.640 --> 0:19:14.280 go ahead and knock yourself out. It wasn't like I'm 0:19:14.280 --> 0:19:16.600 gonna take these and put them away for thirty years. 0:19:16.640 --> 0:19:19.240 It's like I'm gonna take these and put them on 0:19:19.320 --> 0:19:22.440 my feet and walk around town. And they were great 0:19:22.480 --> 0:19:25.399 for that. They were like every now and then my 0:19:25.560 --> 0:19:29.920 nephews are now big enough that I give them some 0:19:30.000 --> 0:19:33.679 of my old sneakers and I'll pull something out and 0:19:33.720 --> 0:19:37.080 I'll say, all right, here's a pair of Lebrons. They're 0:19:37.119 --> 0:19:39.680 brand new in the box. I don't care if they're 0:19:39.680 --> 0:19:42.600 worth anything. I'm gonna give these to you, but you 0:19:42.720 --> 0:19:46.040 have to wear them. And like three days later, you 0:19:46.119 --> 0:19:49.359 can't imagine the ruck as I caused the school wearing 0:19:49.400 --> 0:19:54.159 the purple and yellow lebrons. It's just, you know, to me, 0:19:55.920 --> 0:19:58.760 it's funny that a lot of stuff I've done throughout 0:19:58.760 --> 0:20:04.359 my life when and suddenly rentiers middlemen jump in because oh, 0:20:04.440 --> 0:20:07.479 there's money to be made speculating. It doesn't matter if 0:20:07.480 --> 0:20:10.480 it's sneakers, if it's fixing up old cars, if it's 0:20:11.160 --> 0:20:14.800 whatever it happens to be. It's really annoying when people 0:20:14.920 --> 0:20:19.119 find my favorite hobbies and turn it into a money 0:20:19.119 --> 0:20:26.720 producing enterprise. The sneakers are kind of laughable, Okay. 0:20:27.119 --> 0:20:31.159 A great percentage of the book is calling out bullshit. 0:20:32.080 --> 0:20:36.240 Don't trust the people on CNBC or Fox Business or 0:20:36.280 --> 0:20:38.920 even the Wall Street Journal. And you have an amazing 0:20:39.000 --> 0:20:40.960 number of quotes that turned out to be one hundred 0:20:41.000 --> 0:20:47.040 percent wrong. There's a teen spirit in finance. There's a brotherhood. 0:20:47.040 --> 0:20:50.120 As you said, a lot of these people started out 0:20:50.119 --> 0:20:54.359 as salespeople. Of course, Michael Lewis, you know lifted the uh, 0:20:54.560 --> 0:20:55.439 whatever your veil. 0:20:55.560 --> 0:20:58.200 He lifted the veil with liars poker for sure. 0:20:58.440 --> 0:21:04.639 Right, But how easy is it for you or difficult 0:21:04.680 --> 0:21:08.040 for you to have an opinion or have a flow 0:21:08.480 --> 0:21:11.960 that is different from the majority of the people. 0:21:13.520 --> 0:21:17.040 It's been. It's so, first of all, I will admit 0:21:17.160 --> 0:21:23.960 to being, you know, a little atypical. I never went 0:21:24.000 --> 0:21:29.440 through the machinery that most people go through, meaning I 0:21:29.560 --> 0:21:32.440 was never I didn't go to an ivy school. I 0:21:32.480 --> 0:21:35.240 went to a state school. I didn't go to business school. 0:21:35.320 --> 0:21:37.919 I went to law school. Did well in law school, 0:21:38.960 --> 0:21:41.679 cumloudy law of you passed the bar first time out, 0:21:42.160 --> 0:21:45.520 hated the practice of law, and was kind of. 0:21:45.680 --> 0:21:48.280 Well, since you know, since I sort of followed the 0:21:48.320 --> 0:21:51.080 same routine, maybe not for the same reasons. How long 0:21:51.119 --> 0:21:52.880 did you actually practice law? 0:21:53.560 --> 0:21:58.040 Graduated eighty nine, started in finance late ninety five, so 0:21:58.280 --> 0:22:00.480 less than by the way, the rule of thumb that 0:22:00.720 --> 0:22:04.320 I learned in law school seven years post bar exam. 0:22:04.480 --> 0:22:07.760 Fifty percent of lawyers are not practicing law, so I 0:22:07.840 --> 0:22:10.919 was a year or two early. So I just just 0:22:11.080 --> 0:22:15.560 managed to miss that. And you know, the fascinating thing 0:22:15.720 --> 0:22:19.560 is law school is fascinating. I mean, if you go, 0:22:19.800 --> 0:22:22.239 if you're a rabbit hole type of guy, and I 0:22:22.400 --> 0:22:29.879 am learning about the legal doctrine and structure of the 0:22:29.960 --> 0:22:32.680 United States and what made it so unique and why 0:22:32.760 --> 0:22:37.640 it was so special. And really just a fascinating all right, 0:22:37.840 --> 0:22:39.800 does it really need to be three years? It could 0:22:39.840 --> 0:22:42.159 have been two years. The third years kind of a 0:22:42.320 --> 0:22:47.320 tuition grab waste of time. That said, it was just fascinating. 0:22:47.359 --> 0:22:50.400 And then you start practicing and you quickly find out 0:22:51.040 --> 0:22:54.560 talk about bullshit. You quickly find out everybody's full of 0:22:54.600 --> 0:22:58.359 shit if you're doing criminal stuff. The person who swears 0:22:58.440 --> 0:23:00.879 up and down, I don't know where those drugs came from. 0:23:00.960 --> 0:23:02.679 I didn't have any drugs on me. How do you 0:23:02.680 --> 0:23:06.080 have fourteen prior arrest? The prosecutors they don't care. They're 0:23:06.119 --> 0:23:08.560 just looking at their batting average. They want to have 0:23:08.600 --> 0:23:11.440 a good number. The rest of the defense bar, it's 0:23:11.480 --> 0:23:14.800 like they're just especially if you're looking at public defenders 0:23:14.800 --> 0:23:16.880 that wildly overworked, they don't have the time to put 0:23:16.920 --> 0:23:20.920 into this. I will never forget doing a criminal appeal. 0:23:21.359 --> 0:23:24.840 And it's on bank. There are five judges, and you know, 0:23:25.000 --> 0:23:27.920 ninety seconds in, one of the judges, who obviously had 0:23:27.920 --> 0:23:32.800 already decided, just spins his chair round like it's like 0:23:32.880 --> 0:23:35.640 it's you know, America's Got Talent or one of those shows. 0:23:35.920 --> 0:23:38.920 They just turned the chair round and I'm like, hey, 0:23:38.920 --> 0:23:41.480 this son of a bitch is going to jail over here, 0:23:42.119 --> 0:23:48.560 And like it became really clear. So long before the 0:23:48.680 --> 0:23:52.520 current environment came along, I knew the legal system was broken. 0:23:52.560 --> 0:23:57.240 The Supreme Court was corrupt. Everybody was partisan, even though 0:23:57.280 --> 0:23:59.760 they take an oath swearing to faithfully up hold the 0:23:59.760 --> 0:24:03.800 Constitution and not be partisan. And it was like, I 0:24:03.840 --> 0:24:09.200 can't be in the system because because of my own pathologies, 0:24:09.280 --> 0:24:11.679 I will lose my mind with this. I have a 0:24:11.920 --> 0:24:18.600 very heightened awareness of unfairness. And the whole system was just. 0:24:19.080 --> 0:24:22.200 And then once you if you go into the civil side, 0:24:22.800 --> 0:24:26.840 that's even worse because litigation is a cudgel that we 0:24:26.880 --> 0:24:30.360 could use to beat up people with less money than ourselves, 0:24:30.600 --> 0:24:33.960 and we could torture them and basically get what we 0:24:34.000 --> 0:24:37.439 want because we can outlet we're a big company. We 0:24:37.480 --> 0:24:41.760 can you know, we are theoretically perpetual and infinite. They 0:24:41.760 --> 0:24:45.160 have a fire, at the very least, we'll outlast them, 0:24:45.280 --> 0:24:47.760 we'll certainly outspend them, and we'll get what we want. 0:24:48.240 --> 0:24:51.240 And so you come to realize, you know, I once 0:24:51.280 --> 0:24:54.400 had a judge, I once had a senior attorney say 0:24:54.400 --> 0:24:58.040 something very insightful to me, which is I was talking 0:24:58.040 --> 0:25:02.119 about a contract, And he says, Hey, the question isn't 0:25:02.119 --> 0:25:04.840 what's in the contract. The question is do you want 0:25:04.880 --> 0:25:09.440 to do business with that guy? What do you mean, Well, 0:25:09.480 --> 0:25:13.479 a contract is only what a judge will enforce if 0:25:13.560 --> 0:25:17.639 you make everybody stand up and pay attention to the contract. 0:25:17.960 --> 0:25:20.520 After a lot of time and a lot of costs, 0:25:20.840 --> 0:25:23.360 he goes, so that's not that what's in the contract 0:25:23.480 --> 0:25:26.159 isn't the question? The question is do you want to 0:25:26.160 --> 0:25:27.960 get into bed with this person? Do you want to 0:25:28.000 --> 0:25:33.320 have a very significant relationship where if it works out, 0:25:33.359 --> 0:25:35.879 it's great, but if it doesn't work out, you're going 0:25:35.920 --> 0:25:39.160 to spend a long time untying this. And are they 0:25:39.200 --> 0:25:42.359 going to be graceful in saying it didn't work out, 0:25:42.560 --> 0:25:46.040 Let's figure out an exbra way to cut our losses 0:25:46.080 --> 0:25:49.200 and move on, or are they going to make you 0:25:49.280 --> 0:25:52.960 take them to court? Like it's not what you can enforce, 0:25:53.480 --> 0:25:57.919 it's is the other person going to make you enforce it? All? 0:25:58.000 --> 0:25:58.160 Right? 0:25:58.240 --> 0:25:58.359 Like? 0:25:58.560 --> 0:26:01.560 Really, the turn he was saying to me, is that 0:26:01.680 --> 0:26:04.000 a decent person? Are you getting into bed with someone 0:26:04.440 --> 0:26:07.160 who you know? The old joke about the two partners 0:26:07.440 --> 0:26:10.000 are out to lunch and one says, oh my god, 0:26:10.040 --> 0:26:11.880 I left the safe open, and the other one says, 0:26:11.920 --> 0:26:14.520 what do you care? We're both here, like very funny. 0:26:14.640 --> 0:26:17.520 My dad told me that joke, very funny joke about 0:26:17.640 --> 0:26:21.800 partners stealing from each other. So the question is, and 0:26:21.880 --> 0:26:26.640 again it's there was a lot of cynicism, but always 0:26:26.680 --> 0:26:30.080 with a sense of humor. That's the household I grew 0:26:30.160 --> 0:26:34.800 up in, So a little skepticism. Try not to be 0:26:34.880 --> 0:26:38.119 so gullible and naive, and make sure you know what 0:26:38.200 --> 0:26:42.240 the other guy is selling, because it seems like everybody 0:26:42.520 --> 0:26:43.600 is selling something. 0:26:44.640 --> 0:26:49.119 Just to wrap this up again, yes, your philosophy in 0:26:49.200 --> 0:26:53.320 your book is atypical in this field. To what degree 0:26:53.440 --> 0:26:56.760 do you get blown back that you're not one of them? 0:26:56.920 --> 0:26:57.960 And how do you cope with that? 0:27:00.080 --> 0:27:03.560 So I'm sure I get blowback. I don't really notice it. 0:27:05.560 --> 0:27:08.840 I kinda don't really give a fuck what other people think. 0:27:09.119 --> 0:27:12.040 I know, you're not supposed to say that, so that's 0:27:12.040 --> 0:27:16.720 only half true. Everybody wants likes. Everybody wants people to 0:27:16.760 --> 0:27:20.640 buy their product. I disclose in the book what I'm selling, 0:27:22.440 --> 0:27:26.520 but you know, so here's the fascinating thing. I have 0:27:26.600 --> 0:27:31.040 this conversation with the younger guys in my office. I've 0:27:31.080 --> 0:27:35.200 been like you, I've been writing in public for Jesus, 0:27:35.240 --> 0:27:39.679 it's almost thirty years. I started on GeoCities in the nineties, 0:27:40.240 --> 0:27:43.280 so in ninety eight, so we're three years away from 0:27:43.480 --> 0:27:48.320 thirty years. Then I moved to WordPress because in two 0:27:48.320 --> 0:27:51.159 thousand and one my office was headquartered in two World Trade. 0:27:51.920 --> 0:27:54.159 During nine to eleven, I got my head trader on 0:27:54.200 --> 0:27:57.480 the phone and he just gave me a running that 0:27:57.680 --> 0:28:00.640 ration of everything was going on until the tower collapsed 0:28:00.640 --> 0:28:04.359 and the cell connection dropped, and I wrote it up, 0:28:04.480 --> 0:28:06.520 sent it to him and said, what do you think 0:28:06.560 --> 0:28:08.240 You're okay if I just throw this up on the 0:28:08.280 --> 0:28:12.600 side to let all our clients know we're okay. He's like, yeah, sure, 0:28:12.680 --> 0:28:14.840 do it, and I wake up the next morning there's 0:28:14.880 --> 0:28:19.919 one thousand emails from people. It was one of the 0:28:20.000 --> 0:28:25.119 earlier first hand reports. I'm convinced that is why typead 0:28:25.200 --> 0:28:30.720 offered me a beta test with their newfangled Wizzywig blogging software. 0:28:30.800 --> 0:28:34.040 From there, I eventually ended up at WordPress. But I've 0:28:34.040 --> 0:28:37.840 been writing publicly for let's call it twenty five years, 0:28:37.840 --> 0:28:40.640 twenty seven years. And one of the things you learn 0:28:40.760 --> 0:28:45.400 when we were younger is if somebody is kind of 0:28:45.560 --> 0:28:48.240 upset at your writing. Well, they have to take a 0:28:48.240 --> 0:28:49.960 sheet of paper and a pen and they have to 0:28:50.000 --> 0:28:52.360 scribble a note and type it up and send it 0:28:52.400 --> 0:28:55.080 into the editor. Then the editors review all these mail 0:28:55.120 --> 0:28:58.520 that comes in, and three weeks later, on page c seventeen, 0:28:59.440 --> 0:29:02.040 Deer ad that Ridoltz is a schmuck and here's why, 0:29:02.080 --> 0:29:06.040 and blah blah blah. There were gatekeepers, There were guardrails. 0:29:06.640 --> 0:29:11.040 It wasn't just hey, I have an Internet connection and 0:29:11.080 --> 0:29:15.400 therefore I'm entitled to shit all over whatever you did. 0:29:16.000 --> 0:29:19.360 And I'll give you. I'll give you example. You mentioned 0:29:19.360 --> 0:29:23.800 Michael Lewis. One of Michael Lewis's books came out. I 0:29:23.840 --> 0:29:26.200 don't remember if it was Flash Boys. I was just 0:29:26.240 --> 0:29:29.200 talking to him Friday. He has a new book out 0:29:29.240 --> 0:29:35.320 now also, so one of his books come out and 0:29:35.440 --> 0:29:40.280 for whatever reason, not controlled by him. This is strictly 0:29:40.320 --> 0:29:46.160 between the publisher and Amazon. The Kindle version doesn't come 0:29:46.200 --> 0:29:50.120 out for thirty days, and a whole bunch of people 0:29:50.680 --> 0:29:55.120 are giving the book one star reviews because the Kindle 0:29:55.600 --> 0:29:58.640 and I just want to slap these people upside their heads. 0:29:59.080 --> 0:30:02.719 And it's like, first of all, most of you are 0:30:02.760 --> 0:30:05.760 not qualified to write reviews. Let's just start there. Most 0:30:05.760 --> 0:30:09.040 of you are bad writers. You're terrible readers, like I'm 0:30:09.080 --> 0:30:13.320 amazed at reading comprehension, a broad indictment of the American 0:30:13.440 --> 0:30:18.040 education system. But then you're winding me up. I'm going 0:30:18.040 --> 0:30:22.000 on a rant. But then it's like, what do you 0:30:22.040 --> 0:30:25.120 have any idea? How much this is my second book, 0:30:25.520 --> 0:30:28.479 like the last one was fifteen years ago. That's how 0:30:28.560 --> 0:30:30.960 much work goes into it. Look look to the sequel 0:30:30.960 --> 0:30:33.640 for this coming in twenty forty. It's a pain in 0:30:33.680 --> 0:30:36.120 the ass to write a book. It's a lot of time, 0:30:36.160 --> 0:30:37.720 it's a lot of effort. It's a lot of work. 0:30:37.960 --> 0:30:41.640 You submit the manuscript and then the editing process starts coming, 0:30:41.640 --> 0:30:43.920 and then you're back. And then once the book has published, 0:30:43.920 --> 0:30:47.800 the promotion and someone some I'm going to curse again. 0:30:48.200 --> 0:30:52.240 Some asshole says I have to wait four weeks for 0:30:52.360 --> 0:30:55.640 the kindle version. Ooh, I'm gonna give it one star. 0:30:56.400 --> 0:30:59.280 It's like I had I had comments on my blog 0:30:59.600 --> 0:31:03.280 during the Golden Age of blogging. At a certain point, 0:31:03.360 --> 0:31:05.920 I just kind of got to reach it. So here's 0:31:05.960 --> 0:31:09.640 the answer to the contrarianism, long winded way. At a 0:31:09.680 --> 0:31:12.880 certain point, I'm like, yeah, this is no longer worth it. 0:31:12.880 --> 0:31:16.520 It's trolls, It's people trying to promote their own bullshit. 0:31:17.000 --> 0:31:20.400 It's spam. It's before we knew what bots were, it 0:31:20.480 --> 0:31:23.200 was bots. I'm like, hey, and I wrote like a 0:31:23.240 --> 0:31:27.680 two thousand word missive here's why I'm shutting the comments down. 0:31:28.560 --> 0:31:31.680 It's a shame, but it's the tragedy of the commons. 0:31:31.720 --> 0:31:35.640 Anytime you have a public space. Most of most people, 0:31:35.760 --> 0:31:39.360 this is the funny takeaway. Most people are kind, decent 0:31:39.480 --> 0:31:43.800 human beings. So if only one percent of the world 0:31:44.360 --> 0:31:48.840 are assholes, hey, there's eight billion people in the world. 0:31:48.960 --> 0:31:52.880 Guess what you know, eight billion people, that's still eighty 0:31:52.920 --> 0:31:58.040 million assholes. That's a lot of assholes. And because they're assholes, 0:31:58.080 --> 0:32:01.200 they spend a lot of time online. And it's you know, 0:32:01.280 --> 0:32:04.360 you saw it happen with Twitter. Twitter. This is long 0:32:04.400 --> 0:32:08.280 before Elmo bought it. Twitter started circling the drain a 0:32:08.320 --> 0:32:10.520 while ago. It just got worse and worse and worse. 0:32:10.760 --> 0:32:14.400 I gotta stop here for one second. You referred to 0:32:14.520 --> 0:32:15.040 mis Elmo. 0:32:16.720 --> 0:32:20.600 Yeah, because I don't like to use his name, because 0:32:20.920 --> 0:32:25.320 I'm convinced somewhere on Twitter, if you mentioned Elon he 0:32:25.400 --> 0:32:29.040 seems to be insecure and vindictive enough that it'll pull 0:32:29.160 --> 0:32:33.160 up something. And I've had a bunch of friends suddenly 0:32:33.440 --> 0:32:38.280 their entire account is downgraded. They could do one post 0:32:38.320 --> 0:32:43.120 to day. Everything is is the free speech talk about 0:32:43.120 --> 0:32:47.560 selling bullshit, free speech absolutist unless you disagree with me, 0:32:47.640 --> 0:32:50.840 and then you're screwed. So it just I used to 0:32:50.920 --> 0:32:54.440 type it, and it's just become. And you know, he's 0:32:54.560 --> 0:32:57.840 kind of like a sesame Street muppet. You know, if 0:32:57.880 --> 0:33:01.160 you know his history, if you know that he didn't 0:33:01.200 --> 0:33:05.360 found PayPal, he didn't found Tesla. He's really good at 0:33:05.800 --> 0:33:08.120 finding a parade and hopping in the front of it. 0:33:08.160 --> 0:33:11.360 He didn't find found Twitter. I'm trying to remember if 0:33:11.360 --> 0:33:14.960 he even found its space sex. He may have been 0:33:14.960 --> 0:33:19.560 there at the beginning. I don't really remember, but you know, 0:33:19.800 --> 0:33:23.600 he And this is to get back to the question 0:33:24.720 --> 0:33:27.840 how you deal with the slings and arrows of other 0:33:27.880 --> 0:33:33.160 people in the industry. The reality is that back in 0:33:33.240 --> 0:33:36.760 the day, listen, when we were growing up, every library 0:33:36.800 --> 0:33:39.520 had that crazy guy outside, whether he had the aluminum 0:33:39.520 --> 0:33:42.240 on his head or not. What the Internet has allowed 0:33:42.880 --> 0:33:46.400 is all the crazies to link up and actually form 0:33:46.480 --> 0:33:52.479 a movement solo kind of wacky people who believed in 0:33:52.600 --> 0:33:58.480 things that weren't true. You know, they they've found each 0:33:58.520 --> 0:34:02.160 other through the Internet. So I've kinda I've kind of 0:34:02.200 --> 0:34:06.920 become quick to dismiss nonsense. I got into a Twitter 0:34:07.200 --> 0:34:11.560 spat with the founder of Chewy who said something very 0:34:11.640 --> 0:34:14.720 ignorant about short sellers. There have been a lot of fraud, 0:34:14.719 --> 0:34:18.520 and his shop is perfectly legitimate, but there have been 0:34:18.640 --> 0:34:23.120 like Overstock and all these companies that had accounting fraud. 