WEBVTT - Markets in Hindsight 0:00:12.600 --> 0:00:15.840 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:15.920 --> 0:00:18.480 My name is Mike Reagan. I'm a senior editor at Bloomberg, 0:00:19.000 --> 0:00:22.520 and I'm Danna Higher across Acid reporter at Bloomberg. And 0:00:22.680 --> 0:00:24.880 this week on the show, well did you ever get 0:00:24.880 --> 0:00:27.040 to New Year's Eve and wish you could go back 0:00:27.080 --> 0:00:29.480 in time and place all the trades that turned out 0:00:29.480 --> 0:00:31.720 to be the winners that year? We'll talk to a 0:00:31.760 --> 0:00:35.800 Bloomberg columnist who moonlights as the manager of a hedge fund. Well, 0:00:36.080 --> 0:00:39.280 and I lusory hedge fund is what we'll call it. 0:00:39.280 --> 0:00:42.960 It's called Hindsight Capital, and his strategy is exactly that, 0:00:43.280 --> 0:00:46.120 and we'll talk about all the trades, all the wonderful 0:00:46.159 --> 0:00:48.600 trades that he made this year. But first of all, Donna, 0:00:48.600 --> 0:00:50.479 I gotta tell you, I was a columnist for a 0:00:50.479 --> 0:00:53.639 long time at Bloomberg, and I think every columnist dreams 0:00:54.120 --> 0:00:56.520 of one day being a hedge fund manager as well. 0:00:57.080 --> 0:00:59.240 And I actually wrote a column one time about an 0:00:59.280 --> 0:01:02.200 imaginary edge fund that I made up to try to 0:01:02.240 --> 0:01:05.040 explain all the goings on in the markets. And I 0:01:05.040 --> 0:01:08.559 gotta say, my bosses looked at me like they thought 0:01:08.560 --> 0:01:13.000 I needed a psychiatric evaluation. It didn't go over so well, yeah, 0:01:13.040 --> 0:01:16.399 are you sure that's the only reason they thought that? Well, yeah, 0:01:16.760 --> 0:01:18.880 it might, There might be others. It's a thick file. 0:01:19.000 --> 0:01:22.680 It's a thick file. A couple others. But our guest 0:01:22.760 --> 0:01:24.840 this week gets away with it somehow. So why don't 0:01:24.840 --> 0:01:27.360 you tell us who's joining us this week? He does so. 0:01:27.400 --> 0:01:30.399 Our guest is John Author's he's the senior editor with 0:01:30.480 --> 0:01:35.360 Bloomberg Markets and he's the chief investment officer of Hindsight Capital. John, 0:01:35.440 --> 0:01:38.240 Welcome to the show. It's sitting sitting in London at 0:01:38.240 --> 0:01:40.959 this moment, which is very very pleasantive now rather a 0:01:40.959 --> 0:01:43.720 bit of a ghostly place with the pandemic again, Jed, 0:01:43.800 --> 0:01:46.959 I was going through Hindsights Capitals trades of the Are 0:01:47.120 --> 0:01:49.680 you guys knocked it out of the park once again? 0:01:49.760 --> 0:01:53.600 What can I say? Hindsight is a very powerful investment strategy, 0:01:53.800 --> 0:01:56.000 but I think my favorite is used cars. You got 0:01:56.120 --> 0:01:58.640 into the used cars business. Tell us about that a 0:01:58.640 --> 0:02:01.640 little bit, right, But this is this is obviously I 0:02:01.720 --> 0:02:04.760 only have practical data on the on the trades that 0:02:04.800 --> 0:02:07.720 have been placed in public markets. But in the run 0:02:07.800 --> 0:02:12.480 up to the the New year was buy up every 0:02:12.680 --> 0:02:15.520 fleet of rental cars, it could possibly lay its hands 0:02:15.520 --> 0:02:21.480 on cornered whole lots of used cars. Uh. And as 0:02:21.560 --> 0:02:25.120 we know, the great boom in inflation this year was 0:02:25.200 --> 0:02:28.480 quite something most you know, the prices of rental cars 0:02:28.480 --> 0:02:32.000 and of used cars went up far more than for 0:02:32.080 --> 0:02:35.440 much of the year. That was one heck of an investment. 0:02:35.880 --> 0:02:38.000 So I forgot to mention we also there was also 0:02:38.080 --> 0:02:43.560 the chartering some Chinese container ships during the Pacific route. 