WEBVTT - Welcome to 2021 With Barry Ritholtz 0:00:05.720 --> 0:00:07.800 Well Care trillions. I'm Joel Weber and I'm Eric bel 0:00:07.880 --> 0:00:15.360 Tunis Eric. Now that is the beginning of the year. 0:00:15.840 --> 0:00:22.160 I feel like I need to speak with a financial advisor. Yeah. Yeah, 0:00:22.200 --> 0:00:26.440 there's so much going on, and what is going on? 0:00:26.680 --> 0:00:30.120 I mean, Bitcoin Tesla, what in the hell is happening 0:00:30.200 --> 0:00:34.960 right now? There's a new political lance gap, so that 0:00:35.320 --> 0:00:38.400 so so I figured, uh, we We've had a gentleman 0:00:38.440 --> 0:00:42.400 on before named Barry Ritt Holtz who's a Bloomberg opinion 0:00:42.440 --> 0:00:46.479 columnist has a podcast with Bloomberg called Masters in Business, 0:00:46.560 --> 0:00:49.839 and he's also the head of Holts Wealth Management. And 0:00:49.840 --> 0:00:52.080 I was like, oh, yeah, Barry, we can solve this problem. 0:00:52.159 --> 0:00:55.800 Let's dr Barry. Barry is great. You can throw anything 0:00:55.840 --> 0:00:58.840 at him and he's probably has three opinions on it um. 0:00:58.880 --> 0:01:01.800 And that's exactly the kind of thing we want to do, 0:01:01.920 --> 0:01:03.840 is just bring up these things we're seeing and just 0:01:03.920 --> 0:01:06.720 get his take. And he does not have a shortage 0:01:06.720 --> 0:01:08.960 of takes, and they're usually good and they usually get 0:01:09.000 --> 0:01:11.440 your thinking. And so you know, it's a good top 0:01:11.480 --> 0:01:15.360 of the year guest. And if you are interested in 0:01:15.480 --> 0:01:20.720 listening to prayer conversations with Barry, We've did a Use 0:01:20.800 --> 0:01:25.800 Your Disillusion Volume one and two episode a while back, 0:01:26.120 --> 0:01:29.080 and we basically just went really long on that one. 0:01:29.440 --> 0:01:31.480 We'll try to keep this one a little shorter though. 0:01:32.040 --> 0:01:35.560 That was the first and only episode that was two episodes. 0:01:35.600 --> 0:01:38.679 It was we could not contain Barry into one episode. 0:01:39.240 --> 0:01:41.600 But this time we're gonna do it right. We're gonna 0:01:41.680 --> 0:01:44.600 keep keep it to one, aren't we. Yes, we are, well, 0:01:44.680 --> 0:01:52.320 we're gonna try our damnedest this time on Trillions. Welcome 0:01:52.320 --> 0:01:59.960 to the Jungle of with Barry rid holes Berry. Welcome 0:02:00.000 --> 0:02:03.120 actor Trillions. Well, thanks for having me again. Okay, we 0:02:03.200 --> 0:02:05.840 got to talk about the fact that this is uh 0:02:06.000 --> 0:02:09.720 the beginning of a new year with a completely different 0:02:09.840 --> 0:02:14.080 political landscape than we've had for a bit, which is, 0:02:14.240 --> 0:02:17.919 you know, a democratic uh sweep. Uh So, So, Barry, 0:02:17.919 --> 0:02:20.720 what how are you talking to investors and to to 0:02:20.800 --> 0:02:24.639 prepare them for this new world? So first off, the 0:02:25.240 --> 0:02:32.360 data about is so amazing and compelling that I think 0:02:32.400 --> 0:02:37.280 it's going to, if not influence the incoming Biden administration 0:02:37.520 --> 0:02:40.639 at the very least, it will look it will confirm 0:02:40.760 --> 0:02:44.520 their priors. It will it will basically give them license 0:02:44.560 --> 0:02:46.840 to do what they wanted to do anyway, and the 0:02:46.919 --> 0:02:51.359 data is this externality hits the market, the economy collapse 0:02:51.440 --> 0:02:54.840 that it's worst. GDP was probably cut in half. We 0:02:54.880 --> 0:02:58.680 saw the single biggest drop in the markets, the single 0:02:58.720 --> 0:03:03.240 biggest spike unemployment in the shortest period of time. And 0:03:03.280 --> 0:03:07.480 then Congress that normally can't agree on renaming the library 0:03:08.000 --> 0:03:10.800 past the first Cares Act. It was what two point 0:03:10.840 --> 0:03:16.080 one trillion dollars um versus you know, six or seven 0:03:16.120 --> 0:03:19.519 hundred eight hundred billion for the financial crisis that was 0:03:19.639 --> 0:03:23.400 doled out over four months for years. This was eight months. 