0:34:23.560 --> 0:34:26.440 And why is it that everywhere there's fraud. You know, 0:34:26.560 --> 0:34:31.239 short sellers ferret out fraud and identify a mispricing. Hey, 0:34:31.280 --> 0:34:33.439 the market hasn't figured this out. This shouldn't be one hundred, 0:34:33.480 --> 0:34:36.439 this should be twenty. And why is it that every 0:34:36.480 --> 0:34:41.239 time someone complains about short sellers you find out that 0:34:41.320 --> 0:34:44.560 there's some sort of terrible garbage going on in the company. 0:34:44.880 --> 0:34:48.760 So I just think he didn't know better and said something, 0:34:48.800 --> 0:34:51.560 and I kind of mocked it, and he sicked his 0:34:51.880 --> 0:34:56.680 three million, you know, followers on me, and so I 0:34:56.680 --> 0:35:00.160 don't know if I don't think he didn't intentionally. It's 0:35:00.239 --> 0:35:04.640 just that you know, young dumb on the internet. Hey, 0:35:04.800 --> 0:35:08.799 they're entitled to slag me because they paid twenty seven 0:35:08.840 --> 0:35:12.160 dollars a month for an Internet connection. They're experts now, 0:35:12.719 --> 0:35:15.200 and like some of the younger guys, it's like, dude, 0:35:15.239 --> 0:35:17.239 what's going on. I'm like, oh yeah, let me just 0:35:17.360 --> 0:35:21.600 mute that conversation. All right, it doesn't exist guys like us. 0:35:21.800 --> 0:35:24.319 The internet is a room in the house. We go 0:35:24.440 --> 0:35:28.560 into the younger generation. The Internet in real life are 0:35:28.600 --> 0:35:32.600 the same thing. So like you could you could be 0:35:33.280 --> 0:35:37.319 very online, or you could be two online. So I 0:35:37.400 --> 0:35:41.680 think that something happened. Oh so I've been doing a 0:35:41.680 --> 0:35:44.839 bunch of pods and videos and I started going through 0:35:44.880 --> 0:35:47.480 the comments on one of the YouTube videos and I 0:35:47.520 --> 0:35:51.480 started laughing out loud. It's like, this is why I 0:35:51.520 --> 0:35:55.280 think it's like twelve years ago, I turned off comments 0:35:55.280 --> 0:35:57.440 and I had comments off on my Bloomberg and my 0:35:57.560 --> 0:36:01.200 Washington Post column. Not because I don't want to engage 0:36:01.239 --> 0:36:05.839 in spirited debate, but there are rules for debate, and 0:36:06.200 --> 0:36:11.200 there's got to be like a basic fundamental understanding of 0:36:12.120 --> 0:36:16.319 here's what the topic is, here's how you can debate it. 0:36:16.719 --> 0:36:19.359 My I love mixing it up with people now. Moot 0:36:19.440 --> 0:36:22.960 court was my favorite part of law school. I'm very 0:36:23.040 --> 0:36:26.719 happy to debate anything in the book, anything, But then, 0:36:27.120 --> 0:36:31.520 you know, as a friend once said, you know, when 0:36:31.600 --> 0:36:35.960 people are wrapped in a glass and steel vehicle and 0:36:36.000 --> 0:36:40.160 they're protected by five thousand pounds of you know, a 0:36:40.239 --> 0:36:43.279 vehicle moving fifty miles an hour, they'll flip you off, 0:36:43.320 --> 0:36:45.080 they'll give you the finger, they'll tell you to go 0:36:45.120 --> 0:36:48.080 fuck yourself, they'll yell whatever they want out the car. 0:36:48.560 --> 0:36:51.239 You would never do that as a pedestrian or in 0:36:51.280 --> 0:36:55.320 an elevator, probably because you get your ass kicked, but 0:36:56.080 --> 0:37:03.800 also because that sort of screen of safety disappears. The Internet, unfortunately, 0:37:03.920 --> 0:37:08.959 has a tendency to encourage people's very worst behavior. And 0:37:09.560 --> 0:37:13.200 you know, it's not social media. Everybody complains about social media. 0:37:13.719 --> 0:37:19.560 It's algorithmic social media that is designed to reward attention 0:37:19.880 --> 0:37:23.919 and outrage, and they do it by tickling your emotions 0:37:23.960 --> 0:37:27.760 and getting you frustrated and getting you angry. John Stewart 0:37:27.840 --> 0:37:33.759 calls Fox News bullshit Mountain. Algorithmic social media is the 0:37:33.800 --> 0:37:38.120 same way, and the fascinating thing you mentioned Fox News 0:37:38.160 --> 0:37:41.920 and CNBC. It's not all of them. You just have 0:37:42.000 --> 0:37:47.520 to pick what's worthwhile and useful and ignore the rest. 0:37:47.800 --> 0:37:54.040 By the way, CNN MSNBC, Bloomberg TV, Forbes, The Wall 0:37:54.040 --> 0:37:56.879 Street Journal, The New York Times, The Atlantic, go through 0:37:56.920 --> 0:37:59.719 all of them. Some writers are better than others, some 0:38:00.000 --> 0:38:03.640 ideas they're better than others. It would be really, really 0:38:03.800 --> 0:38:10.240 helpful to us as individuals to be better critical thinking 0:38:10.600 --> 0:38:16.120 thinkers have an ability to understand framing and context. The 0:38:16.160 --> 0:38:21.360 world is complicated and filled with shades of gray. Anybody 0:38:21.400 --> 0:38:25.000 who reduces these things to a black and white thumbs 0:38:25.040 --> 0:38:29.479 up or thumbs down binary outcome, they're doing a great 0:38:29.520 --> 0:38:33.560 disservice to themselves and to everybody else. And so why 0:38:33.800 --> 0:38:36.839 why don't I care what other people say? Either they 0:38:36.840 --> 0:38:43.680 don't understand the whole framework, they don't understand the math inside. 0:38:44.160 --> 0:38:48.640 They're not picking up the nuance. More often than not, 0:38:48.920 --> 0:38:52.600 they read the headline and that's what they form their 0:38:52.600 --> 0:38:53.279 opinion on. 0:39:01.200 --> 0:39:04.400 Okay to great Greek except for one company you mentioned, Chewy. 0:39:04.880 --> 0:39:09.320 That's the public. Yeah. I don't know enough about the finance, 0:39:09.440 --> 0:39:13.400 not really my world, but you know there are certain events, Robinhood, 0:39:13.520 --> 0:39:16.640 I don't really know where everybody shows up. Are you 0:39:16.760 --> 0:39:20.040 a pariah? Are you not a member of the group? 0:39:21.280 --> 0:39:22.200 Where do you fit in? 0:39:25.920 --> 0:39:30.319 So I know I'm definitely not a pariah. And you 0:39:30.360 --> 0:39:33.680 could tell by the blurbs in the beginning of the 0:39:33.680 --> 0:39:36.480 book that there are a lot of big hitters who 0:39:36.520 --> 0:39:39.520 seem to put up with me and gave me a nice, 0:39:39.560 --> 0:39:45.960 a nice blurb. I will say the two real, two 0:39:46.000 --> 0:39:49.840 or three things that I did that kind of allowed 0:39:49.840 --> 0:39:52.200 me to throw them out of cocktails but still get 0:39:52.239 --> 0:39:58.720 invited to the parties is first heading into the financial crisis. 0:39:59.200 --> 0:40:01.239 Not a lot of peopleeople were jumping up and down 0:40:01.280 --> 0:40:05.359 and saying, hey, guys, this is a Remember the three 0:40:05.440 --> 0:40:08.000 D posters. You look at them out of focus and 0:40:08.040 --> 0:40:11.080 the dolphin jumps out. That's what was going on in 0:40:11.120 --> 0:40:13.719 the mid two thousands. If you looked at what was 0:40:13.760 --> 0:40:16.920 going on in the economy and the market correctly, it 0:40:17.000 --> 0:40:20.840 was pretty clear shit's about to hit the fan, right 0:40:21.000 --> 0:40:25.160 and it's at the time I was very public about this. 0:40:26.239 --> 0:40:30.480 I went on Cudlow's show after the I don't believe 0:40:30.480 --> 0:40:33.839 in forecasts, but I got into a debate with the 0:40:33.960 --> 0:40:37.359 editor way back then of BusinessWeek, Hey, you're doing your 0:40:37.360 --> 0:40:40.879 big annual forecast issue. Why don't we run a little 0:40:40.920 --> 0:40:43.120 counter programming and talk about how no one's won this 0:40:43.160 --> 0:40:45.640 two years in a row. The outcome is random. You 0:40:45.719 --> 0:40:48.960 move the end date forward or back twenty four hours 0:40:49.000 --> 0:40:52.160 the whole number, order show the whole thing is and 0:40:52.200 --> 0:40:56.879 that the editor says, it's a double issue. We sell 0:40:56.880 --> 0:40:59.160 a shit ton of advertising. Do you want to participate 0:40:59.280 --> 0:41:05.040 or not? So I put in I had written rein 0:41:05.120 --> 0:41:08.800 Hart and Rogoff wrote a piece to academics that Harvard 0:41:08.880 --> 0:41:11.280 and I don't remember whether they're married. I don't remember where. 0:41:11.560 --> 0:41:14.560 Maybe it's Harvard, MIT or Harvard and Boston College, but 0:41:15.080 --> 0:41:17.640 they're married. And they write this piece that looks at 0:41:17.760 --> 0:41:24.880 five financial crises. It's Helsinki, Mexico, the US, Japan. I 0:41:25.000 --> 0:41:28.600 always forget the fifth one, whatever it is. And it 0:41:28.680 --> 0:41:34.800 turns out that if you have a leveraged base financial crisis, 0:41:34.840 --> 0:41:39.080 too much debt and it blows up, real estate has 0:41:39.120 --> 0:41:41.600 a tendency to drop twenty five to thirty five percent. 0:41:41.880 --> 0:41:46.560 By the way, that later that that paper later gets 0:41:46.560 --> 0:41:49.880 expanded into this time is different. Eight hundred years of 0:41:49.880 --> 0:41:53.480 financial folly by them. So I take that, let's take 0:41:53.520 --> 0:41:57.160 thirty percent as the average. What would happen to the 0:41:57.520 --> 0:42:01.680 dow if real estate fell thirty So I write up 0:42:01.680 --> 0:42:05.000 the series Forthstreet dot Com I did it with the 0:42:05.040 --> 0:42:07.640 Dow because the S and P five hundreds, five hundred companies, 0:42:07.640 --> 0:42:09.759 it would have taken forever to do. Hey, I could 0:42:09.840 --> 0:42:12.879 kind of spit all my way through thirty companies. Long 0:42:12.880 --> 0:42:15.279 story short, I come up with a number at the 0:42:15.360 --> 0:42:18.280 time when the Dow is like thirteen thousand and change 0:42:18.760 --> 0:42:22.600 of sixty eight hundred, like down fifty percent or so, 0:42:23.280 --> 0:42:27.400 and so I dutifully. After I hang up the phone, 0:42:27.440 --> 0:42:30.040 I go back to that piece. I pull out those numbers. 0:42:30.320 --> 0:42:34.480 I put it into the Business Week forecast, and Dow 0:42:34.600 --> 0:42:37.080 sixty eight hundred. I don't remember. The SMP was like 0:42:37.200 --> 0:42:40.280 six eighty or six ninety something like that. The NASDAK, 0:42:41.160 --> 0:42:43.040 I can't even remember the numbers. They were so low. 0:42:43.520 --> 0:42:46.560 Cudlow brings me on, and I've been doing his show 0:42:46.600 --> 0:42:50.520 pretty regularly, and he brings me on and basically mocks 0:42:50.560 --> 0:42:53.880 me for twenty minutes, and I'm like, Larry, this is 0:42:53.920 --> 0:42:58.360 a thought experiment, and here's here's what nobody is thinking about. 0:42:58.719 --> 0:43:02.080 This has been a backward real estate driven economy. Normally, 0:43:02.680 --> 0:43:05.560 people get jobs, they get raises, they go buy houses. 0:43:06.080 --> 0:43:09.360 Not Hey, we're cunning rates to zero. Everybody borrow money. 0:43:10.239 --> 0:43:12.839 Anybody who could fog a mier borrow money go buy 0:43:12.880 --> 0:43:16.319 houses and then that stimulates that's backwards. That's not how 0:43:16.360 --> 0:43:18.879 this is supposed to work. And look over here at 0:43:18.880 --> 0:43:22.560 we're selling all these subprime mortgages and collateralizing them. That's 0:43:22.600 --> 0:43:25.759 the poison, that's the toxin getting into the bloodstream. All 0:43:25.800 --> 0:43:28.800 of this ends badly. And he's like, but look, everybody 0:43:28.800 --> 0:43:31.240 else is up here and you're all the way down here. 0:43:31.640 --> 0:43:34.480 I'm like, so for about a year I looked like 0:43:34.760 --> 0:43:39.040 a fucking idiot. And I remember going on CNBC with 0:43:39.080 --> 0:43:43.439 my friend Peter Buchfar, He's a market strategist. Elsewhere I'm 0:43:43.480 --> 0:43:46.840 talking about housing and the impact on markets. He's talking 0:43:46.880 --> 0:43:50.920 about rates and the impact on profits, and the anchors literally, 0:43:50.960 --> 0:43:54.759 I want to say. This was like late seven. Our 0:43:54.800 --> 0:43:58.000 offices were downtown forty fourth Street and forty sixth Street. 0:43:58.040 --> 0:44:00.840 We were near each other and Madison and like fifty 0:44:00.880 --> 0:44:04.960 something was the remote CNBC studios, and the anchors laughed 0:44:05.000 --> 0:44:08.279 at us on the air. Peter bookvar please reach out 0:44:08.280 --> 0:44:11.319 to Bob and confirm this, and we kind of we 0:44:11.320 --> 0:44:14.719 were walking back to our offices down Madison and just 0:44:14.800 --> 0:44:18.800 kind of hey, either we're really right or we're really wrong, 0:44:19.200 --> 0:44:24.319 because they just laughed us off the air, like we 0:44:24.360 --> 0:44:26.920 really look like idiots. And I'm like, I don't know 0:44:26.920 --> 0:44:29.319 how much longer this goes. And you kind of see 0:44:29.360 --> 0:44:32.800 it in the movie The Big Short, even though Michael 0:44:32.840 --> 0:44:37.120 Burry makes his clients hundreds of millions of dollars, like, 0:44:37.239 --> 0:44:40.680 the two years heading into the collapse is just torturous 0:44:40.680 --> 0:44:44.200 for him. So I had nothing like that experience, but 0:44:44.320 --> 0:44:47.719 I understood, gee, you know this doesn't make sense. I 0:44:47.800 --> 0:44:50.960 know markets go longer and higher than anyone could expect. 0:44:51.360 --> 0:44:54.759 So the funny part about that was, as soon as 0:44:54.760 --> 0:44:56.880 the shit starts hitting the fan, Larry starts having me 0:44:56.920 --> 0:44:59.960 on every week twice a week, I'm getting called constantly. 0:45:00.400 --> 0:45:03.759 So the fact that I more or less got that right, 0:45:04.160 --> 0:45:09.000 and then on by dumb luck, Henry Blodgett of Business 0:45:09.040 --> 0:45:12.480 Insider and Yahoo invites me on on I had I 0:45:12.520 --> 0:45:15.120 had said to a friend, Hey, the sixty eight hundred 0:45:15.200 --> 0:45:19.120 thing is, you know, a little embarrassing but starting to turn. 0:45:19.480 --> 0:45:22.359 If please, if we get anywhere near that, don't let 0:45:22.360 --> 0:45:24.680 me be that jerk that doubles down and says thirty 0:45:24.680 --> 0:45:27.720 four hundred. So I'm on vacation when we cross sixty 0:45:27.719 --> 0:45:31.799 eight hundred and I get a phone call, So what 0:45:31.840 --> 0:45:34.080 are you doing. I'm like, I'm literally writing the note 0:45:34.160 --> 0:45:38.640 right now. I send it out Henry Blodgett immediately, Hey 0:45:38.680 --> 0:45:43.040 you want to come on Yahoo TV? Sure? So the 0:45:43.080 --> 0:45:45.319 biggest baron Wall Street, the guy who warned you about 0:45:45.360 --> 0:45:48.200 sixty eight hundred, seven thousand points ago. What are you 0:45:48.200 --> 0:45:51.080 seeing now? Hey? Everything we're looking at is this pinned 0:45:51.600 --> 0:45:54.279 negative as it gets. Cover your shorts and go along. 0:45:54.360 --> 0:45:54.560 Here. 0:45:54.640 --> 0:45:58.160 It's it. And this is not how I run money. 0:45:58.680 --> 0:46:02.200 I was at an institutional I had planted a flag 0:46:02.239 --> 0:46:05.480 and it's like, all right, we're down fifty percent. Maybe 0:46:05.480 --> 0:46:07.440 we fall more. I don't know. I'm just going to 0:46:07.520 --> 0:46:10.400 take the win and go home. And by the dumbest 0:46:10.440 --> 0:46:13.440 of dumb luck, the next morning was the bottom and 0:46:14.120 --> 0:46:18.520 markets took off. So I think people in the industry, 0:46:18.880 --> 0:46:21.600 all right, he got that one right, So he's not 0:46:21.680 --> 0:46:24.920 a total idiot. Will will tolerate some of his nonsense 0:46:25.280 --> 0:46:28.160 because anyone who listened to him saved a bunch of money. 0:46:28.640 --> 0:46:31.840 And then, not only had I been blogging for forever, 0:46:32.280 --> 0:46:36.600 but when I moved over to Bloomberg, I told them 0:46:36.760 --> 0:46:41.040 I wanted to fool around with this new fangled podcast thing. 0:46:41.160 --> 0:46:43.000 They're like, what do you mean, Well, I want to 0:46:43.040 --> 0:46:47.440 speak to intelligent, accomplished people and have long form conversations. 0:46:47.719 --> 0:46:50.279 What do you mean long form like ten minutes? No, 0:46:50.480 --> 0:46:54.200 like two hours? And everybody laughed at the time. The 0:46:54.200 --> 0:46:57.760 way I the way I pitched it was Mark Maren's 0:46:57.880 --> 0:47:01.160 WTF meets Charlie Rose And then a few years later 0:47:01.200 --> 0:47:05.480 I had to amend that, but with pants on. So 0:47:06.160 --> 0:47:08.200 Bloomberg came back to me and said, tell you what 0:47:08.920 --> 0:47:11.760 if you get us thirty two minutes, thirty two minutes 0:47:11.760 --> 0:47:15.520 of your content traffic, news, sports, weather, commercials, that's an 0:47:15.520 --> 0:47:18.000 hour of radio. Have at it. Whatever is longer than 0:47:18.080 --> 0:47:20.920 thirty two minutes will put online. No one's going to listen. 0:47:21.000 --> 0:47:24.120 But what the hell? And that was eleven years ago, 0:47:24.280 --> 0:47:29.520 five hundred and fifty episodes ago. And I've kind of 0:47:30.280 --> 0:47:34.680 gotten to meet everybody in the industry. And I'll never 0:47:35.280 --> 0:47:39.600 make someone who's terrible look good. I will give somebody 0:47:39.600 --> 0:47:42.759 an opportunity to say, who are you, how did you 0:47:42.800 --> 0:47:46.719 get that way? What's your investment philosophy? What can we 0:47:46.840 --> 0:47:50.560 learn from you? And so I think I've kind of 0:47:51.360 --> 0:47:54.919 earned my way into a pass, even though I kind 0:47:54.960 --> 0:47:58.760 of you know, let's be honest. For most of its history, 0:47:58.880 --> 0:48:03.120 Wall Street was not Mom and Pop's friends. Wall Street 0:48:03.160 --> 0:48:06.680 existed for the wealthy, by the wealthy. I grew up 0:48:06.719 --> 0:48:10.600 a really middle class kid. I mean, when I was younger, 0:48:10.680 --> 0:48:15.200 my dad was the business he was working for imploded. 0:48:15.600 --> 0:48:18.800 By the time my younger brother was in high school. 0:48:18.840 --> 0:48:23.280 Well by then he had switched careers, launched the store, 0:48:23.360 --> 0:48:26.879 and they were doing well. But I grew up very, 0:48:27.080 --> 0:48:29.600 very middle class. Went to a state school, paid for 0:48:29.640 --> 0:48:32.640 it myself, went to a local law school, paid for 0:48:32.719 --> 0:48:37.399 it myself, working my way through both, and so I 0:48:37.440 --> 0:48:40.960 never intended to go into finance. It was never like, 0:48:41.040 --> 0:48:45.200 there was never a plan here other than that kind 0:48:45.239 --> 0:48:48.760 of looks interesting. I got a tour of my buddy's 0:48:48.840 --> 0:48:52.120 trading room. He's like, why don't you do this? You're 0:48:52.120 --> 0:48:54.480 good with computers, you're good with numbers. You would be 0:48:54.520 --> 0:48:57.040 a natural at this. I'm like, really, do you like 0:48:57.120 --> 0:48:59.560 being a lawyer. No, I hate being a lawyer. Well, 0:48:59.600 --> 0:49:03.480 then try this, and I did, and you know, thirty 0:49:03.520 --> 0:49:04.480 years later, here we are. 0:49:05.480 --> 0:49:10.240 Okay. You mentioned short sellers Hindenburgh, which got the most 0:49:10.280 --> 0:49:14.560 ink and was right shut down. So you say in 0:49:14.600 --> 0:49:17.120 the book there should be word short sellers, even though 0:49:17.160 --> 0:49:20.520 the trend is the Dow and the S and P 0:49:20.719 --> 0:49:22.520 continue to go up, So tell me more about that. 0:49:23.640 --> 0:49:27.719 So you know, we come out of the financial crisis 0:49:27.719 --> 0:49:31.520 in nine and a good rule of thumb, anytime markets 0:49:31.560 --> 0:49:35.920 are cut in half by equities like it's it's you 0:49:35.920 --> 0:49:38.600 shouldn't be market timing, you shouldn't be jumping in and out. 0:49:39.040 --> 0:49:42.480 But down fifty percent on US equities has turned out 0:49:42.719 --> 0:49:44.920 to be a pretty good entry point, all right. If 0:49:44.920 --> 0:49:47.400 you bought in twenty nine down fifty percent, there was 0:49:47.440 --> 0:49:51.120 still another down thirty percent to go. But five years 0:49:51.200 --> 0:49:56.280 later you'll find and ever since then, you won't rarely 0:49:56.360 --> 0:49:59.719 get down fifty percent. We've had we've had the financial 0:49:59.760 --> 0:50:03.280 crime sis, even the dot com implosion where the Nasdaq 0:50:03.400 --> 0:50:06.799 was down where all the technology companies were listed, was 0:50:06.840 --> 0:50:08.920 down eighty one percent, But I want to say the 0:50:09.000 --> 0:50:11.000 S and P five hundred was down something like thirty 0:50:11.040 --> 0:50:13.640 eight or forty per didn't quite get that low. So 0:50:13.719 --> 0:50:17.520 it's really really rare. And yet coming out of the 0:50:17.640 --> 0:50:22.520 financial crisis, all I heard for a long time was 0:50:24.520 --> 0:50:28.919 the FED is repressing assets they've the manipulating markets. They've 0:50:28.920 --> 0:50:32.680 cut rates to zero, they're forcing people into the market. 