0:02:43.600 --> 0:02:47.800 There there there their rates at one point quadrupled. Really 0:02:47.840 --> 0:02:49.959 thinking out outside the box there, John, You know, I 0:02:50.160 --> 0:02:51.720 I gotta say, I've met a lot of hedge fund 0:02:51.760 --> 0:02:54.360 managers who remind me of used car salesman. But this 0:02:54.400 --> 0:02:56.400 has taken it to another level. Yeah, this is this 0:02:56.480 --> 0:02:58.520 is but this is the kind of innovative way that 0:02:59.400 --> 0:03:03.240 that you need to think these days because private markets 0:03:03.280 --> 0:03:06.760 in general are so efficient these days, it's hard to 0:03:06.800 --> 0:03:10.840 beat them, hard to make real money unless you're armed 0:03:11.080 --> 0:03:15.680 with hindsight. Well, John, speaking of China, you just mentioned 0:03:15.680 --> 0:03:19.400 some of the shipping boxes that we've seen basically all year. 0:03:19.440 --> 0:03:21.560 Can you talk about what we saw with China? Because 0:03:21.600 --> 0:03:24.720 I was working on a story about some of the 0:03:24.720 --> 0:03:29.040 things that people would like to leave behind from and 0:03:29.080 --> 0:03:33.800 one of them was just Chinese equities. One portfolio manager's 0:03:33.840 --> 0:03:36.480 book with said I really wish to leave that behind. 0:03:36.520 --> 0:03:38.520 So can you tell us what you what you found 0:03:38.520 --> 0:03:41.720 with China. You could see for a number of years 0:03:41.800 --> 0:03:44.680 that there there was a confluence of factors coming together. 0:03:45.320 --> 0:03:49.840 One was that China, obviously last year really had a 0:03:49.960 --> 0:03:54.080 very nice boomlet in equities because for a while China 0:03:54.160 --> 0:03:56.840 was doing better than anybody else coming out of the pandemic, 0:03:57.760 --> 0:04:01.640 appeared to exit the pandemic before any announce You also 0:04:01.800 --> 0:04:04.080 had the fact that we have all been all been 0:04:04.240 --> 0:04:07.960 very well aware of the credit problems built up or 0:04:08.040 --> 0:04:11.040 China by the way it had over expanded to to 0:04:11.120 --> 0:04:15.480 deal with the GFC back in two nine. There was 0:04:15.560 --> 0:04:19.560 plainly a come upance coming for that. And by the 0:04:19.640 --> 0:04:22.080 by the beginning of this year it was really clear 0:04:22.520 --> 0:04:25.680 who c Jing Ping was, what his attitude to the 0:04:25.720 --> 0:04:30.480 private sector was. This was the year when he finally 0:04:30.600 --> 0:04:34.440 really clamped down on that the what is he saw 0:04:34.440 --> 0:04:39.000 as the overmighty private sector. So there are a couple 0:04:39.000 --> 0:04:42.760 of trades that hindsight put on First, obviously, there's no 0:04:42.800 --> 0:04:44.640 money to be made in China on the on the 0:04:44.680 --> 0:04:48.839 long side. But if you went along in the market 0:04:48.880 --> 0:04:52.159 that is doing best out of the decline of China 0:04:52.240 --> 0:04:55.479 as a big exporter, which is Vietnam, which that's what 0:04:55.560 --> 0:04:58.839 I still think is the world's best named index, the 0:04:58.920 --> 0:05:03.240 ho Chi Minh Index, very unsporting of the Chinese, not 0:05:03.320 --> 0:05:06.120 to rename the Shanghai composite, the mout say Tongue Index. 