WEBVTT - Hedge Fund Manager: This Is How I Know WHEN To Exit Investments | Chris Macintosh 0:00:00.240 --> 0:00:01.920 Look at what's going on in El salbad Or. He's 0:00:01.960 --> 0:00:03.960 even gone so far now as I think he's given 0:00:04.040 --> 0:00:06.519 out like one hundred citizenships. 0:00:05.720 --> 0:00:08.680 To scientists, doctors, philosophers. 0:00:08.800 --> 0:00:10.799 I love what he said. He talked about the immigration 0:00:10.800 --> 0:00:12.719 problem in the United States. He said, we need to 0:00:12.760 --> 0:00:15.920 ask ourselves, why are people leaving our country. 0:00:15.680 --> 0:00:18.400 The things that are of real value to you. By 0:00:18.440 --> 0:00:23.320 putting capital behind them, you're generating positive return. Whether you 0:00:23.360 --> 0:00:26.360 see that in a portfolio number is to some extent 0:00:26.560 --> 0:00:29.159 less material. Your portfolio is going through the roof, but 0:00:29.200 --> 0:00:31.400 your world's collapsing around you. What's the point? 0:00:31.520 --> 0:00:33.400 I think right now, with the rise of the Internet, 0:00:33.520 --> 0:00:38.239 we're becoming more globally connected, but more locally disconnected at 0:00:38.280 --> 0:00:38.800 the same time. 0:00:38.880 --> 0:00:42.920 Even that guystory cycles. I mean, I'm watching local communities 0:00:42.960 --> 0:00:47.560 forming literally ten years ago, we're not really forming. 0:00:47.840 --> 0:00:50.800 There was someone on Twitter, a doctor. She posted a 0:00:50.880 --> 0:00:53.760 letter that she'd gotten from the entrance company by referring 0:00:53.840 --> 0:00:55.840 over the COVID patients. And she had said, if she 0:00:55.880 --> 0:00:57.560 would have referred all these covered patients, she would have 0:00:57.560 --> 0:00:59.680 made one point five million dollars. That's what how much 0:00:59.680 --> 0:01:00.640 they would have Peter. 0:01:00.800 --> 0:01:03.080 And people are waking to that, and they're saying I 0:01:03.200 --> 0:01:07.720 no longer trusted. The reason that we need them is 0:01:07.760 --> 0:01:11.840 that you don't get asymmetry without them. You won't get 0:01:11.840 --> 0:01:17.200 the eighty twenty right because if everybody was the twenty, 0:01:17.760 --> 0:01:21.840 there would be no twenty. Then everybody is like there 0:01:21.920 --> 0:01:24.839 is like, how do you get eighty percent moving right 0:01:25.400 --> 0:01:29.240 with a twenty percent move left? Like, you can't have everyone. 0:01:30.080 --> 0:01:31.560 You have to have the anomaly. That's how you get 0:01:31.560 --> 0:01:32.240 the asymmetry. 0:01:33.280 --> 0:01:33.920 So for. 0:01:35.480 --> 0:01:39.440 People like me who spend our time trying to find 0:01:39.480 --> 0:01:46.640 the asymmetry, we have to have the vast majority doing something. 0:01:46.760 --> 0:01:50.360 And for the most part, they're generally right, you know, 0:01:50.480 --> 0:01:54.320 in herds when the majority. We were talking about this 0:01:54.360 --> 0:01:58.480 the other day, right Michael's Eve. The herd are typically right, 0:01:58.640 --> 0:02:01.400 but every now and then they're wrong. And so as 0:02:01.440 --> 0:02:05.760 an asset manager looking for asymmetry, you're just spending your time. 0:02:05.840 --> 0:02:09.520 It's like, I think it was Jim Rogers. Jim, I 0:02:09.520 --> 0:02:12.080 think it was Jim Rogers. He said, look, he just 0:02:12.200 --> 0:02:15.720 waits for he doesn't want to jump over like hurdles. 0:02:16.160 --> 0:02:18.160 He waits for the one he can just step over. 0:02:19.200 --> 0:02:21.160 And so you've got to be It's like you're a surfer, 0:02:21.800 --> 0:02:26.560 what's it every seventh wave, ninth wave depending, like that's good. Yeah, 0:02:27.200 --> 0:02:29.280 there's something like that. I'm not a surfer, but I 0:02:29.320 --> 0:02:31.600 know there's some thing where it's like it. 0:02:31.560 --> 0:02:33.680 Depends on how many waves come in per set or something. 0:02:33.680 --> 0:02:35.640 But yeah, typically maybe the second, third wave or the 0:02:35.639 --> 0:02:37.240 best skipped the first kind of thing. 