0:50:33.200 --> 0:50:37.200 And I frequently found myself speaking to people saying, you know, 0:50:39.200 --> 0:50:41.920 over at NYU Start School of Business, around the corner 0:50:41.960 --> 0:50:46.440 on McDougal is Cafe Reggio, and if you're a grad student, 0:50:46.560 --> 0:50:50.840 you can go get some cappuccino, smoke clothes, cigarettes, stroke 0:50:50.920 --> 0:50:56.120 your beard or your goatee, and philosophically debate the propriety 0:50:56.239 --> 0:50:59.880 of what the Fed's doing. But you're an asset manager. 0:51:00.160 --> 0:51:03.920 Your job is to manage your client's assets. If you 0:51:03.960 --> 0:51:07.279 want to fight the FED, well knock yourself out. But 0:51:07.800 --> 0:51:10.120 that's a different job than the one you were hired for. 0:51:10.640 --> 0:51:14.600 And people don't like hearing that, and they especially don't 0:51:14.680 --> 0:51:19.800 like hearing how come everybody who's anti FED has wildly 0:51:19.880 --> 0:51:23.839 underperformed their benchmark for the past fill in a blank one, three, five, 0:51:23.960 --> 0:51:28.360 seven years. It's almost as if whining against the central 0:51:28.400 --> 0:51:33.440 bank is an excuse for poor performance. So stuff like 0:51:33.480 --> 0:51:36.839 that doesn't really win you friends, but it's, you know, 0:51:36.960 --> 0:51:40.480 more or less true. It's uh. I know people who 0:51:40.560 --> 0:51:45.759 are former bank regulators and former Federal Reserve researchers, and 0:51:45.800 --> 0:51:49.080 they've gone into academia. Those are the right people that 0:51:49.120 --> 0:51:53.279 should be debating FED policy, and you know they have 0:51:54.640 --> 0:51:56.920 because that's what they were hired to do. But if 0:51:56.960 --> 0:52:01.320 you're hired to manage someone's bond portfolio, well then shut 0:52:01.360 --> 0:52:04.920 the fuck up and manage the bond portfolio. Whining about 0:52:04.960 --> 0:52:09.279 the FED isn't gonna help your your numbers. So I 0:52:09.320 --> 0:52:12.120 am occasionally a fly in the ointment. I am occasionally 0:52:13.440 --> 0:52:17.760 somebody that can piss people off, But for the most part, 0:52:17.960 --> 0:52:23.120 I have tried to make finance smarter, make it fairer, 0:52:24.560 --> 0:52:28.560 focus people on what matters, Debunk a lot of nonsense, 0:52:29.200 --> 0:52:33.400 and just keep mom and pop investors focused on, you know, 0:52:33.600 --> 0:52:37.759 purposeful investing. What are you saving for and why? Right? 0:52:37.840 --> 0:52:41.160 What's the like money money, more money for money, More 0:52:41.160 --> 0:52:45.040 money's sake doesn't really get you anywhere. But if you're 0:52:45.080 --> 0:52:48.280 saving for a purpose, it could be five point twenty 0:52:48.360 --> 0:52:52.400 nine for kids college, for one K for retirement. Maybe 0:52:52.400 --> 0:52:56.400 you have enough money you're saving for philanthropy or generational 0:52:56.400 --> 0:52:59.600 wealth trener, whatever it is. Once you figure out the 0:52:59.640 --> 0:53:03.520 purpose that you're aiming your investments towards, well then you 0:53:03.520 --> 0:53:05.920 can figure out the best route there. With the least 0:53:05.960 --> 0:53:09.279 taking you know, returns or a function of risk. You 0:53:09.320 --> 0:53:13.200 have to assume some level of risk risk free returns 0:53:13.239 --> 0:53:15.360 or what you get from the ten year treasury because 0:53:15.640 --> 0:53:18.960 you're guaranteed to get your money back now. Yielding four 0:53:19.000 --> 0:53:22.120 percent not a great return when inflation's two and a 0:53:22.120 --> 0:53:25.400 half three percent. Stocks tend to be eight ten percent 0:53:25.440 --> 0:53:28.160 of a long term better return. But as we saw 0:53:28.239 --> 0:53:30.319 last month, they don't just go up. They go up 0:53:30.360 --> 0:53:33.440 and down, and so you have to be prepared for that. 0:53:33.960 --> 0:53:36.640 So if you, you know, if I can get people 0:53:36.719 --> 0:53:40.759 focused on here's how to do this, here's how to 0:53:40.800 --> 0:53:43.440 not shoot yourself in the foot, and here's how to 0:53:43.520 --> 0:53:47.160 manage towards a goal. You know, more for more's sake, 0:53:47.400 --> 0:53:50.040 is not a goal more because I want to leave 0:53:50.080 --> 0:53:55.479 all my money to the Humane Society because I don't 0:53:55.520 --> 0:53:58.120 like how we're treating cats and dogs. Hey, now you 0:53:58.160 --> 0:54:00.440 have a goal, you know how to we know how 0:54:00.480 --> 0:54:05.080 to map a path to that, and you can assume 0:54:05.200 --> 0:54:09.680 the right amount of risk relative to that purpose. And 0:54:09.760 --> 0:54:13.400 so I think I'm sincere about that. Maybe that buys 0:54:13.440 --> 0:54:16.280 me a little bit of goodwill. I've had enough people 0:54:16.400 --> 0:54:20.840 call me an asshole, so I'm clearly pissing some people off. 0:54:21.200 --> 0:54:23.520 And I think as you read the book, you could 0:54:23.600 --> 0:54:29.359 tell so my wife got me this. She's like, now 0:54:29.400 --> 0:54:33.279 you have some fucks to give, because previously I had 0:54:33.320 --> 0:54:36.360 no fucks to give. Oh, you don't, dude, this was 0:54:36.400 --> 0:54:41.400 the cover story you wrote on the cover of Fortune magazine. 0:54:41.480 --> 0:54:44.319 Here's why Cisco is the one stock to own. You 0:54:44.440 --> 0:54:47.279 have to own this. Don't own Microsoft, they say in 0:54:47.360 --> 0:54:51.160 the magazine. Own this one. Don't own Ge they say. 0:54:51.200 --> 0:54:53.600 They turn out to be right about that, but Microsoft, 0:54:53.640 --> 0:54:57.319 they were wildly wrong. And ever since that cover came 0:54:57.360 --> 0:55:01.640 out in May of two thousand, we're twenty five years 0:55:01.719 --> 0:55:05.440 later and that trade is still a loser. It's still 0:55:05.480 --> 0:55:10.719 below where they recommended it. I feel someone should be 0:55:10.800 --> 0:55:14.880 calling out people that put bad ideas out into the ether, 0:55:15.600 --> 0:55:21.440 and people will, unfortunately put money to work based on 0:55:21.560 --> 0:55:24.239 what they're reading, what they're seeing, what they're hearing. And 0:55:24.320 --> 0:55:30.480 so I admittedly cherry picked the most egregious examples, and 0:55:30.600 --> 0:55:34.080 some of the examples in the book are just really 0:55:34.560 --> 0:55:39.200 horrifyingly egregious, But the lesson within the each is still 0:55:39.200 --> 0:55:44.080 the same. Whether it's the idiots who paid their asset 0:55:44.160 --> 0:55:49.400 managers a billion dollars. Two asset managers manage a family 0:55:49.440 --> 0:55:54.200 office for one family and managed to squeeze a billion 0:55:54.280 --> 0:55:58.279 each in fees out. That's egregious. Recip's a locutor. The 0:55:58.360 --> 0:56:02.239 thing speaks for itself. I'm sorry, but I don't care 0:56:02.280 --> 0:56:05.360 how good you are. You shouldn't be getting a billion 0:56:05.440 --> 0:56:10.120 dollars for giving anyone advice, and so I thought that 0:56:10.200 --> 0:56:16.839 was worth calling out. The best selling personal finance book 0:56:16.880 --> 0:56:21.000 of all time is Rich Dad, Poor Dad. Robert Koyasaki 0:56:21.040 --> 0:56:24.520 always mispronounced his name. Thirty two million copies of that 0:56:24.600 --> 0:56:28.200 book sold. I haven't read it, but I've seen him 0:56:28.320 --> 0:56:31.759 on Twitter. In every week he's four care or every 0:56:31.840 --> 0:56:37.120 year he's forecasting an economic crisis and a market crash. 0:56:37.600 --> 0:56:41.000 Literally since two thousand and nine. Somebody else on Twitter 0:56:41.239 --> 0:56:44.719 found all of his tweets stacked him together, and it's like, 0:56:45.239 --> 0:56:48.200 oh my god, this guy has just never recovered from 0:56:48.360 --> 0:56:52.239 eight oh nine. He's been negative and bearish and has 0:56:52.360 --> 0:56:56.640 like two million Twitter followers, which is unfortunate because those 0:56:56.680 --> 0:57:00.200 poor bastards, if they listened to him, they missed what 0:57:00.280 --> 0:57:03.879 was one of the greatest decades in market history. Every 0:57:04.000 --> 0:57:07.680 year he forecasted a crash My favorite forecast of his 0:57:07.880 --> 0:57:11.040 was twenty eighteen, sell residential real estate in the US, 0:57:11.120 --> 0:57:15.080 big housing crash coming. I'm hard pressed to find a 0:57:15.239 --> 0:57:19.120 better time to buy residential real estate in the United 0:57:19.160 --> 0:57:22.720 States than twenty eighteen, even with the dumb luck of 0:57:22.760 --> 0:57:27.240 the pandemic. But here we are. Housing topped out in 0:57:27.480 --> 0:57:31.480 five oh six, we underbuilt single family homes for a decade, 0:57:31.920 --> 0:57:35.880 and by twenty eighteen, forget the pandemic, we were Depending 0:57:35.880 --> 0:57:40.040 on who you listen to, the Architects Association, National Association, 0:57:40.080 --> 0:57:44.720 and Realtors National Builders wear two three four million homes 0:57:44.760 --> 0:57:48.640 short as of twenty eighteen. Because we underbuilt homes for 0:57:48.720 --> 0:57:51.960 a decade. And this guy is telling people sell the 0:57:52.080 --> 0:57:55.520 US real estate. So nobody calls these people out. I 0:57:55.600 --> 0:58:00.160 kind of feel somewhat obligate. That's my neuropathy, is that 0:58:00.720 --> 0:58:02.960 I just can't let the shit go. I have to 0:58:03.560 --> 0:58:04.480 call it out. 0:58:13.920 --> 0:58:17.200 Okay, just to go back what should be happening with 0:58:17.280 --> 0:58:18.000 short selling. 0:58:20.200 --> 0:58:23.360 I'm tough to wrestle into submission, aren't I. So short 0:58:23.360 --> 0:58:27.280 sellers serve a really important purpose. They identify fraud that 0:58:27.480 --> 0:58:30.840 the SEC misses. They're the first ones to buy in 0:58:30.880 --> 0:58:34.760 a market crash because they sold up here the market crashes, 0:58:35.040 --> 0:58:40.760 they're a buyer. Hey, free money. And it's become really 0:58:40.880 --> 0:58:45.080 challenging to do, in part because the modern world has 0:58:45.120 --> 0:58:48.000 become so much more efficient markets are. They used to 0:58:48.000 --> 0:58:53.160 be kind of sort of eventually efficient. Now they're pretty efficient, 0:58:53.760 --> 0:58:56.520 meaning that if there's fraud out there, if there's something 0:58:56.600 --> 0:59:01.000 wrong with a company, forget fraud. If a business model 0:59:01.360 --> 0:59:06.880 is crapping out, short sellers are usually the first ones 0:59:06.960 --> 0:59:10.640 to figure that out. They tend to be negative because 0:59:10.680 --> 0:59:14.040 they're betting on things going down. They tend to see 0:59:14.440 --> 0:59:18.160 the glasses half full. But they serve a useful purpose. 0:59:18.280 --> 0:59:21.360 They are the eyes and ears you know. Short Sellers 0:59:21.360 --> 0:59:24.120 are the one who identified and run as a fraud. 0:59:24.520 --> 0:59:27.920 Short Sellers are the one who identified world com overstuck. 0:59:28.600 --> 0:59:30.880 Go through the list of all the big frauds of 0:59:30.920 --> 0:59:34.920 the past ten twenty thirty years, It wasn't the SEC 0:59:34.960 --> 0:59:39.960 that uncovered most of these. It was typically short sellers. 0:59:40.000 --> 0:59:43.840 In fact, as much as you want to believe the 0:59:43.920 --> 0:59:47.600 SEC is the one who found out about Bernie Madoff, 0:59:47.920 --> 0:59:50.240 a handful of short sellers looked at that and said, 0:59:50.480 --> 0:59:54.200 none of the strategy makes sense. This is clearly a fraud. 0:59:54.800 --> 0:59:59.840 I know three or four people quants that looked at 1:00:01.160 --> 1:00:05.160 that looked Renaissance Technologies. Is a quant that did that. 1:00:06.720 --> 1:00:08.960 I'm drawn a blank on the guy's name. A former 1:00:09.320 --> 1:00:14.280 MIT professor who wrote Beat the Dealer Right. He was 1:00:14.320 --> 1:00:17.800 one of the people there. There were a handful of 1:00:18.560 --> 1:00:23.680 folks who looked at who ed Thorpe, who looked at 1:00:23.720 --> 1:00:28.240 at made off and said, something doesn't smell right with this. 1:00:28.800 --> 1:00:32.200 It wasn't. And he managed to skate through the dot 1:00:32.240 --> 1:00:36.480 com implosion, but he couldn't skate through the financial crisis. 1:00:37.000 --> 1:00:40.240 The SEC didn't figure it out. It was the market 1:00:40.280 --> 1:00:42.840 crash that you know, the tide went out and he 1:00:42.920 --> 1:00:46.000 was naked and everybody saw what was going on. So 1:00:47.320 --> 1:00:50.960 short sellers serve a really important purpose. It's become really 1:00:51.080 --> 1:00:55.600 challenging to do. People have been abusive with litigation. The SEC. 1:00:56.280 --> 1:00:58.880 You know, they don't like being shown up. You would 1:00:58.880 --> 1:01:04.280 think they would work with short sellers to reveal to 1:01:04.440 --> 1:01:09.680 uncover fraud, but instead it's that they haven't been especially nice. 1:01:09.680 --> 1:01:11.480 And the way to make money, there's two ways to 1:01:11.480 --> 1:01:16.040 make money as a short seller. So the way it 1:01:16.080 --> 1:01:18.920 works is I borrow stock from you and then I 1:01:19.080 --> 1:01:21.400 sell it, and when I buy it back lower, I 1:01:21.520 --> 1:01:24.160 return the shares to you. Right, That's how and I 1:01:24.160 --> 1:01:26.520 pay you a fee for that. That's how short selling works. 1:01:26.800 --> 1:01:29.240 So that's one way to make money as a short seller. 1:01:29.320 --> 1:01:32.960 The other way is to write up research reports. But 1:01:33.720 --> 1:01:36.960 that whole business, that side of the business. You know, 1:01:37.160 --> 1:01:39.280 back in the old days, when you would trade, it 1:01:39.280 --> 1:01:42.960 would cost you fifteen to twenty cents a share. Then 1:01:43.000 --> 1:01:44.960 it was ten cents a share, then it was five cents. 1:01:45.520 --> 1:01:49.560 And the way research shops would make money is, Hey, 1:01:49.640 --> 1:01:51.560 run all your trading through us. We'll give you all 1:01:51.600 --> 1:01:55.640 our research for free, soft dollar. And so at five 1:01:55.680 --> 1:01:58.440 cents a share, people doing tens of millions of shares 1:01:58.480 --> 1:02:01.360 trading a day. Hey, it adds up to you know, 1:02:01.800 --> 1:02:05.160 ten million here, ten million there. Pretty soon it's real money. 1:02:06.000 --> 1:02:10.520 That business is really shrunk dramatically, so the you know, 1:02:10.720 --> 1:02:14.200 there is a need for newspapers that business says, and 1:02:14.280 --> 1:02:19.000 local reporting that's shrunk. The fascinating thing about the Internet 1:02:19.160 --> 1:02:23.200 and digital and modern technology is a lot of the 1:02:23.360 --> 1:02:27.280 institutional building block blocks of our society have had their 1:02:27.360 --> 1:02:30.800 legs cut out from on them. Between Craigslist and eBay 1:02:31.320 --> 1:02:33.360 and then all the dating apps, and then all the 1:02:33.760 --> 1:02:37.840 bring a trailer and cars and bids like and Zillow. 1:02:38.480 --> 1:02:43.640 Each of these were giant real estate, giant newspaper advertising sections, 1:02:43.680 --> 1:02:49.520 the classifieds, garage sales, used cars, house listings. That's all gone, 1:02:50.120 --> 1:02:55.480 and you know, you lose newspapers and democracy suffers. Well, 1:02:55.560 --> 1:02:58.400 the same thing happens in the market. The business of 1:02:58.600 --> 1:03:03.280 short selling has becomeing recently difficult. Trading is essentially free 1:03:03.280 --> 1:03:06.200 these days, so it's really hard. It's one thing to say, 1:03:06.200 --> 1:03:09.240 we have to trade, all right, run it, give some 1:03:09.400 --> 1:03:11.080 to him and some to her and some to them, 1:03:11.120 --> 1:03:13.600 and you know, well, that's how we'll pay for our research, 1:03:14.120 --> 1:03:16.760 as opposed to, oh, trading's free. I got to write 1:03:16.760 --> 1:03:19.080 a check for a quarter million dollars. I don't think 1:03:19.120 --> 1:03:21.480 I want to do that. And so that business has 1:03:21.520 --> 1:03:25.560 become really, really challenging. And it's unfortunate because they served 1:03:25.600 --> 1:03:28.120 an important purpose in the market. 1:03:28.800 --> 1:03:33.919 Okay, you take down Susie Orman and Dave Ramsey. Dave, 1:03:34.040 --> 1:03:38.400 of course, is really all over TikTok and Instagram wheels. 1:03:38.760 --> 1:03:40.120 Can you go into that a little bit. 1:03:41.120 --> 1:03:45.520 So, look, they both serve a purpose, and I every 1:03:45.560 --> 1:03:47.520 now and then they just kind of cross the line 1:03:47.640 --> 1:03:51.280 and it makes me a little crazy. So if you 1:03:51.840 --> 1:03:55.280 and Dave Ramsey, bless him. He's built a great business. 1:03:55.280 --> 1:03:58.880 Good for him. Susie Orman. Also, finally, now there's a 1:03:58.880 --> 1:04:01.400 woman or there has a woman on that saying the 1:04:01.400 --> 1:04:07.520 same thing, telling people how to deploy fundamental budgeting. Right, 1:04:07.560 --> 1:04:10.800 there's a need for that. I'm not like anti Susie 1:04:10.880 --> 1:04:14.360 Orman or anti Dave Ramsey. It's when they start saying 1:04:14.720 --> 1:04:19.200 stuff that's just clickbait kind of nonsense. It pisses me off, 1:04:19.480 --> 1:04:23.720 all right, so I get so let me sum up, 1:04:23.800 --> 1:04:28.760 Dave Ramsey, Hey, get your personal budget together. Spend less 1:04:28.800 --> 1:04:32.200 than you earn, don't run up credit card debt, invest 1:04:32.240 --> 1:04:36.640 in yourself via education or whatever. Invest in your long 1:04:36.720 --> 1:04:40.600 term by saving for the future. This is really, you know, 1:04:40.640 --> 1:04:43.240 the sort of stuff we should be teaching in high school, 1:04:43.680 --> 1:04:45.880 you know, back in the day when there was home ech, 1:04:47.080 --> 1:04:49.520 family budgeting. A lot of this stuff is pretty basic, 1:04:49.880 --> 1:04:53.440 and some people really need to hear this over and 1:04:53.480 --> 1:04:57.440 over again. Where it starts to get a little crazy 1:04:57.720 --> 1:05:02.240 is what I call the spending skolds, and it's never 1:05:02.280 --> 1:05:05.040 buy a sports car, don't spend a lot of money 1:05:05.120 --> 1:05:07.840 on a boat, don't do this, and they leave out 1:05:07.960 --> 1:05:11.480 the last part of the sentence, which is if you 1:05:11.680 --> 1:05:16.240 can't afford it. Right, I'm a boater. My first boat 1:05:16.280 --> 1:05:21.080 was like a forty dollars row boat, and then a kayak, 1:05:21.120 --> 1:05:24.560 and then eventually a little thing with a little outboard, 1:05:24.600 --> 1:05:29.000 and now I have During the financial crisis, I bought 1:05:29.040 --> 1:05:30.880 a boat that was a short sale. The guy was 1:05:30.880 --> 1:05:34.120 about to lose it to the bank, and you can negotiate. 