0:05:06.160 --> 0:05:09.839 But there you go, so long hotel in index. And 0:05:09.880 --> 0:05:12.560 then the best way to really get bank in the 0:05:12.560 --> 0:05:15.240 bucket of shorting China was through a d R s. 0:05:15.680 --> 0:05:19.760 There was American investors who really got fed up with 0:05:19.880 --> 0:05:23.520 Chinese equities. So if you short the Bank of New 0:05:23.600 --> 0:05:27.840 York Chinese a d R index, put those two traces 0:05:27.920 --> 0:05:30.960 together and you make a hundred and that's not bad. 0:05:31.040 --> 0:05:35.120 Hundred thirty will take that as future investors of Hindsight Capital. John, 0:05:35.200 --> 0:05:39.039 that's not bad. Yeah, I'm curious about China, John, Um, 0:05:39.080 --> 0:05:40.960 you know, and maybe we'll have to wait till New 0:05:41.000 --> 0:05:43.120 Year's Eve of next year to find out how Hindsight 0:05:43.160 --> 0:05:47.360 played this. But yeah, there's this, Yes, there's the sense 0:05:47.640 --> 0:05:50.160 that you know, she Jun Pink kind of ripped the 0:05:50.200 --> 0:05:52.640 band aid off all at once. When it comes to regulation. 0:05:52.720 --> 0:05:55.800 That got it all over with that the worst is 0:05:55.839 --> 0:05:58.600 behind us, and now you can kind of it's maybe 0:05:58.640 --> 0:06:00.760 safe to go back into the water in China a 0:06:00.760 --> 0:06:04.359 little bit that you know, they're sort of turning the 0:06:04.360 --> 0:06:07.360 other way and we'll sort of stabilize prop up the economy. 0:06:07.400 --> 0:06:08.800 Is it. What do you think is a two yearly 0:06:08.880 --> 0:06:11.560 to sort of reverse that trade? Well, it's too early 0:06:11.600 --> 0:06:15.560 for hindsight to let you know about. I think. I 0:06:15.640 --> 0:06:20.159 think what's most what's most concerning there is is what 0:06:20.320 --> 0:06:25.400 happens with the property market. China has decided whatever happens, 0:06:25.440 --> 0:06:27.640 China is not going to have its own GFC, its 0:06:27.640 --> 0:06:33.080 own Lehman crisis, and so there is a determination to 0:06:33.440 --> 0:06:36.880 mop up the real estate center, which has obviously been 0:06:37.120 --> 0:06:41.880 very badly over extended. If necessary, China is going to 0:06:42.080 --> 0:06:44.159 you know that that's going to involve losing some money, 0:06:44.560 --> 0:06:47.320 some more money next year. It's involved losing a lots 0:06:47.320 --> 0:06:50.600 of money this year, which was actually another hindsight trade. 0:06:50.720 --> 0:06:54.599 In fact, if you this this is a classic of 0:06:54.920 --> 0:06:58.320 seeing what is cheap, remembering that the biggest determinant of 0:06:58.360 --> 0:07:00.720 how how any investment is going to do is how 0:07:00.760 --> 0:07:04.560 cheaply you buy it. So they went along the Bloomberg 0:07:04.760 --> 0:07:10.000 US Office Reat Index, which was seriously bombed out at 0:07:10.000 --> 0:07:13.640 the end of last year, and shorten the Footsie Abbas 0:07:14.200 --> 0:07:19.560 Chinese High Yield real Estate Index. And that made you 0:07:19.880 --> 0:07:26.320 exactly which isn't bad in a year hindsight only deals 0:07:26.320 --> 0:07:30.520 in triple digit returns that it seems like, well, unless 0:07:30.600 --> 0:07:33.240 unless it's army is really twisted. It's it just it 0:07:34.000 --> 0:07:37.760 prefers not to bother with anything that's that's only in 0:07:38.480 --> 0:07:53.680 double digits. Just to stick with international markets. I know 0:07:53.960 --> 0:07:57.280 you were looking at Turkey and the collapse of the 0:07:57.320 --> 0:08:00.640 Turkish lira. I love reading stories about the lira because 0:08:00.640 --> 0:08:05.600 there's always the clause that Turkey's president ur Twan has 0:08:05.640 --> 0:08:10.200 this sort of counter to what you what regular economists 0:08:10.600 --> 0:08:14.240 believe about interest rates, and what how cutting or raising 0:08:14.240 --> 0:08:16.720 interest rates ties in with the economy. So can you 0:08:16.760 --> 0:08:19.320 tell us what you found about the Turkish lira? Well, 0:08:20.280 --> 0:08:23.240 he is indeed, in my day job of writing about 0:08:24.120 --> 0:08:27.480 macro and cross assets and stuff, he is God's gift 0:08:27.560 --> 0:08:30.440 to columnists because everybody else is having an argument about 0:08:31.480 --> 0:08:34.079 when and how much to raise rates, and he is 0:08:34.120 --> 0:08:37.000 the only person on the planet who actually seriously thinks 0:08:37.000 --> 0:08:39.040 it's a good idea to cut them at this moment. 