1 00:00:11,200 --> 00:00:14,600 Speaker 1: Hello, and welcome to another episode of the Onlocks podcast. 2 00:00:14,680 --> 00:00:21,520 Speaker 1: I'm I'm Tracy Alloway. Tracy, remember like last year when 3 00:00:21,520 --> 00:00:25,079 Speaker 1: we used to start off episodes of our show complaining 4 00:00:25,160 --> 00:00:30,520 Speaker 1: about all the lack of volatility and markets. Yeah, that's 5 00:00:30,600 --> 00:00:32,800 Speaker 1: kind of a classic beware of what you wish for 6 00:00:33,200 --> 00:00:35,440 Speaker 1: kind of thing, isn't it, Because now, of course we've 7 00:00:35,440 --> 00:00:39,000 Speaker 1: had too much volatility at various times this year. Well, 8 00:00:39,000 --> 00:00:41,519 Speaker 1: I'm not really complaining. I mean from our from the 9 00:00:41,560 --> 00:00:44,560 Speaker 1: perspective of what you and I do, and probably from 10 00:00:44,600 --> 00:00:47,960 Speaker 1: the perspective a lot of market practitioners. It has been 11 00:00:48,000 --> 00:00:51,640 Speaker 1: a very different year. But yeah, absolutely, a lot of 12 00:00:51,680 --> 00:00:55,880 Speaker 1: those intros they just don't apply anymore. No, It's true 13 00:00:56,080 --> 00:00:59,080 Speaker 1: we have been blessed by news flow when it comes 14 00:00:59,080 --> 00:01:01,160 Speaker 1: to markets this year. Of course, we had the big 15 00:01:01,280 --> 00:01:05,160 Speaker 1: vol apocalypse in February that we spoke about, and since 16 00:01:05,200 --> 00:01:08,479 Speaker 1: then we've had some more interesting moves in markets, most 17 00:01:08,600 --> 00:01:12,240 Speaker 1: recently caused by some of the trade tensions, which we've 18 00:01:12,280 --> 00:01:14,800 Speaker 1: also talked about on the show. Well, I think it's 19 00:01:14,880 --> 00:01:18,840 Speaker 1: interesting that you say caused by the trade tensions, because 20 00:01:19,120 --> 00:01:21,520 Speaker 1: I think one of the fascinating aspects of this year 21 00:01:22,000 --> 00:01:27,679 Speaker 1: has been the difficulty sort of disentangling news stories from 22 00:01:27,720 --> 00:01:30,240 Speaker 1: the actual results. So sometimes I think it looks like 23 00:01:30,319 --> 00:01:33,200 Speaker 1: trade stories are weighing on markets, and then other times 24 00:01:33,600 --> 00:01:37,040 Speaker 1: not so much. Or sometimes it looks like the president's 25 00:01:37,040 --> 00:01:39,959 Speaker 1: tweets are hitting markets, and then you see the companies 26 00:01:40,000 --> 00:01:43,160 Speaker 1: he's tweeting about hitting new highs. So it's been a 27 00:01:43,280 --> 00:01:48,000 Speaker 1: really tricky market environment to navigate. And so we that 28 00:01:48,120 --> 00:01:50,560 Speaker 1: all this volatility, all this news flow, and we just 29 00:01:50,560 --> 00:01:53,200 Speaker 1: haven't really gone anywhere. Yeah, you're absolutely right. I mean, 30 00:01:53,360 --> 00:01:55,720 Speaker 1: in markets, to some extent, it's always a bit difficult 31 00:01:55,760 --> 00:01:59,880 Speaker 1: to disentangle the narrative from the price action that you're seeing. Right, 32 00:02:00,200 --> 00:02:03,040 Speaker 1: Sometimes it's tempting for us as journalists to just say 33 00:02:03,240 --> 00:02:06,560 Speaker 1: there are more buyers than sellers, or more sellers than buyers, 34 00:02:06,560 --> 00:02:08,880 Speaker 1: and that's really the explanation. But I think you're right 35 00:02:09,040 --> 00:02:11,600 Speaker 1: that this year has been trickier than a lot of 36 00:02:11,639 --> 00:02:15,000 Speaker 1: other years because not only do we have volatility coming back, 37 00:02:15,400 --> 00:02:19,720 Speaker 1: we also have a really complicated political narrative, and it's 38 00:02:19,800 --> 00:02:23,799 Speaker 1: difficult for investors to price in the unpredictability of someone 39 00:02:23,880 --> 00:02:27,079 Speaker 1: like the U S. President Donald Trump. That's exactly right. 40 00:02:27,360 --> 00:02:29,720 Speaker 1: So today we're gonna do something a little bit different 41 00:02:29,720 --> 00:02:32,280 Speaker 1: than we don't normally do on the show, which is 42 00:02:32,320 --> 00:02:36,160 Speaker 1: sort of really talk about markets right now. Obviously listeners 43 00:02:36,200 --> 00:02:38,960 Speaker 1: know we like to find the odd lot stories that 44 00:02:39,320 --> 00:02:42,880 Speaker 1: you know, some obscure old bubble or financial regulatory thing 45 00:02:43,080 --> 00:02:46,920 Speaker 1: or something arcane about market structure. Today we're sort of 46 00:02:46,960 --> 00:02:49,720 Speaker 1: going to try to really keep it present tent and 47 00:02:50,400 --> 00:02:55,080 Speaker 1: actually uh talk with an active market practitioner who's seen 48 00:02:55,120 --> 00:02:58,920 Speaker 1: a lot of different environments to gain some understanding of 49 00:02:59,120 --> 00:03:02,320 Speaker 1: what's going on right now in markets. I will do 50 00:03:02,400 --> 00:03:04,480 Speaker 1: my best to keep at present tense, but I think 51 00:03:04,520 --> 00:03:07,040 Speaker 1: we're having someone on that we've actually had on before 52 00:03:07,240 --> 00:03:09,720 Speaker 1: right to talk about essentially the opposite of what we're 53 00:03:09,720 --> 00:03:13,080 Speaker 1: going to talk about today. Yeah, that's right. So, without 54 00:03:13,200 --> 00:03:16,359 Speaker 1: further ado, we will be speaking to Peter Boris. He's 55 00:03:16,400 --> 00:03:19,799 Speaker 1: a chief strategist at the Quad Group, a real market veteran. 56 00:03:19,840 --> 00:03:23,240 Speaker 1: He was on one of our very early episodes and 57 00:03:23,240 --> 00:03:26,000 Speaker 1: we talked about some of the history and markets and 58 00:03:26,040 --> 00:03:30,600 Speaker 1: some of the patterns that historically repeat throughout markets, and 59 00:03:30,639 --> 00:03:33,760 Speaker 1: so hopefully he'll be able to walk us through what 60 00:03:33,960 --> 00:03:42,560 Speaker 1: he's seeing right now and apply some of that experience. Peter, 61 00:03:42,640 --> 00:03:45,360 Speaker 1: thank you very much. For joining us. Always a pleasure 62 00:03:45,760 --> 00:03:48,520 Speaker 1: and I do very much joy be on the show 63 00:03:48,920 --> 00:03:52,400 Speaker 1: so we can drill deeper right before we talk about 64 00:03:52,560 --> 00:03:55,320 Speaker 1: what's going on right now. And as Tracy and I mentioned, 65 00:03:55,320 --> 00:03:57,480 Speaker 1: there are there are a lot of threads to pull 66 00:03:57,560 --> 00:04:01,800 Speaker 1: on these days. For those who may not have listened 67 00:04:01,840 --> 00:04:04,200 Speaker 1: to our older episode with you, and they really should 68 00:04:04,240 --> 00:04:06,480 Speaker 1: go back and listen to it. Tell us a little 69 00:04:06,480 --> 00:04:10,280 Speaker 1: bit about your background and sort of your general approach 70 00:04:10,360 --> 00:04:15,440 Speaker 1: that you've devised over the years and uh trading markets. Well, thanks, 71 00:04:15,920 --> 00:04:19,920 Speaker 1: I've been very fortunate and lucky. I finished graduate school 72 00:04:19,960 --> 00:04:23,560 Speaker 1: and wow with long time ago two, I went to 73 00:04:23,600 --> 00:04:25,880 Speaker 1: the New York FED. I happened to start the first 74 00:04:25,920 --> 00:04:29,440 Speaker 1: month that SMP futures began trading, and then some young 75 00:04:29,440 --> 00:04:32,080 Speaker 1: guy out of the floor of the Cotton Exchanged by 76 00:04:32,120 --> 00:04:34,240 Speaker 1: the name of Paul Tutor Jones recruited me out of 77 00:04:34,279 --> 00:04:39,560 Speaker 1: there and the first month of crude oil futures trading. 