1:05:34.160 --> 1:05:38.160 So I've had that c Ray for twenty years. But 1:05:38.240 --> 1:05:42.960 the takeaway is I could afford it. If you're buying 1:05:43.000 --> 1:05:47.040 something as a flex, well, you're wasting your money, nobody. 1:05:47.120 --> 1:05:51.520 And that's the flip side of Instagram and TikTok. You know, 1:05:51.600 --> 1:05:53.440 you just see the tip of the iceberg. You don't 1:05:53.480 --> 1:05:56.080 see the two thirds that are below the waterline. You 1:05:56.120 --> 1:05:59.560 see a big house or a fancy car, or jewelry 1:05:59.640 --> 1:06:03.320 or watch whatever. You're only seeing the asset. You're not 1:06:03.360 --> 1:06:06.280 seeing the liability on the other side of that. You're 1:06:06.280 --> 1:06:08.360 not seeing Hey, it's nice that you have a two 1:06:08.400 --> 1:06:11.520 million dollar house. How much is your mortgage? Two million dollars? 1:06:11.720 --> 1:06:14.040 All right, so you have nothing. Here's the asset, here's 1:06:14.040 --> 1:06:17.840 the mortgage. They offset right, that's a very different experience. 1:06:18.240 --> 1:06:21.640 And when I see people flexing and buying things that 1:06:22.160 --> 1:06:26.560 they can't afford, that's where D Dave Ramsey and Stusie 1:06:26.600 --> 1:06:29.440 Orman one hundred percent right, where I kind of get 1:06:29.440 --> 1:06:32.720 a little pissed. Is you know, if you buy a latte, 1:06:32.800 --> 1:06:36.520 you're pissing away millions of dollars. Hey, not for nothing. 1:06:36.560 --> 1:06:38.360 I don't want to be a top ten percent or 1:06:38.400 --> 1:06:41.880 a top one percenter. If a five dollars latte is 1:06:41.920 --> 1:06:46.160 the difference between a comfortable retirement or not. You're doing 1:06:46.240 --> 1:06:50.000 something else wrong. You're just doing something else wrong, no matter. 1:06:50.600 --> 1:06:54.200 And there's a concept called denominator blindness where you just 1:06:54.280 --> 1:06:58.120 see the numerator but not the denominator. All right, So 1:06:58.480 --> 1:07:03.600 five dollars, I guess over thirty years, you could say 1:07:03.600 --> 1:07:07.120 it extrapolates out to hundreds of thousands of dollars. That's 1:07:07.160 --> 1:07:11.360 before you inflation adjusted. But hey, over that same thirty 1:07:11.440 --> 1:07:14.520 year period, how much is your earning going to go 1:07:14.680 --> 1:07:16.600 up if you're not buying a latte for the next 1:07:16.640 --> 1:07:20.800 thirty years because you're only making one hundred grand now, well, 1:07:20.840 --> 1:07:23.640 thirty years from now, you're not still making one hundred grand. 1:07:24.080 --> 1:07:27.440 You're probably making closer to eight hundred grand. And again, 1:07:27.760 --> 1:07:31.280 who cares about a five dollars latte? When the funny 1:07:31.320 --> 1:07:35.320 thing is, when when all the latte crap came out, 1:07:35.760 --> 1:07:40.000 we were looking at about thirty years of no increase 1:07:40.040 --> 1:07:44.320 in wages for the bottom sixty percent of earners in America. 1:07:44.960 --> 1:07:48.800 And to me, rather than waste my time scolding people 1:07:48.960 --> 1:07:52.360 not to buy a latte, I think you should look 1:07:52.440 --> 1:07:55.760 at Hey, how come nobody's income in the bottom on 1:07:55.880 --> 1:07:59.400 a half of society is keeping up with inflation. We're 1:07:59.440 --> 1:08:01.520 watching hell health care go up nine percent a year 1:08:01.560 --> 1:08:04.440 for the past twenty five years. We're watching education go 1:08:04.600 --> 1:08:09.240 up that much. Wages are badly lagging for pick a number, 1:08:09.320 --> 1:08:13.160 bottom forty fifty sixty percent of society. I don't think 1:08:13.280 --> 1:08:16.360 lecturing those people about five dollars lattes is going to 1:08:16.400 --> 1:08:19.439 help them. What would really help them is trying to 1:08:19.479 --> 1:08:24.559 figure out why we are not keeping up wages. And 1:08:24.600 --> 1:08:29.559 that was the great irony of the pandemic is suddenly, 1:08:29.640 --> 1:08:33.639 not only was there a giant fiscal stimulus that made 1:08:33.640 --> 1:08:37.719 its way into everybody's pockets, but a lot of companies 1:08:37.800 --> 1:08:42.160 quickly realized, oh, we're competing for a modest pool of workers, 1:08:42.720 --> 1:08:44.680 and the only way we're going to be able to 1:08:44.760 --> 1:08:48.080 keep find the people we need is by giving them 1:08:48.120 --> 1:08:51.000 a salary increase. I know a lot of folks aren't 1:08:51.000 --> 1:08:57.120 thrilled with Amazon and Bezos and the crapification of the site, 1:08:57.520 --> 1:09:01.880 but I think it was around twenty sixteen they realized, hey, 1:09:01.920 --> 1:09:03.439 we have a shit ton of money. We don't pay 1:09:03.439 --> 1:09:06.920 taxes because we don't show a profit. So they raised 1:09:06.920 --> 1:09:11.439 their minimum wage to fifteen dollars nationwide and scooped up 1:09:11.560 --> 1:09:14.439 all these people. And for a couple of years you 1:09:14.439 --> 1:09:17.160 would go through a Walmart and it looked like crap. 1:09:17.760 --> 1:09:22.160 They couldn't hire enough people and their incentives were really misaligned. 1:09:22.640 --> 1:09:26.000 So over the past let's call it ten years, there's 1:09:26.040 --> 1:09:29.799 been a pretty big catchup for a lot of people. 1:09:29.960 --> 1:09:32.799 I think medium wage is up to like eighty thousand 1:09:32.840 --> 1:09:36.320 dollars now in the United States from like forty three. 1:09:37.080 --> 1:09:40.920 Not that much. That not that far. I'll go. Let's 1:09:41.000 --> 1:09:42.920 just take a quick look to see where we are. 1:09:45.840 --> 1:09:50.960 I mean, eleven ninety two per week, that's that's not bad. 1:09:52.400 --> 1:09:55.960 So when I see people complaining about five dollar lattes 1:09:56.080 --> 1:09:59.040 or don't buy a sports car. Yeah, if you can't 1:09:59.080 --> 1:10:01.760 afford it, don't buy it. But if that's something that 1:10:01.760 --> 1:10:03.280 floats your boat and you want to go do it, 1:10:03.320 --> 1:10:05.360 and you're going to hang out with friends, you're gonna 1:10:05.400 --> 1:10:07.920 have fun going on road trips. And you know the 1:10:07.960 --> 1:10:10.320 thing about the I had a conversation with one of 1:10:10.320 --> 1:10:12.200 the people I work with who has a lake house. 1:10:12.240 --> 1:10:15.679 He lives in Michigan, and he, you know, is debating 1:10:15.760 --> 1:10:20.360 getting a small boat and he could easily afford it 1:10:20.920 --> 1:10:24.920 and kind of was hesitant because of the scolding. And 1:10:24.960 --> 1:10:27.880 I'm like, the problem isn't never buy a boat. By 1:10:27.880 --> 1:10:30.799 the way, the boat is the least expensive part of boating. 1:10:31.200 --> 1:10:34.240 Then there's repairs and gas and maintenance and dock fees 1:10:34.280 --> 1:10:37.680 and winter storage and beer, and like, the boat is 1:10:37.680 --> 1:10:40.880 the cheapest part of boating. If you can afford this 1:10:41.479 --> 1:10:43.720 and you want to spend time with your family and 1:10:43.720 --> 1:10:45.800 your kids will go out and you'll you know, have 1:10:45.840 --> 1:10:49.479 great experiences and create memories, knock yourself out. And he 1:10:49.560 --> 1:10:52.760 bought the boat and it's been a blast. It's not 1:10:53.120 --> 1:10:57.120 about it's just too lazy and easy to always say no. 1:10:57.600 --> 1:10:59.320 I don't think you should just say no. I think 1:10:59.360 --> 1:11:02.160 you have to think these things through and put it 1:11:02.160 --> 1:11:05.800 into some context and find some nuance, and hey, if 1:11:05.800 --> 1:11:08.639 you can't buy it, afford a boat or a latte. 1:11:08.760 --> 1:11:11.840 If you can't afford it, don't buy it. But if 1:11:11.880 --> 1:11:15.000 you understand the costs and what goes into it, like 1:11:15.360 --> 1:11:19.439 someone did, someone did something, Never buy a beach house. 1:11:20.240 --> 1:11:22.679 Why don't you want to go to the beach and 1:11:23.240 --> 1:11:25.960 relax over the summer. The most fun I have had 1:11:26.439 --> 1:11:29.200 is hanging out reading a book, listening to the ocean. 1:11:29.600 --> 1:11:32.880 Why should I not buy a beach house? Well, it's expensive, 1:11:32.880 --> 1:11:36.639 and there are maintenance costs and this and that. Listen, 1:11:37.080 --> 1:11:39.720 you could buy a two hundred thousand dollars shack, you 1:11:39.760 --> 1:11:43.479 could buy a forty million dollar mansion and everything in between. 1:11:44.160 --> 1:11:46.879 Just saying no kind of seems lazy. 1:11:47.400 --> 1:11:49.840 Okay, I want to go a little bit deeper into 1:11:49.840 --> 1:11:54.520 the latte because you talk about the enumenterator and denominated 1:11:54.520 --> 1:11:59.040 be very specific that the latte. I think it's Susie 1:11:59.120 --> 1:12:02.559 Orman extra lates to this incredible payment in the future, 1:12:02.960 --> 1:12:06.160 And you dig down and say, she's assuming a rate 1:12:06.200 --> 1:12:11.960 of return that's actually twice of what one might expect. 1:12:12.160 --> 1:12:16.320 So first it's non inflation adjusted so that's number one. 1:12:16.439 --> 1:12:19.280 That's where you end up with a part of it. Second, 1:12:19.320 --> 1:12:21.679 if I'm remembering it correctly, I'm doing this for memory, 1:12:21.760 --> 1:12:24.880 it was either twelve percent or fourteen percent. You know, 1:12:24.920 --> 1:12:28.799 you should really look for about ten percent over long periods, 1:12:28.840 --> 1:12:31.160 So that that was a believe it or not, two 1:12:31.160 --> 1:12:34.800 percent after thirty years adds up to about thirty five 1:12:34.840 --> 1:12:39.000 percent of the total returns. It's a huge, huge, outsized impact. 1:12:39.360 --> 1:12:43.000 And then it also ignored the other side of the equation. 1:12:44.680 --> 1:12:47.280 If you're also seeing your income go up and you're 1:12:47.320 --> 1:12:52.360 seeing you know, you're every time you bump up your salary, 1:12:52.400 --> 1:12:54.040 you put more money into your four oh one k. 1:12:56.000 --> 1:12:59.479 It worked out to be net of everything about what 1:12:59.600 --> 1:13:03.639 a car would cost, assuming there's still cars thirty years 1:13:03.640 --> 1:13:08.160 from now. So here's your choice. Never have another Starbucks 1:13:08.640 --> 1:13:13.479 or Blue Bottle or whatever your favorite local coffee brewer is. 1:13:13.600 --> 1:13:16.320 Never have another one of their four five six dollars lattes, 1:13:16.840 --> 1:13:19.439 and thirty years from now it'll pay for a car 1:13:19.560 --> 1:13:22.599 or so right not, I'm going to bet thirty years 1:13:22.600 --> 1:13:26.280 from now they're probably not selling cars, or they're selling 1:13:26.320 --> 1:13:29.800 self driving cars and everybody is ubering everywhere, or not 1:13:29.960 --> 1:13:33.479 I have no idea, but it's not millions of dollars. 1:13:33.560 --> 1:13:38.559 You're not retiring. And I use the example of hey, 1:13:38.640 --> 1:13:41.840 the median income thirty years ago was twenty three thousand dollars. 1:13:41.920 --> 1:13:45.400 Now it's twenty six thousand dollars. Now it's eighty something thousand. 1:13:45.800 --> 1:13:49.639 And the median home price was like forty five thousand, 1:13:49.640 --> 1:13:52.719 and now it's four hundred thousand. So now that's thirty 1:13:52.800 --> 1:13:57.280 years ago. So extrapola thirty years forward, and these hundreds 1:13:57.320 --> 1:14:01.920 of thousands of dollars in Latte save, it's really insignificant 1:14:01.960 --> 1:14:04.840 to homes that are going to be ten twenty million 1:14:04.880 --> 1:14:08.040 dollars in the future, and relative to salaries that are 1:14:08.040 --> 1:14:10.720 going to be half a million a million just for 1:14:10.800 --> 1:14:13.800 the meeting and salary thirty forty years from now. So 1:14:14.200 --> 1:14:19.240 by just showing you half of the equation, you really 1:14:19.240 --> 1:14:22.599 miss it. I'll give you another example that I love 1:14:23.680 --> 1:14:27.120 and you by the way, there is a Twitter feed 1:14:27.320 --> 1:14:31.960 called TikTok Investors, and this guy goes out and picks 1:14:32.000 --> 1:14:38.200 out the dumbest, most ridiculous investment advice and financial advice 1:14:38.360 --> 1:14:44.960 on TikTok. You know, how do we maintain our lifestyle? 1:14:45.080 --> 1:14:49.200 We day traded Home says this handsome couple, what's their secret? 1:14:49.560 --> 1:14:52.320 We only buy stocks that go up. If they don't 1:14:52.320 --> 1:14:54.639 go up, we don't buy them. And I'm like, are 1:14:54.640 --> 1:14:58.320 they purposefully channeling Will Rogers? Do they have any idea 1:14:58.800 --> 1:15:04.200 ps pandemic crash happens in twenty twenty two, they move 1:15:04.240 --> 1:15:07.120 into real estate. They're done with done with stocks. Hey, 1:15:07.160 --> 1:15:10.000 if you're on a boat on April fifteenth, you don't 1:15:10.000 --> 1:15:14.040 know any taxes, really, the IRS will beg to diff 1:15:14.120 --> 1:15:16.519 with you. In fact, the IRS had to put out 1:15:16.560 --> 1:15:20.679 a fact sheet forty two things that are on social 1:15:20.720 --> 1:15:24.360 media that are not true being in international waters. If 1:15:24.360 --> 1:15:27.519 you're a US citizen, you still owe taxes. It's not 1:15:27.680 --> 1:15:31.960 a So one of the memes that he identified cracked 1:15:32.040 --> 1:15:37.960 me up. Somebody took the bag of groceries that Kevin 1:15:38.080 --> 1:15:41.920 from Home Alone bought, and way back then it was 1:15:42.040 --> 1:15:45.080 like twenty dollars and ninety cents. I think Home Alone 1:15:45.160 --> 1:15:47.840 was nineteen ninety or nineteen ninety three, something like that, 1:15:48.240 --> 1:15:50.760 so it was twenty dollars. The same bag of groceries 1:15:50.760 --> 1:15:54.680 today is fifty seven dollars. Oh my god, look at 1:15:54.680 --> 1:15:57.880 how much worse the American dollar is done. It's like, 1:15:58.000 --> 1:16:01.639 wait a second. When I go to buy groceries today, 1:16:02.120 --> 1:16:04.840 I'm not using money I put aside in nineteen ninety. 1:16:05.160 --> 1:16:08.800 I'm using money I earned in twenty twenty five. So 1:16:08.920 --> 1:16:12.679 let's compare the groceries went up this much, how much 1:16:13.040 --> 1:16:16.719 have salaries gone up? And it turns out that salaries 1:16:16.760 --> 1:16:20.439 have gone up about ten percent more than the groceries 1:16:20.479 --> 1:16:24.160 went up. So in reality, the groceries are a little 1:16:24.200 --> 1:16:28.719 bit cheaper. But that's if you're just using your wages. 1:16:29.280 --> 1:16:32.960 If Kevin would have taken the money he spent on 1:16:33.120 --> 1:16:37.360 groceries and invested in the market, well from nineteen ninety 1:16:37.400 --> 1:16:42.200 today it's worth two thousand dollars or some crazy number. 1:16:42.800 --> 1:16:45.120 I detail it in the book. He could have bought 1:16:45.160 --> 1:16:48.920 the groceries and still had, you know, ten x left over. 1:16:49.560 --> 1:16:53.639 The purpose of money is not a store of value. 1:16:53.680 --> 1:16:57.679 It's amazing people don't understand this. The purpose of money 1:16:57.800 --> 1:17:01.439 is a median medium of exchange change. You get paid 1:17:01.439 --> 1:17:04.400 in dollars. You use those dollars to pay your rent 1:17:04.520 --> 1:17:09.639 or your mortgage, to buy the basic necessities of life, food, medicine, clothing, 1:17:11.200 --> 1:17:17.599 to pay your taxes, to occasionally buy entertainment, travel, movies, whatever, music, whatever, 1:17:18.040 --> 1:17:20.040 and to invest. You can start a business, you can 1:17:20.040 --> 1:17:22.559 put in the market. That's it. And when you look 1:17:22.640 --> 1:17:26.800 at money ten twenty thirty years later that's been invested, 1:17:27.240 --> 1:17:31.000 it's gone up appreciably. I always cracked up every time 1:17:31.080 --> 1:17:34.479 someone says, you know, the dollar has lost ninety six 1:17:34.520 --> 1:17:38.479 percent of its value over the past hundred years. Why 1:17:38.520 --> 1:17:41.080 the fuck would you hold on to a dollar bill 1:17:41.680 --> 1:17:46.080 for one hundred years. Money only has value when it's 1:17:46.280 --> 1:17:49.559 in motion, when it's being put to work. If you 1:17:49.640 --> 1:17:53.120 want to sit on a dollar bill or one hundred 1:17:53.280 --> 1:17:57.400 dollars or one thousand dollars for a century and miss 1:17:57.439 --> 1:18:01.639 the opportunity to let it compound over time, time, that's on. You. 1:18:01.720 --> 1:18:04.519 Don't blame the dollar. My job is to get the 1:18:04.600 --> 1:18:06.840 dollars out of my hands as fast as I can. 1:18:07.160 --> 1:18:09.920 The money comes in, I pay all my bills, and 1:18:10.120 --> 1:18:12.960 I put money into my four oh one k anything 1:18:13.040 --> 1:18:15.880 that's left and I pay my taxes anything that's left over. 1:18:15.960 --> 1:18:18.280 After that, now I have to figure out what am 1:18:18.280 --> 1:18:20.560 I going to do with this dollar that's going to 1:18:20.640 --> 1:18:23.880 either bring me or my family joy or bring someone 1:18:23.960 --> 1:18:28.160 else joy, or keep up with inflation and off that's 1:18:28.160 --> 1:18:31.360 the purpose of a dollar not sitting in a mason 1:18:31.479 --> 1:18:34.960 jar in someone's backyard for a hundred years. But that's 1:18:35.080 --> 1:18:38.559 kind of and coming back to the original question, you know, 1:18:38.600 --> 1:18:42.200 what are they selling? Well, they're selling gold bullion, they're 1:18:42.240 --> 1:18:47.680 selling bitcoin, They're selling something. And the only way the story, 1:18:47.760 --> 1:18:53.879 the narrative works is if you realize dollars are not valuable. 1:18:54.120 --> 1:18:56.040 You know, I speak at a lot of public events 1:18:56.520 --> 1:18:59.760 and we open it up for Q and A, and 1:18:59.800 --> 1:19:03.880 in variably someone says, you know, what's your views on 1:19:03.920 --> 1:19:06.040 the collapse of the dollar? But by the way, the 1:19:06.120 --> 1:19:09.639 dollar over the past six months has been pretty close 1:19:09.720 --> 1:19:14.200 to all time highs relative to other currencies. Remembered currency 1:19:14.280 --> 1:19:16.439 is always relative. Where else are you gonna go? You're 1:19:16.439 --> 1:19:19.280 gonna go to the Japanese yen? No, the Euro they 1:19:19.320 --> 1:19:23.400 have structural problems, the Chinese wand please don't make me 1:19:23.479 --> 1:19:26.479 laugh that we are the cleanest shirt in the hamper. 1:19:26.720 --> 1:19:29.120 There's no other way to describe it. So whenever and 1:19:29.160 --> 1:19:32.240 I get that question, I'm like, yes, you're right, dollars 1:19:32.320 --> 1:19:37.599 are worthless. Their fiat currency has collapsed. My office, my firm, 1:19:37.640 --> 1:19:42.559 offers a very free service. Send me all your worthless dollars, 1:19:42.560 --> 1:19:45.640 and we will dispose of them properly. You don't have 1:19:45.720 --> 1:19:50.000 to worry about being weighted down by all that useless 1:19:50.120 --> 1:19:54.120 Fiat currency. And everybody kind of snickers. But the point 1:19:54.240 --> 1:19:57.639 is you get paid in dollars, You spend your dollars, 1:19:57.680 --> 1:20:00.599 you pay your taxes, and invest in dollars. That's all 1:20:00.640 --> 1:20:04.000 it's supposed to do. It was never supposed to be 1:20:04.160 --> 1:20:09.040 a store of value. And it's shocking how obvious it 1:20:09.120 --> 1:20:10.880 is if you just think about it for a second. 