0:03:24.040 --> 0:03:27.480 And what's amazing is you can really see it in 0:03:27.520 --> 0:03:30.359 the economic data. So year of a year we saw 0:03:30.400 --> 0:03:36.320 a one trillion plus increase in the after tax personal 0:03:36.360 --> 0:03:41.280 income of Americans compared to the previous year. That's an 0:03:41.320 --> 0:03:44.680 eight percent gain over like eight or nine months from 0:03:44.720 --> 0:03:49.720 like March to November, same period versus giant increase. How 0:03:49.720 --> 0:03:55.440 does that manifest itself? Um savings rates go up. Not 0:03:55.560 --> 0:03:59.160 only does retail sales go higher, they go above the 0:03:59.200 --> 0:04:03.240 pre pandemic level. They spiked up, and credit card delinquencies 0:04:03.240 --> 0:04:05.760 are now at you know, if not all time lows, 0:04:06.280 --> 0:04:09.360 really close to it. And that's what you know the 0:04:09.360 --> 0:04:11.320 old joke. I think it was Warren Buffett who said, 0:04:11.320 --> 0:04:13.040 give me a trillion dollars, I'll throw you a hell 0:04:13.080 --> 0:04:16.200 of a party. Um, hey, here's a trillion dollars and 0:04:16.240 --> 0:04:18.719 they threw a hell of a party. What does that 0:04:18.920 --> 0:04:23.080 mean going forward? Well, it means that the Biden administration 0:04:23.160 --> 0:04:27.479 now has carte blanche first for the Cares Act three. Right, 0:04:27.520 --> 0:04:30.280 we just had a you know, a mini Cares Act, 0:04:30.279 --> 0:04:33.599 a trillion dollars. They're gonna do another two trillion dollars, 0:04:34.279 --> 0:04:36.760 part of which is going to include four hundred billion 0:04:36.760 --> 0:04:40.480 dollars for the vaccine rollout for the States. Another part 0:04:40.480 --> 0:04:42.240 of that is going to be a two thousand dollar 0:04:42.360 --> 0:04:46.000 check for everybody. Um, they'll problem I'm guessing that there'll 0:04:46.000 --> 0:04:49.760 be a national mask mandate and a temporary lockdown while 0:04:49.839 --> 0:04:52.840 vaccines go out. And you can't fix the economy until 0:04:52.880 --> 0:04:55.720 you fix the pandemic. A lot of my friends on 0:04:55.760 --> 0:04:58.719 the right, um, completely couldn't wrap their head around that. 0:04:58.960 --> 0:05:04.400 And uh, I think the data absolutely shows that. But 0:05:04.640 --> 0:05:08.440 it's not just the pandemic. You're gonna see a long 0:05:08.520 --> 0:05:13.159 overdue infrastructure bill. I don't know, four billions, four trillion, 0:05:13.240 --> 0:05:16.800 five trillion, six trillion over a decade. If they were smart, 0:05:16.880 --> 0:05:19.960 they would fund this with fifty or a hundred year bonds. 0:05:20.000 --> 0:05:22.080 I don't know how smart these guys are, but that's 0:05:22.120 --> 0:05:24.480 what I would do. We we may have actually said 0:05:24.480 --> 0:05:27.080 that exact same thing last time I was on This time, 0:05:27.120 --> 0:05:29.800 we're gonna get an infrastructure bill. There's gonna be a 0:05:29.839 --> 0:05:34.760 green new deal with extended UM tax credits for solar 0:05:34.839 --> 0:05:37.839 and e vs, and maybe even smart roads with implanted 0:05:37.920 --> 0:05:41.400 RF devices so self driving cars don't have to rely on, 0:05:41.880 --> 0:05:44.599 you know, crappy little cameras to see where they're going. 0:05:44.839 --> 0:05:47.960 They'll know exactly where they're going just a giant rollout. 0:05:48.040 --> 0:05:51.839 Oh and ps, we're also going to see a massive 0:05:51.880 --> 0:05:56.400 expansion of Obamacare. When we added thirty five to forty 0:05:56.600 --> 0:05:59.760 million people to the role of to the roles of 0:06:00.080 --> 0:06:05.000 sured the first Obamacare, it had a huge impact on 0:06:05.440 --> 0:06:09.920 healthcare and hospital and pharmaceuticals and that entire sector, which 0:06:09.960 --> 0:06:15.120 is a huge chunk of UM retail sales. This time, 0:06:15.240 --> 0:06:17.960 maybe we had another twenty to twenty five million people 0:06:18.240 --> 0:06:23.280 similarly going to impact UH, the economy and retail sales. 