78 00:04:39,600 --> 00:04:43,200 Speaker 1: So I've been in the industry really since the beginning 79 00:04:43,279 --> 00:04:46,919 Speaker 1: of the financial futures derivative markets that have had a 80 00:04:46,960 --> 00:04:51,039 Speaker 1: long arc and it's a perfect segue to today because 81 00:04:51,040 --> 00:04:55,360 Speaker 1: if you think about the late nineteen eighties, November nine, 82 00:04:57,279 --> 00:05:00,680 Speaker 1: the Berlin Wall came down. If you think about our 83 00:05:00,720 --> 00:05:05,039 Speaker 1: president today and you think about the fan of all Republicans, 84 00:05:05,320 --> 00:05:10,800 Speaker 1: President Reagan, his role was tearing down walls that led 85 00:05:10,880 --> 00:05:14,160 Speaker 1: to an ear of the free flow of capital, people, 86 00:05:15,000 --> 00:05:19,520 Speaker 1: and ideas. And it didn't start right away on November tenth. 87 00:05:21,240 --> 00:05:24,760 Speaker 1: At markets and meaningful change take place slowly over time. 88 00:05:25,800 --> 00:05:30,080 Speaker 1: Turns out November nine, two sixteen, we elect a new 89 00:05:30,080 --> 00:05:34,080 Speaker 1: president of the United States who is now building walls, 90 00:05:34,960 --> 00:05:39,560 Speaker 1: and that is preventing the free flow of markets, capitals, 91 00:05:39,760 --> 00:05:43,479 Speaker 1: and ideas, and that is likely to usher in a 92 00:05:43,600 --> 00:05:47,479 Speaker 1: much longer cycle. Just as President Reagan's did in terms 93 00:05:47,480 --> 00:05:52,320 Speaker 1: of growth and opportunity in the nineties, We're gonna have 94 00:05:52,360 --> 00:05:55,680 Speaker 1: a much different cycle today. So if you just start 95 00:05:55,720 --> 00:06:01,040 Speaker 1: from that perspective of the beginning of my career in 96 00:06:01,080 --> 00:06:04,200 Speaker 1: the late eighties to really short of I hate to 97 00:06:04,240 --> 00:06:07,680 Speaker 1: say more towards the end of my career now, uh, 98 00:06:07,680 --> 00:06:15,120 Speaker 1: these two presidents bookend the best of what America can be, too, 99 00:06:15,160 --> 00:06:18,440 Speaker 1: demonstrating to the rest of the world some of the 100 00:06:18,560 --> 00:06:24,320 Speaker 1: risks that happens when you move in a direction all 101 00:06:24,360 --> 00:06:29,279 Speaker 1: by yourself. So, Peter, before we I'm very conscious that 102 00:06:29,360 --> 00:06:31,200 Speaker 1: I promised Joe, I would try to keep this present. 103 00:06:31,520 --> 00:06:36,720 Speaker 1: It's OK. Before we we get into what's been happening, now, 104 00:06:36,839 --> 00:06:39,360 Speaker 1: can you just give us a snapshot of your approach 105 00:06:39,400 --> 00:06:41,920 Speaker 1: to thinking about financial markets, because I know you're very 106 00:06:42,000 --> 00:06:44,600 Speaker 1: much into cycles and you're very much into looking at 107 00:06:44,640 --> 00:06:47,000 Speaker 1: financial market history, and I think that's going to be 108 00:06:47,080 --> 00:06:50,159 Speaker 1: key to the conversation we have. Well with all that 109 00:06:50,240 --> 00:06:53,880 Speaker 1: I just said, I think and I mentioned this, uh 110 00:06:53,880 --> 00:06:56,000 Speaker 1: when I was on what did you miss? If I 111 00:06:56,000 --> 00:06:58,599 Speaker 1: can give a shameful plug for that. I need to 112 00:06:58,640 --> 00:07:05,919 Speaker 1: be very mindful and separate my fundamental political thoughts from 113 00:07:06,279 --> 00:07:10,080 Speaker 1: the actual work that one needs to do to participate 114 00:07:10,280 --> 00:07:14,800 Speaker 1: in the markets, and the combination of the markets of 115 00:07:15,160 --> 00:07:20,480 Speaker 1: the analysis of data and combining that with the technical analysis. 116 00:07:20,520 --> 00:07:25,440 Speaker 1: So the key for us in terms of trading and risk, 117 00:07:25,840 --> 00:07:29,320 Speaker 1: and this is very difficult point to get across, is 118 00:07:29,440 --> 00:07:34,160 Speaker 1: that you want to vary your trading size with respect 119 00:07:34,200 --> 00:07:40,520 Speaker 1: to the opportunity when things line up fundamentally technically, then 120 00:07:40,600 --> 00:07:44,640 Speaker 1: you can take a bigger position. There's no shame to 121 00:07:45,040 --> 00:07:48,840 Speaker 1: having a smaller position or not participating when there's a 122 00:07:48,840 --> 00:07:52,360 Speaker 1: lot of conflicts. So, if we go to our central theme, 123 00:07:52,600 --> 00:07:56,720 Speaker 1: we've been saying. We look at two stocks in particular, 124 00:07:57,680 --> 00:08:01,400 Speaker 1: Visa MasterCard as the rent of the consumer. So if 125 00:08:01,400 --> 00:08:04,720 Speaker 1: you're shopping on the couch or you're going to a store, 126 00:08:05,400 --> 00:08:09,880 Speaker 1: they are benefiting. Just yesterday they made both of them 127 00:08:09,880 --> 00:08:13,080 Speaker 1: made new all time highs. So that's in the back 128 00:08:13,120 --> 00:08:15,800 Speaker 1: of our minds saying, hey, you can listen to what 129 00:08:15,880 --> 00:08:18,040 Speaker 1: I just said and say, wow, things aren't going to 130 00:08:18,160 --> 00:08:20,840 Speaker 1: be going well. But that's not today, So you have 131 00:08:20,920 --> 00:08:24,680 Speaker 1: to separate that from the cycle of going forward. When 132 00:08:24,720 --> 00:08:29,680 Speaker 1: there's confirmation of things not going well from a technical 133 00:08:29,720 --> 00:08:32,560 Speaker 1: and fundamental then we will be getting much larger. On 134 00:08:32,600 --> 00:08:36,120 Speaker 1: the short side, it's not now. Do I think it's 135 00:08:36,160 --> 00:08:41,000 Speaker 1: going to be sometime soon. I do, but the weight 136 00:08:41,040 --> 00:08:43,640 Speaker 1: of the evidence has to tell us that. So two 137 00:08:43,640 --> 00:08:46,760 Speaker 1: things real quickly, just for listeners sake, We are recording 138 00:08:46,880 --> 00:08:50,720 Speaker 1: this on Wednesday, July eleven, So you made that reference 139 00:08:50,720 --> 00:08:53,760 Speaker 1: to Visa and MasterCard hitting all time highs yesterday, just 140 00:08:53,800 --> 00:08:55,960 Speaker 1: so if people want to go back and line that 141 00:08:56,200 --> 00:08:59,440 Speaker 1: up with the episode. But I think this is really 142 00:08:59,760 --> 00:09:02,120 Speaker 1: key the point you made here, which is that you 143 00:09:02,160 --> 00:09:06,880 Speaker 1: can simultaneously hold two ideas in your head. One is 144 00:09:07,000 --> 00:09:10,319 Speaker 1: that we are perhaps on the cusp of a fundamental 145 00:09:10,400 --> 00:09:13,719 Speaker 1: change to the economy and market, as you say, due 146 00:09:13,760 --> 00:09:16,160 Speaker 1: to the sort of book ending of the opening of 147 00:09:16,200 --> 00:09:18,640 Speaker 1: the world and the fact that we're building walls again. 