1:20:11.439 --> 1:20:14.040 And these guys have been getting away with this bullshit 1:20:14.680 --> 1:20:17.400 for decades. I've heard that that was one of the 1:20:17.400 --> 1:20:20.200 things in the book. That man that was like I 1:20:20.240 --> 1:20:23.160 stubbed my toe on that twenty five years ago, and 1:20:23.200 --> 1:20:26.479 it's just slowly festered, and finally it all came out 1:20:26.479 --> 1:20:26.960 in the book. 1:20:34.800 --> 1:20:37.759 Let's back up, and let's look at it from a distance. 1:20:37.760 --> 1:20:40.880 If you look at the book in general, you say, 1:20:41.640 --> 1:20:46.480 everybody's full of shit. Nobody can forecast, whether it be CNBC, 1:20:46.800 --> 1:20:51.519 any other outlet, anybody. You said earlier, of course that 1:20:52.120 --> 1:20:55.599 they're selling something, they're getting paid in some way, right, 1:20:55.840 --> 1:21:00.720 do not trust them. Two, do not believe that you 1:21:00.760 --> 1:21:04.519 can pick stocks if for no other reason. Only a 1:21:04.680 --> 1:21:10.120 very small number of stocks actually are profitable. Three have 1:21:10.200 --> 1:21:12.920 a plan, which you referenced earlier, You want to go. 1:21:13.680 --> 1:21:18.519 Four put your money in index funds. So if we 1:21:18.720 --> 1:21:23.760 look at that from the beginning, let's start with the forecast. 1:21:23.840 --> 1:21:27.519 The advice are you used to in even research? Are 1:21:27.560 --> 1:21:29.800 you saying, really we should ignore all of that? 1:21:30.400 --> 1:21:33.920 No? No, And I talk about in the book you 1:21:34.040 --> 1:21:38.160 need to find people who are worthy of your time 1:21:38.200 --> 1:21:42.200 and attention. Right I create, I listed my personal all 1:21:42.200 --> 1:21:44.920 star team and a few names off the top of 1:21:44.920 --> 1:21:48.960 my head. Jason Zwig of The Wall Street Journal edited 1:21:49.040 --> 1:21:53.000 Danny Konneman's book Thinking Fast and Slow just has great 1:21:53.040 --> 1:21:56.920 insights into how people behave around money and the bad 1:21:56.960 --> 1:21:59.600 things they do and what we can learn from them. 1:21:59.640 --> 1:22:04.920 Sam Row writes about market structure and super insight insightful. 1:22:04.960 --> 1:22:08.840 My friend Jonathan Miller, my go to guy about real estate. 1:22:08.880 --> 1:22:12.960 Everything he writes about real estate is data driven, is 1:22:13.080 --> 1:22:17.759 based in reality, and he's been studying real estate for forty years, 1:22:18.200 --> 1:22:20.400 and on and on. I go through through the list 1:22:20.439 --> 1:22:26.120 of people who I find have some things in common. 1:22:26.720 --> 1:22:31.920 First of all, they've all they're all little seasons. They've 1:22:31.920 --> 1:22:34.639 been through cycles before, they know how the movie ends. 1:22:34.680 --> 1:22:38.560 They know you know this too, shell pass, So that's helpful. 1:22:38.760 --> 1:22:42.639 They have a defendable process. They're not just throwing darts. 1:22:42.680 --> 1:22:46.000 They're not just getting lucky. They think about markets from 1:22:46.080 --> 1:22:51.080 a broad perspective, and their insights and way of analyzing 1:22:51.160 --> 1:22:56.439 things and sharing that information is incredibly useful. But like 1:22:56.520 --> 1:22:59.479 Sturgeon's law, you know, ninety percent of the stuff coming 1:22:59.560 --> 1:23:05.640 out really isn't isn't useful. So the people on my 1:23:05.880 --> 1:23:09.679 All Star list, and you know I had a limited 1:23:09.760 --> 1:23:14.559 to ten. Who's writing about music, it's Bob left Sets 1:23:14.560 --> 1:23:18.840 and Ted Goya. Those are the people that I can 1:23:18.920 --> 1:23:22.360 rely on that I'm getting somebody who knows their industry, 1:23:22.439 --> 1:23:25.439 who knows the ups and downs, who's seen all the 1:23:25.600 --> 1:23:30.080 wartz in it, and basically can give you some insight 1:23:30.200 --> 1:23:34.880 into that, you know the fact that something's on TV 1:23:36.280 --> 1:23:40.320 on CNBC. I'm a big fan of Bob Pasani and 1:23:40.400 --> 1:23:45.240 Carl Kantonia. They're rational, they make sense. They could take, 1:23:45.800 --> 1:23:50.120 you know, what could be very emotional challenging things and 1:23:50.200 --> 1:23:52.680 put it into context. My partner Josh Brown is on 1:23:52.760 --> 1:23:56.200 CNBC two or three times a week, and I could 1:23:56.200 --> 1:23:58.879 always rely on him to be a voice of reason 1:23:59.280 --> 1:24:02.360 when everybody's running around with their hair on fire. But 1:24:02.560 --> 1:24:05.280 there's a bunch of people I could give you more 1:24:05.280 --> 1:24:10.960 people from CNBC. Santoli used to be over at Barons. 1:24:10.960 --> 1:24:15.479 He's at CNBC. Very very Mike Santoli, very rational guy. 1:24:16.120 --> 1:24:20.000 I like the way he thinks about the world. It's historical, 1:24:20.120 --> 1:24:24.719 it's analytical, and you know, you could go through sector 1:24:24.760 --> 1:24:28.799 bi sector. Dana Telsey has been covering retail for forever. 1:24:29.280 --> 1:24:32.800 Nobody understands the retail world better than her. So my 1:24:32.920 --> 1:24:35.439 advice to people is not to just say, hey, it 1:24:35.479 --> 1:24:38.920 all sucks, turn it off, because again, the world isn't 1:24:38.960 --> 1:24:41.559 black and white, it's nuanced. You have to be a 1:24:41.600 --> 1:24:44.800 little selective. You have to choose people who you know 1:24:45.360 --> 1:24:47.920 have a good track record. It's not just dumb luck. 1:24:48.280 --> 1:24:52.720 They're thoughtful, they're experienced, and they add value. There are 1:24:52.760 --> 1:24:56.360 lots of things out there. I had to stop my 1:24:56.479 --> 1:24:59.839 list at ten. I probably could have made it one hundred. 1:25:00.240 --> 1:25:02.680 There are so many great substacks out there. There's so 1:25:02.720 --> 1:25:07.920 many great sources. You'll as you go through the book, 1:25:07.960 --> 1:25:13.320 you'll find I'm coding everybody from Derek Thompson to trunk 1:25:13.400 --> 1:25:17.360 fan to on and on people with an expertise in 1:25:17.400 --> 1:25:21.360 a specific area that I've been watching them for years 1:25:21.960 --> 1:25:26.799 and realizing, oh, these guys are or girls are onto something. 1:25:27.360 --> 1:25:31.760 They're consistently more right than wrong. So I don't when 1:25:31.840 --> 1:25:34.280 it comes to you know, I don't want to just 1:25:34.320 --> 1:25:38.120 say turn off the TV, never open a newspaper, magazine again, 1:25:38.720 --> 1:25:43.440 just read nonfiction and books and novels. I think that's overstating, 1:25:43.439 --> 1:25:49.040 and I think you just have to be a little skeptical, 1:25:49.280 --> 1:25:54.840 be critical, and when you do decide to read someone 1:25:54.880 --> 1:25:58.320 on a regular basis and trust what they're saying, make 1:25:58.400 --> 1:26:01.719 sure they're worthy of your trust. I don't want to say, hey, 1:26:01.760 --> 1:26:04.640 everybody's full of shit and everybody's wrong, because I know 1:26:04.800 --> 1:26:07.719 that's not true, but enough people are full of shit 1:26:07.840 --> 1:26:10.479 and so many people have been wrong. You have to 1:26:10.520 --> 1:26:14.840 really be a little selective into who you're following, who 1:26:14.920 --> 1:26:20.400 you're taking advice from, and TikTok and Instagram Are you 1:26:20.520 --> 1:26:24.280 are you kidding me? Every It's not just the irs. 1:26:24.760 --> 1:26:29.120 I just got something from a friend. One of the 1:26:29.200 --> 1:26:34.080 journals of psychology has said had a whole article that 1:26:34.320 --> 1:26:38.200 all of this advice on how to manage ADHD on 1:26:38.280 --> 1:26:45.040 Twitter and TikTok. It's mostly wrong. It's not quite vaccine denial, 1:26:45.439 --> 1:26:47.720 but it's mostly wrong. And if you listen to this, 1:26:48.240 --> 1:26:50.800 you will it will not serve you well. And so 1:26:50.960 --> 1:26:54.759 this comes up on a regular basis. I talk about 1:26:54.800 --> 1:26:58.040 the Dunning Kruger effect in the book, which is our 1:26:58.160 --> 1:27:03.559 ability to evovaluate our own skill set, and we end up, 1:27:04.720 --> 1:27:08.960 as it turns out, that is a discrete skill, separate 1:27:09.000 --> 1:27:12.559 from the underlying skill. And so we have a tendency 1:27:12.600 --> 1:27:16.800 to think we have an ability to do something when 1:27:16.880 --> 1:27:20.720 often we don't. And then the next adjacent step to 1:27:20.800 --> 1:27:25.200 that is something called epistemic trespass when somebody is an 1:27:25.240 --> 1:27:28.280 expert in this area and they're like, what the hell, 1:27:28.320 --> 1:27:30.280 I'm an expert in this, I'm going to try my 1:27:30.360 --> 1:27:34.640 expertise in that field adjacent field When all right, you 1:27:34.680 --> 1:27:37.880 spent thirty years researching, writing, studying about this. You have 1:27:37.960 --> 1:27:39.759 a point of view, and you have a good track record. 1:27:39.800 --> 1:27:43.560 That's great in field A field B is wholly unrelated. 1:27:43.800 --> 1:27:45.920 Why would you imagine you have an expertise in that? 1:27:46.439 --> 1:27:50.799 But that's how us humans are. We step over the line, 1:27:50.880 --> 1:27:53.080 and you know, I give a lot of examples of 1:27:53.120 --> 1:27:57.880 people who are great real estate investors but terrible economic forecasters, 1:27:58.320 --> 1:28:02.360 and so epistemic trespasses is just another one of those examples. 1:28:02.640 --> 1:28:05.880 So if you find people who know what their skills are, 1:28:06.040 --> 1:28:10.160 stay within that, like the tennis, operate within their own 1:28:10.200 --> 1:28:14.000 abilities by all means, subscribe to their substracts, watch them 1:28:14.040 --> 1:28:18.000 on TV. But you have to go through that, you know, 1:28:18.160 --> 1:28:23.360 information hygiene process, that filtering process to get to the 1:28:23.400 --> 1:28:26.519 good stuff, because there's so much let's just call it 1:28:26.760 --> 1:28:30.720 noise that's distraction and doesn't help you get to where 1:28:30.760 --> 1:28:31.320 you have to go. 1:28:31.640 --> 1:28:34.439 Okay, let's go to the other end. So what I've 1:28:34.520 --> 1:28:38.559 learned is don't invest in pull my money out or 1:28:38.560 --> 1:28:41.599 put my money down on a whim. Put my money 1:28:42.040 --> 1:28:46.640 in index funds forgetting the super wealthy, forgetting people who 1:28:46.720 --> 1:28:51.400 have complicated income in the States and other things. Is 1:28:51.439 --> 1:28:54.519 that generally the advice and how does one do it? 1:28:55.120 --> 1:28:58.519 So that's the advice from Larren Buffett. He said, Hey, 1:28:58.520 --> 1:29:02.200 if you're not in, if you didn't participate in Berkshire 1:29:02.240 --> 1:29:06.200 Hathaway way back when, just buy the broad index. So 1:29:06.640 --> 1:29:09.000 you can do this with the S and P five hundred. 1:29:09.920 --> 1:29:12.160 You could do it with a broader index like the 1:29:12.280 --> 1:29:15.840 Vanguard Total Market, which is a little more diverse and 1:29:15.920 --> 1:29:19.240 a little less volatile, and that should be the core 1:29:19.520 --> 1:29:23.040 of your investment portfolio. I don't care if it's fifty 1:29:23.520 --> 1:29:27.759 sixty percent. Having some broad index, so you're at least 1:29:27.800 --> 1:29:31.120 going to get what the market gives you. That's your 1:29:31.160 --> 1:29:34.559 starting point if you are compelled, if this is the 1:29:34.640 --> 1:29:37.080 sort of thing that you really want to do, and 1:29:37.160 --> 1:29:41.519 you want to decorate the tree, says two Jews talking 1:29:41.560 --> 1:29:46.400 about finance, Well, the index is the tree, The ornaments, 1:29:46.439 --> 1:29:49.400 the lights, the garland, those were all the little seasonings. 1:29:49.840 --> 1:29:52.920 If you want to buy a tech fund, or if 1:29:52.960 --> 1:29:57.000 you want to add a shareholder yield fund or something 1:29:57.040 --> 1:30:00.320 like that, sure you could put whatever stink you on 1:30:00.479 --> 1:30:03.680 it knock yourself out, as long as you're starting from 1:30:03.760 --> 1:30:07.920 a core point of I'm not market timing, I'm not stockpicking. 1:30:08.120 --> 1:30:10.040 I'm just gonna buy the whole market and let it 1:30:10.120 --> 1:30:14.040 do its thing. History has told us that's the best 1:30:14.040 --> 1:30:17.799 way to accumulate wealth. When we look at the data, 1:30:18.040 --> 1:30:22.000 and there's there are a number of The SPIVA, which 1:30:22.040 --> 1:30:26.040 is the SNP Investor Analysis. Each year they do an 1:30:26.040 --> 1:30:29.759 annual report and they tell you how many mutual fund 1:30:29.800 --> 1:30:34.120 managers beat the index, beat their benchmark, and in any 1:30:34.160 --> 1:30:37.960 given year about half of them, a little more than 1:30:38.040 --> 1:30:40.720 half of them fail to beat the benchmark. So you're 1:30:40.720 --> 1:30:44.240 not even a fifty percent in year one, you go 1:30:44.400 --> 1:30:48.479 five years out net A fees, it's eighty three percent 1:30:48.520 --> 1:30:52.360 of them fail to beat the Plane Jain Boring index. 1:30:52.800 --> 1:30:56.960 You go ten years and you're in ninetieth percentile, and 1:30:57.000 --> 1:30:59.960 by the time you're twenty years out, it's essentially no, 1:31:00.000 --> 1:31:04.320 oh buddy. A handful of people, the Warren Buffets, the 1:31:04.360 --> 1:31:08.000 Peter Lynches of the world their household names because there's 1:31:08.040 --> 1:31:11.599 so few of them. But for those couple of guys, 1:31:12.120 --> 1:31:14.840 and even Warren Buffett will tell you the bulk of 1:31:14.880 --> 1:31:18.439 his outperformance was in the early part of his career. 1:31:18.520 --> 1:31:21.479 The latter part, you probably would have been better off 1:31:21.479 --> 1:31:27.120 in an index than Berkshire Hathaway. That's just the academic research, 1:31:27.200 --> 1:31:30.840 that's just the math. Start out, and you know, our 1:31:30.880 --> 1:31:36.839 whole business is so asked backwards. I started attracting capital 1:31:36.840 --> 1:31:39.639 from people because I would say, here's how you should invest. 1:31:39.680 --> 1:31:42.120 You could do it yourself. Buy a broad index. You 1:31:42.160 --> 1:31:44.280 want to diversify a little bit. Okay, you can own 1:31:44.280 --> 1:31:47.600 a little overseas assets, you can own some momentum, you 1:31:47.600 --> 1:31:52.120 can own shareholder yield India and Japan, look interest, whatever 1:31:52.160 --> 1:31:56.240 you wanna tag onto that. Knock yourself out, but start 1:31:56.280 --> 1:31:59.800 with this. Rebalance it every three years to whatever you're 1:31:59.800 --> 1:32:02.479 starting numbers are supposed to be. You know, if it's 1:32:02.479 --> 1:32:05.320 supposed to be sixty percent, it's run away, and it's 1:32:05.320 --> 1:32:08.040 now eighty percent of your portfolio. Right, cut a little back, 1:32:08.479 --> 1:32:11.320 put some of that into other the other holdings you have, 1:32:11.920 --> 1:32:16.000 and that's it. You're good for the next thirty forty years. 1:32:16.680 --> 1:32:20.960 Our whole business really grew from that because enough people said, yeah, 1:32:21.000 --> 1:32:22.880 that makes sense, but I don't trust myself, and I 1:32:22.880 --> 1:32:25.479 don't have the time or the interest. You do it, 1:32:26.080 --> 1:32:30.160 and so we started managing money for people kind of 1:32:30.160 --> 1:32:32.640 that way. The core is a broad index. Some of 1:32:32.680 --> 1:32:38.000 it's US, some of its overseas. We add certain flavors 1:32:38.040 --> 1:32:41.639 to it. Here's a little here's a little momentum, here's 1:32:41.680 --> 1:32:47.120 a little emerging market small cap value. Ultimately, ten twenty 1:32:47.200 --> 1:32:49.200 years down the road, you kind of end up in 1:32:49.200 --> 1:32:52.160 the same place. Anyway, we want to reduce a little 1:32:52.240 --> 1:32:54.559 volatility for our clients. We want to get to the 1:32:54.560 --> 1:32:57.840 same place, but without the crazy swings like we've seen 1:32:58.520 --> 1:33:01.880 the past few weeks. But it almost doesn't matter what 1:33:01.920 --> 1:33:07.120 the portfolio is. What matters is your behavior, because we 1:33:07.160 --> 1:33:10.439 see time and time again, if you just whatever that 1:33:10.479 --> 1:33:12.639 portfolio is, if you just let it do its thing 1:33:13.080 --> 1:33:16.680 for a few decades, it'll compound and add up to 1:33:16.760 --> 1:33:22.360 a shock shockingly large amount of money over the decades. Instead, 1:33:22.960 --> 1:33:24.920 we try and get in the way. I don't like 1:33:25.040 --> 1:33:27.479 this president, I don't like the way this market looks. 1:33:27.520 --> 1:33:29.880 I don't like I mean, I use the examples of 1:33:29.960 --> 1:33:34.479 Bush and Obama and Biden and Trump, and you know, 1:33:34.479 --> 1:33:39.120 there are some studies that have shown when a president 1:33:39.320 --> 1:33:43.040 of one party gets elected and you're looking at zip 1:33:43.080 --> 1:33:46.320 codes by how that zip code voted, if they didn't 1:33:46.400 --> 1:33:49.519 vote for that president, they end up selling a lot 1:33:49.520 --> 1:33:54.599 of equities by zip code and missing the ongoing rally. 1:33:55.120 --> 1:33:59.800 And it happened with Bush, it happened with Obama, it 1:33:59.800 --> 1:34:04.519 happened with Trump one, it happens with Biden, and it 1:34:04.600 --> 1:34:08.559 happened again with Trump two. That the fact that you 1:34:08.600 --> 1:34:13.960 don't like this guy's politics leads you to sell stocks. 1:34:14.560 --> 1:34:16.559 And you know, you go back to I think it's 1:34:16.640 --> 1:34:21.200 nineteen fifty, right. If you invest a dollar when Democrats 1:34:21.240 --> 1:34:25.000 were president, it turns into something like fifty two dollars. 1:34:25.040 --> 1:34:28.360 If you only invested when Republicans were president, it turns 1:34:28.400 --> 1:34:31.120 out to be forty eight dollars, And if you invested 1:34:31.200 --> 1:34:34.679 the whole time, it's two thousand dollars. So markets don't 1:34:34.720 --> 1:34:37.759 really give a crap about presidents. Now, if you're retiring 1:34:37.840 --> 1:34:42.120 next year and you're unhappy about all this volatility, Monday, 1:34:42.120 --> 1:34:45.640 there are tariffs Tuesday, they're off Wednesday. This we're recording 1:34:45.640 --> 1:34:49.120 on a day where a market scream hire because over 1:34:49.200 --> 1:34:53.000 the weekend Trump said, you know, maybe we'll reduce some 1:34:53.120 --> 1:34:54.960 of the tariffs and we'll make it more focused and 1:34:55.040 --> 1:34:57.080 it won't be as crazy, and like it was an 1:34:57.120 --> 1:34:59.840 offhand remark, and the next thing, you know, the markets 1:35:00.200 --> 1:35:03.360 to the races. So if you sold last week, you 1:35:03.439 --> 1:35:09.840 missed all of this. It's impossible to time his sort 1:35:09.880 --> 1:35:14.439 of crazy, erratic comments. And so I understand if you 1:35:14.479 --> 1:35:16.760 need the money in the next year or two, this 1:35:16.920 --> 1:35:19.479 is really disconcerting. But if you don't need the money 1:35:19.520 --> 1:35:22.559 for ten years, you have to look past the other 1:35:22.680 --> 1:35:26.760 side of this. Presidency, just as you had to look 1:35:26.840 --> 1:35:30.280 past the Biden presidency where stocks did really well, and 1:35:30.320 --> 1:35:33.200 you had to look past the first Trump presidency where 1:35:33.240 --> 1:35:37.160 stocks actually did even better despite the pandemic and everything. 1:35:37.600 --> 1:35:41.439 Trump had one of the best stop market returns from 1:35:41.720 --> 1:35:45.320 when he took office from twenty seventeen until when he 1:35:45.400 --> 1:35:50.320 left in a cloud from January sixth. It's not whose president. 