0:08:39.640 --> 0:08:44.880 The currency market definitely doesn't agree. So you had a 0:08:44.920 --> 0:08:52.079 series of four rate cuts by Turkey for a while. Amazingly, 0:08:52.280 --> 0:08:55.920 Turkish real rates, if you subtracted the rate of inflation 0:08:56.000 --> 0:08:59.800 from there from the bank rut, were actually not as 0:09:00.440 --> 0:09:04.760 as they were in the States. American rates are stunning 0:09:04.880 --> 0:09:09.920 lee accommodative, stunning lee easy at present. But by the 0:09:10.000 --> 0:09:13.280 end of the year they had managed to cut even 0:09:13.320 --> 0:09:16.840 lower in real terms. And what Hindsight does every year 0:09:16.880 --> 0:09:19.680 is that it moves its office. One of the greatest 0:09:20.120 --> 0:09:23.880 deliverers of returns in markets is money illusion. To denominate 0:09:23.920 --> 0:09:27.079 yourself in a weak currency, you're going to make yourself 0:09:27.080 --> 0:09:30.960 look much better. So they moved to a standbol which 0:09:31.000 --> 0:09:33.720 is I've only been there once. It's a wonderful city. 0:09:34.240 --> 0:09:39.960 The S and P was up twenty four in dollar terms, 0:09:39.960 --> 0:09:45.200 but in lera terms it was up two when I 0:09:45.280 --> 0:09:50.520 last checked. Another brilliant trade. And I know you're dabbling 0:09:50.520 --> 0:09:54.160 in your You're dabbling in the h the digital asset markets. 0:09:54.240 --> 0:09:59.160 John Long Ethereum shortsilver. Is this as simple as it seems, 0:09:59.240 --> 0:10:03.480 is crypto of the new precious metal for those worried 0:10:03.480 --> 0:10:06.440 about inflation and money supply and everything else. Given the 0:10:06.520 --> 0:10:08.960 kind of desperation, you could see that the you know, 0:10:08.960 --> 0:10:13.560 the the techno bros, of the crypto bros, the excitement 0:10:13.559 --> 0:10:16.080 that was brewing over meme stocks at the beginning of 0:10:16.120 --> 0:10:20.880 the year, whether you know, the Hindsight's macro people haven't, 0:10:20.960 --> 0:10:23.680 unfortunately told me whether whether the crypto crazy is here 0:10:23.679 --> 0:10:26.480 to here to stay, But it was obvious that there 0:10:26.559 --> 0:10:30.280 was a lot more juice to squeeze out of crypto. 0:10:32.360 --> 0:10:36.839 And that's a lot of people really do see it 0:10:36.880 --> 0:10:42.360 as a substitute for precious metals. You you can't actually 0:10:42.400 --> 0:10:46.200 wear the necklace made out of ethereum or bitcoin, or 0:10:46.400 --> 0:10:48.959 you have a wedding ring made out of it. Still 0:10:49.040 --> 0:10:51.840 people see it as some kind of a of a substitute. 0:10:51.880 --> 0:10:54.800 So just to juice up the kind of money you 0:10:54.880 --> 0:10:59.040 made in ethereum a little bit more, Hindsight financed it 0:10:59.040 --> 0:11:02.920 by shorting silver, which is the world's which actually fell 0:11:03.080 --> 0:11:06.200 quite a bit while the etherorum went up fifold. So 0:11:06.280 --> 0:11:07.959 that the latest figure I have in front of me, 0:11:07.960 --> 0:11:10.439 which may well be out of date by the time 0:11:10.480 --> 0:11:12.439 we broadcast this, is that that that trade made six 0:11:14.160 --> 0:11:18.760 shorting silver and putting it into a theory. Six. Hindsight 0:11:18.840 --> 0:11:23.960 is a powerful investing strategy. It really the growth value 0:11:24.480 --> 0:11:27.160 you know, you name it risk parity. None of these 0:11:27.160 --> 0:11:30.560 strategies are going to do as well as hindsight period guaranteed. 