0:06:23.560 --> 0:06:26.800 All of those things cares at three. The infrastructure deal 0:06:26.880 --> 0:06:30.680 the Green New Deal. The expansion of Obamacare means that 0:06:30.720 --> 0:06:34.760 we're looking at a massive multi year stimulus, which, as 0:06:34.800 --> 0:06:38.120 we learned in twenty it turned out that John Maynard 0:06:38.200 --> 0:06:43.400 Keynes was right, and when demand falls off, it's very 0:06:43.480 --> 0:06:47.040 easy for the government to replace it by substituting their 0:06:47.080 --> 0:06:50.240 own spending. For what you would normally see from households 0:06:50.240 --> 0:06:54.600 and businesses, there's some offsetting costs. You're gonna see everybody 0:06:54.640 --> 0:06:56.520 making more than four k is going to see their 0:06:56.520 --> 0:06:58.719 tap top tax rate pick up a couple of percent. 0:06:59.440 --> 0:07:03.040 You're gonna the corporate tax rate probably go back towards 0:07:04.320 --> 0:07:06.880 I don't know if it'll get to tht I'm more 0:07:06.920 --> 0:07:10.920 interested in the alternative minimum tax for corporations. So if 0:07:10.920 --> 0:07:14.040 you're an Apple or a Facebook and you're making hundreds 0:07:14.080 --> 0:07:17.440 of billions or Microsoft, you can't pay like no taxes. 0:07:17.480 --> 0:07:21.560 There'll be a twelve percent. Hey, you report your profits 0:07:21.600 --> 0:07:25.080 to the your shareholders. That's what we're gonna attack you on. 0:07:25.320 --> 0:07:27.760 So that's the that's gonna be the trade offs we'll see. 0:07:28.320 --> 0:07:30.480 So you just laid out a lot of spending, a 0:07:30.480 --> 0:07:33.120 lot of stimulus. That's your vision of the future. It's 0:07:33.200 --> 0:07:36.280 very it's very clear, How do you shift portfolios or 0:07:36.520 --> 0:07:39.520 or do you not? You just know all this and 0:07:39.600 --> 0:07:42.120 know that that's why you're in you know, the Vanguard 0:07:42.240 --> 0:07:46.840 Total Market Fund and you know whatever else? Or do 0:07:46.880 --> 0:07:49.040 you tweak things? Do you add an infrastructure e t 0:07:49.160 --> 0:07:50.880 F onto it or a clean energy e t F. 0:07:50.960 --> 0:07:55.600 Those have been seeing some flows. No. So basically the 0:07:56.560 --> 0:08:01.520 big philosophy we try and share with our clients and 0:08:01.600 --> 0:08:04.960 investors is this, there's a lot of noise, there's a 0:08:05.000 --> 0:08:09.000 lot of cross currents. You should leave I I wasn't 0:08:09.040 --> 0:08:12.560 exaggerating when I said own a globally diversified portfolio of 0:08:12.600 --> 0:08:15.640 low cost ETFs. Hey, maybe I'll add rebalance once a 0:08:15.720 --> 0:08:18.960 year and then leave it the hell alone. But were 0:08:19.120 --> 0:08:22.680 you mentioned the behavioral side. How do you train people 0:08:22.800 --> 0:08:26.120 to leave it the hell alone? Well, you give them 0:08:26.320 --> 0:08:30.239 a data based explanation of what's going on in the world, 0:08:30.880 --> 0:08:35.640 so they're comfortable with leaving it alone. Because when things 0:08:35.679 --> 0:08:40.160 don't make sense, they want to sell. When when there 0:08:40.200 --> 0:08:44.840 are cross currents and there's confusion and there's noise, hey 0:08:45.000 --> 0:08:49.360 I don't really understand this, Maybe I should sell. And 0:08:49.800 --> 0:08:52.280 you know, one of the most popular pieces I wrote 0:08:52.320 --> 0:08:58.200 for Bloomberg opinion this year was explaining why, hey, maybe 0:08:58.360 --> 0:09:02.439 mr market isn't so rational after all. And we looked 0:09:02.480 --> 0:09:06.000 at all the components of the SMP five hundred index 0:09:06.720 --> 0:09:09.280 to figure out to answer the question that we got 0:09:09.280 --> 0:09:12.840 over and over from clients. This market doesn't make sense. 