1:35:50.360 --> 1:35:53.639 The presidents get way too much credit when the markets 1:35:53.680 --> 1:35:56.519 are doing well, and they get way too much blame 1:35:56.560 --> 1:35:59.840 when the economy and the markets are doing poorly. It's 1:35:59.880 --> 1:36:03.160 not just who's in the White House. It's a whole 1:36:03.200 --> 1:36:07.080 lot of moving parts. Politics is really just a teeny 1:36:07.160 --> 1:36:07.680 part of it. 1:36:15.720 --> 1:36:19.599 Okay, leaving finance out. Sure, there's a thought that, well, 1:36:19.640 --> 1:36:21.400 you know, the Democrats is going to be election in 1:36:21.439 --> 1:36:24.719 twenty twenty six, going to be election in twenty twenty eight, 1:36:25.240 --> 1:36:28.040 and you know, we'll see what happens, will roll the dice. 1:36:28.600 --> 1:36:33.000 Then there's a contrary thought that, well, no, we're moving 1:36:33.040 --> 1:36:35.559 into autocracy. This is a whole new error. W we're 1:36:35.560 --> 1:36:40.080 in a constitutional crisis. Two things, are you saying that 1:36:40.240 --> 1:36:44.400 the market exists outside of all of this, or you 1:36:44.680 --> 1:36:49.160 choose not to pay attention, or is it possible that 1:36:49.360 --> 1:36:52.760 we're entering a new era? You know. 1:36:54.320 --> 1:36:56.840 A little bit of all the above, and let me 1:36:56.960 --> 1:37:01.880 unpack each of those. So first I tell people tune 1:37:01.880 --> 1:37:04.680 out the noise. Right. I wrote a blog post a 1:37:04.720 --> 1:37:07.120 couple of weeks ago, Hey, listen, if you don't need 1:37:07.160 --> 1:37:08.960 your money for the next four years, you have to 1:37:08.960 --> 1:37:13.320 look through the Trump presidency to the other side. And 1:37:13.479 --> 1:37:17.920 regardless of what you think of him and the markets, 1:37:18.400 --> 1:37:22.400 you can't make investments based on what he's doing. You 1:37:22.479 --> 1:37:26.800 just can't. It's unpredictable, it's unforeseeable, and you can't just 1:37:26.920 --> 1:37:30.800 assume that whatever he does goes to hell. Now the 1:37:30.920 --> 1:37:33.839 narrative has changed in a couple of ways, because initially 1:37:33.880 --> 1:37:38.360 it was hey, tax cuts, Hey deregulation, business friendly environment. 1:37:38.760 --> 1:37:43.560 Markets ran up in anticipation of that, right up until 1:37:43.600 --> 1:37:47.800 February twenty twenty five, where oh, this guy's serious about 1:37:47.840 --> 1:37:51.120 these twenty five percent tariffs? What the hell? Then they 1:37:51.160 --> 1:37:53.720 were on again, off again, on again, off again, And 1:37:54.040 --> 1:37:57.080 the sentiment today seems to be, all right, this is 1:37:57.160 --> 1:37:59.800 all you know what, China hasn't treated us fairly. Maybe 1:37:59.800 --> 1:38:03.519 this should be more tariffs, but we're gonna definitely take 1:38:03.560 --> 1:38:06.519 it down a couple of notches. So those two things 1:38:06.520 --> 1:38:10.280 are right. I am not comfortable with a lot of 1:38:10.320 --> 1:38:14.559 the autocratic things we're reading about. And you know, if 1:38:14.600 --> 1:38:21.200 you read jv. Last and the Bulwark, he's pretty negative 1:38:21.320 --> 1:38:26.160 about the outcome of all this. The debate is will 1:38:26.360 --> 1:38:31.240 or won't Trump follow what court's rule? Is the rule 1:38:31.280 --> 1:38:35.840 of loss still in effect. After January sixth, I wrote 1:38:35.920 --> 1:38:38.480 up an analysis and kind of came to the conclusion 1:38:38.560 --> 1:38:41.360 that how is it possible that the US is four 1:38:41.400 --> 1:38:46.240 percent of the world's population, Right, we're about twenty percent 1:38:46.479 --> 1:38:51.160 of global GDP, but we're like fifty something percent of 1:38:51.200 --> 1:38:54.719 the total market cap of all the publicly traded stocks 1:38:54.760 --> 1:38:59.040 in the world. And the answer was three things, so 1:38:59.400 --> 1:39:06.040 sanctity of personal property, sanctity of contracts, and rule of law. 1:39:06.200 --> 1:39:09.360 And I kind of spitballed. That's worth about twenty five 1:39:09.720 --> 1:39:13.920 trillion dollars, right, And so that was the problem with 1:39:14.040 --> 1:39:18.719 January sixth was there's a whole political and partisan issue. 1:39:19.920 --> 1:39:23.240 There's a whole debate about the pardons. I don't really 1:39:23.240 --> 1:39:26.240 think there should be any debate there. There's a whole 1:39:26.360 --> 1:39:28.680 lot of stuff that's going on that a lot of 1:39:28.800 --> 1:39:33.160 thoughtful people are really unhappy with, regardless of party affiliation. 1:39:35.200 --> 1:39:39.040 But the real question is, hey, is there is there 1:39:39.640 --> 1:39:42.599 still going to be a rule of law? And some 1:39:42.800 --> 1:39:45.200 people are very negative and think that a lot of 1:39:45.240 --> 1:39:50.280 these things. We've seen some deportations and some issues. You 1:39:50.640 --> 1:39:54.760 had John Roberts, Chief Justice of the Supreme Court, who 1:39:54.800 --> 1:39:59.200 had an embarrassingly laughable, you know, dread Scott type of 1:39:59.240 --> 1:40:09.520 a opinion about the personal exemption from criminal liability for presidents, 1:40:10.439 --> 1:40:13.599 even if they're not quite doing their jobs, if they're 1:40:13.720 --> 1:40:18.280 sort of operating outside of that, Like law students centuries 1:40:18.280 --> 1:40:22.400 from now are gonna mock every jackass justice that signed that. 1:40:22.920 --> 1:40:28.479 Their whatever reputation they had flushed down the toilet. But 1:40:28.680 --> 1:40:33.120 now you have John Roberts coming out and rebooking, rebuking 1:40:33.360 --> 1:40:38.320 Trump for implying that courts don't apply to him, judges 1:40:38.360 --> 1:40:42.080 don't apply to him. I am not thrilled with how 1:40:42.120 --> 1:40:45.559 many you know, the Camelot and the Kennedy's were the 1:40:45.560 --> 1:40:49.479 best and the brightest. I'm not all that keen about uh, 1:40:50.280 --> 1:40:53.559 the worst and the dumbest that he surrounded himself with. 1:40:54.240 --> 1:40:58.439 And I can't disagree with friends who say he's doing 1:40:58.560 --> 1:41:01.599 permanent damage to a man in society, to the government. 1:41:02.560 --> 1:41:05.720 Michael Loui we talked about Michael Lewis's new book, Who 1:41:05.800 --> 1:41:10.240 Is Government. The stories in the book about what functions 1:41:10.320 --> 1:41:14.840 governments perform, the US government performs, and how crucial it 1:41:14.920 --> 1:41:19.479 is for the successful functioning of the US society is 1:41:20.560 --> 1:41:24.200 so perfectly timed. He just has a knack for skating 1:41:24.200 --> 1:41:28.680 to where the puck is. And it's really disheartening to 1:41:28.760 --> 1:41:32.080 see a lot of these things that what this is 1:41:32.160 --> 1:41:37.439 really a mass rapid privatization of the public commons. Here 1:41:37.439 --> 1:41:40.639 we are back to the tragedy of the commons. Somebody 1:41:40.640 --> 1:41:43.840 has figured out how to capture a lot of the 1:41:43.920 --> 1:41:47.160 value of the US government and bring for the private site. 1:41:47.360 --> 1:41:51.720 So that's the negative, that's the downside risk the positive, 1:41:51.720 --> 1:41:54.200 and it's always hard to be positive. You go back 1:41:54.240 --> 1:41:57.720 through history and you had the Red Scare and McCarthy, 1:41:57.760 --> 1:42:01.120 and you had, you know, the Japanese internment during World 1:42:01.120 --> 1:42:03.240 War Two, and then you had prohibition, and you had 1:42:04.800 --> 1:42:06.800 you know, to say nothing of the Civil War, and 1:42:06.840 --> 1:42:11.760 then all of the parts of the South that you know, 1:42:12.320 --> 1:42:16.479 never quite got over the Civil War and put a 1:42:16.520 --> 1:42:21.120 lot of laws into place that were just overtly unfair 1:42:21.120 --> 1:42:26.719 and overtly racist. And so we've come through a whole 1:42:26.760 --> 1:42:30.080 lot of problems in the United States, and it always 1:42:30.120 --> 1:42:33.519 feels terrible, it always looks terrible. I want to be 1:42:33.600 --> 1:42:35.839 a glass half full and not a glass half empty 1:42:35.880 --> 1:42:40.160 sort of guy and say, on the one hand, the 1:42:40.240 --> 1:42:43.320 United States has survived all these things. And then the 1:42:43.400 --> 1:42:46.759 second part of that is, and there's so much money 1:42:46.880 --> 1:42:51.360 at risk that I can't imagine that, you know, all right, 1:42:51.360 --> 1:42:53.200 a couple, a couple of the big law firms have 1:42:53.280 --> 1:42:57.799 knuckled under, and that's always disappointing to see. Paul Weiss 1:42:57.800 --> 1:43:03.160 in particular, is getting slagged these days for really whimping out. 1:43:03.240 --> 1:43:07.160 But they are part of the judicial system. They're part 1:43:07.200 --> 1:43:11.880 of the legal system, I think, and I'm hopeful that 1:43:12.240 --> 1:43:17.280 the financial system. You know, you saw what happened. He 1:43:17.439 --> 1:43:21.439 was acting erradically and saying wacky things and doing crazy 1:43:21.840 --> 1:43:25.240 shit with tariffs, and the market said, hold my beer, 1:43:25.400 --> 1:43:27.519 we don't want anything to do with this, and it 1:43:27.600 --> 1:43:30.840 started selling off. I don't think in my entire thirty 1:43:30.920 --> 1:43:35.000 years in finance, I have heard so much angst and 1:43:35.240 --> 1:43:40.160 anguish and complaints about a ten percent drop, you know, 1:43:40.360 --> 1:43:43.760 ten percent happens twice every three years, about once every 1:43:43.760 --> 1:43:47.519 eighteen months. It's not clockwork, but you look over a century, 1:43:47.560 --> 1:43:51.960 that's about the average. And so I think the takeaway 1:43:52.400 --> 1:43:55.360 is and I think, what the reason we had those 1:43:55.880 --> 1:44:00.479 constructive comments from him? He tweeted, once the Dow is 1:44:00.520 --> 1:44:04.200 down a thousand points in two days. Any president that 1:44:04.280 --> 1:44:08.320 has that should be impeached. Well, bad news. Don the 1:44:08.400 --> 1:44:11.080 Dow has been down a lot more than that on 1:44:11.960 --> 1:44:15.559 a short number of days. Your own standard is, hey, 1:44:15.560 --> 1:44:18.800 you're screwing up. If the market is your measure, and 1:44:18.920 --> 1:44:22.360 I know he looks at the market, it's pretty well understood. 1:44:22.800 --> 1:44:25.439 So I think that's a little bit of a check 1:44:25.920 --> 1:44:29.720 on his worst impulses, because if he does stuff and 1:44:29.760 --> 1:44:34.040 the market says, oh no, this won't stand that scene. 1:44:34.040 --> 1:44:35.439 I don't know if the courts are going to be 1:44:35.439 --> 1:44:41.000 a check on him. Certainly, unlike he's the president forty seven. 1:44:41.280 --> 1:44:45.120 When he was president forty five, there were pe adults 1:44:45.160 --> 1:44:49.240 around him that kind of restrained his worst impulses. He 1:44:49.320 --> 1:44:52.759 does not have that now. Now he's surrounded by people 1:44:52.800 --> 1:44:56.519 who were of the same ILKs and gold, to say 1:44:56.600 --> 1:45:03.080 nothing of the unelected Elmo doing his thing. So that's 1:45:03.120 --> 1:45:06.840 a real risk. It's a genuine risk. The follow up 1:45:07.400 --> 1:45:12.479 post to Lose the Noise was seven potential errors, and 1:45:12.560 --> 1:45:19.640 I named recession, market crash, dollars, geopolitical chaos. I went 1:45:19.680 --> 1:45:22.760 through like seven things and said, hey, four months ago, 1:45:22.960 --> 1:45:27.519 these were really low. Now they're still kind of low, 1:45:27.720 --> 1:45:32.040 but they're somewhat higher than where they were before January twentieth, 1:45:32.560 --> 1:45:35.439 and so I don't see a recession imminent. I don't 1:45:35.439 --> 1:45:38.240 see a market crash imminent. I don't see a collapse 1:45:38.280 --> 1:45:43.200 of the US dollar happening anytime soon. But all of 1:45:43.240 --> 1:45:47.960 those things are now higher probabilities of occurring than they 1:45:48.000 --> 1:45:52.920 were before the noise. I don't you know, people think 1:45:52.960 --> 1:45:56.599 they know my politics, They really don't. My favorite thing 1:45:56.640 --> 1:45:59.280 about Biden was I didn't have to hear from him 1:45:59.280 --> 1:46:05.519 every day, and the constant noise out of this White 1:46:05.560 --> 1:46:10.840 House will see if it kind of fades. So if 1:46:10.880 --> 1:46:15.320 you remember in twenty sixteen, when Trump was elected but 1:46:15.520 --> 1:46:19.360 not inaugurated until January twenty of twenty seventeen, he was 1:46:19.400 --> 1:46:23.760 tweeting at people, he was calling them names. I love 1:46:23.840 --> 1:46:27.400 Tim Apple, Tim Cook of Apple was Tim Apple, And 1:46:27.880 --> 1:46:29.720 the first couple of months of him doing this. Every 1:46:29.760 --> 1:46:33.519 time he would single out a company, the stock would 1:46:33.560 --> 1:46:36.080 get shellacked. For a couple of days, it would get whacked, 1:46:36.400 --> 1:46:39.280 and then people kind of figured out, oh, this is 1:46:39.439 --> 1:46:42.200 just paper tiger stuff. He's not going off after any 1:46:42.240 --> 1:46:46.439 of these companies, unlike China where they're unhappy with a 1:46:46.479 --> 1:46:50.080 couple of companies and they disappear the CEOs for a 1:46:50.080 --> 1:46:54.240 few years. We still have contract rights, property rights, rule 1:46:54.240 --> 1:46:57.360 of law, and it's worth tens of trillions of dollars. 1:46:57.760 --> 1:47:01.760 So he hasn't been doing as much of that nonsense 1:47:01.880 --> 1:47:04.960 as he did last time. I think he's been focused 1:47:05.000 --> 1:47:09.840 on a different agenda. So I don't again it's nuanced. 1:47:09.880 --> 1:47:11.840 I don't want to just say tune it out, because 1:47:11.840 --> 1:47:15.479 you really can't, but you have to put it into context. Then, 1:47:15.520 --> 1:47:18.080 one of the things I wrote in Tune out the 1:47:18.120 --> 1:47:22.120 Noise was, Hey, it's been three weeks of tariff stuff. 1:47:22.280 --> 1:47:26.360 Tariff stuff. Tariffs were on, tarafts were off, tariffs with 1:47:26.400 --> 1:47:30.160 Canada and Mexico, and then Canada and Mexico agreed to 1:47:30.200 --> 1:47:33.320 do shit they were already doing. Then the tarafts were off, 1:47:33.560 --> 1:47:35.360 Then the taraffs came back, and then this taffs for 1:47:35.439 --> 1:47:41.679 Europe and taraffs for China. China is a much savvy, 1:47:42.280 --> 1:47:46.800 savvyer geopolitical player than I think a lot of people 1:47:46.880 --> 1:47:51.240 give them credit for. And so China turned around and said, 1:47:51.720 --> 1:47:55.120 what are the reddest of the red districts? Great, we're 1:47:55.120 --> 1:47:58.200 not buying your soybeans. You're gonna put tariffs on us. 1:47:58.400 --> 1:48:00.799 We're not buying your soy beans, We're not buying your cars, 1:48:00.840 --> 1:48:03.960 we're not buying your liths. And they're going to say, 1:48:04.040 --> 1:48:06.400 you want to tarif us, We're going to tarify you back. 1:48:06.960 --> 1:48:11.679 Same thing kind of with Canada. What are you talking 1:48:11.720 --> 1:48:17.520 about Canada? Like when you build a car in North America. 1:48:17.840 --> 1:48:22.160 By the way, forty five negotiated the More North American 1:48:22.160 --> 1:48:26.240 Trade Agreement, which forty seven criticized. It's like, dude, that 1:48:26.360 --> 1:48:29.439 was yours. What do you mean? So parts are made 1:48:29.520 --> 1:48:32.400 in some places, they're shipped to other places, they're assembled, 1:48:32.760 --> 1:48:37.120 they get chipped into other places. The tariffs that were 1:48:37.160 --> 1:48:40.840 proposed would have raised the cost of US cars. I 1:48:40.880 --> 1:48:44.559 think it was something like twelve grand, and Japanese cars 1:48:44.600 --> 1:48:48.559 something like eight grand. Even the Japanese cars made in 1:48:48.680 --> 1:48:51.880 all the plants. There's Honda plants here there's Tiota plants here, 1:48:52.200 --> 1:48:56.720 just as there's Mercedes and BMW plants. They didn't go 1:48:56.840 --> 1:48:59.679 to the Midwest. They went to the union free places 1:49:00.120 --> 1:49:02.880 like Alabama, and you look at all these different places 1:49:02.880 --> 1:49:08.200 where these cars are made. I'm this is wishful thinking 1:49:08.240 --> 1:49:10.719 on my part. I don't know how this plays out. 1:49:11.200 --> 1:49:14.680 I don't imagine it goes on forever. I don't even 1:49:14.720 --> 1:49:18.559 think it goes on for four years. I think two. 1:49:18.640 --> 1:49:22.519 I'm hopeful that two years from now, you know, Obama 1:49:22.560 --> 1:49:25.920 got elected, big swing to the left. What happens during 1:49:25.960 --> 1:49:29.840 the midterm elections, swings back and now you have to 1:49:29.880 --> 1:49:32.719 reach a course the isle and negotiate the way every 1:49:32.760 --> 1:49:37.320 president is done for for forever. Hopefully we see a 1:49:37.320 --> 1:49:41.559 little more of that, a little more negotiation. A lot 1:49:41.640 --> 1:49:46.120 of Republican congressmen have been afraid of getting primaried from 1:49:46.160 --> 1:49:49.040 the right, and what we've been seeing in these deep 1:49:49.080 --> 1:49:53.040 red states. And this isn't Antifa showing up, this isn't 1:49:53.400 --> 1:49:56.799 Democrats showing up. These are Republicans showing up and booing 1:49:56.800 --> 1:50:00.559 their congressmen. I think they should start to get worried 1:50:00.920 --> 1:50:04.240 about being primaried from the middle right. They're not going 1:50:04.280 --> 1:50:06.920 to be primaried from the left and the far right. 1:50:07.040 --> 1:50:11.320 People are unhappy about Wait, my social security is getting cut. 1:50:11.479 --> 1:50:14.160 I have to call the Social Security office. You fired 1:50:14.200 --> 1:50:17.280 all the people to answer the phones. Like. It's kind 1:50:17.280 --> 1:50:23.640 of fascinating watching all these groups suddenly realize, Hey, we 1:50:23.680 --> 1:50:25.840 should have been a little more skeptical, we should have 1:50:25.880 --> 1:50:28.599 been a little less gullible, we should have thought about 1:50:28.680 --> 1:50:32.519 this a little more critically before we cast our vote, 1:50:32.520 --> 1:50:36.280 because this isn't what we were voting for. And so 1:50:37.400 --> 1:50:40.160 I don't care if it's politics or investing or what 1:50:40.320 --> 1:50:45.440 have you. You really have to think about things intelligently, 1:50:45.680 --> 1:50:49.960 not just make emotional decisions off the seat of your pants, 1:50:50.680 --> 1:50:54.160 because you end up either with a portfolio you're unhappy 1:50:54.200 --> 1:50:57.840 with or a Congress you're unhappy with. And you know 1:50:58.640 --> 1:51:01.920 what is today, we're recording the towards the end of March, 1:51:02.520 --> 1:51:09.400 so we're barely two months into this presidency. I can't 1:51:09.439 --> 1:51:12.479 imagine the sort of mayhem is going to keep up forever. 1:51:12.960 --> 1:51:16.559 I kinda I'm hoping that they settle into a groove, 1:51:17.200 --> 1:51:20.480 the noise level comes down and some of the volatility 1:51:20.520 --> 1:51:24.320 goes away. But truth be told, that's wishful thinking I 1:51:24.360 --> 1:51:26.240 have no idea what's going to happen. 1:51:26.280 --> 1:51:30.440 Okay, let's go back. Let's say I'm just an individual 1:51:32.120 --> 1:51:35.120 and I buy an index. Fun is it set it 1:51:35.360 --> 1:51:38.680 and forget it like wrong for Peal? Or do I 1:51:38.760 --> 1:51:42.240 have to like anybody else three, four or five years ago, 1:51:42.400 --> 1:51:44.320 I have to do my own rebalancing. 