0:02:37.680 --> 0:02:40.240 Yeah, So you there's a patience that you've got to have. 0:02:40.280 --> 0:02:42.440 It's like, you don't ride every way. It's all timing 0:02:42.880 --> 0:02:45.000 and and so you've got to you have to be 0:02:45.080 --> 0:02:47.800 patient and be like, Okay, that's where that the setup 0:02:47.840 --> 0:02:49.520 now is right and I can see it. 0:02:49.960 --> 0:02:51.679 Charlie Munger said, the big money is not made in 0:02:51.680 --> 0:02:52.520 the bay and or something. 0:02:52.360 --> 0:02:56.079 But the weeding absolutely, yeah, absolutely, So you have to 0:02:56.120 --> 0:03:00.200 have patients, and most people don't have patients, and you've 0:03:00.240 --> 0:03:06.560 got to have the ability to have that wherewithal to 0:03:06.639 --> 0:03:11.239 go left when everyone's going right. And those setups come 0:03:11.280 --> 0:03:13.880 along every now and then, but they're not that often. 0:03:14.280 --> 0:03:17.120 Again because most of the time the herd is broadly correct. 0:03:18.000 --> 0:03:20.760 But do you think the herd is broadly mostly broadly 0:03:20.800 --> 0:03:22.959 correct in certain periods of time? So what do I 0:03:23.000 --> 0:03:27.240 mean by that? Not to throw this out but just 0:03:27.400 --> 0:03:29.120 maybe for a frame of reference, you know, in a 0:03:29.160 --> 0:03:33.080 fourth turning type environment with the generational theory, where the 0:03:33.120 --> 0:03:36.200 hard times bring strong men and then at the end, right, 0:03:36.840 --> 0:03:39.560 the weak men cause bad times kind of thing. And 0:03:39.640 --> 0:03:41.680 so you might argue that we're sort of in this 0:03:41.760 --> 0:03:44.440 period in time where people are so far removed from 0:03:44.480 --> 0:03:48.760 the wealth creation aspect, right that they start making just idiotic, 0:03:48.800 --> 0:03:50.920 stupid policies because they don't just understand the world. They 0:03:51.000 --> 0:03:55.400 never worked in that world. You're familiar with generational theory, right, So, 0:03:55.600 --> 0:03:59.160 I mean it's a model. It's certainly not empirical. I 0:03:59.200 --> 0:04:00.640 don't believe it for everything, but it's one way to 0:04:00.720 --> 0:04:03.840 view the world. If you look at Germany after coming 0:04:03.880 --> 0:04:08.560 out of hyperinflation and war reparations, the country was basically 0:04:08.600 --> 0:04:13.200 broken down to nothing. Very hard times created very strong men, 0:04:13.560 --> 0:04:16.880 and they became the economic powerhouse of Europe, right in precision, 0:04:16.920 --> 0:04:20.240 German engineering and German cars and all of that. We're 0:04:20.279 --> 0:04:23.080 eighty years later right now, and what is Germany doing. 0:04:23.320 --> 0:04:26.919 They're de industrializing because you have people putting in policies 0:04:26.960 --> 0:04:29.840 that don't understand that those were the things that actually 0:04:29.839 --> 0:04:33.200 made them great in the first place. And that's just 0:04:34.120 --> 0:04:38.000 one ancidotal piece of information. But generally, and back to 0:04:38.040 --> 0:04:41.880 the point of the question, maybe at certain points in time, 0:04:42.520 --> 0:04:47.240 finding that asymmetry because of bad decisions is easier. So 0:04:47.279 --> 0:04:50.920 maybe trying to find that in Germany forty years ago 0:04:51.120 --> 0:04:53.840 might have been tough. Germany was doing great, but today 0:04:53.920 --> 0:04:58.040 you see these stupid decisions of shutting down your energy 0:04:58.680 --> 0:05:00.800 and then it's like, well, wait minute, but you're going 0:05:00.839 --> 0:05:03.520 to need the energy. So do you think that's true 0:05:03.600 --> 0:05:04.480 or I. 0:05:04.440 --> 0:05:06.320 Think it's one hundred percent true? And I think you 0:05:06.440 --> 0:05:12.120 have cycles within cycles that distribution that we just discussed, 0:05:12.680 --> 0:05:18.120 where you have roughly twenty percent of individuals that will 0:05:18.360 --> 