0:09:13.559 --> 0:09:16.400 I look around, the economy isn't going to hell? How 0:09:16.400 --> 0:09:19.000 can the stock market keep going up? There's something wrong here. 0:09:19.600 --> 0:09:22.600 And when you look around at at why the economy 0:09:22.600 --> 0:09:25.360 looks like how well your local dry cleaner is doing 0:09:25.400 --> 0:09:27.800 a third of the business, they were all the little 0:09:27.840 --> 0:09:31.720 restaurants are closing, the bars are closing, the retailers. Even 0:09:31.760 --> 0:09:34.640 the gas station isn't doing well. Gases like a buck nineties, 0:09:34.640 --> 0:09:39.520 so everything is so cheap. Their personal experience is the 0:09:39.520 --> 0:09:44.040 economy is terrible, but that's not what drives the market. 0:09:44.120 --> 0:09:46.600 When we look at we took apart to the SMP 0:09:46.720 --> 0:09:51.280 five index and found top ten names are sent of 0:09:51.280 --> 0:09:54.559 the index. And these are companies that are a global 0:09:54.640 --> 0:09:56.520 They get most of them get half of more of 0:09:56.520 --> 0:09:59.719 their business from overseas, where they admittedly did a much 0:09:59.720 --> 0:10:02.880 better job than we in America did managing the pandemic, 0:10:03.360 --> 0:10:07.040 and be they're perfectly set up for the work from 0:10:07.160 --> 0:10:13.079 home environment. So Apple, Microsoft, Amazon, Netflix, go go down 0:10:13.120 --> 0:10:15.760 the list of all those giant companies that are doing great. Hey, 0:10:15.800 --> 0:10:18.640 the pandemic went for another ten years, they would be fine. 0:10:18.679 --> 0:10:21.480 They don't care. But when you look at what's doing 0:10:21.520 --> 0:10:27.280 really poorly, it's travel and hotels, and you know, your 0:10:27.440 --> 0:10:32.719 most people's personal economic experience is not very well reflected 0:10:32.720 --> 0:10:35.280 in the SMP five hundred, and in fact the number 0:10:35.320 --> 0:10:40.520 that blows people away. Take the thirty worst industrial sectors um, 0:10:40.840 --> 0:10:43.640 thirty words sectors in the SMP five, the little sub 0:10:44.000 --> 0:10:46.880 industry groups and just throw them away, send them all 0:10:46.920 --> 0:10:51.160 to zero. It takes two off of the SMP five hundred. 0:10:51.559 --> 0:10:56.080 So it when you could explain to clients, hey, it 0:10:56.200 --> 0:10:59.920 may seem that the market is irrational, but your personal 0:11:00.000 --> 0:11:04.240 economic situation and what you're seeing around you is very 0:11:04.440 --> 0:11:10.320 very um not publicly traded, it's very private, and so 0:11:10.440 --> 0:11:17.360 therefore it's actually rational that the global, profitable, big cap 0:11:17.440 --> 0:11:21.400 companies that are working um taking advantage of working from home, 0:11:22.000 --> 0:11:27.600 are doing really well and therefore leave your damn portfolio alone. Okay, 0:11:27.760 --> 0:11:30.040 so if I if I leave my portfolio alone, I'm 0:11:30.080 --> 0:11:35.520 still living in a world that has gigantic infusions of cash. Yeah, stimulus, 0:11:35.600 --> 0:11:39.800 stimulus coming fed doing what it's gonna do. How concerned 0:11:40.360 --> 0:11:45.840 about you know this bubblicious environment? Are you so? Having 0:11:45.960 --> 0:11:51.520 been a trader and lived through the nineties and two thousand, um, 0:11:51.559 --> 0:11:56.000 this isn't this, this is this is still a fraction 0:11:56.040 --> 0:11:59.160 of that, right, I remember when you would buy something 0:11:59.200 --> 0:12:03.680 and that would go up there. Every sale was punished immediately. 0:12:04.240 --> 0:12:07.560 It was it was just hey, from from I remember, 0:12:07.600 --> 0:12:11.240 it was from my birthday in October untill the top 0:12:11.320 --> 0:12:16.200 in March from the nasdack doubled. Right, we had the 0:12:16.240 --> 0:12:19.200 best year in in a decade. The Nasdaq was up 0:12:19.240 --> 0:12:24.000 forty So it's still not not even anywhere close to that. 0:12:24.040 --> 0:12:26.480 And by the way, most of those companies that are 0:12:26.480 --> 0:12:29.839 doing really well have giant revenues and giant cash on 0:12:29.880 --> 0:12:34.520 the balance sheets and huge profits. That said, there are 0:12:34.559 --> 0:12:38.920 all sorts of pockets of speculation. UM Bitcoin probably the 0:12:38.920 --> 0:12:42.760 poster child speculation. Uh, someone smarter than me can explain 0:12:42.840 --> 0:12:47.240 what it's fundamental intrinsic value is. Um. I like to 0:12:47.240 --> 0:12:50.440 tell people the intrinsic value of a dollar is that 0:12:50.480 --> 0:12:53.199 we it's are all. I'll admit it's a delusion it's 0:12:53.240 --> 0:12:57.080 a collective delusion that a dollar has value. Plus it's 0:12:57.120 --> 0:13:00.360 with Uncle Sam demands you pay your taxes in and 0:13:00.400 --> 0:13:02.600 they have a standing army to enforce it. So it's 0:13:02.640 --> 0:13:08.360 more than just an abstract thing. Bitcoin has become an 0:13:08.400 --> 0:13:14.320 asset to speculate with um. The spacks clearly have gone, 0:13:14.559 --> 0:13:17.760 you know, berserk And what was the thing Elon Musk 0:13:17.880 --> 0:13:20.800 mentioned the other day? And the wrong company you know 0:13:20.840 --> 0:13:24.680 went up fift These are all anecdotes, but you know 0:13:24.760 --> 0:13:28.439 you see enough of them. Oh and did I mention Tesla? 0:13:29.600 --> 0:13:33.720 Testlas looks a little bubblicious. I don't want to short 0:13:33.760 --> 0:13:37.360 it yet, but I'm interested in it. I mean, the 0:13:37.440 --> 0:13:40.520 trader in me says there's a there's some money to 0:13:40.559 --> 0:13:43.480 be made on the downside there. I've just watched too 0:13:43.520 --> 0:13:45.800 many people carry down on their shields to want to 0:13:46.000 --> 0:13:49.640 step into that fray just yet. I don't want to. 0:13:49.679 --> 0:13:51.360 I don't want to go deep on bitcoin. But do 0:13:51.400 --> 0:13:54.280 you own any crypto? No? None. And by the way, 0:13:54.280 --> 0:13:55.960 when clients come to me and say I want to 0:13:55.960 --> 0:13:58.520 buy some crypto, it's like, all right, go buy some crypto. 0:13:58.760 --> 0:14:00.520 I don't care. I'm not gonna tell you not to. 0:14:01.200 --> 0:14:03.880 Just don't mortgage the house and leverage up with crypto, 0:14:03.920 --> 0:14:06.320 because he'll knows I was. I was just gonna end 0:14:06.679 --> 0:14:09.000 I could tell you where equities will be a hundred 0:14:09.120 --> 0:14:11.960 years from now, more or less. I have no idea 0:14:12.000 --> 0:14:14.319 what crypto will be. Where will equities being in a 0:14:14.360 --> 0:14:19.640 hundred years from now higher? That's not a hard bet 0:14:19.680 --> 0:14:22.320 to make, right And if it's not higher, we have 0:14:23.000 --> 0:14:25.560 you have to worry about clean water and air at 0:14:25.600 --> 0:14:28.920 that point, right right, Well, you know a lot of 0:14:28.960 --> 0:14:31.760 advisors are talking about working in crypto to the portfolio. 0:14:31.760 --> 0:14:34.680 You see institutions getting into it. Is there any thought 0:14:34.720 --> 0:14:38.760 that you might lose or upset clients if if it's 0:14:38.760 --> 0:14:45.040 not part of the ritolds portfolio. You know, some of 0:14:45.040 --> 0:14:49.240 the basic rules of investing are know what you are own, 0:14:50.440 --> 0:14:53.800 know what it's worth, and understand how it fits into 0:14:53.840 --> 0:14:59.240 a diversified portfolio. And if someone wants to take you know, 0:14:59.360 --> 0:15:03.720 five percent two of their liquid net worth and by bitcoin, 0:15:04.520 --> 0:15:08.160 um I would tell them two things. Write your password 0:15:08.200 --> 0:15:11.400 down and put it in your bank vault. Because what 0:15:11.400 --> 0:15:15.920 what is it? Something like twenty of bitcoin value has 0:15:15.960 --> 0:15:19.960 been lost? That stop and think about that just for 0:15:20.000 --> 0:15:23.160 a second. A fifth to a quarter of the value 0:15:23.160 --> 0:15:30.040 of bitcoin is lost behind forgotten passwords or lost thumb drives, 0:15:30.080 --> 0:15:34.800 So to me, that's not necessarily a Hopefully institutions will 0:15:34.800 --> 0:15:37.560 be able to solve that. Maybe maybe Fidelity or somebody 0:15:37.560 --> 0:15:40.640 else that is moving into that space will do it. 0:15:40.720 --> 0:15:43.600 But that's kind of a warning. The other thing is, 0:15:45.080 --> 0:15:47.480 you know, until you understand what it is, what it does, 0:15:47.600 --> 0:15:51.280 and what it's you know purpose. I like the explanation 0:15:51.280 --> 0:15:54.360 that it's a solution in