1:51:46.200 --> 1:51:48.479 You know, it depends on how much money you're starting with, 1:51:48.600 --> 1:51:52.240 and how what your age is. If you're a twenty 1:51:52.280 --> 1:51:55.439 something thirty something and you're throwing a couple of hundred 1:51:55.479 --> 1:51:58.800 bucks into the market every month, one hundred bucks every 1:51:58.800 --> 1:52:02.760 other paycheck, whatver it is, you don't really have to 1:52:02.800 --> 1:52:04.599 pay a lot of attention to it. You can let 1:52:04.640 --> 1:52:08.160 it do its thing. If you're coming up on retirement, 1:52:08.760 --> 1:52:11.519 well then you probably want to have a mix of 1:52:11.600 --> 1:52:14.879 stocks and bonds. You probably don't want to be pure equity. 1:52:15.920 --> 1:52:19.800 We used to talk about the sixty forty portfolio. You 1:52:19.880 --> 1:52:23.799 run into a longevity problem with that because when social 1:52:23.800 --> 1:52:27.280 security was set up, Hey, you'd retire at sixty five, 1:52:27.640 --> 1:52:30.080 you'd play a few rounds of golf, you drop dead. 1:52:30.200 --> 1:52:30.519 That's it. 1:52:30.600 --> 1:52:34.519 You're done. If you make it today, the odds are 1:52:34.560 --> 1:52:37.360 if you make it to sixty five today, and I 1:52:37.400 --> 1:52:40.200 just saw with the Bill Burr Special, so drop dead 1:52:40.520 --> 1:52:43.080 years just kind of is stuck in my head. But 1:52:43.680 --> 1:52:45.559 if you make it to sixty five, the odds are 1:52:45.560 --> 1:52:47.760 you're going to make it to eighty eighty five, maybe 1:52:47.800 --> 1:52:51.120 even ninety, And so your money has to last that 1:52:51.280 --> 1:52:56.160 much longer than it used to, and so sixty forty 1:52:56.280 --> 1:52:59.639 might not be enough equity to cover that. So maybe 1:53:00.080 --> 1:53:04.720 you stay with a seventy thirty portfolio until you're pick 1:53:04.760 --> 1:53:07.920 a number seventy five, and then you can throttle back 1:53:08.000 --> 1:53:11.320 the equity and have a little less volatility. But when 1:53:11.320 --> 1:53:14.640 I say rebalance, what I mean is if your portfolio 1:53:14.840 --> 1:53:21.040 is sixty percent Vanguard Total Market and five percent whatever 1:53:21.120 --> 1:53:25.000 the next eight things, over the course of time, those 1:53:25.080 --> 1:53:28.400 numbers will get out of whack, and every couple of 1:53:28.439 --> 1:53:31.920 years you should. By the way, the software, I don't 1:53:31.960 --> 1:53:34.720 care if you're with Fidelity or Schwab or Think or 1:53:34.720 --> 1:53:40.280 Swim or what or Morgansteen, whatever e Trade, whatever online 1:53:40.280 --> 1:53:43.360 broker you're using. There you push your button and it 1:53:43.400 --> 1:53:47.040 automatically you can set your portfolio up to say here's 1:53:47.080 --> 1:53:50.200 my portfolio. I want to rebalance this every three years, 1:53:51.040 --> 1:53:53.400 or I want a notification when it gets more than 1:53:54.000 --> 1:53:58.360 five percent away from my starting percentages. The technology has 1:53:58.400 --> 1:54:01.599 made it really simple to do that. It's not eight 1:54:01.640 --> 1:54:05.479 guys in green visors in the basement working around the clock, 1:54:06.040 --> 1:54:08.920 it's the software just makes it fast and easy to do. 1:54:09.439 --> 1:54:15.320 Okay, generally speaking, should I buy the dip? I'm talking 1:54:15.360 --> 1:54:19.120 about significant when the market is off ten percent and 1:54:19.160 --> 1:54:22.400 we've already established the average person doesn't know what to 1:54:22.520 --> 1:54:25.160 buy and there was only a few stocks that will 1:54:25.160 --> 1:54:26.760 pay them a long difference. But if you say, well, 1:54:26.800 --> 1:54:29.360 you know, stock down ten percent, I should buy Microsoft 1:54:29.360 --> 1:54:32.400 and Apple and a Nvidia. 1:54:32.560 --> 1:54:35.640 So here's the way I look at the world. And 1:54:35.840 --> 1:54:37.920 by the way, I love this question. Here's the way 1:54:37.960 --> 1:54:39.480 I look at the world. You go back, you look 1:54:39.480 --> 1:54:42.360 at the math. How often are we down ten percent? Hey, 1:54:42.440 --> 1:54:45.920 twice every three years? Are you better off buying the dip? 1:54:45.960 --> 1:54:49.840 Are you better off making regular contributions come hell or 1:54:49.920 --> 1:54:54.600 high water every month dollar cost averaging? We've done studies 1:54:54.600 --> 1:54:57.440 about this. If you have a windfall and a lump 1:54:57.520 --> 1:54:59.760 sum of money, are you better off putting the money 1:54:59.800 --> 1:55:02.480 all and it wants? You're better off spreading it out. 1:55:03.880 --> 1:55:06.360 So there are a lot of variations on this But 1:55:07.920 --> 1:55:09.960 the first thing is I have to ask the question, 1:55:10.440 --> 1:55:12.720 do you really want to pay that close attention to 1:55:12.760 --> 1:55:16.000 the market? Do you want to buy every ten, twenty percent, 1:55:16.040 --> 1:55:18.120 thirty percent down? Is that something? Is that how you 1:55:18.120 --> 1:55:20.960 want to spend your time. If the answer is yes, 1:55:21.040 --> 1:55:24.040 I really like tracking the market in the economy, and 1:55:24.120 --> 1:55:27.879 I could manage my own behavior and I feel comfortable 1:55:27.920 --> 1:55:30.800 doing this, then here's what I would say to people. Hey, 1:55:30.840 --> 1:55:33.040 you should be putting money into your four to oh 1:55:33.080 --> 1:55:36.600 one K or your portfolio every month. The little money 1:55:36.600 --> 1:55:39.640 comes out of your paycheck every month to do this. 1:55:40.800 --> 1:55:44.440 Anytime the market's down ten percent, you want to double 1:55:44.560 --> 1:55:47.520 up and throw a little more money in. Great, the 1:55:47.560 --> 1:55:49.560 odds are that's going to work out in your favor. 1:55:50.360 --> 1:55:54.600 Anytime the market is down twenty percent, guess what. Well, 1:55:54.680 --> 1:55:58.920 Now that happens even less frequently we get down twenty percent, 1:55:59.560 --> 1:56:02.120 I want to say, once every four or five years, 1:56:03.160 --> 1:56:07.000 step up, increase that cash flow even more into the market. 1:56:07.240 --> 1:56:10.560 What about down thirty percent? Hey, we were down thirty 1:56:10.560 --> 1:56:14.400 four percent in twenty twenty. We were down much more 1:56:14.440 --> 1:56:17.560 than thirty percent in eight oh nine, we were down 1:56:17.720 --> 1:56:22.480 thirty percent in two thousand. You go back to nineteen 1:56:22.520 --> 1:56:25.320 eighty seven, the crash was just twenty two percent. For 1:56:25.360 --> 1:56:27.560 the whole year, you were from peak to trough, you 1:56:27.600 --> 1:56:31.080 were down over thirty percent. Anytime markets in the US 1:56:31.280 --> 1:56:34.320 go back to nineteen twenty nine, anytime you're down thirty percent, 1:56:35.560 --> 1:56:39.080 back up the truck. Buy as much as you can afford. 1:56:39.160 --> 1:56:41.920 Don't borrow money to do this. But if you have 1:56:41.960 --> 1:56:47.120 spare cash, absolutely down thirty percent, buy the caveat is under. 1:56:48.400 --> 1:56:51.520 For the vast, vast majority of people, it will be 1:56:51.600 --> 1:56:55.040 the most difficult thing in their life to fight the 1:56:55.040 --> 1:56:59.360 negative hair headlines, to fight the panic, and actually be 1:56:59.440 --> 1:57:02.600 a contral and do the opposite of what most of 1:57:02.600 --> 1:57:06.480 the crowd is doing, which is panic selling ps. Down 1:57:06.560 --> 1:57:09.400 thirty percent doesn't mean you're not gonna end up down 1:57:09.440 --> 1:57:13.040 forty or fifty percent. Uh eight oh nine, you were 1:57:13.080 --> 1:57:16.400 down fifty six percent, seventy three, seventy four, down fifty 1:57:16.400 --> 1:57:21.760 seven percent. It happens all too frequently, and you just 1:57:21.840 --> 1:57:24.320 have to be prepared. Hey, I'm gonna throw a little 1:57:24.320 --> 1:57:26.520 more money in down ten percent, a little more down 1:57:26.520 --> 1:57:30.720 twenty into broad index funds. If you're picking a stock, 1:57:31.320 --> 1:57:34.800 you got to make sure that down forty percent you're 1:57:34.800 --> 1:57:38.480 not buying a Lehman Brothers or Silicon Valley Bank or 1:57:39.080 --> 1:57:41.320 you know, an en Run. So when you buy a 1:57:41.360 --> 1:57:43.840 broad index, you don't have to worry about it going 1:57:43.840 --> 1:57:46.600 to zero. You have to worry about it doing poorly 1:57:46.840 --> 1:57:52.040 for a decade or so. And the if buying down 1:57:52.080 --> 1:57:55.120 thirty percent is hard. You look at market history and 1:57:55.160 --> 1:57:58.320 you see nineteen sixty six to nineteen eighty two the 1:57:58.400 --> 1:58:01.680 Dow kissed one thousand and ninety sixty six. It didn't 1:58:01.680 --> 1:58:04.600 get over that on a permanent basis till nineteen eighty two, 1:58:05.160 --> 1:58:08.720 and that's before we start talking about inflation. So sixteen 1:58:08.840 --> 1:58:13.520 years your return is effectively zero. Then you adjusted for inflation, 1:58:13.680 --> 1:58:17.160 your turn is down sixty or seventy percent, and inflation 1:58:17.240 --> 1:58:20.760 adjusted returns. But if you diligently put money in the 1:58:20.760 --> 1:58:24.880 market every month over those miserable sixteen years, well from 1:58:24.920 --> 1:58:27.320 eighty two to two thousand the market was up one 1:58:27.320 --> 1:58:31.640 thousand percent, and that's where you know you really kill it. 1:58:31.800 --> 1:58:35.040 So the fact that markets go through these long periods 1:58:35.080 --> 1:58:38.120 of time where and I don't believe we're in one 1:58:38.160 --> 1:58:40.840 of those periods. Now, they'll go through a secular bear 1:58:40.960 --> 1:58:44.400 market where it's flat to negative for ten fifteen years. 1:58:45.120 --> 1:58:48.160 That's an opportunity to save. It's going to feel terrible, 1:58:48.480 --> 1:58:50.080 but when you're on the other side of it, it 1:58:50.120 --> 1:58:55.360 feels great. So long answer cut down to short a 1:58:55.400 --> 1:59:00.200 little at ten twenty thirty percent. But even buying down 1:59:00.240 --> 1:59:02.600 thirty percent is no guarantee that the market bottoms and 1:59:02.640 --> 1:59:07.600 turns around. Every generation we see a down fifty percent, 1:59:08.080 --> 1:59:13.320 and that's an amazing buying opportunity. Nineteen twenty nine being 1:59:13.360 --> 1:59:16.480 the exception. Down fifty percent. Hey, you still had a 1:59:16.680 --> 1:59:21.280 whole lot way to go before the market's recovered. But 1:59:21.360 --> 1:59:24.400 it's a different world. It's a different market than it 1:59:24.520 --> 1:59:31.600 was a century ago. 1:59:33.960 --> 1:59:39.480 Okay, left Field, Steve Cone, the SEC cracks down, he 1:59:39.560 --> 1:59:44.040 turns it into a family office. That period of time expires. 1:59:44.600 --> 1:59:48.760 He says that he's getting these amazing returns. Is he 1:59:49.080 --> 1:59:52.680 just brilliant lucky or is it fraud? 1:59:52.920 --> 1:59:57.080 So I don't think it's fraud. He's just been doing 1:59:57.120 --> 2:00:01.400 it too long with too many employees. You know, if 2:00:01.480 --> 2:00:08.400 you read the book by Ryan Holiday about conspiracy about 2:00:08.400 --> 2:00:11.600 the Hulk Holgan thing, two people knew and they couldn't 2:00:11.680 --> 2:00:14.920 keep it a secret. So the thing that always cracks 2:00:14.960 --> 2:00:18.680 me up about the moon landing was faked. They're like 2:00:18.960 --> 2:00:22.320 forty thousand people working at NASA, how on Earth? And 2:00:22.920 --> 2:00:29.440 ten thousand worked on the lunar Apollo missions. How you 2:00:29.480 --> 2:00:31.240 going to get ten thousand people to keep a secret 2:00:31.240 --> 2:00:33.520 if you can't get three people to keep a secret. 2:00:33.960 --> 2:00:37.320 So I don't think there's any fraud there. It would 2:00:37.320 --> 2:00:42.720 have come out number one, number two. He is one 2:00:42.760 --> 2:00:48.200 of those Michael Jordan type gifted mutants that does things 2:00:48.280 --> 2:00:52.000 that the average person simply cannot do. And you can 2:00:52.120 --> 2:00:55.600 name a bunch of them, Renaissance technologies in Jim Simon's 2:00:55.680 --> 2:01:00.080 d E Shaw, David Shaw, there are Jane Street Tray. 2:01:00.600 --> 2:01:05.320 There are a handful of these companies that have just 2:01:05.680 --> 2:01:10.480 shot the lights out for decades. They don't want your money. 2:01:10.760 --> 2:01:13.720 You don't have enough money to give them. And if 2:01:13.720 --> 2:01:16.400 you have a billion dollars maybe they'll talk to you. 2:01:16.920 --> 2:01:19.080 But and even then they don't want to put you 2:01:19.120 --> 2:01:22.640 in their flagship funds because they tend not to do 2:01:22.720 --> 2:01:25.640 as well. They tend to do really well, and they 2:01:25.640 --> 2:01:28.040 don't do as well when too much money flows in. 2:01:28.600 --> 2:01:31.760 So yeah, if you have the opportunity to be in 2:01:32.160 --> 2:01:37.880 a top ten funds by all means. Jim Chano said this, 2:01:37.960 --> 2:01:39.880 and I'm pretty sure I put this in the book, 2:01:40.080 --> 2:01:42.840 but I'm in quoting it for forever. He was a 2:01:42.880 --> 2:01:46.200 short seller and a hedge fund manager. He's semi retired 2:01:46.760 --> 2:01:50.800 and ran Kinnekosa Associates, and he said, when I started 2:01:50.840 --> 2:01:53.840 forty years ago in the nineteen eighties, there were one 2:01:53.920 --> 2:01:57.960 hundred hedge fund managers, and all of them produced alpha, 2:01:58.080 --> 2:02:01.920 all of them beat the market, They produced amazing returns. 2:02:02.360 --> 2:02:05.360 Now there's ten thousand hedge funds, it's kind of the 2:02:05.400 --> 2:02:11.200 same one hundred guys still producing great returns. The problem, 2:02:11.360 --> 2:02:14.600 as we've expanded to three trillion dollars in hedge funds 2:02:15.000 --> 2:02:18.120 and I think it's eleven thousand funds now, is you 2:02:18.240 --> 2:02:22.880 dilute the talent. It makes the market more efficient. The 2:02:22.920 --> 2:02:25.440 way a lot of these funds make their money is 2:02:25.480 --> 2:02:31.160 they identify an inefficiency and they sort of, you know, 2:02:31.480 --> 2:02:37.360 mine that vein until it's exhausted. And as an inefficient market, 2:02:37.440 --> 2:02:40.800 as the price is closed, the inefficiency goes away. So 2:02:40.920 --> 2:02:45.120 Renaissance Technologies, Jim Simon's just passed away a few years ago, 2:02:45.640 --> 2:02:48.800 was head of He was a codebreaker for the NSA 2:02:49.480 --> 2:02:53.480 disagreed with them about Vietnam and left. He eventually, I 2:02:53.480 --> 2:02:56.040 think he started an MIT, ended up at Sonny Stonybrook 2:02:56.040 --> 2:02:59.839 where I went to college, eventually led the math department, 2:02:59.840 --> 2:03:04.840 and then he launched Renaissance. And they have like they 2:03:04.880 --> 2:03:07.680 don't hire people from Wall Street. They have hundreds and 2:03:07.760 --> 2:03:14.360 hundreds of applied physics and coders and math whizzes, and 2:03:14.400 --> 2:03:19.840 they're using computer technology long before most other firms were 2:03:20.480 --> 2:03:25.680 to identify these little anomalies to capture whatever the gap 2:03:25.800 --> 2:03:30.200 is and to close the trade out quickly. They supposedly 2:03:30.280 --> 2:03:32.760 I think it was Greg Zuckerman's book, The Man Who 2:03:32.800 --> 2:03:35.840 Beat the Markets. It's really the man who figured out 2:03:37.320 --> 2:03:41.800 how to trade on a very profitable basis. Nobody's even 2:03:41.880 --> 2:03:44.160 close to them. They put up like sixty percent a 2:03:44.280 --> 2:03:47.920 year for forty years. The numbers are just mind blowing. 2:03:48.400 --> 2:03:52.640 And it's not anyone fund. It's an entire organization that 2:03:52.720 --> 2:03:57.000 deploys hundreds and hundreds of different strategies, and as long 2:03:57.040 --> 2:04:01.440 as each strategy generates enough return, they keep doing it, 2:04:01.480 --> 2:04:04.840 and they keep tweaking this when they their core fund, 2:04:04.880 --> 2:04:08.920 the medallion funds, when they opened it, so after a 2:04:08.960 --> 2:04:12.720 few years they essentially kicked out all their outside investors, 2:04:12.760 --> 2:04:15.360 returned their money and said, this is just for us 2:04:15.720 --> 2:04:18.200 because it worked if it had, you know, a billion 2:04:18.240 --> 2:04:20.200 dollars in it, When it had three or four billion, 2:04:21.280 --> 2:04:24.920 you couldn't generate those sort of returns. It's the inefficiencies 2:04:24.960 --> 2:04:27.480 are that small, all right. And when I say a 2:04:27.480 --> 2:04:31.960 billion dollars is small, US equity markets are fifty sixty seven. 2:04:32.080 --> 2:04:35.720 It depends on what we close today. Trillion dollars A 2:04:35.760 --> 2:04:41.120 billion dollars is pocket change, but at sixty percent compounded, 2:04:41.160 --> 2:04:45.200 it's just an astonishing amount of money. That was one 2:04:45.400 --> 2:04:50.320 organizational approach to Shaw is a very specific quantitative approach. 2:04:51.160 --> 2:04:56.360 Jane Street Trading has figured out Citadel Millennium. There's like, 2:04:56.360 --> 2:04:58.120 like I know the names off the top of my 2:04:58.200 --> 2:05:01.800 Head's cause year in, year out, these guys are at 2:05:01.840 --> 2:05:04.400 the top of the league charts. They're putting out numbers. 2:05:04.720 --> 2:05:10.760 They all have outside investors, they're all audited sacks. Steve 2:05:10.840 --> 2:05:15.360 Cohen's original funds became a family office and now it's 2:05:15.480 --> 2:05:19.760 point seventy two. They have, you know, mainstream auditors. People 2:05:19.840 --> 2:05:22.320 are looking at the books. I would be stunned if 2:05:22.360 --> 2:05:25.920 any of them were doing anything you know, way too 2:05:25.960 --> 2:05:32.080 far off the reservation, and people figure out ways to 2:05:32.200 --> 2:05:37.640 identify these little inefficiencies. Citadel Ken Griffin runs Citadel. They 2:05:37.640 --> 2:05:41.640 were one of the earliest high frequency traders. They figured out, 2:05:41.760 --> 2:05:46.680 as the Nasdaq and the NYC, we're moving to electronic trading, 2:05:47.320 --> 2:05:50.760 how can we do this cheaper, faster, better than everybody 2:05:50.840 --> 2:05:55.960 else and capture you know, the market does hundreds of 2:05:56.080 --> 2:05:59.560 billions of shares a day. If you can find out 2:06:00.720 --> 2:06:03.400 we want to buy buy this at a dollar fifty 2:06:03.440 --> 2:06:05.800 seven and sell it at a dollar fifty eight to 2:06:06.160 --> 2:06:08.920 make a market for somebody. If you could do that 2:06:09.120 --> 2:06:12.680 billions and billions of time, it adds up. So that 2:06:12.840 --> 2:06:16.760 was their genius high frequency training. Each one of these 2:06:17.040 --> 2:06:21.640 giant funds, giant hedge funds that have been so successful, 2:06:21.880 --> 2:06:25.360 they've all like the six blind men describing the elephant. 2:06:25.600 --> 2:06:32.480 They've all figured out different ways to identify something that 2:06:32.520 --> 2:06:37.320 the market doesn't understand. First, get in there, capture the profit, 2:06:37.400 --> 2:06:40.160 and get out and then move on to the next thing. 2:06:40.600 --> 2:06:44.600 And I mean that's really a gross oversimplification, but they've 2:06:44.600 --> 2:06:48.200 been so consistent over you know, at least the top 2:06:48.320 --> 2:06:52.200 twenty have been so consistent over time. It's kind of shocking. 