148 00:09:19,040 --> 00:09:20,600 Speaker 1: But the other thing you can hold in your mind 149 00:09:20,679 --> 00:09:23,360 Speaker 1: is that even while seeing that if the market is 150 00:09:23,360 --> 00:09:26,480 Speaker 1: not confirming that you can't just jump on that. That 151 00:09:26,800 --> 00:09:29,480 Speaker 1: if you see stocks that you consider to be Billweathers 152 00:09:29,760 --> 00:09:32,640 Speaker 1: hitting all time highs, you really need to wait for 153 00:09:32,679 --> 00:09:36,320 Speaker 1: that to break down before this idea that um things 154 00:09:36,360 --> 00:09:39,920 Speaker 1: are changing becomes actionable. No question, our job is to 155 00:09:40,000 --> 00:09:44,720 Speaker 1: try to make money. It's not to try to be right. 156 00:09:45,240 --> 00:09:49,120 Speaker 1: And part of this difficult process for me as a 157 00:09:49,240 --> 00:09:55,280 Speaker 1: strategist is to try to think rationally when a lot 158 00:09:55,360 --> 00:10:00,480 Speaker 1: of the activities are irrational. So as a perfect example 159 00:10:00,679 --> 00:10:05,240 Speaker 1: of where we add a bad trade. So the President 160 00:10:05,320 --> 00:10:10,600 Speaker 1: comes back from North Korea all gung ho about you know, 161 00:10:10,640 --> 00:10:13,600 Speaker 1: we're gonna have a deal and so forth and so on, 162 00:10:14,080 --> 00:10:17,719 Speaker 1: and we think, okay, that means that he's going to 163 00:10:17,840 --> 00:10:21,720 Speaker 1: need China's support and therefore he's not going to say 164 00:10:21,800 --> 00:10:27,320 Speaker 1: anything negative about China for a few weeks. Our time 165 00:10:27,360 --> 00:10:30,240 Speaker 1: horizon is, you know, a few weeks to a few 166 00:10:30,280 --> 00:10:32,320 Speaker 1: months That's how we look at things and said, this 167 00:10:32,400 --> 00:10:35,959 Speaker 1: is a good opportunity to go in that direction. If 168 00:10:36,000 --> 00:10:39,040 Speaker 1: you look at sort of where the Shanghai Index was, 169 00:10:39,080 --> 00:10:41,280 Speaker 1: where the e M was, this is an interesting time 170 00:10:41,320 --> 00:10:43,960 Speaker 1: to put on that kind of spread. So we get 171 00:10:44,160 --> 00:10:49,240 Speaker 1: along those particular markets and guess what happens. It's almost 172 00:10:49,280 --> 00:10:51,080 Speaker 1: like they're out to get me. And you always have 173 00:10:51,160 --> 00:10:53,480 Speaker 1: to be very defensive in this business because they are 174 00:10:53,520 --> 00:10:55,960 Speaker 1: out to get you. We put on all these positions 175 00:10:56,040 --> 00:10:59,040 Speaker 1: and then he comes out and says, hey, I think 176 00:10:59,040 --> 00:11:01,280 Speaker 1: we're going to raise the Harris on China from fifty 177 00:11:01,280 --> 00:11:07,000 Speaker 1: billion to two. So for me as a strategist, I 178 00:11:07,040 --> 00:11:11,280 Speaker 1: am totally wrong. I try as hard as I can 179 00:11:11,320 --> 00:11:13,640 Speaker 1: to find other people to blame, but in this case, 180 00:11:14,040 --> 00:11:17,200 Speaker 1: I could not do that. And what do we have 181 00:11:17,280 --> 00:11:22,160 Speaker 1: to do? Risk management is paramount the information, the story, 182 00:11:22,640 --> 00:11:25,160 Speaker 1: and the markets. So if they all these markets had 183 00:11:25,200 --> 00:11:28,160 Speaker 1: gone up on this negative news, that would have been fine, 184 00:11:28,200 --> 00:11:31,080 Speaker 1: because again I'm more interested in making money than being right. 185 00:11:31,360 --> 00:11:33,720 Speaker 1: But they did not. They hit our stop levels. We 186 00:11:33,800 --> 00:11:38,040 Speaker 1: get out when you're wrong. You have to reevaluate, and 187 00:11:38,600 --> 00:11:42,160 Speaker 1: you're seeing this across the board because that means a 188 00:11:42,280 --> 00:11:48,120 Speaker 1: greater uncertainty, which translates naturally, and you have to trade smaller, 189 00:11:48,160 --> 00:11:52,320 Speaker 1: so we're seeing less volume. So these things have impacts 190 00:11:52,480 --> 00:11:56,400 Speaker 1: on the entire business and the nature of the markets. 191 00:11:56,880 --> 00:12:00,640 Speaker 1: So you're thinking to yourself, huh, we're trading smaller. I'm 192 00:12:00,640 --> 00:12:04,520 Speaker 1: gonna talk to other people. They're trading smaller. There's more uncertainty. Wow, 193 00:12:04,559 --> 00:12:06,920 Speaker 1: I'm gonna be looking at the trading firms that benefit 194 00:12:07,000 --> 00:12:10,480 Speaker 1: from this activity because remember volume is fully leveraged. You 195 00:12:10,520 --> 00:12:12,760 Speaker 1: need the same staff. Basically, if you're trading a hundred 196 00:12:12,840 --> 00:12:16,000 Speaker 1: chairs or a thousand shares, m all right, I'm not 197 00:12:16,080 --> 00:12:20,000 Speaker 1: gonna be as favorable towards the larger money center banks. 198 00:12:20,040 --> 00:12:23,680 Speaker 1: Maybe that's an opportunity to be short at the XLF 199 00:12:23,760 --> 00:12:26,520 Speaker 1: and be along the regional banks KRI So you're always 200 00:12:26,920 --> 00:12:32,000 Speaker 1: every single action one takes you need to think about 201 00:12:32,000 --> 00:12:34,240 Speaker 1: it from an analytical framework, is how's that going to 202 00:12:34,320 --> 00:12:39,640 Speaker 1: translate into your trading of the markets. And one of 203 00:12:39,679 --> 00:12:42,040 Speaker 1: the things I'm fond of saying is trading is a 204 00:12:42,120 --> 00:12:43,840 Speaker 1: little bit like you know, you play the wheel of 205 00:12:43,880 --> 00:12:48,040 Speaker 1: fortune and somebody's there turning over the pictures. If you 206 00:12:49,240 --> 00:12:52,840 Speaker 1: try to put your risk on too early, you're likely 207 00:12:52,880 --> 00:12:56,360 Speaker 1: to lose. If you wait until you can see everything clearly, 208 00:12:57,480 --> 00:13:00,400 Speaker 1: then it's too late. So we see that all the time. 209 00:13:00,600 --> 00:13:02,960 Speaker 1: I mean for somebody to coming in today and going, Wow, 210 00:13:03,000 --> 00:13:06,240 Speaker 1: these tech stocks have been doing great, I should buy them. 211 00:13:06,280 --> 00:13:10,160 Speaker 1: There's no risk reward. You can't buy it because where 212 00:13:10,160 --> 00:13:12,640 Speaker 1: do you put your stop? That's very far away. You 213 00:13:12,720 --> 00:13:16,520 Speaker 1: can't short it because why should one be sitting there 214 00:13:16,559 --> 00:13:19,880 Speaker 1: trying to uh get in front of a speeding bullet. 215 00:13:20,240 --> 00:13:22,640 Speaker 1: Now you may think they're coming down, but trading is 216 00:13:22,679 --> 00:13:26,760 Speaker 1: about risk, reward and opportunity, so you have to stay 217 00:13:26,800 --> 00:13:30,240 Speaker 1: on the sidelines. That means there's going to be less trading. Oh, 218 00:13:30,280 --> 00:13:34,640 Speaker 1: by the way, Amazon at anyone that's trading that is 219 00:13:34,679 --> 00:13:38,960 Speaker 1: trading less than they're trading when it was trading a thousand, 220 00:13:39,080 --> 00:13:43,080 Speaker 1: just by the definition of risk reward and money available 221 00:13:43,120 --> 00:13:46,680 Speaker 1: to you. Huh okay, So how does that translate into volume? 