search of a problem, but 0:15:54.440 --> 0:15:56.680 none of that matters. If someone says to me, hey, 0:15:56.720 --> 0:15:59.360 I want to own two or three percent of bitcoin, great, 0:15:59.400 --> 0:16:01.560 we'll set up a side pocket for you, you you know, 0:16:01.560 --> 0:16:04.160 a separate account. We won't charge you on it, and 0:16:04.280 --> 0:16:06.600 it'll be here, and anytime you want to sell it 0:16:06.720 --> 0:16:10.840 or buy more, you can do it. Just understand, assume 0:16:10.920 --> 0:16:14.560 it goes to zero. That's how much you should put 0:16:14.560 --> 0:16:17.800 into it, enough that it doesn't change your lifestyle. And 0:16:17.840 --> 0:16:27.680 if it goes to a million, hey god bless Tesla. Okay, 0:16:27.800 --> 0:16:30.400 we were looking at some numbers in my team and 0:16:30.720 --> 0:16:34.400 there's some mind blowing stuff. Besides the price jump. Obviously 0:16:34.440 --> 0:16:38.040 that's been parabolic. The volume in tesla um so for 0:16:38.120 --> 0:16:43.320 twenty years, not nothing traded more than Spy. I think 0:16:43.360 --> 0:16:47.040 Apple did on one days. Now, yeah, Tesla has now 0:16:47.040 --> 0:16:49.240 traded more than Spy for twenty six out of less 0:16:49.280 --> 0:16:51.760 twenty days, and in the past month it's traded a 0:16:51.880 --> 0:16:55.520 trillion dollars. UM, what's going on here? Have you have 0:16:55.600 --> 0:17:00.400 you ever seen anything like this? Is this the retail investor? Um? 0:17:00.400 --> 0:17:02.280 What do you think will happen to Tesla? If we 0:17:02.280 --> 0:17:05.439 were to you know, timestamp now and look back and 0:17:05.480 --> 0:17:08.600 we're you know, we're five years down the road, what 0:17:08.680 --> 0:17:11.000 call would you make? Where will Tesla be? And just 0:17:11.080 --> 0:17:14.640 give me your general wide take on Tesla? So so 0:17:14.800 --> 0:17:19.240 I have a hard time. UM. You know, you need 0:17:19.280 --> 0:17:22.840 a certain distance from things to be objective. If you're 0:17:22.840 --> 0:17:25.280 too far away, you don't understand anything about it, And 0:17:25.280 --> 0:17:28.200 if you're too close, you know too much and it's 0:17:28.240 --> 0:17:32.240 hard to see it. You guys know, I'm a car guy, 0:17:32.440 --> 0:17:40.200 and while I'm both fascinated and intrigued by Tesla, the automobile, Tesla, 0:17:40.280 --> 0:17:44.399 the company has not shown itself to be UM a 0:17:44.560 --> 0:17:50.840 great automobile manufacturer. They are interesting cars with great technologies, 0:17:51.200 --> 0:17:56.120 but terrible manufacturing. UM. And I understand why Tesla didn't 0:17:56.119 --> 0:18:00.200 hook up with Ford or Toyota to manufacturer that the US, 0:18:02.080 --> 0:18:06.560 But I don't know how long their lead is going 0:18:06.600 --> 0:18:11.720 to stay. Keep them in the lead. So, uh, the 0:18:12.359 --> 0:18:14.679 number of cars that are coming out of kind of fascinating, 0:18:15.359 --> 0:18:18.920 the the initial ones. Everybody is following here. First off, 0:18:18.920 --> 0:18:23.159 before we go into the details, Tesla one like hold 0:18:23.200 --> 0:18:26.760 hold aside the company the stock. Elon Musk changed the 0:18:26.800 --> 0:18:32.920 paradigm of automobiles for the right reason. Hey, uh, internal 0:18:32.920 --> 0:18:37.520 combustion engines and and carbon based transportation is destroying the 0:18:37.560 --> 0:18:43.600 planet and just impacting the them the climate. And so 0:18:43.720 --> 0:18:47.320 therefore I'm going to introduce this electric car and everybody 0:18:47.359 --> 0:18:49.840 better come along. We're gonna You're gonna be left behind. 0:18:50.520 --> 0:18:55.359 And the rest of the car industry said, we're not 0:18:55.400 --> 0:18:59.760 gonna let Musk do to us what Bezos did to retail, 0:19:00.040 --> 0:19:03.480 and Bezos did to cloud computing, and Bezos did to 0:19:03.560 --> 0:19:07.919 go down the list. So the paradigm has shifted. Elon 0:19:08.040 --> 0:19:13.240 Musk has won the internal combustion versus electric car debate. 