0:11:31.080 --> 0:11:34.760 So John, I know one big thing with cryptocurrencies this 0:11:34.840 --> 0:11:37.640 year was their energy use. So I'm hoping you can 0:11:37.640 --> 0:11:40.120 tell us about the clean energy sector and what you 0:11:40.160 --> 0:11:45.439 found there. Okay, this this was fascinating. You had a 0:11:45.880 --> 0:11:49.679 global economy that was still really being hit by all 0:11:49.720 --> 0:11:53.720 the reverberations from the southern stop in the pandemic, particularly 0:11:53.720 --> 0:11:56.199 in Europe. You also had the cross currents coming from 0:11:56.240 --> 0:11:58.440 Vladimir Putin in the way that he was trying to 0:11:59.040 --> 0:12:03.360 assert his country roll over Europe or assertin his power 0:12:03.440 --> 0:12:08.960 by air by limiting supplies of natural gas. And there 0:12:09.080 --> 0:12:13.160 is this discovery that it really was important to have 0:12:13.600 --> 0:12:19.280 greater supplies of of traditional energy in stock while the 0:12:19.320 --> 0:12:25.440 transition to newer, alternative, cleaner energy was underway. So the 0:12:25.520 --> 0:12:33.000 one really successful trade was to go long natural gas features, 0:12:33.120 --> 0:12:38.400 particularly gas natural gas features for the British and Netherlands markets, 0:12:39.120 --> 0:12:44.480 while shorting the selective solar power index and index of 0:12:44.880 --> 0:12:47.920 stocks that invest inlar power, which actually fell quite a 0:12:47.960 --> 0:12:52.040 bit last year. The last time I checked that trade, 0:12:52.360 --> 0:12:56.600 long natural gas short solar had made just slightly less 0:12:56.600 --> 0:13:01.040 than seven for the year, which again is better than 0:13:01.080 --> 0:13:03.960 a poke in the eye. The other big investment that 0:13:04.000 --> 0:13:07.120 you could see coming a long way away was that 0:13:07.400 --> 0:13:10.719 oil was asked officially depressed by all the fallout there 0:13:10.720 --> 0:13:15.880 had been among OPEC plus last year, and that there 0:13:15.880 --> 0:13:20.080 were now supply problems as demand was for for oil 0:13:20.160 --> 0:13:22.600 was beginning to take off. And the way you make 0:13:22.679 --> 0:13:26.839 a really good geared play on oil is through the 0:13:27.040 --> 0:13:31.839 expiration section that the drillers. Meanwhile, clean energy as a whole, 0:13:32.400 --> 0:13:37.240 people were so excited about it entering this year. Again 0:13:37.280 --> 0:13:40.959 it was just a straightforward Benjamin Graham trade. Really just 0:13:41.400 --> 0:13:46.199 buy oiled it. There's long oil, expiration stocks, short b SMP, 0:13:46.400 --> 0:13:49.600 global clean energy, and that trade made about a hundred 0:13:49.600 --> 0:13:53.640 and thirty not bad, not bad, not one of the best, 0:13:53.679 --> 0:13:57.280 but that's they they all count John, you know, almost 0:13:57.280 --> 0:14:00.040 a sucker for a good old man movie reference. So 0:14:00.440 --> 0:14:03.360 I was I caught my eye. The I'm not dead 0:14:03.440 --> 0:14:06.920 yet Monty Python trade also notes the at least we 0:14:07.040 --> 0:14:09.280 reopened a little bit trade talk to us a little 0:14:09.280 --> 0:14:11.920 bit about that. One another good re trade for the year. 0:14:12.320 --> 0:14:14.320 This this is one of this, This was one of 0:14:14.360 --> 0:14:17.200 my one of my favorites. I'm not yet is equote 0:14:17.240 --> 0:14:20.080 from Monty Placing and the Holy Rail. Yes, and I 0:14:20.200 --> 0:14:22.600 regarded he is going past yelling bring out your dead 0:14:22.720 --> 0:14:27.600 and one of the eat Yes that did really badly 0:14:27.680 --> 0:14:31.800 this year. It was the ticker symbol empty, which was 0:14:32.440 --> 0:14:36.960 which is the decline of