0:05:21.520 move a certain way, and you'll have the market moving 0:05:21.560 --> 0:05:23.680 sayety percent of the time a certain way, and those 0:05:23.720 --> 0:05:27.360 things generally generally true and they become so there is 0:05:28.360 --> 0:05:32.839 there's a cycle pattern there. Within that cycle, you'll have 0:05:32.960 --> 0:05:35.800 the generational there. So let's take this and let's just 0:05:35.800 --> 0:05:38.120 think about the business cycle roughly a seven to two 0:05:38.160 --> 0:05:42.760 sort of twelve year cycle. Everybody most everyone is relatively 0:05:42.800 --> 0:05:46.640 familiar with it, and so you can look at that 0:05:46.720 --> 0:05:48.560 as a cycle. Now, within that cycle, you're going to 0:05:48.600 --> 0:05:52.320 have individuals that profit often that twenty percent will profit 0:05:52.360 --> 0:05:55.120 at the tail end of either. They'll profit from the 0:05:55.120 --> 0:05:57.880 tail end of either because they'll identify, oh, this is 0:05:57.920 --> 0:06:00.400 the end of that business cycle. This is when assets 0:06:00.440 --> 0:06:03.240 get cheap, and they'll buy them. And then in the 0:06:03.240 --> 0:06:05.760 opposite they that's too expensive and they'll sell them, and 0:06:05.839 --> 0:06:09.560 vice versa. In fact, your Greek shippers have been extraordinary, 0:06:09.640 --> 0:06:14.440 Your Greek shipping families have been extraordinary successful over generations 0:06:14.600 --> 0:06:19.320 doing that very thing. Because shipping is a very cyclical business. 0:06:19.640 --> 0:06:23.960 It's extraordinarily capital intensive, which means it's debt financed. The 0:06:24.040 --> 0:06:28.120 debt markets themselves have their own credit cycle. The commodity markets, 0:06:28.160 --> 0:06:31.400 which the which the shipping space is typically tied to, 0:06:32.920 --> 0:06:37.240 has its own cycles, and so those individual families have 0:06:37.320 --> 0:06:40.279 often been able to just identify those particular cycles and 0:06:40.400 --> 0:06:45.039 just pretty much time them. Right. So there's like your 0:06:45.080 --> 0:06:49.280 business cycle tied in with a longer term debt cycle. Right, 0:06:49.320 --> 0:06:52.080 So the longer term debt cycle will simply exacerbate your 0:06:52.120 --> 0:06:55.120 existing business cycles. You're going to have a big business 0:06:55.120 --> 0:06:57.720 cycle at the tail ends of either of the debt cycle, 0:06:58.040 --> 0:07:00.279 which is the different sort of eighty year cycle, right, 0:07:00.520 --> 0:07:03.400 or sometimes there's a thirty years debt cycle as well. 0:07:03.440 --> 0:07:08.719 But so to your question, you have these broader cycles, 0:07:08.760 --> 0:07:12.800 and I think the same individuals and the pest personalities 0:07:12.800 --> 0:07:15.600 will always exist and they will just have an exacerbated 0:07:16.960 --> 0:07:22.920 result within the context of those cycles. And it's very 0:07:23.480 --> 0:07:25.480 unique in this period of time that you and I 0:07:25.480 --> 0:07:28.600 are sitting down now in that we have multiple of 0:07:28.600 --> 0:07:31.240 these cycles all converging at once. And I know you've 0:07:31.400 --> 0:07:34.840 you've done a lot of fantastic work on this, and 0:07:34.880 --> 0:07:37.280 we have a lot of those cycles that are all 0:07:37.320 --> 0:07:41.120 prevalent now. And what's really fascinating is that the longer 0:07:41.160 --> 0:07:45.240 the cycles, the less well known they are, which is 0:07:45.280 --> 0:07:48.160 for obvious reasons. A business cycle, you know, you can 0:07:48.160 --> 0:07:50.400 grow up and you're like, oh dad lost his business 0:07:50.400 --> 0:07:53.280 and any like. You know, people have a visitor have 0:07:53.320 --> 0:07:56.120 an impact within a business cycle where they can sort 0:07:56.120 --> 0:08:00.320 of identify it. Longer term debt cycles that don't because 0:08:00.600 --> 0:08:01.840 they're multi generational. 0:08:02.760 --> 0:08:05.120 We know, like fifty years that's like our windows exactly. 