222 00:13:46,679 --> 00:13:52,360 Speaker 1: On the nastaic, we look at the February case of 223 00:13:52,600 --> 00:13:56,880 Speaker 1: volatility in the breakdown of x I V. Huh okay, 224 00:13:56,880 --> 00:14:00,360 Speaker 1: what does that do to the cbo E futures track? 225 00:14:00,440 --> 00:14:06,840 Speaker 1: Because that was arbitrage. So every action, forget the political ramifications, 226 00:14:06,880 --> 00:14:09,319 Speaker 1: you need to be thinking in terms of where is 227 00:14:09,360 --> 00:14:13,720 Speaker 1: a trading opportunity for me? Peter, I want to press 228 00:14:13,760 --> 00:14:16,439 Speaker 1: you on this point because I think it's really important. 229 00:14:16,679 --> 00:14:19,440 Speaker 1: You're talking about time horizons and you're talking about how 230 00:14:19,480 --> 00:14:22,600 Speaker 1: do you balance fear and greed? Right? You know you 231 00:14:22,640 --> 00:14:25,040 Speaker 1: want to make money clearly, so you might be tempted 232 00:14:25,080 --> 00:14:27,560 Speaker 1: into a crowded trade where everyone else is making money. 233 00:14:27,560 --> 00:14:29,320 Speaker 1: But at the same time, you don't want to be 234 00:14:29,360 --> 00:14:31,600 Speaker 1: caught out and you don't want to be last to 235 00:14:31,720 --> 00:14:36,800 Speaker 1: the exit. So what are your actual, like concrete suggestions 236 00:14:36,920 --> 00:14:41,360 Speaker 1: for people trying to gauge how much longer those things 237 00:14:41,400 --> 00:14:44,200 Speaker 1: are going to continue? People trying to follow those sorts 238 00:14:44,200 --> 00:14:47,760 Speaker 1: of trends. I suggest everybody that they put a big 239 00:14:47,800 --> 00:14:50,920 Speaker 1: sign on their wall, which says, what is the definition 240 00:14:50,920 --> 00:14:54,080 Speaker 1: of a quandary? Do I stay out of a market 241 00:14:54,280 --> 00:14:57,200 Speaker 1: and watch everyone else make money? Or do I get 242 00:14:57,240 --> 00:15:00,920 Speaker 1: in and thereby cause it to immediately crash? And that 243 00:15:01,320 --> 00:15:07,200 Speaker 1: is the conundrum of participating in markets. So you need 244 00:15:07,280 --> 00:15:11,120 Speaker 1: to make your own independent decisions, but you have to 245 00:15:11,200 --> 00:15:18,320 Speaker 1: have a framework and a discipline associated with that of 246 00:15:18,560 --> 00:15:21,600 Speaker 1: what happens if I'm wrong. This is a business where 247 00:15:22,040 --> 00:15:24,480 Speaker 1: if you survive, you win. You want to live for 248 00:15:25,080 --> 00:15:30,760 Speaker 1: another day. You can't listen to other people and make 249 00:15:31,160 --> 00:15:35,640 Speaker 1: decisions based on that. It's all inputs into your own 250 00:15:36,160 --> 00:15:39,800 Speaker 1: decision making. And as I said at the very beginning, 251 00:15:39,840 --> 00:15:44,320 Speaker 1: when there are opportunities that seem to work or line 252 00:15:44,400 --> 00:15:47,520 Speaker 1: up from a technical fundamental perspective, then you can go 253 00:15:47,640 --> 00:15:53,320 Speaker 1: for it. The test of an experienced trader is when 254 00:15:53,360 --> 00:15:59,880 Speaker 1: they don't understand anything, they don't participate. That's hard to do. 255 00:16:00,080 --> 00:16:03,120 Speaker 1: It's very, very hard to do. And we always have 256 00:16:03,320 --> 00:16:07,400 Speaker 1: risk management. Every time I buy something, I only buy 257 00:16:07,440 --> 00:16:10,240 Speaker 1: it because I don't think we're ever going to see 258 00:16:10,240 --> 00:16:12,800 Speaker 1: that price again. And in theory, I buy it and 259 00:16:12,800 --> 00:16:15,240 Speaker 1: I'm gonna hold it for fifty years, and that lasts 260 00:16:15,280 --> 00:16:19,360 Speaker 1: about forty minutes. And the same thing if I wouldn't 261 00:16:19,400 --> 00:16:21,480 Speaker 1: sell it if I thought the price was going up. 262 00:16:21,600 --> 00:16:24,520 Speaker 1: My you have to know your own personality. I'm not 263 00:16:24,640 --> 00:16:29,120 Speaker 1: one of these guys that averages things. If it's sell 264 00:16:29,200 --> 00:16:31,640 Speaker 1: it and if it goes up, sell a little more, 265 00:16:31,720 --> 00:16:34,320 Speaker 1: or vice versa, by it if it goes down by 266 00:16:34,320 --> 00:16:38,000 Speaker 1: a little more. I was grown up in the Paul 267 00:16:38,040 --> 00:16:47,440 Speaker 1: Tutor Jones philosophy of trading discipline before vision and Losers. 268 00:16:47,880 --> 00:16:53,600 Speaker 1: Average losers because averaging down works until the one time 269 00:16:53,640 --> 00:16:59,000 Speaker 1: when it doesn't, and then you're out of business. You 270 00:16:59,120 --> 00:17:02,600 Speaker 1: mentioned that definition of a quandary where you're watching everyone 271 00:17:02,880 --> 00:17:06,840 Speaker 1: make money and you feel sort of intuitively that the 272 00:17:06,880 --> 00:17:10,560 Speaker 1: moment you jump onto the trend, that that's got to 273 00:17:10,600 --> 00:17:12,280 Speaker 1: be the end of it. And I feel like everyone 274 00:17:12,600 --> 00:17:16,960 Speaker 1: probably in trading feels that to some extent. Nonetheless, I 275 00:17:17,000 --> 00:17:20,000 Speaker 1: am thinking about sort of this incredible multi year tech 276 00:17:20,000 --> 00:17:23,880 Speaker 1: stock run that we've had, and so you could certainly say, oh, yeah, 277 00:17:23,920 --> 00:17:26,000 Speaker 1: if I buy Netflix here, it's got to be the 278 00:17:26,040 --> 00:17:29,040 Speaker 1: top because that's when I'm capitulating and buying. But on 279 00:17:29,080 --> 00:17:31,359 Speaker 1: the other hand, you could have just as easily felt 280 00:17:31,400 --> 00:17:35,600 Speaker 1: that at the beginning of and it looked just as 281 00:17:35,640 --> 00:17:37,920 Speaker 1: extreme perhaps then. But if you had bought then you 282 00:17:37,960 --> 00:17:40,800 Speaker 1: would have made a fortune. So what is a better 283 00:17:41,000 --> 00:17:44,119 Speaker 1: way to answer the question? I mean, this is what 284 00:17:44,240 --> 00:17:48,000 Speaker 1: everyone's sort of wrestling with. Okay, Netflix, it's going up 285 00:17:48,119 --> 00:17:50,760 Speaker 1: or whatever it is, rather than just sort of being 286 00:17:50,800 --> 00:17:53,399 Speaker 1: in this mindset where I'm gonna jinx myself or I'm 287 00:17:53,400 --> 00:17:55,399 Speaker 1: going to drink the market if I jump in. Is 288 00:17:55,440 --> 00:17:58,040 Speaker 1: there a better question to ask at the beginning or 289 00:17:58,080 --> 00:18:00,800 Speaker 1: a better way to think about that, because you know, 290 00:18:01,320 --> 00:18:03,199 Speaker 1: you know, sometimes it pays to get on top of 291 00:18:03,400 --> 00:18:06,040 Speaker 1: or jump on a shooting rocket. You have to trade 292 00:18:06,080 --> 00:18:09,159 Speaker 1: your own personality. Sometimes you miss it. It's a market 293 00:18:09,160 --> 00:18:12,719 Speaker 1: of stocks, it's not a stock market. Hey, I missed it. 294 00:18:13,200 --> 00:18:16,760 Speaker 1: Congratulations to them. They're all gonna make money. But I 295 00:18:16,840 --> 00:18:20,480 Speaker 1: can assure you I don't have any idea from what level. 