the retail stock trade, a 0:14:37.040 --> 0:14:40.920 decline of the retail brist and more retail, which was 0:14:41.360 --> 0:14:45.040 designed to short the companies that you that you go 0:14:45.120 --> 0:14:48.040 to your mall. But by the end of last year 0:14:49.000 --> 0:14:52.320 that had been taken to an extreme. People were expecting 0:14:52.480 --> 0:14:57.160 malls to be going bankrupt, left, right and center. Meanwhile, 0:14:57.240 --> 0:15:02.600 there was a belief that internet entertainment was here forever 0:15:02.880 --> 0:15:05.560 and people have got over excited. There was a classic 0:15:05.960 --> 0:15:09.840 pandemic trade. So all you needed to do was bet 0:15:09.960 --> 0:15:12.520 that we would at least that that there was at 0:15:12.560 --> 0:15:16.240 least some life left in the old concept of the 0:15:16.240 --> 0:15:19.440 retail mall and that we would at least reopen a bit. 0:15:20.400 --> 0:15:24.640 So if you go along the Bloomberg Regional Mall reat 0:15:24.920 --> 0:15:28.160 Index and short the s and p five under at 0:15:28.160 --> 0:15:31.600 home Entertainment Index. When I last check, that had made 0:15:31.600 --> 0:15:34.120 a hundred and thirty three for the year. And at 0:15:34.160 --> 0:15:38.120 the same time we had exactly what happening with our 0:15:38.320 --> 0:15:44.080 US office property reets office property is it's another classic story. 0:15:44.600 --> 0:15:48.600 Everybody desperately got out of office property reets last year 0:15:48.960 --> 0:15:52.000 because but we all know why, we thought that everybody 0:15:52.040 --> 0:15:54.200 was going to be working from home forever in a day. 0:15:54.520 --> 0:15:58.720 It's still not clear exactly how much we are going 0:15:58.760 --> 0:16:01.760 to a long term swards working from home, but it's 0:16:01.760 --> 0:16:04.680 plain certainly we know Bloomberg there are a lot of 0:16:04.680 --> 0:16:09.600 advantages still too to working in an office. So you know, 0:16:09.680 --> 0:16:11.880 office routes are still not back to where they were 0:16:12.160 --> 0:16:14.680 pre pandemic. But if you bought them at the beginning 0:16:14.680 --> 0:16:16.480 of this year and coupled them with a short in 0:16:17.240 --> 0:16:21.680 Chinese high yield real estate, which finally had its great 0:16:21.720 --> 0:16:24.760 moment of destiny this year with the ever grand incident, 0:16:24.840 --> 0:16:28.320 then that made just under one when I last checked. 0:16:28.960 --> 0:16:32.800 There was money to be had, even in contrarians really need, 0:16:33.160 --> 0:16:36.880 really can make a lot of money if you've got 0:16:36.960 --> 0:16:41.200 the the interestinal fortune, fortitude to do it, or of course, 0:16:41.240 --> 0:16:59.680 if you know the future that helps to Jed. I 0:16:59.800 --> 0:17:03.960 was prized when I heard that Hindsight's portfolio managers were 0:17:04.000 --> 0:17:07.720 not allowed to buy game Stop, I gotta wonder about 0:17:07.720 --> 0:17:10.040 your chief risk officer. Did I assume you fired that 0:17:10.160 --> 0:17:13.280 cheap chief risk officer over that? But talk to us 0:17:13.320 --> 0:17:17.000 about that? Well, then basically this is just a standard 0:17:17.080 --> 0:17:20.119 rule that if hind State is allowed to invest in 0:17:20.400 --> 0:17:23.520 single stocks, then forget it that the kind of money 0:17:23.520 --> 0:17:26.639 they're going to make is just infinite. So you know, 0:17:26.680 --> 0:17:30.440 the regulator just won't let them play that. However, the 0:17:30.560 --> 0:17:33.680 c I O DIDs want me to say it, even 0:17:33.720 --> 0:17:35.960 though as we know, game Stop has come off a 0:17:36.080 --> 0:17:39.639 lot down by more than from the top. How do 0:17:39.760 --> 0:17:45.720 you bought James Stop on January