0:08:05.480 --> 0:08:08.800 And you might hear stories about grandma or grandpa and things, 0:08:08.840 --> 0:08:11.680 and you know, if the curious of us will look 0:08:11.680 --> 0:08:13.640 at that and go, what does that mean? What happened? 0:08:13.640 --> 0:08:16.880 And investigated and then they'll see, oh, there's something going 0:08:16.880 --> 0:08:20.440 on here, and what was what happened to grandpa back then? 0:08:20.840 --> 0:08:23.480 Looks like it's kind of happening now. And they start 0:08:23.520 --> 0:08:27.360 piecing things together and they're like, there's something going on. Yeah, brother. 0:08:28.720 --> 0:08:31.320 But again, when you go in long, long cycles like 0:08:31.360 --> 0:08:34.200 your revolutionary cycle, two and fifty year cycle, most of 0:08:34.240 --> 0:08:36.240 us have got no idea. So it's the very very 0:08:36.320 --> 0:08:39.920 curious who look at that and go are we there? 0:08:40.360 --> 0:08:42.240 And what does that mean if we are? And what 0:08:42.280 --> 0:08:45.360 are the probabilities? And so like. For an asset manager 0:08:45.440 --> 0:08:50.280 like me, it's not just identifying the cycles. It's part 0:08:50.520 --> 0:08:56.480 in large part, it's pricing the probability because it's not 0:08:56.640 --> 0:08:59.880 just like, oh, okay, we might have a crash in 0:09:01.320 --> 0:09:05.040 say housing, now I want to go and buy cheap housing, right, 0:09:05.120 --> 0:09:07.960 so you can look for that, but it's like, what 0:09:08.080 --> 0:09:10.240 is cheap housing mean? What is it? What are the ratios? 0:09:10.280 --> 0:09:13.080 What does it need to look like? You know? So? 0:09:13.880 --> 0:09:15.840 And there's so there's two ways that you can go 0:09:15.920 --> 0:09:18.880 about it. One is just simply just looking for cheap value, 0:09:19.559 --> 0:09:22.559 and so you can take historical metrics and go, okay, 0:09:22.600 --> 0:09:29.680 we know it's roughly cheap at two times annual incomes right, 0:09:29.880 --> 0:09:33.679 and it's really expensive it's seven, eight, nine times, you know, 0:09:33.760 --> 0:09:36.200 and anything in between is like, well, we're probably somewhere 0:09:36.200 --> 0:09:40.600 in between in the cycle. So you can do that, 0:09:40.800 --> 0:09:43.160 and then if you do that consistently, you'll go, oh, 0:09:43.200 --> 0:09:47.400 there's cycles. Yeah, whenever it keeps getting cheap every like, 0:09:47.720 --> 0:09:49.720 you know, it's kind of a repeating affair that keeps 0:09:49.720 --> 0:09:51.640 getting cheap and then it kind of keeps getting expensive, 0:09:51.720 --> 0:09:54.360 So you start seeing these cycles within. I'm just using 0:09:54.400 --> 0:09:57.040 real estate as an example because it's one that many 0:09:57.080 --> 0:10:01.000 people are more familiar with. But so, so you can 0:10:01.040 --> 0:10:02.920 do that, or you can look at the cycle paer 0:10:03.000 --> 0:10:05.000 and go, okay, what does that look like? And what 0:10:05.040 --> 0:10:07.600 are the factors you look at? So I really enjoy 0:10:07.679 --> 0:10:12.040 looking at at it from multiple angles, and you know, 0:10:12.160 --> 0:10:14.960 so like my business partner in the fund, he's very 0:10:15.040 --> 0:10:18.320 very good at just the granular like what is cheap? 0:10:18.360 --> 0:10:20.360 What are the p E ratios, what are the sectors 0:10:20.360 --> 0:10:27.160 that are exhibiting these types of metrics that would ordinarily 0:10:27.200 --> 0:10:31.840 identify something as being worth looking at at least? And 0:10:31.880 --> 0:10:34.240 then I will often look at that macro space and 0:10:34.280 --> 0:10:37.800 go what is like where should I be and very 0:10:37.840 --> 0:10:41.840 often we we we converge on something and I'm like, 0:10:42.200 --> 0:10:44.480 different angles. You're from very different angles because we've got 0:10:44.559 --> 0:10:52.600 very you know, he's a mathematician, and so it's you know, 0:10:52.640 --> 0:10:54.840 I think that's that's those what you're talking about. Those 0:10:54.880 --> 0:11:03.600 sort of cycles, are they manifest themselves? They repeat? 