296 00:18:21,280 --> 00:18:25,639 Speaker 1: But Netflix will have a forty year fift decline, just 297 00:18:25,800 --> 00:18:30,760 Speaker 1: as it's had before an Amazon and Microsoft? Is it today? 298 00:18:31,480 --> 00:18:37,320 Speaker 1: Is it from two thousand on Amazon? I have no idea. 299 00:18:37,920 --> 00:18:44,000 Speaker 1: The discipline is saying, okay, I've missed it. What happens 300 00:18:44,680 --> 00:18:47,919 Speaker 1: when it goes back down? Am I willing to buy it? 301 00:18:48,160 --> 00:18:51,040 Speaker 1: So let's take a recent example of a stock that's 302 00:18:51,040 --> 00:18:54,679 Speaker 1: in the news and everybody loves the trade, which is Tesla. 303 00:18:54,920 --> 00:18:58,320 Speaker 1: So you know, at two fifty you were an idiot 304 00:18:58,359 --> 00:19:01,840 Speaker 1: if you weren't short, and at three sixty you were 305 00:19:01,840 --> 00:19:06,200 Speaker 1: an idiot if you weren't long, which is fine because 306 00:19:06,240 --> 00:19:08,879 Speaker 1: I'm a natural idiot, so I was probably short that 307 00:19:09,080 --> 00:19:12,240 Speaker 1: and long up there. But no, if you don't understand it, 308 00:19:12,240 --> 00:19:15,439 Speaker 1: it's okay not to participate the trading world, and the 309 00:19:15,520 --> 00:19:19,960 Speaker 1: purchasing of stocks, and even in our business. So if 310 00:19:20,000 --> 00:19:22,200 Speaker 1: we have a hedge fund, which we do of course, 311 00:19:22,320 --> 00:19:24,639 Speaker 1: and we're up, you know, mid teens, three years in 312 00:19:24,640 --> 00:19:27,040 Speaker 1: a row, and then I'm wrong this year, as I 313 00:19:27,080 --> 00:19:29,560 Speaker 1: said earlier about some of the strategic stuff, and we're 314 00:19:29,600 --> 00:19:34,000 Speaker 1: down five or six percent, everybody freaks out. Where if 315 00:19:34,040 --> 00:19:38,320 Speaker 1: it's an individual stock, they'll say, huh, okay, it's down 316 00:19:38,320 --> 00:19:41,720 Speaker 1: a little bit, I'm gonna buy it. But the funny 317 00:19:41,760 --> 00:19:46,200 Speaker 1: thing is buyers are higher in this business and sellers 318 00:19:46,359 --> 00:19:51,000 Speaker 1: are lowered. So if a stock's down thirty, everybody's a seller. 319 00:19:51,440 --> 00:19:55,520 Speaker 1: If it's up, everybody wants to buy it. I don't 320 00:19:55,560 --> 00:19:58,040 Speaker 1: see that in any other business. If I go into 321 00:19:58,040 --> 00:20:00,200 Speaker 1: a store and I'm like, hey, you know what, Joe, 322 00:20:00,960 --> 00:20:03,280 Speaker 1: I really like that tie, and you go AT's. You know, 323 00:20:03,560 --> 00:20:06,200 Speaker 1: it's a hundred and five bucks, but you look wealthy, 324 00:20:06,200 --> 00:20:08,680 Speaker 1: I'm gonna charge you a hundred and fifty. I'm gonna 325 00:20:08,760 --> 00:20:11,640 Speaker 1: be like, I'm not buying that. And if it's at 326 00:20:11,640 --> 00:20:13,600 Speaker 1: seventy five, I'm like, what a great deal I might 327 00:20:13,600 --> 00:20:16,800 Speaker 1: get too. We don't do that in the stock market world. 328 00:20:16,840 --> 00:20:20,199 Speaker 1: There's a different mentality, there's a different approach as an 329 00:20:20,240 --> 00:20:23,960 Speaker 1: individual and as a participant in the markets. That's where 330 00:20:24,000 --> 00:20:26,000 Speaker 1: you want to take that approach, and that's why I 331 00:20:26,160 --> 00:20:30,879 Speaker 1: refer to the combination about tactical and fundamental. You don't 332 00:20:30,920 --> 00:20:32,840 Speaker 1: want to be the one that sits there and try 333 00:20:32,880 --> 00:20:35,760 Speaker 1: to catch as the falling knife, because if it misses you, 334 00:20:36,240 --> 00:20:38,320 Speaker 1: from a risk management point of view, it might land 335 00:20:38,320 --> 00:20:40,680 Speaker 1: in your heart, which puts you out of business. So 336 00:20:41,240 --> 00:20:44,399 Speaker 1: be patient, wait for it to stabilize, wait for it 337 00:20:44,480 --> 00:20:47,679 Speaker 1: to bounce, and you don't have to jump on board 338 00:20:47,840 --> 00:20:53,840 Speaker 1: that exponential rise because it will pull back. I e. 339 00:20:55,000 --> 00:21:01,560 Speaker 1: Our friendly neighborhood cryptocurrency Bitcoin. Oh gosh. I could ask 340 00:21:01,600 --> 00:21:04,280 Speaker 1: some questions on bitcoin, but I'm kind of keen to 341 00:21:04,359 --> 00:21:07,280 Speaker 1: get back to uh some of the political discussion that 342 00:21:07,320 --> 00:21:11,480 Speaker 1: we started out with. I feel like markets historically, or 343 00:21:11,560 --> 00:21:15,640 Speaker 1: investors historically, have had difficulty when it comes to pricing 344 00:21:15,680 --> 00:21:19,879 Speaker 1: in political developments, and I feel like maybe that's become 345 00:21:19,920 --> 00:21:24,160 Speaker 1: even trickier now that we have an unpredictable president, let's 346 00:21:24,200 --> 00:21:26,679 Speaker 1: say um in office. Maybe I'll disagree with me on 347 00:21:26,760 --> 00:21:31,119 Speaker 1: that one. How do you think investors have been approaching 348 00:21:31,119 --> 00:21:34,480 Speaker 1: the Trump administration and how do you think they should 349 00:21:34,520 --> 00:21:37,399 Speaker 1: be approaching him, so I tend to disagree. I think 350 00:21:37,480 --> 00:21:41,760 Speaker 1: the president has been very predictable. He's made these campaign 351 00:21:41,800 --> 00:21:46,280 Speaker 1: promises and one by one he's ticking them off. He 352 00:21:46,320 --> 00:21:51,320 Speaker 1: has no interested in expanding his base. He feels that 353 00:21:51,480 --> 00:21:56,159 Speaker 1: he needs to coddle his base. I do think that 354 00:21:56,560 --> 00:22:00,720 Speaker 1: every time there's an external force on him that is 355 00:22:00,760 --> 00:22:04,200 Speaker 1: potentially negative, he goes back and then tries to rev 356 00:22:04,280 --> 00:22:07,560 Speaker 1: up his base. I also feel that he's a master 357 00:22:08,400 --> 00:22:13,280 Speaker 1: at deflecting. So we have this basic crash and soy beans, 358 00:22:13,280 --> 00:22:17,520 Speaker 1: which I've been talking about for a long time. Literally, 359 00:22:17,840 --> 00:22:21,320 Speaker 1: if you want to plug Twitter, you can see that 360 00:22:21,400 --> 00:22:25,840 Speaker 1: he tweeted this morning at the conference blaming the crash 361 00:22:25,920 --> 00:22:30,280 Speaker 1: on story beans for fifteen years of bad economic policy, 362 00:22:30,800 --> 00:22:34,680 Speaker 1: where just not that long ago we had beans and 363 00:22:34,760 --> 00:22:39,800 Speaker 1: the teens. And so when you think about the politics now, 364 00:22:39,880 --> 00:22:43,000 Speaker 1: you get back into the longer cycle of where we 365 00:22:43,080 --> 00:22:47,200 Speaker 1: are now. I'm