0:19:13.880 --> 0:19:18.000 Now that he's won that, he has created a massive 0:19:18.040 --> 0:19:22.120 amount of future competition for himself. So the Porsche take 0:19:22.240 --> 0:19:26.960 Can Turbo comes out and it's spectacular. It's much better 0:19:27.000 --> 0:19:30.159 than anything out of Tesla, except it's a hundred and 0:19:30.160 --> 0:19:35.720 eighty six thousand dollars. It's it's a high end luxury, 0:19:35.840 --> 0:19:40.280 very fast forward four seat e V. The question is, 0:19:40.320 --> 0:19:44.199 can somebody come out and make a product that's competitive 0:19:44.280 --> 0:19:49.080 with the Tesla UM with either the Model three UM 0:19:49.320 --> 0:19:54.560 or or them the model uh at? Why? Or go 0:19:54.680 --> 0:19:57.800 down the list? And we now have an answer. The 0:19:58.280 --> 0:20:01.920 new Ford Mustang Maki is every bit as good as 0:20:02.040 --> 0:20:07.240 anything from Tesla. It the reviews are spectacular. Everybody seems 0:20:07.240 --> 0:20:09.359 to love it. The one thing people don't like is 0:20:09.400 --> 0:20:13.000 the name Mustang. But you know, get over yourself. And 0:20:13.200 --> 0:20:16.800 the argument now is, and I have this argument with 0:20:16.840 --> 0:20:19.080 some mutual friends, Dave not Agan. I argue about this 0:20:19.119 --> 0:20:21.560 all the time. You seem to think Tesla is a 0:20:21.560 --> 0:20:24.960 car company. Their genius is the network of super fast 0:20:25.040 --> 0:20:30.680 charging stations. Dave range anxiety was has always been nonsense 0:20:31.560 --> 0:20:35.119 of all trips in a car are within you know, 0:20:35.359 --> 0:20:38.560 fifty miles of the home. And if you're gonna take 0:20:38.600 --> 0:20:41.280 any electric car and along the trip, well you may 0:20:41.320 --> 0:20:43.560 have to do a little more planning in the Mustang 0:20:43.560 --> 0:20:47.240 than the Tesla. But you know, so what and PS, 0:20:47.280 --> 0:20:50.840 there's still a bajillion gasoline cars around, so this isn't 0:20:50.840 --> 0:20:54.040 gonna be a problem. By the time the gasoline cars 0:20:54.119 --> 0:20:56.520 go away. I don't know if it will be some 0:20:56.560 --> 0:21:00.080 consortium a ford in Toyota and Volkswagen will have the 0:21:00.600 --> 0:21:04.880 charging network equal to Tesla's. Maybe the government rolls went out. 0:21:04.920 --> 0:21:07.560 Maybe a bunch of manufacturers agree in a standard and 0:21:07.600 --> 0:21:11.040 they all use it interoperably. But I don't think that's 0:21:11.080 --> 0:21:16.480 worth the massive premium that Tesla is getting. And PS, 0:21:16.520 --> 0:21:20.520 there are startups like the Lucid Air is a spectacular car. 0:21:21.280 --> 0:21:24.280 Um uh, the I'm gonna get the name wrong, the 0:21:24.320 --> 0:21:29.240 Bolinger Bodinger, the suv and the pickup truck really interesting. PS. 0:21:29.359 --> 0:21:32.400 The the GM Electric Hummer, Oh my god, that that's 0:21:32.400 --> 0:21:37.520 a spectacular vehicle. So elon Muskwaden. We're all going electric. 0:21:38.080 --> 0:21:42.080 And it's a matter of time before it becomes clear 0:21:42.240 --> 0:21:45.960 that Tesla is not going to have a market share 0:21:46.080 --> 0:21:50.080 of the electric market. Um and so at a certain point, 0:21:50.680 --> 0:21:53.040 and and this is the difference between a company and 0:21:53.119 --> 0:21:55.600 a stock. And this is why I have no interest 0:21:55.640 --> 0:22:00.160 in shorting Tesla yet um the stock looks fantastic. Think 0:22:00.240 --> 0:22:02.800 the companies on fire. It's just going higher and higher. 0:22:03.240 --> 0:22:06.879 It's a great story. The narrative behind it is just 0:22:07.040 --> 0:22:12.640 kicking everything else's ass. Eventually that'll probably come to an end, 0:22:13.080 --> 0:22:15.520 and at a certain point the downside in Tesla is 0:22:15.560 --> 0:22:18.840 going to be a great trade. But I don't think 0:22:18.840 --> 0:22:22.320 we're there yet. We're maybe we're closer than further. I 0:22:22.320 --> 0:22:25.679 don't know, but you know the three bullet points elon 0:22:25.760 --> 0:22:30.639 musk one. Everybody's going e V. Tesla stock is on fire. 0:22:30.960 --> 0:22:34.440 Anybody who shorts this is killing themselves. But one day 0:22:34.640 --> 0:22:36.639 they'll say, oh, I wish I had a few pennies 0:22:36.720 --> 0:22:38.920 left to still short this. It's a shame I went 0:22:39.000 --> 0:22:43.280 broke in. Can I give you a fourth bullet point? 