0:11:04.559 --> 0:11:08.600 And so what are the big cycles that you're seeing 0:11:08.720 --> 0:11:10.920 that the trends that you're seeing that you're sort of 0:11:10.920 --> 0:11:11.840 excited about with your. 0:11:11.679 --> 0:11:18.760 Fund Well, hm, I think the I think the largest 0:11:18.880 --> 0:11:21.640 is meaning, I think the largest debt is worth focusing 0:11:21.679 --> 0:11:27.679 on is the long term debt cycle because it has 0:11:27.760 --> 0:11:31.200 probably the most broad impact. It's the largest asset class 0:11:31.280 --> 0:11:35.760 is debt debt markets. And we have this extraordinary set 0:11:35.840 --> 0:11:40.160 up where we have the highest levels of debt globally 0:11:40.320 --> 0:11:45.319 and simultaneously you have the lowest relative interest rates, which 0:11:45.360 --> 0:11:46.600 is which is an anomaly? 0:11:47.640 --> 0:11:50.600 And is it an anomaly though, because isn't it the 0:11:50.600 --> 0:11:52.520 low interest rates that allowed for the such high debt 0:11:52.600 --> 0:11:56.120 levels as debt As as interest rates continue to get 0:11:56.120 --> 0:11:59.160 cut in half, debt was able to double yep. 0:11:59.440 --> 0:12:01.920 Yep. It's just that in the past often that has 0:12:01.960 --> 0:12:07.600 been corrected by various market forces, and so the market 0:12:07.640 --> 0:12:10.200 forces that we've had this time have often been overwhelmed. 0:12:10.840 --> 0:12:13.320 We had it in eight you know, many of us 0:12:13.360 --> 0:12:15.040 looked at and we thought, okay, this is going to 0:12:15.559 --> 0:12:18.560 correct a lot of that death cycle. And guess what 0:12:18.640 --> 0:12:22.199 they literally did the opposite. They flipped the swipt and 0:12:21.640 --> 0:12:24.040 they flipped the switch and pushed it up. And so 0:12:24.920 --> 0:12:28.440 you know, then you have to recalibrate. I mean, I 0:12:28.480 --> 0:12:33.400 recall sitting. I had just exited a whole lot of 0:12:33.400 --> 0:12:37.800 real estate in November six because I'm like, this is 0:12:37.920 --> 0:12:44.120 fucking insane, this is right. I can't make a case anymore. 0:12:44.559 --> 0:12:47.200 And I couldn't find anything of value. So part of 0:12:47.240 --> 0:12:49.800 that was like I knew there wasn't I knew the 0:12:49.880 --> 0:12:54.680 values that existed weren't particularly there weren't asymmetric on the upside, 0:12:54.920 --> 0:12:57.560 partly because I couldn't no longer find anything that made 0:12:57.559 --> 0:13:00.600 any sense to buy, and so like and it's like, well, 0:13:00.600 --> 0:13:03.160 if you wouldn't buy what you own today, why do 0:13:03.240 --> 0:13:07.120 you own it? Right? Because often we get caught, you know, 0:13:07.200 --> 0:13:09.120 owning things that we own. But if you woke up 0:13:09.120 --> 0:13:12.240 every morning and you said, would I buy everything in 0:13:12.240 --> 0:13:14.080 my portfolio? I think that's a very good way to 0:13:14.080 --> 0:13:14.559 look at it. 0:13:15.360 --> 0:13:16.040 That is a good way too. 0:13:16.920 --> 0:13:20.400 Then you assess it from a different angle, right because 0:13:20.400 --> 0:13:23.840 you're not married. This isn't like something that you don't 0:13:23.880 --> 0:13:26.000 have to own it. You just you can get rid 0:13:26.040 --> 0:13:28.800 of it if you don't want it. And so when 0:13:28.840 --> 0:13:30.599 you view things from that perspective, I looked at the 0:13:30.600 --> 0:13:32.320 stuff I owned, I'm like, no, I wouldn't buy this, 0:13:33.080 --> 0:13:35.120 Like why would I buy this? And I'm like, well, 0:13:35.120 --> 0:13:37.559 that's obvious. I need to sell it in any event, 0:13:37.880 --> 0:13:39.920 Then we had the you know, and I didn't know 0:13:40.000 --> 0:13:41.920 that there was a crisis. I just there would be 0:13:41.920 --> 0:13:45.280 a crisis. I just knew the probability of upside for 0:13:45.400 --> 0:13:48.600 me was no longer there, and I knew that the 0:13:48.760 --> 0:13:53.080 risks that existed were growing every day. That was enough 0:13:53.080 --> 0:13:55.720 for me to go, don't I shouldn't be involved anymore. 