an outlier. So this morning, again we're 366 00:22:47,200 --> 00:22:52,040 Speaker 1: talking current markets. The pp I number was strong. Joe 367 00:22:52,160 --> 00:22:55,320 Speaker 1: was on there at eight thirty three tweeting about trucking 368 00:22:55,840 --> 00:23:00,200 Speaker 1: and its largest UH increase, and it goes to you, 369 00:23:00,359 --> 00:23:02,959 Speaker 1: Joe is a lot like me, and and spending too 370 00:23:03,080 --> 00:23:06,560 Speaker 1: much time thinking about esoteric things into markets rather than 371 00:23:06,600 --> 00:23:08,159 Speaker 1: trying to have a real life. And that could be 372 00:23:08,200 --> 00:23:12,200 Speaker 1: a whole other odd lots cast But Tracy, Tracy thinks 373 00:23:12,240 --> 00:23:14,760 Speaker 1: about those two except she's actually doing her job and 374 00:23:15,080 --> 00:23:18,680 Speaker 1: doing the management and editing responsibilities she's supposed to be. 375 00:23:18,960 --> 00:23:22,359 Speaker 1: I have those responsibilities too, but I'm wasting my time 376 00:23:22,440 --> 00:23:26,159 Speaker 1: tweeting charts on trying on the cost of trucking. No, 377 00:23:26,280 --> 00:23:28,720 Speaker 1: you're not. So that is a very sort of short term. 378 00:23:28,760 --> 00:23:31,480 Speaker 1: But what the president is doing here in terms of 379 00:23:31,520 --> 00:23:36,320 Speaker 1: building these are massive deflationary pressures that are building up 380 00:23:36,760 --> 00:23:40,560 Speaker 1: across the system, and that is the biggest risk that 381 00:23:40,600 --> 00:23:44,560 Speaker 1: we have, and we the change of technology. So if 382 00:23:44,560 --> 00:23:47,080 Speaker 1: we start from this notion that the Internet is the 383 00:23:47,119 --> 00:23:51,000 Speaker 1: greatest deflationary machine ever built and we're just learning to 384 00:23:51,200 --> 00:23:56,240 Speaker 1: use it. And technology enhances the ability to produce at 385 00:23:56,280 --> 00:24:00,760 Speaker 1: any level. And we also, and people tend not to 386 00:24:00,880 --> 00:24:04,760 Speaker 1: focus on this enough, we also use it much more efficiently. 387 00:24:05,280 --> 00:24:09,160 Speaker 1: So at any given level there's less demand and at 388 00:24:09,160 --> 00:24:12,879 Speaker 1: any given level there's more supply that puts downward pressure 389 00:24:13,000 --> 00:24:19,160 Speaker 1: on these prices. Again, yesterday that was the chart of 390 00:24:19,200 --> 00:24:24,000 Speaker 1: the century that I should have copyrighted this, But What 391 00:24:24,160 --> 00:24:27,600 Speaker 1: I like to say is the things that you don't 392 00:24:27,680 --> 00:24:30,359 Speaker 1: really need have gone down in price, and the things 393 00:24:30,400 --> 00:24:33,320 Speaker 1: that you do need have gone up in price. People 394 00:24:33,560 --> 00:24:38,840 Speaker 1: tend to think that price increases by themselves are inflationary. 395 00:24:39,840 --> 00:24:45,400 Speaker 1: They're not, because they're substitute herbal effects associated with them. 396 00:24:45,720 --> 00:24:50,280 Speaker 1: The other favorite economist of going back into the seventies 397 00:24:50,280 --> 00:24:56,040 Speaker 1: of eighties, Milton Freedman, They talked about monetary policy being inflationary. 398 00:24:56,080 --> 00:24:59,920 Speaker 1: We don't have an inflationary monetary policy. The real cruc 399 00:25:00,040 --> 00:25:03,240 Speaker 1: so the matter is going to be on this deflationary 400 00:25:03,320 --> 00:25:08,119 Speaker 1: side is what happens to energy prices, and to me, 401 00:25:09,320 --> 00:25:14,760 Speaker 1: they are heading towards that also deflationary cliff. It's the 402 00:25:14,840 --> 00:25:19,240 Speaker 1: unintended consequences of some of these policies, which is we're 403 00:25:19,280 --> 00:25:23,320 Speaker 1: going to push more and more supply on the market 404 00:25:23,400 --> 00:25:28,040 Speaker 1: by lowering regulations, by making it easier to pump energy. Now, 405 00:25:28,080 --> 00:25:33,119 Speaker 1: of course, we have the international aspect associated with the 406 00:25:33,200 --> 00:25:38,160 Speaker 1: question of Iran and Saudi Arabia in terms of pulling 407 00:25:38,240 --> 00:25:42,120 Speaker 1: out of the nuclear agreement. But I could argue that 408 00:25:42,720 --> 00:25:46,080 Speaker 1: the US being such a large exporter now of energy 409 00:25:46,680 --> 00:25:50,040 Speaker 1: that some of these Iranians they could start pumping more 410 00:25:50,040 --> 00:25:52,600 Speaker 1: and more oil to try to drive down the prices, 411 00:25:52,680 --> 00:25:55,639 Speaker 1: and that would hurt Texas, it would hurt a lot 412 00:25:55,680 --> 00:25:59,320 Speaker 1: of red states. So to try to really think about 413 00:25:59,359 --> 00:26:02,639 Speaker 1: all these dynam a mix from a political perspective. To me, 414 00:26:02,760 --> 00:26:06,480 Speaker 1: I always go back, what's the market, what's the trading opportunity? 415 00:26:06,720 --> 00:26:09,040 Speaker 1: So I look at Exo Mobile, I look at Chevron. 416 00:26:09,080 --> 00:26:13,800 Speaker 1: They have not outperformed on this energy rally. I try 417 00:26:13,840 --> 00:26:16,440 Speaker 1: to listen to the markets and have discipline, and they're 418 00:26:16,440 --> 00:26:20,800 Speaker 1: telling me that there's definitely an issue with regard to 419 00:26:20,880 --> 00:26:22,960 Speaker 1: some of these stocks. Look at Valero, which has come 420 00:26:23,000 --> 00:26:25,840 Speaker 1: off significantly from its highs. So there's gonna be a 421 00:26:25,840 --> 00:26:29,320 Speaker 1: lot of opportunities, a lot of fun. But I as 422 00:26:29,359 --> 00:26:33,520 Speaker 1: a strategist, we are in the potential spreading of the 423 00:26:33,600 --> 00:26:39,960 Speaker 1: deflationary camp. That's what's going on as we build these walls. Yeah, 424 00:26:40,160 --> 00:26:42,280 Speaker 1: I'm kind of annoyed that you brought up the Trump 425 00:26:42,320 --> 00:26:44,680 Speaker 1: soybean tweet because I was about to ask you about that, 426 00:26:44,800 --> 00:26:48,120 Speaker 1: because Peter is definitely the only guest we've ever had 427 00:26:48,119 --> 00:26:52,159 Speaker 1: on TV. Right at four PM, the market closes, everyone 428 00:26:52,160 --> 00:26:54,360 Speaker 1: wants to like talk about the SMP and the the Nazzac 429 00:26:54,400 --> 00:26:56,920 Speaker 1: computer comes on. The show and talks about what soybean 430 00:26:56,960 --> 00:26:59,520 Speaker 1: prices did that day. But obviously, I think as long 431 00:26:59,560 --> 00:27:02,240 Speaker 1: as we've been talking, and we've we've uh you know, 432 00:27:02,720 --> 00:27:06,320 Speaker 1: done multiple interviews together and now on this and TV, 433 00:27:06,440 --> 00:27:08,840 Speaker 1: you have talked about soybeans probably more than anyone else. 434 00:27:09,119 --> 00:27:11,800 Speaker 1: Why you Why is that like a bell Weather deal? 435 00:27:12,400 --> 00:27:15,480 Speaker 1: It's a bell Weather because it encompasses everything that we 436 00:27:15,600 --> 00:27:19,320 Speaker 1: just talked about, the ability to produce