2:06:52.480 --> 2:06:54.480 Every now and then they have a bad year, they 2:06:54.480 --> 2:06:59.200 have an off year. But and that's kind of makes 2:06:59.240 --> 2:07:03.360 me hopeful because I don't imagine these guys are going 2:07:03.440 --> 2:07:07.480 to allow the guys in DC to mess it up. 2:07:07.880 --> 2:07:10.879 They just have too much money at risk. Steve Cohen 2:07:11.040 --> 2:07:13.360 just bought the New York Knicks. What do you mean 2:07:13.400 --> 2:07:16.560 You're gonna put tariffs on this stuff? Like, I'm hopeful that, 2:07:17.280 --> 2:07:19.800 you know, I can't say I've been the world's biggest 2:07:19.800 --> 2:07:23.480 fan of the point one percent. I'm hoping that for 2:07:23.600 --> 2:07:28.520 a change, the point one percent's interest now aligns with 2:07:28.560 --> 2:07:32.720 the rest of Americas. And Hey, we want a functioning economy, 2:07:32.760 --> 2:07:35.200 we want to functioning market, we want the rule of law. 2:07:35.600 --> 2:07:38.640 This is important. Please don't let this go to help. 2:07:38.800 --> 2:07:42.120 Okay, just to be clear, it's the Mets, not the Knicks. 2:07:42.160 --> 2:07:44.640 The Mets, the Mets. The Cohen bought the What did 2:07:44.680 --> 2:07:45.600 I say? Did I say? 2:07:45.880 --> 2:07:47.320 You said the Knicks? I just want to be coming. 2:07:47.400 --> 2:07:49.520 I'm going to a Nick game tomorrow. But it was 2:07:49.600 --> 2:07:50.600 the New York Mets. 2:07:50.600 --> 2:07:55.080 Oh, okay, you've done all of these interviews. Name two 2:07:55.240 --> 2:08:01.360 people who you liked interviewing best. Either because their personalities 2:08:01.480 --> 2:08:04.600 or the charisma or what they had to say. Two 2:08:04.680 --> 2:08:05.520 most memorable. 2:08:05.880 --> 2:08:07.680 You want music people, I have. 2:08:07.640 --> 2:08:09.320 Some No no, no, no no no. I want to 2:08:09.400 --> 2:08:14.120 flatten the landscape, just period the two that stick out. 2:08:14.920 --> 2:08:20.840 There's so many that stick out. So Ken Feinberg was 2:08:20.880 --> 2:08:24.760 the special master for the nine to eleven Victims Fund 2:08:25.280 --> 2:08:27.320 for the Gulf of Are we still calling it Golf 2:08:27.360 --> 2:08:31.400 of Mexico? The Gulf of Mexico BP oil spill. He's 2:08:31.440 --> 2:08:34.560 done so many of these, and for the most part, 2:08:34.560 --> 2:08:36.960 Bloomberg lets me bring in whoever I want to interview, 2:08:37.480 --> 2:08:42.800 Steve Miller, Lawrence Juber, Don Felder, like any John Pizarelli, 2:08:43.040 --> 2:08:46.160 anytime I like meet somebody who's kind of interesting, Hey, 2:08:46.160 --> 2:08:48.480 you want to come on Bloomberg. They kind of leave 2:08:48.560 --> 2:08:53.080 me alone. But Ken Feinberg, what does he have to 2:08:53.120 --> 2:08:56.960 do with finance? What's this about? And I'm like, well, 2:08:57.000 --> 2:09:00.800 not for nothing, but the insurance industry. And nine to 2:09:00.840 --> 2:09:03.360 eleven was focused on Wall Street and then what went 2:09:03.400 --> 2:09:08.160 on in the Gulf, and like I had a fight 2:09:08.280 --> 2:09:11.480 to get that on, not just Bloomberg, Like some of 2:09:11.520 --> 2:09:13.160 the guys I work with, what are you doing? My 2:09:13.320 --> 2:09:17.120 research assistant at the time was like, what the hell 2:09:17.160 --> 2:09:19.640 does this have to do with what we do? And 2:09:21.200 --> 2:09:23.960 of course he comes on and he's this thick New 2:09:24.000 --> 2:09:28.880 York accent, soft spoken guy American hero, talk about a 2:09:28.920 --> 2:09:33.840 thankless task, taking this giant victim's fund and having to 2:09:33.880 --> 2:09:38.120 get everybody who lost someone in the nine to eleven 2:09:38.120 --> 2:09:42.440 attacks to sign up for it, right, So that's every family, 2:09:42.680 --> 2:09:47.800 every spouse, every whatever. And then explain, Hey, I don't 2:09:47.800 --> 2:09:50.440 think it's right that the guy who jumped out of 2:09:50.440 --> 2:09:54.920 the hundredth floor, the bond trader who landed on the 2:09:54.960 --> 2:09:58.200 firemen and they both died. I don't think it's right 2:09:58.280 --> 2:10:01.520 that his family is getting more money than the fireman's family. 2:10:02.840 --> 2:10:06.640 But that's what Congress has forced me to do, is 2:10:06.720 --> 2:10:11.000 to make these payments based on economic loss. My hands 2:10:11.000 --> 2:10:14.520 are tied. If you want, you could go to court 2:10:14.720 --> 2:10:18.160 and maybe in ten years you get something, or you 2:10:18.320 --> 2:10:20.160 take the money now. And by the way, it was, 2:10:20.600 --> 2:10:23.880 this was all like decent chunks of money. Put this, 2:10:24.320 --> 2:10:28.720 start grief, wrap up the grieving process, put this behind you, 2:10:29.120 --> 2:10:32.800 and start living your life instead of being stuck in court. 2:10:33.080 --> 2:10:37.120 Like so, I the person who told me this is 2:10:37.120 --> 2:10:40.040 a terrible idea. What are you doing on that much 2:10:40.160 --> 2:10:43.680 So broadcast over the weekend. That Monday, I go into 2:10:43.680 --> 2:10:46.040 the office and I get a hug and he's like, 2:10:46.080 --> 2:10:49.200 you're a son of a bitch. First podcast that made 2:10:49.240 --> 2:10:52.440 me cry. He's an American hero. I'm like, right, it's 2:10:53.320 --> 2:10:55.640 by the way, you can't listen to that without having 2:10:56.200 --> 2:10:58.920 the hair on the back of your next stand up. 2:10:59.280 --> 2:11:01.280 I have a hundred, but I'm going to give you 2:11:01.320 --> 2:11:07.080 a recent one that stands out because you know, most 2:11:07.120 --> 2:11:11.000 of these people are successful and smart and accomplished, and like, wow, 2:11:11.040 --> 2:11:14.040 that guy's really interesting. Every now and then you meet 2:11:14.080 --> 2:11:19.200 someone and it's just like what the so I've been 2:11:19.320 --> 2:11:21.640 kind of I was scheduled to have him on during 2:11:21.640 --> 2:11:24.960 the pandemic. Then the pandemic hit, and so I finally 2:11:25.080 --> 2:11:27.880 got him back, like years later, finally got to him. 2:11:28.240 --> 2:11:32.720 David Rubinstein of the Carlisle Group is just one of 2:11:32.760 --> 2:11:38.680 these human beings that everything he touches is better for 2:11:38.800 --> 2:11:42.280 his involvement. And let me just give you and all 2:11:42.320 --> 2:11:45.720 this stuff is you know, none of this is off 2:11:45.760 --> 2:11:47.560 the record. All this stuff was sent on the air. 2:11:48.120 --> 2:11:51.400 So I used to think he stole my gig at Bloomberg. 2:11:51.480 --> 2:11:55.640 I'm like, God, damn chairman of founder of Carlisle Group. 2:11:55.880 --> 2:11:59.080 It's doing my podcast stuff on. Like I used to 2:11:59.160 --> 2:12:02.320 jokingly to someone who worked for him, your boss stole 2:12:02.400 --> 2:12:05.000 my gig and I finally he had a book. So 2:12:05.040 --> 2:12:07.760 it's always a great opportunity to get people when a 2:12:07.840 --> 2:12:11.680 book comes out. So he comes on the show and 2:12:11.800 --> 2:12:15.080 he just starts talking about, you know, I have a 2:12:15.360 --> 2:12:17.800 we do deep dive a lot of research, and I 2:12:17.800 --> 2:12:23.560 start asking him questions. So they started in DC and 2:12:23.600 --> 2:12:27.720 it was a pretty successful business right from the out 2:12:27.720 --> 2:12:31.400 of the gate forty years ago. And he started holding 2:12:31.520 --> 2:12:36.120 these I don't even know what to call them, just conversations. 2:12:36.600 --> 2:12:39.800 He would get somebody who was an expert in a 2:12:39.880 --> 2:12:45.520 space and he would interview them. But the audience were 2:12:45.680 --> 2:12:51.720 closed door. Senators and congressmen across the aisle, no party affiliation. 2:12:52.000 --> 2:12:56.440 Everybody was there just to hear this conversation and becomes 2:12:56.480 --> 2:13:01.520 smarter and better elected officials. He's just doing that. It's 2:13:01.960 --> 2:13:05.040 there's no record, there's no broadcast, there's no book. It's 2:13:05.040 --> 2:13:09.160 all on the side. And and that's what he did. 2:13:09.240 --> 2:13:16.480 And then he like everything he touches. So the Washington 2:13:17.320 --> 2:13:22.320 Monument in DC starting to crumble, they get occasional earthquakes. 2:13:22.640 --> 2:13:26.120 Wasn't built to last forever. It's not an Egyptian pyramid, 2:13:26.480 --> 2:13:30.920 but it's still an American, you know, part of American icography. 2:13:31.360 --> 2:13:37.040 It's absolutely a landmark. He goes to Congress and says, hey, 2:13:37.080 --> 2:13:40.080 you guys, this has falling apart. You know you're gonna 2:13:40.080 --> 2:13:42.920 be embarrassed if the Washington Monument comes down on your 2:13:42.960 --> 2:13:46.880 watch and the like. Nobody wants to do anything, so 2:13:47.040 --> 2:13:51.480 he like they they the budgeting argument, whatever, it just 2:13:52.080 --> 2:13:54.080 no one can get the shit together. And he turns 2:13:54.120 --> 2:13:56.360 around and said, all right, I'm gonna start the ball rolling. 2:13:56.400 --> 2:13:58.280 You guys will figure out a way to pay for it. 2:13:58.720 --> 2:14:01.320 And he just goes a couple of buddies, Hey, I 2:14:01.320 --> 2:14:03.600 need a couple of million dollars, and everybody throws money 2:14:03.600 --> 2:14:06.240 in the kiddy, and he hires an architect and an 2:14:06.280 --> 2:14:09.240 engineer and they figure out how to shore up the 2:14:09.320 --> 2:14:14.200 Washington Monument, and eventually Congress comes through and does the bulk, 2:14:14.600 --> 2:14:17.160 but he goes deep out of pocket. And then he 2:14:17.240 --> 2:14:22.080 starts looking around the country and Monticello with Thomas Jefferson 2:14:22.120 --> 2:14:25.080 and just all these monuments no one's taken care of, 2:14:25.480 --> 2:14:29.800 and then all these the Constitution, the Declaration of Independence. 2:14:29.800 --> 2:14:32.520 There are multiple copies of this. He buys them and 2:14:32.600 --> 2:14:36.360 donates them to the Smithsonian. So it's not in Bill 2:14:36.440 --> 2:14:40.400 Gates's layer. It's there for the American people. And he 2:14:40.480 --> 2:14:43.920 grew up in Baltimore, a city that's kind of hard scrabble, 2:14:44.280 --> 2:14:48.720 and he buys the Baltimore Orioles and essentially promises the town, 2:14:49.000 --> 2:14:52.080 I'll build a new stadium, probably the best stadium in 2:14:52.680 --> 2:14:56.920 Major League Baseball, and I'll keep the Orioles here, and 2:14:57.000 --> 2:14:59.839 I'm gonna keep hot dogs two dollars and beer four dollars, 2:15:00.120 --> 2:15:03.200 and this will be a core part of the waterfront revival. 2:15:03.360 --> 2:15:07.320 Like wherever he goes, it's not I'm going to buy 2:15:07.400 --> 2:15:11.240 a baseball team as a flex. It's all right. Someone 2:15:11.280 --> 2:15:13.560 has to do something otherwise the Orioles are out of here. 2:15:13.600 --> 2:15:16.040 You know, Baltimore is suffering. Let's see if we can 2:15:16.080 --> 2:15:19.360 lock them here for ten or twenty years. And like, 2:15:20.000 --> 2:15:23.760 as I'm having the interview, like, I don't know what 2:15:23.840 --> 2:15:27.520 you think about me. As we're talking, hopefully you're saying, oh, 2:15:27.600 --> 2:15:29.200 he seems to know what he's talking about. And he's 2:15:29.280 --> 2:15:32.520 kind of amusing and Jesus Fucking this guy babbled. But 2:15:33.840 --> 2:15:37.000 you know that's kind of the perspective you come away from. 2:15:37.360 --> 2:15:40.880 I'm with him for an hour in change, and I'm like, 2:15:41.440 --> 2:15:45.840 Jesus Christ, everything this guy touches is not just a 2:15:45.880 --> 2:15:50.280 little better, it's so much better. And I'm just like 2:15:50.400 --> 2:15:52.240 four or five things off the top of my head. 2:15:52.680 --> 2:15:54.920 We spoke for like just that sort of stuff. We 2:15:54.960 --> 2:15:58.880 spoke for twenty minutes, and that that's the most recent 2:15:59.000 --> 2:16:02.720 one that has stood out with me, like, oh there 2:16:02.760 --> 2:16:06.480 are You know, it's very easy to become when you're 2:16:06.480 --> 2:16:09.920 looking at how not to invest that how bad a 2:16:09.960 --> 2:16:14.320 lot of stuff is. It's easy to let yourself become cynical. 2:16:14.720 --> 2:16:17.560 And that's why I really tried to say, don't just 2:16:17.600 --> 2:16:21.000 say no to everything. Find the best in each and 2:16:21.560 --> 2:16:25.240 that's your team. Like, you see a person like that, 2:16:26.920 --> 2:16:30.520 and it's inspiring and it kind of gives you hope. Hey, 2:16:30.640 --> 2:16:34.680 not everybody is an asshole out for themselves and running 2:16:34.760 --> 2:16:37.880 rough shot and doesn't give a shit over what happens. 2:16:37.920 --> 2:16:43.040 There are people, including some with assets and resources and 2:16:43.200 --> 2:16:47.120 abilities that are making things better. So that kind of 2:16:47.120 --> 2:16:48.320 makes me a little hopeful. 2:16:48.920 --> 2:16:55.440 Okay, finally, you hated practicing law forgetting the podcast and 2:16:55.480 --> 2:16:59.200 the blogging and the column and the Washington Post. What 2:16:59.520 --> 2:17:01.880 do you like about finance? 2:17:04.680 --> 2:17:09.800 It's this giant puzzle, It really is, so so I 2:17:09.840 --> 2:17:12.240 have a tendency to go down the rabbit hole really 2:17:12.280 --> 2:17:16.280 deep on anything I do, and sometimes it's something just 2:17:16.360 --> 2:17:22.320 as as stupid as film or music or you know. 2:17:22.440 --> 2:17:26.400 I still create. I can't help myself. I still create 2:17:26.440 --> 2:17:32.600 playlists for different events. I included the scene the line 2:17:32.680 --> 2:17:38.959 from a High Fidelity that there are rules in the book, 2:17:39.040 --> 2:17:43.959 but I find finance to be this fascinating puzzle. And 2:17:44.040 --> 2:17:47.440 I mentioned the six blind guys describing the elephant. But 2:17:47.800 --> 2:17:50.600 there is no one black of white answer. There is 2:17:50.640 --> 2:17:55.360 no one, you know, definitive response. It's a little art, 2:17:55.520 --> 2:18:01.120 it's a little science. The reason I use bad ideas, numbers, 2:18:01.160 --> 2:18:05.200 and behavior because those are three different ways to describe 2:18:05.720 --> 2:18:09.440 how humans go through the world. We you know, we 2:18:09.480 --> 2:18:12.440 grow up, we get jobs, we live our lives, and 2:18:12.520 --> 2:18:16.240 we consume a lot of ideas and very often we 2:18:16.760 --> 2:18:20.440 ignore the data and the numbers that either confirm or 2:18:20.480 --> 2:18:24.279 deny those ideas, and that combination leads us to making 2:18:24.320 --> 2:18:28.119 certain decisions and behaving in a certain way, and sometimes 2:18:28.440 --> 2:18:30.640 if it's based on either a bad idea or not 2:18:30.800 --> 2:18:34.560 understanding the numbers and data around it, the behavior leads 2:18:34.600 --> 2:18:39.000 to a bad outcome. And so the concept of gee, 2:18:39.000 --> 2:18:41.959 this is a giant wordle puzzle. How do I put 2:18:41.959 --> 2:18:45.320 this together? How do I figure out? You know, how comes? 2:18:45.440 --> 2:18:49.720 Sometimes stocks are cheap and other times stocks are expensive, 2:18:49.800 --> 2:18:54.080 and in how come cheap stocks sometimes go down? It's 2:18:54.120 --> 2:18:56.000 sort of the opposite word to od it. Oh, don't 2:18:56.040 --> 2:19:01.720 buy expensive stocks. Expensive stocks keep going up. How can 2:19:01.760 --> 2:19:05.600 we spend so much time on these aspects of investing 2:19:06.160 --> 2:19:11.360 when really it's irrelevant. It doesn't matter. It really doesn't 2:19:11.400 --> 2:19:16.080 matter if five percent of your portfolio is in shareholder 2:19:16.160 --> 2:19:20.840 yield that's dividends and buybacks or momentum. In the long run, 2:19:20.920 --> 2:19:23.560 it kind of all comes out in the wash. It 2:19:23.680 --> 2:19:27.920 kind of all evens up. Yeah, maybe this portfolio will 2:19:27.920 --> 2:19:31.360 outperform that portfolio a little bit. But when you run 2:19:31.560 --> 2:19:35.600 the numbers and it's a you know, look at all 2:19:35.600 --> 2:19:40.039 these different simulations or a rolling ten year returns, you 2:19:40.160 --> 2:19:44.240 find out, Hey, you know, I was really lucky to 2:19:44.320 --> 2:19:47.760 be born in a part of the world where whatever 2:19:47.879 --> 2:19:52.879 skills I had, and certainly to quote Professor gall Scott 2:19:52.920 --> 2:19:56.039 Galloway lucky to be born in the US as a 2:19:56.080 --> 2:20:00.360 straight white male in the nineteen sixties. Like you, you 2:20:00.560 --> 2:20:04.160 already won the lottery. When we look at how people's 2:20:04.240 --> 2:20:08.480 portfolios return, there's an awful lot on randomness. There's an 2:20:08.520 --> 2:20:14.520 awful lot of luck. If you start investing in a recession, 2:20:15.560 --> 2:20:18.440 it feels terrible, but you're gonna end up doing really well. 2:20:18.760 --> 2:20:23.760 You start investing in the late nineties, hey, you're gonna 2:20:23.760 --> 2:20:26.560 feel it for a couple of years. And some of 2:20:26.560 --> 2:20:29.640 the data shows that when people pan exel out of markets, 2:20:30.640 --> 2:20:33.600 thirty one percent of them never you know, that's stock market. 2:20:33.600 --> 2:20:36.600 It's not for me, and that's really hard to save 2:20:36.720 --> 2:20:39.640 for retirement over long periods of time. So to me, 2:20:40.200 --> 2:20:44.680 what's most interesting about the markets is trying to tease 2:20:44.800 --> 2:20:48.800 out this. It's not just that it's a puzzle, but 2:20:48.920 --> 2:20:52.560 it's a dynamic puzzle that constantly changes. This is never 2:20:52.640 --> 2:20:56.760 a solution. You think you figured out the solution, and 2:20:56.800 --> 2:21:00.360 then the market shifts and the market changes, and it's 2:21:00.360 --> 2:21:04.040 a never ending thing. And it's kind of the most 2:21:04.160 --> 2:21:06.600 to me of all the things I look at. And 2:21:06.600 --> 2:21:10.360 I have a lot of different interests. It's the most 2:21:10.400 --> 2:21:16.960 fascinating game in town. If your intellectual curiosity moves in 2:21:17.000 --> 2:21:21.160 that direction, if you're good with numbers, if you understand 2:21:21.240 --> 2:21:25.480 the human factors and the psychology of it, it's fascinating. 2:21:26.760 --> 2:21:29.920 Okay, we've come to the end of the feeling we've known. 2:21:29.959 --> 2:21:32.880 I've been talking to Barry Ridtholts. You see them everywhere 2:21:33.480 --> 2:21:38.039 Bloomberg Online. It's got a new book, How Not to Invest. 2:21:38.120 --> 2:21:40.800 If you're the type of person who's playing in the market, 2:21:41.200 --> 2:21:43.520 or you're the type of person who's afraid of the market, 2:21:43.800 --> 2:21:48.119 you should definitely read it. Get your head set on straight. Barry. 2:21:48.240 --> 2:21:50.600 I want to thank you so much for taking the 2:21:50.640 --> 2:21:51.680 time with my audience. 2:21:52.320 --> 2:21:56.240 Bob, thank you so much. You know, full disclosure, I've 2:21:56.280 --> 2:21:59.080 been reading you for a million years, and I've been 2:21:59.120 --> 2:22:02.040 publishing you on my website. Yes, I want to say, 2:22:02.040 --> 2:22:06.360 it's got to be like fifteen years about that's insane. 2:22:06.400 --> 2:22:09.080 And I've I've had every time one of your pieces 2:22:09.160 --> 2:22:12.680 come up, One's coming up Sunday, that just came up 2:22:12.720 --> 2:22:16.640 Sunday Disruption. Someone always says to me, where'd you find 2:22:16.680 --> 2:22:20.320 this guy? He's really interesting, And it's like, you know, 2:22:21.200 --> 2:22:23.879 if you know a certain group of people. Bob is 2:22:23.879 --> 2:22:25.320 a legend in that space. 2:22:26.840 --> 2:22:27.080 You know. 2:22:27.320 --> 2:22:29.959 Thank you very much. I'll leave it at that till 2:22:30.120 --> 2:22:32.440 next time. This is Bob left set