0:13:55.920 --> 0:13:58.760 I have to get out of this. And then at 0:13:58.760 --> 0:14:00.760 the same time, there was nothing of real value that 0:14:00.800 --> 0:14:04.640 I could find. You know, when I searched across asset classes, 0:14:05.200 --> 0:14:07.720 I really struggled, and you know what, so my default 0:14:07.760 --> 0:14:09.680 was to go to cash, but that was the asset 0:14:09.720 --> 0:14:13.640 class that was undervalued. So like by default, I'll ended 0:14:13.720 --> 0:14:17.800 up buying the deep value asset, which was literally cash. 0:14:18.200 --> 0:14:20.440 So there's many ways you can go about like kind 0:14:20.440 --> 0:14:23.920 of finding deep value, if you will. But further to 0:14:23.960 --> 0:14:26.120 the point like that was that was then eight. And 0:14:26.160 --> 0:14:28.120 then when that hits I was like, Okay, this is 0:14:28.160 --> 0:14:31.960 gonna we need this, We need a cleansing of the system. 0:14:32.280 --> 0:14:34.480 And then when I saw the FED stepping in and 0:14:35.240 --> 0:14:40.360 every imaginable three letter freaking quantit et of this and that, 0:14:40.520 --> 0:14:42.880 and like, I was like, this is what they're going 0:14:42.960 --> 0:14:45.960 to do. They're just going to push this thing hard 0:14:46.160 --> 0:14:49.120 and further than it should do, which is going to 0:14:49.160 --> 0:14:52.200 create an ever greater problem. But that's where they're going 0:14:52.240 --> 0:14:57.040 to go, which then led me into saying, Okay, what 0:14:57.120 --> 0:14:59.840 are the consequences of these actions that they're going to take? 0:15:00.720 --> 0:15:02.840 And for me at the time, the consequences of those 0:15:02.880 --> 0:15:06.160 actions were that capital was going to have to go 0:15:06.280 --> 0:15:10.800 to the far end of the risk curve because the 0:15:10.840 --> 0:15:12.240 way that they were going to do that was to 0:15:12.280 --> 0:15:15.480 lower interest rates, which meant the debt was going to higher, 0:15:15.680 --> 0:15:19.240 which was just alluded to. But the lowering of interest 0:15:19.320 --> 0:15:25.360 rates meant that anybody that was dependent on income from 0:15:25.400 --> 0:15:28.000 your bond market was going to be in trouble, which 0:15:28.040 --> 0:15:31.240 is your pension funds, and your pension funds and your 0:15:31.320 --> 0:15:36.200 mutual funds are humongous, the trillions and trillions of dollars 0:15:36.760 --> 0:15:40.840 in value, and so these guys typically have to get 0:15:40.880 --> 0:15:44.200 roughly a seven percent coupon just to live, just to 0:15:44.240 --> 0:15:46.920 stay aboard. How do you get a seven percent coupon 0:15:46.960 --> 0:15:51.880 on a bond portfolio, mostly bond portfolio when interest rates 0:15:51.880 --> 0:15:55.920 are two points So what it meant was they're going 0:15:55.960 --> 0:15:58.280 to have to take more risk within the bond portfolio. 0:15:58.600 --> 0:16:01.640 I equalpriate debt, but even that was like it was 0:16:01.640 --> 0:16:04.920 still like sub seven even in the junk bond market. 0:16:05.760 --> 0:16:08.520 So the portion of their portfolio that they could take 0:16:08.560 --> 0:16:12.560 equity exposure, you had to take the greatest equity exposure 0:16:12.560 --> 0:16:16.120 imaginable just to try and live. So I went and 0:16:16.160 --> 0:16:18.000 set up a venture capital firm. I'm like, this is 0:16:18.040 --> 0:16:20.440 where the money is going to go, and that's where 0:16:20.440 --> 0:16:25.360 it went. So like you have into high end risk 0:16:25.560 --> 0:16:32.040 growth quote unquote growth assets, Silicon Valley, shit, anything, growth, right, 0:16:32.720 --> 0:16:35.440 And the more capital that poured in, there's also like 0:16:35.720 --> 0:16:38.560 there's a feedback loop in that if you put enough 0:16:38.560 --> 0:16:43.560 capital into any sector, you will see results. It doesn't 0:16:43.560 --> 0:16:48.040 necessarily mean that net that's productive. Like