0:22:44.480 --> 0:22:49.200 Cathy Wood might be even hotter than Tesla. So I 0:22:49.240 --> 0:22:52.240 don't want to disc Cathy because I think she built 0:22:52.280 --> 0:22:57.840 something spectacular. I um, I watched from a distance that 0:22:58.240 --> 0:23:03.679 entire arc of her minority shareholder exercising the right to 0:23:03.840 --> 0:23:09.800 buy that forced her to buy him out. Now, I 0:23:09.840 --> 0:23:11.919 don't know if she goes on to be a hundred 0:23:11.920 --> 0:23:15.760 billion or a trillion dollar company. I kind of think 0:23:15.800 --> 0:23:19.120 that she may have top picked herself. When so, when 0:23:19.119 --> 0:23:22.720 you see someone who's had just an amazing ride. I mean, 0:23:22.800 --> 0:23:26.520 what was it six years ago? They were a hundred million, 0:23:26.560 --> 0:23:30.320 two hundred million. That's when they went to Reliance as 0:23:30.359 --> 0:23:33.760 their marketer. And there, this and that, and nobody expected 0:23:33.800 --> 0:23:37.080 her to blow up to be a fifty billion dollar company. 0:23:37.119 --> 0:23:42.400 But she just bought them out with a note at 0:23:42.520 --> 0:23:45.359 some ungodly price. It's undisclosed. I don't know if it's 0:23:45.400 --> 0:23:48.359 fifty million, a hundred million. It's kind of weird. It 0:23:48.880 --> 0:23:53.200 reminds me so God bless her for kicking ass. I 0:23:53.480 --> 0:23:56.679 hope the farm goes to a hundred billion dollars. But 0:23:56.800 --> 0:24:01.000 when we look back in hindsight and say, hey, Cathy 0:24:01.080 --> 0:24:04.200 would financed a hundred million dollar buy out of her 0:24:04.240 --> 0:24:07.760 firm after they raised fifty billion dollars and after a 0:24:07.840 --> 0:24:10.719 hundred and sixty percent raise, we may look back at 0:24:10.720 --> 0:24:14.240 that and say she is like the mutual fund buyers 0:24:14.280 --> 0:24:17.320 that managed to top tick the hot funds, she may 0:24:17.320 --> 0:24:20.240 have top ticked herself. I hope that doesn't happen. I 0:24:20.280 --> 0:24:23.520 hope the fund does great. Um. I find her research 0:24:23.640 --> 0:24:27.399 and her approach fascinating, but it would really make for 0:24:27.440 --> 0:24:32.200 an ironic ending to that story. And like as an advisor. 0:24:32.320 --> 0:24:36.160 You guys don't touch anything like that, anything that's highly concentrated, 0:24:36.359 --> 0:24:38.879 you know, because we do talk about this idea of 0:24:38.920 --> 0:24:43.359 a Barbell portfolio very low cost passive and then you 0:24:43.359 --> 0:24:46.439 you know, put some hot sauce on top. And you know, 0:24:46.680 --> 0:24:50.080 because the middle those middle closet indexing active managers seem 0:24:50.160 --> 0:24:53.119 like it's just they're not nobody's interested in that anymore. 0:24:53.119 --> 0:24:57.320 They want either cheap beta or shiny objects, right right, Well, well, 0:24:57.359 --> 0:25:00.920 the you know, the closet indexers, what's the point. Come 0:25:00.960 --> 0:25:02.960 for the high fees, stay for the under performance. It 0:25:03.200 --> 0:25:06.800 does nothing for you. So so if you're gonna be 0:25:07.160 --> 0:25:10.840 pretty um, if you're gonna be pretty beta, and maybe 0:25:10.920 --> 0:25:14.159 you have a lean towards value or small cap or whatever. 0:25:14.840 --> 0:25:19.640 To me, the more interesting aspect of the concentrated positions 0:25:20.359 --> 0:25:24.520 is not us putting clients into a concentrated position, but 0:25:24.560 --> 0:25:28.000 a client coming to us and saying, hey, I'm a 0:25:28.080 --> 0:25:33.520 sea level executive at fill in the blank Exo, Mobile, Amazon, Google, Apple, 0:25:33.560 --> 0:25:36.720 It doesn't matter, and while I love your concept of 0:25:36.720 --> 0:25:41.000 a diversified portfolio, I don't want any more exposure to 0:25:41.440 --> 0:25:44.840