one in lira and 0:17:45.880 --> 0:17:50.080 held one Turkish lira would now be worth seventeen hundred 0:17:50.200 --> 0:17:53.359 Turkish lira. So you know, there was a lot of 0:17:53.680 --> 0:17:58.120 real irritation about not being allowed to to dive into 0:17:58.200 --> 0:18:01.600 game Stop. But there you go. And how happy were 0:18:01.760 --> 0:18:07.119 you to not own Cathy Woods arc et F Can 0:18:07.160 --> 0:18:09.600 you talk about that because that one was a big 0:18:09.720 --> 0:18:14.560 name in but it hasn't done as well. No, not 0:18:14.760 --> 0:18:18.720 necessarily because there's anything wrong with Cathy Wood strategy. It 0:18:18.880 --> 0:18:21.520 was just there was something wrong with piling into her 0:18:22.320 --> 0:18:24.119 her fund in the way that people did. It's a 0:18:24.240 --> 0:18:27.840 classic issue that has long been there in the mutual 0:18:27.920 --> 0:18:31.119 fund world as well. If lots of people give you 0:18:31.280 --> 0:18:34.119 more money, you have to deploy that money somehow, and 0:18:34.480 --> 0:18:37.800 generally speaking much harder for you to to make the 0:18:37.880 --> 0:18:42.040 underlying portfolio work really well. There had been so much 0:18:42.119 --> 0:18:46.320 of a excitement around Kathy Woods. The amount of Kathy 0:18:46.359 --> 0:18:48.880 would merch that was available at the end of last 0:18:48.960 --> 0:18:52.200 year was just such an obvious scientist short arc. You 0:18:52.600 --> 0:18:56.280 don't hindsights. Managers don't quite understand how people didn't didn't 0:18:56.320 --> 0:18:59.480 get that, so all you needed to do. You know, 0:18:59.680 --> 0:19:02.719 it's like if the CEO has just opened a brand new, 0:19:02.840 --> 0:19:07.119 gorgeous new headquarters, you short the stock. If if you 0:19:07.200 --> 0:19:10.480 can get the c I O S face on a 0:19:10.600 --> 0:19:12.920 T shirt, you probably don't want to be in that 0:19:13.040 --> 0:19:16.760 funds just at the moment. So if you go long spy, 0:19:17.280 --> 0:19:19.560 it's not the greatest trade. But if you go long spy, 0:19:19.800 --> 0:19:24.360 just boring, straightforward, just go with the market. Short arc 0:19:25.080 --> 0:19:28.800 sixty when I last checked, which is you know, respectable 0:19:28.880 --> 0:19:31.520 small potatoes behindside capital. But it's again, it's a lot 0:19:31.560 --> 0:19:34.439 better than a boken the eye. Yeah. For the mirrormortal 0:19:34.920 --> 0:19:37.639 uh fund managers who do not employ the power of 0:19:37.720 --> 0:19:42.240 fine site that that's nothing. I thought when Cathy, when 0:19:42.280 --> 0:19:45.920 the ARC site offered a backpack a bag, I thought 0:19:45.960 --> 0:19:47.720 that was a signed to for the bag holders. You 0:19:47.760 --> 0:19:50.960 know that that you don't want an ARC theme bag. 0:19:51.080 --> 0:19:53.119 You could almost directly say you are going to be 0:19:53.240 --> 0:19:57.840 left holding the bag one more. Before we get to 0:19:57.880 --> 0:20:01.280 the craziest things of the errors. V Donna calls them 0:20:01.280 --> 0:20:03.320 the weirdest thing, or is Down calls them the madest thing, 0:20:03.480 --> 0:20:07.880 which might be my favorite pressures of pandemic life. Long 0:20:08.000 --> 0:20:12.480 coffee short beer stacks. I usually go long beer post 0:20:12.600 --> 0:20:15.359 market and then long coffee in the pre market the 0:20:15.400 --> 0:20:18.200 next morning. But talk to us about this trade. Uh. 0:20:18.640 --> 0:20:23.040 This this is a trade that is quite something. Basically, 0:20:23.480 --> 0:20:29.119 coffee is benefiting from supply chain problems. You have to 0:20:29.560 --> 0:20:32.680 bring it in from all kinds of interesting, faraway places 0:20:33.320 --> 0:20:37.480 and there is a lot of demand for