you can have 0:16:48.120 --> 0:16:50.560 eighty percent of them all turned into garbage, and you 0:16:50.600 --> 0:16:52.680 can have some of them actually succeed and so on 0:16:52.680 --> 0:16:54.680 and so forth. But you can still have trillions go 0:16:54.800 --> 0:16:59.120 in and you could have let's just say, ease of numbers, 0:16:59.160 --> 0:17:04.080 ten billion go in and five come out, right, so 0:17:04.119 --> 0:17:06.600 you've lost fifty percent of value. But the ones that 0:17:06.600 --> 0:17:10.600 are still survive people have done well in them, so 0:17:11.200 --> 0:17:12.879 and to some extent, you almost need that as a 0:17:12.920 --> 0:17:14.959 bit of like creative destruction. So like you don't think 0:17:15.000 --> 0:17:17.640 about the dot coms. We had tons of money poured 0:17:17.640 --> 0:17:20.400 into dot coms, but look, it changed the world. Yeah, 0:17:20.840 --> 0:17:22.680 you know, there was a whole lot of people that 0:17:22.880 --> 0:17:25.800 lost a shitload of money, but you know, over time 0:17:25.800 --> 0:17:28.119 it changed the world. So we had a lot of 0:17:28.119 --> 0:17:31.480 money that was going into high end risk assets. You 0:17:31.640 --> 0:17:33.680 just needed to see numbers, You need to see growth. 0:17:33.680 --> 0:17:36.280 It was the whole eyeball stage. You know, companies that 0:17:36.320 --> 0:17:40.119 were getting more eyeballs, they get higher valuations. So like, 0:17:40.240 --> 0:17:43.719 it didn't need to make if you've purely looked at 0:17:43.760 --> 0:17:46.320 it from pe ratios and cash flows and all this, 0:17:46.440 --> 0:17:49.320 it didn't make sense. But if you understood that cycle 0:17:49.720 --> 0:17:52.000 and you understood why the capital was going to flow 0:17:52.040 --> 0:17:55.600 a certain way as a consequence of central bank actions, 0:17:56.480 --> 0:17:59.320 like that's where it had to go. Like it didn't matter, 0:18:00.119 --> 0:18:05.080 you know if you're the asset manager running a pension fund, 0:18:05.200 --> 0:18:08.520 like what are you going to do? Yeah, because part 0:18:08.520 --> 0:18:12.240 of it is like you couldn't. They can only invest 0:18:12.280 --> 0:18:16.160 in certain asset classes as a mandate. That's how it is. 0:18:16.240 --> 0:18:21.040 Do you study like long like old insurance companies and 0:18:21.040 --> 0:18:25.119 how they invest for their capital. I've been thinking about 0:18:25.760 --> 0:18:28.760 the life insurance company specifically and how dangerous it is 0:18:28.800 --> 0:18:30.960 for them to write the actuary tables, right, they have 0:18:31.040 --> 0:18:33.800 to really get good at like coming up with the 0:18:33.840 --> 0:18:36.320 time of death for those people they can write risk properly. 0:18:37.000 --> 0:18:40.080 And some of these like whole life insurance vehicles, right, 0:18:40.119 --> 0:18:43.719 they guarantee four percent or six percent return, But how 0:18:43.760 --> 0:18:46.840 do they get that in a zero rate environment? So 0:18:47.000 --> 0:18:50.400 they obviously were having they were having to move out 0:18:50.440 --> 0:18:52.200 further and further on the risk curve as well. 0:18:52.320 --> 0:18:52.600 Yep. 0:18:54.000 --> 0:18:58.280 But now with the pandemic and because of the COVID vaccine, 0:18:59.080 --> 0:19:02.120 I think they're going to be way our sides on there. 0:19:02.359 --> 0:19:03.920 I don't want to be any any of them. 0:19:04.000 --> 0:19:07.840 Yeah, so they're gonna be way outsides on estimating those 0:19:07.880 --> 0:19:10.440 times of death. But also at the same time, the 0:19:10.680 --> 0:19:13.960 luos are on the risk curve at the same time, 0:19:14.000 --> 0:19:15.719 so it's almost like this double whammy. 