more right, the 437 00:27:19,359 --> 00:27:23,880 Speaker 1: American farmer is the most productive at supply. China has 438 00:27:23,920 --> 00:27:28,840 Speaker 1: a very large demand for soybeans. Uh, it's a very 439 00:27:28,880 --> 00:27:33,800 Speaker 1: healthy product. In fact, part of the thought process is 440 00:27:33,840 --> 00:27:37,560 Speaker 1: that the strong growth of the second quarter was front 441 00:27:37,560 --> 00:27:42,040 Speaker 1: loaded by Chinese purchasing a tremendous amount of beans before 442 00:27:42,119 --> 00:27:46,560 Speaker 1: the implementation of terrors. So now I'm thinking about this. 443 00:27:47,080 --> 00:27:49,600 Speaker 1: We don't live in a closed society. So who's going 444 00:27:49,640 --> 00:27:55,280 Speaker 1: to benefit from terrace on US soybeans? Brazil? So China 445 00:27:55,320 --> 00:27:57,960 Speaker 1: will go to Brazil and buy that and then maybe 446 00:27:58,000 --> 00:28:00,479 Speaker 1: and that's why prices go down. So now if I 447 00:28:00,520 --> 00:28:04,680 Speaker 1: produce something I can't it's you know, I can't put 448 00:28:04,680 --> 00:28:06,760 Speaker 1: it in a closet and store it. Yeah, there are 449 00:28:06,800 --> 00:28:09,560 Speaker 1: storage bins, but there are limits to that, I've got 450 00:28:09,600 --> 00:28:11,840 Speaker 1: to go sell it on the open market. That's what 451 00:28:11,920 --> 00:28:15,040 Speaker 1: the futures markets tells you. What's the forward price. Wow, 452 00:28:15,080 --> 00:28:17,280 Speaker 1: there's gonna be a lot more supply on these things 453 00:28:17,320 --> 00:28:22,280 Speaker 1: because once you start growing, you have two choices. You 454 00:28:22,400 --> 00:28:27,480 Speaker 1: harvest it, you sell it, or you plowed into the ground. Well, 455 00:28:27,600 --> 00:28:31,560 Speaker 1: plowing into the ground versus getting a non zero price 456 00:28:32,280 --> 00:28:35,800 Speaker 1: is not a very good option. So it's a very 457 00:28:35,840 --> 00:28:40,840 Speaker 1: liquid sensitive markets and it's a good reflection of geopolitical 458 00:28:41,240 --> 00:28:44,400 Speaker 1: Now again as a trader, so I'm thinking about, huh, 459 00:28:44,880 --> 00:28:48,320 Speaker 1: what's going on with qual calm and an x p I. Right, 460 00:28:48,400 --> 00:28:52,560 Speaker 1: that's a big political issue. So today right with this, 461 00:28:52,920 --> 00:28:56,280 Speaker 1: soybeans aren't down that much. I look at that spread 462 00:28:56,360 --> 00:28:58,400 Speaker 1: between qual Calm and n xp I and I'm like, 463 00:28:58,480 --> 00:29:01,280 Speaker 1: all right, I probably we shouldn't be selling n xp 464 00:29:01,440 --> 00:29:05,720 Speaker 1: I today because my favorite leading indicator is not that weak. 465 00:29:06,320 --> 00:29:10,320 Speaker 1: Just for those who aren't familiar claw comms buying an XPI. 466 00:29:10,360 --> 00:29:13,160 Speaker 1: But it needs approval from the Chinese government, that's correct. 467 00:29:13,280 --> 00:29:16,160 Speaker 1: And so one of the theoretical ways that China could 468 00:29:16,200 --> 00:29:19,520 Speaker 1: retaliate for what it doesn't like Trump doing is it 469 00:29:19,600 --> 00:29:23,400 Speaker 1: could block mergers get more aggressive about preventing US companies 470 00:29:23,560 --> 00:29:26,720 Speaker 1: from buying Chinese ones. And what you're saying is there 471 00:29:26,800 --> 00:29:29,680 Speaker 1: is an opportunity. Theoretically, if you're long n xp I 472 00:29:29,760 --> 00:29:32,959 Speaker 1: and the deal goes through, that's a big win. Uh. 473 00:29:33,000 --> 00:29:37,520 Speaker 1: And so the soybean market is telling you, in other words, 474 00:29:38,040 --> 00:29:40,719 Speaker 1: that the risk to that deal may not be as 475 00:29:40,760 --> 00:29:44,880 Speaker 1: big as what people think today today, because yeah, you know, 476 00:29:44,960 --> 00:29:48,200 Speaker 1: my crystal ball gets foggy really quickly, and that's why 477 00:29:48,240 --> 00:29:51,680 Speaker 1: we try to have risk management. So I can think 478 00:29:51,720 --> 00:29:53,600 Speaker 1: in terms that we started at the very beginning of 479 00:29:53,640 --> 00:29:59,120 Speaker 1: these long term cycles and where we are and it's changing. 480 00:29:59,760 --> 00:30:01,560 Speaker 1: And oh, by the way, we've been in a long 481 00:30:01,680 --> 00:30:07,160 Speaker 1: term bull market. Nobody lives forever. So the only definition 482 00:30:07,280 --> 00:30:11,000 Speaker 1: is I don't know if it's ended today, ended January. 483 00:30:11,320 --> 00:30:14,080 Speaker 1: I can make a strong argument for that, but I 484 00:30:14,120 --> 00:30:17,320 Speaker 1: just know that every day it's one day closer to 485 00:30:17,440 --> 00:30:21,280 Speaker 1: the end by definition. So that's going to get my 486 00:30:21,360 --> 00:30:24,800 Speaker 1: antenna up. That's going to get us more risk adverse 487 00:30:25,000 --> 00:30:28,120 Speaker 1: on things that were on the long side. Peter, lots 488 00:30:28,120 --> 00:30:31,120 Speaker 1: of people clearly concerned about the end of the cycle, 489 00:30:31,240 --> 00:30:34,080 Speaker 1: the economic cycle, the bull market, as you just mentioned, 490 00:30:34,560 --> 00:30:36,560 Speaker 1: what do you advise people to watch out for, and 491 00:30:36,600 --> 00:30:42,400 Speaker 1: do you have a favorite leading indicator for late cycle signs? Well, 492 00:30:42,400 --> 00:30:44,280 Speaker 1: as I said very early on, the one of our 493 00:30:44,360 --> 00:30:47,000 Speaker 1: leading indicators is really we were looking at Visa and 494 00:30:47,080 --> 00:30:50,120 Speaker 1: MasterCard as the strength of the consumer. It's still a 495 00:30:50,160 --> 00:30:54,040 Speaker 1: consumer driven economy. We look at each of the components 496 00:30:54,040 --> 00:30:56,520 Speaker 1: of G D P right C plus I plus G 497 00:30:57,120 --> 00:31:01,800 Speaker 1: plus X minus M X minus M. Now that exports. Wow, 498 00:31:02,240 --> 00:31:05,320 Speaker 1: that's full of uncertainty. As we've spent a lot of 499 00:31:05,320 --> 00:31:12,160 Speaker 1: the time discussing UH, investment is strange because there is 500 00:31:12,280 --> 00:31:16,760 Speaker 1: far more uncertainty as you're doing your economic forecast. That 501 00:31:16,800 --> 00:31:23,000 Speaker 1: could really slow down as well. Government spending M. We've 502 00:31:23,000 --> 00:31:25,760 Speaker 1: got a fiscal year coming up at the end of October, 503 00:31:25,880 --> 00:31:28,520 Speaker 1: right into a mid term election. I can really see 504 00:31:28,560 --> 00:31:32,120 Speaker 1: Congress passing all those appropriation bills on time with no 505 00:31:32,280 --> 00:31:36,640 Speaker 1: issues whatsoever. Probably not, so that's gonna be. That's why 506 00:31:36,680 --> 00:31:41,120 Speaker 1: I talk about inflation uncertainty there, government spending X M. 507 00:31:41,200 --> 00:31:43,800 Speaker 1: So the only thing which is a majority is C, 508 00:31:44,480 --> 00:31:48,880 Speaker 1: which is consumption. If we see that starting to slow, 509 00:31:49,200 --> 00:31:52,240 Speaker 1: then that would be the to us the sign that 510 00:31:52,400 --> 00:31:56,680 Speaker 1: the cycle is right about at the end. And as 511 00:31:56,720 --> 00:32:01,160 Speaker 1: I was saying that the issue for investors is trying 512 00:32:01,200 --> 00:32:05,880 Speaker 1: to look forward towards an uncertain future and not saying, hey, 513 00:32:05,920 --> 00:32:08,000 Speaker 1: the stock market has been up for the past ten years, 514 00:32:08,000 --> 00:32:10,880 Speaker 1: I'm going to be in an index. If I will 515 00:32:10,920 --> 00:32:12,959 Speaker 1: just say that, at the beginning of a bull market, 516 00:32:13,080 --> 00:32:15,840 Speaker 1: everybody wants to be a trader because there was a 517 00:32:15,880 --> 00:32:19,320 Speaker 1: lot of altility, and by the end everybody wants to 518 00:32:19,360 --> 00:32:22,400 Speaker 1: be an investor because the worst thing that anyone can 519 00:32:22,480 --> 00:32:25,960 Speaker 1: have in a bull market is risk management, because time 520 00:32:26,000 --> 00:32:31,640 Speaker 1: bails you out. But when that changes, you win because 521 00:32:31,680 --> 00:32:35,400 Speaker 1: you have that discipline and you have that risk management. 522 00:32:35,440 --> 00:32:40,480 Speaker 1: This is a business where it's all about surviving. It's 523 00:32:40,560 --> 00:32:45,320 Speaker 1: not about being right all the time. It's about being disciplined. 524 00:32:45,360 --> 00:32:48,560 Speaker 1: If I want to keep harping on that, because as 525 00:32:48,600 --> 00:32:51,400 Speaker 1: Joe was talking about Netflix, and we all like to 526 00:32:51,440 --> 00:32:53,080 Speaker 1: do that that you know, we want to go to 527 00:32:53,160 --> 00:32:55,800 Speaker 1: the next event and say, hey, you know, I bought 528 00:32:55,800 --> 00:32:59,360 Speaker 1: so and so at five and now it's at fifty, 529 00:32:59,440 --> 00:33:03,240 Speaker 1: but nobody talks about the stocks that they bought at five. 530 00:33:03,720 --> 00:33:06,160 Speaker 1: Peter Borish of the Quod Group, thank you very much 531 00:33:06,200 --> 00:33:09,040 Speaker 1: for joining us. Always great to get your perspective. Thank 532 00:33:09,080 --> 00:33:24,760 Speaker 1: you so Tracy. I thought that was really helpful in 533 00:33:24,840 --> 00:33:28,920 Speaker 1: terms of understanding some of the different dynamics at play 534 00:33:29,040 --> 00:33:33,479 Speaker 1: right now. I really liked Peter's answer to your question 535 00:33:33,520 --> 00:33:36,800 Speaker 1: about Trump's unpredictability because I think the way he framed 536 00:33:36,840 --> 00:33:40,400 Speaker 1: that that there is a level of predictability very base 537 00:33:40,520 --> 00:33:44,440 Speaker 1: focused and very focused on taking the boxes of his promises, 538 00:33:45,000 --> 00:33:48,560 Speaker 1: sort of has a clarity of characterization of this administration 539 00:33:49,000 --> 00:33:51,440 Speaker 1: that I think is a sort of often missing from 540 00:33:51,520 --> 00:33:55,200 Speaker 1: the Marcus discussion. Well, I think I quite liked the 541 00:33:55,600 --> 00:33:59,600 Speaker 1: more step back philosophy, which was this idea of listening 542 00:33:59,680 --> 00:34:03,040 Speaker 1: to the market is actually telling you because a lot 543 00:34:03,040 --> 00:34:05,800 Speaker 1: of people when they approach investing, they're going to try 544 00:34:05,840 --> 00:34:08,520 Speaker 1: to outsmart the market, right, They're going to be contrarian, 545 00:34:08,600 --> 00:34:11,680 Speaker 1: They're gonna look for opportunities that they think the majority 546 00:34:11,680 --> 00:34:15,560 Speaker 1: of people are missing. And Peter's point is to not 547 00:34:15,920 --> 00:34:18,359 Speaker 1: ignore the market. You don't really want to fight it. 548 00:34:18,440 --> 00:34:20,319 Speaker 1: You want to be listening to it. And then you 549 00:34:20,360 --> 00:34:23,880 Speaker 1: want to try to be disciplined, as he kept repeating 550 00:34:24,400 --> 00:34:27,360 Speaker 1: at the same time, so following the market, but not 551 00:34:27,560 --> 00:34:31,919 Speaker 1: in a completely stupid way. Yeah, And to his point, uh, 552 00:34:31,960 --> 00:34:36,160 Speaker 1: and he identified this directly one of the big questions 553 00:34:36,239 --> 00:34:39,279 Speaker 1: that we've seen is we've seen oil prices do very well, 554 00:34:39,880 --> 00:34:43,799 Speaker 1: US prices pretty close to seventy a barrel on West 555 00:34:43,800 --> 00:34:47,280 Speaker 1: Texas Intermediate, but a lot of these oil stocks haven't 556 00:34:47,280 --> 00:34:50,279 Speaker 1: done that well. And there is this sort of conundrum 557 00:34:50,440 --> 00:34:53,200 Speaker 1: or people thinking there's an opportunity because of the market 558 00:34:53,440 --> 00:34:56,239 Speaker 1: is miss pricing them, and who knows, maybe there is. 559 00:34:56,640 --> 00:34:59,279 Speaker 1: But it's also worth sort of stepping back and saying, wait, 560 00:34:59,480 --> 00:35:03,000 Speaker 1: could the could be telling us something about these companies 561 00:35:03,360 --> 00:35:06,319 Speaker 1: and about what's about to happen that we should be 562 00:35:06,360 --> 00:35:08,879 Speaker 1: listening to. Yeah, some of the connections that he draws 563 00:35:08,880 --> 00:35:11,000 Speaker 1: are really really interesting, and I have to say I 564 00:35:11,080 --> 00:35:15,560 Speaker 1: really like the reading soybean prices idea in order to 565 00:35:15,600 --> 00:35:20,200 Speaker 1: figure out the perspective for a cross border merger. That's 566 00:35:20,520 --> 00:35:23,600 Speaker 1: a really nice instance of the sort of old fashioned 567 00:35:23,600 --> 00:35:28,200 Speaker 1: connection soybean prices as a for merger arbitrage traders. I 568 00:35:28,239 --> 00:35:30,440 Speaker 1: have to imagine there aren't a lot of people in 569 00:35:30,480 --> 00:35:32,560 Speaker 1: that space for whom the first thing they do is 570 00:35:32,640 --> 00:35:35,120 Speaker 1: check the price of soybeans. But you know, you gotta 571 00:35:35,120 --> 00:35:37,760 Speaker 1: get your edge where you can get it. Yeah, maybe 572 00:35:37,760 --> 00:35:40,880 Speaker 1: that will change. This is the ad thoughts value proposition. 573 00:35:40,960 --> 00:35:45,600 Speaker 1: You find connections you never thought of before. Exactly? All right, Well, 574 00:35:45,760 --> 00:35:48,760 Speaker 1: this has been another episode of the All Thoughts podcast 575 00:35:48,840 --> 00:35:51,359 Speaker 1: on Tracy Alloway. You can follow me on Twitter at 576 00:35:51,440 --> 00:35:55,040 Speaker 1: Tracy Alloway and I'm Joe Wisenthal. You can follow me 577 00:35:55,239 --> 00:35:58,280 Speaker 1: on Twitter at the Stalwart, and Peter is on Twitter. 578 00:35:58,360 --> 00:36:03,520 Speaker 1: He tweets occasionally at Peterborough. And you should follow our 579 00:36:03,680 --> 00:36:07,759 Speaker 1: producer tofor Foreheads at Foreheads T, as well as the 580 00:36:07,760 --> 00:36:12,320 Speaker 1: Bloomberg head of podcast, Francesca Leavy at Francesco Today. Thanks 581 00:36:12,360 --> 00:36:12,840 Speaker 1: for listening.