0:19:15.840 --> 0:19:16.080 Yeah. 0:19:16.320 --> 0:19:17.880 I haven't done a lot of research into that. It's 0:19:17.920 --> 0:19:19.680 something I've been thinking about. I'm just curious if. 0:19:19.560 --> 0:19:22.800 You know it's I wrote. I wrote articles about this 0:19:22.960 --> 0:19:27.400 in Gosh. I think it must have been twenty late 0:19:27.440 --> 0:19:33.080 twenty maybe twenty one, pointing out that there was that 0:19:33.119 --> 0:19:37.240 there was risk within the insurance market. I don't. I 0:19:37.280 --> 0:19:40.600 don't typically delve too deeply once I cannot identify our 0:19:40.680 --> 0:19:42.560 risk because my job is to make money, and I 0:19:42.640 --> 0:19:45.199 make money. On the log side, we don't short for 0:19:45.240 --> 0:19:48.679 the most part. Occasionally we may take some sort of 0:19:49.520 --> 0:19:54.600 option positions, but we never go We never use leverage 0:19:54.720 --> 0:19:58.840 insofar as as being fully exposed, so we'd have we 0:19:58.920 --> 0:20:03.640 might buyput some calls know an exposure, but generally it's 0:20:03.640 --> 0:20:06.480 just a long or long only portfolio. So if I don't, 0:20:06.560 --> 0:20:08.480 if I identify something where I don't want to be 0:20:10.119 --> 0:20:13.160 very very hard to actually be a successful short seller. 0:20:13.359 --> 0:20:16.720 The few people last careers trying to do exactly and 0:20:17.920 --> 0:20:19.960 I've lost money doing it. And the lesson for me, 0:20:21.040 --> 0:20:23.439 just in terms of my own skill set is just 0:20:23.440 --> 0:20:27.240 don't go near it, know what not to touch, and 0:20:28.119 --> 0:20:31.320 if there is an asymmetry within that market, I need 0:20:31.359 --> 0:20:33.640 to find it on the upside. In other words, if 0:20:34.040 --> 0:20:37.320 X happens, what are the consequences? What's the second third 0:20:37.440 --> 0:20:42.720 order thinking? If life insurance companies do fail on whatever, 0:20:42.880 --> 0:20:46.359 if the annuities fail, like, then what are the consequences? 0:20:46.920 --> 0:20:50.120 And is there anything that's then asymmetric? In other words, 0:20:50.200 --> 0:20:53.160 could I buy some particular asset that, as a consequence, 0:20:53.600 --> 0:20:55.720 is going to go really high, that's very very cheap. 0:20:55.760 --> 0:20:58.399 Now that's what's interesting to me. If I can't find it, 0:20:58.440 --> 0:21:00.640 I just walk a hang. Okay, I know I don't 0:21:00.680 --> 0:21:02.800 want to be involved in that. Will let me keep looking. 0:21:03.240 --> 0:21:06.640 I'm just going to keep looking for what actually represents Yeah. 0:21:06.960 --> 0:21:08.239 All right, I want to take a break just real 0:21:08.320 --> 0:21:10.240 quick and say that. You know, as we're talking about 0:21:10.240 --> 0:21:14.040 bitcoin and digital assets, the question really comes down to, like, 0:21:14.080 --> 0:21:16.760 are you tired of the global elites robbing you blind 0:21:16.800 --> 0:21:19.840 through all this money printing that's happening, And if so, 0:21:20.160 --> 0:21:22.840 then you need to be holding your wealth outside of that, 0:21:22.880 --> 0:21:24.920 and more importantly, you should be coming to the Bitcoin 0:21:25.359 --> 0:21:28.400 Conference in Nashville. The twenty twenty four conference is happening 0:21:28.400 --> 0:21:31.160 in July twenty fifth through twenty seventh. It's the largest bitcoin, 0:21:31.440 --> 0:21:34.520 the largest fintech conference in the world. I've been going 0:21:34.560 --> 0:21:37.160 every single year. It's an amazing event, and Bitcoin twenty 0:21:37.160 --> 0:21:40.280 twenty four really stands as a beacon of monetary freedom 0:21:40.320 --> 0:21:42.600 if you care about that. If you care about freedom, 0:21:43.000 --> 0:21:46.320 all freedom sits at the freedom to transact, and really 0:21:46.400 --> 0:21:50.840 the darkening macroeconomic backdrop that's happening needs that Bitcoin more 0:21:50.880 --> 0:21:51.200 than ever. 0:21:51.280 --> 0:21:51.440 Now. 0:21:51.440 --> 0:21:54.200 There's going to be top speakers there, companies, thought leaders 0:21:54.200 --> 0:21:56.399 from across the industry. They're all going to be in 0:21:56.480 --> 0:21:59.480 Nashville looking ahead for the future. And I'm going to 0:21:59.560 --> 0:22:01.280 be there. Lots of other people, my friends are going 0:22:01.320 --> 0:22:04.080