it. Meanwhile, basically, 0:20:37.600 --> 0:20:42.040 because drinking together is still not back in full swing, 0:20:43.080 --> 0:20:46.880 people tend not to drink so much beer. They tend 0:20:46.920 --> 0:20:48.840 to drink other things if they're not if they're not 0:20:49.200 --> 0:20:53.760 socializing in big groups. So, given that things were not 0:20:53.880 --> 0:20:56.880 getting back to normal as many had hope this year, 0:20:57.680 --> 0:21:00.680 if you went long coffee futures and shorts s and 0:21:00.760 --> 0:21:04.360 P five hundred brewery sick to that made you an 0:21:04.359 --> 0:21:09.320 amazing hundred and fifty. It was. It's an extraordinary thing. 0:21:09.400 --> 0:21:12.480 But we we are all at this moment desperate for 0:21:12.600 --> 0:21:18.320 caffeine and less desperate for alcohol. Very interesting, very it's 0:21:18.400 --> 0:21:21.000 it all. It all plays out in the narrative of 0:21:21.119 --> 0:21:23.359 the year end letter. And if you haven't picked up 0:21:23.400 --> 0:21:27.200 on it by now, hindsight capital exists basically only in 0:21:27.320 --> 0:21:30.480 John's imagination and UH and in the year end and 0:21:30.560 --> 0:21:32.560 the but real, the real thing is the year end 0:21:32.640 --> 0:21:35.239 Letter to Investors that we all look forward to UH 0:21:36.080 --> 0:21:38.760 as one of John's final columns columns of the year, 0:21:38.920 --> 0:21:41.480 and it's just a great way to recap the year. 0:21:42.040 --> 0:21:44.040 John has been doing it for years, and some way 0:21:44.119 --> 0:21:47.240 John will figure out to really employ hindsight in the 0:21:47.280 --> 0:21:49.600 capital markets and then we can finally retire. I think 0:21:49.760 --> 0:21:54.400 exactly exactly I'm looking forward to that. Tieden up your 0:21:54.440 --> 0:21:58.320 straight jackets. It's time for the craziest things we saw 0:21:58.840 --> 0:22:01.840 in markets this week. Well, Dona, let's get to those 0:22:01.920 --> 0:22:04.480 crazy things. It was a crazy year, a lot of 0:22:04.560 --> 0:22:07.040 mad things, weird things in the market. What's what's your 0:22:07.080 --> 0:22:11.119 pick for the craziest thing all year? Well, obviously it 0:22:11.400 --> 0:22:13.879 has There's just so many things to choose from this. 0:22:14.160 --> 0:22:19.600 I think the staying power of Game Stop investors, AMC investors, 0:22:19.840 --> 0:22:23.800 and me still getting text messages from friends asking about 0:22:23.920 --> 0:22:27.520 game Stop and all these other things, that really is. 0:22:27.800 --> 0:22:31.639 It's amazing. But I'm going to go with Facebook's name change. 0:22:32.200 --> 0:22:35.720 So if you remember a couple of months ago, Facebook 0:22:36.080 --> 0:22:40.680 changed its name to Meta. They're also in the process, 0:22:40.720 --> 0:22:44.000 I believe, of changing their ticker, so there was some confusion, 0:22:44.040 --> 0:22:48.280 even with investors putting some money towards an e t 0:22:48.520 --> 0:22:53.440 F that had the metaverse ticker and and theme on it. 0:22:53.640 --> 0:22:57.520 So I think that's one of the most strangest, weirdest, 0:22:57.600 --> 0:23:00.600 maddest things that we've seen, just because everything that the 0:23:00.640 --> 0:23:03.480 company has been going through, and we'll see how well 0:23:03.560 --> 0:23:06.480 it sticks. I think even still in stories people say 0:23:07.040 --> 0:23:11.480 Facebook parent Meta Yeah, so it's not really working yet 0:23:11.880 --> 0:23:14.320 in Google parent alphabet. We we can't give up those 0:23:14.359 --> 0:23:17.360 all that is a good one. I'm gonna pile onto 0:23:17.400 --> 0:23:19.600 your meme stock thing a little bit to me, John, 0:23:19.680 --> 0:23:24.000 It's it's funny how often professional fund managers such as 0:23:24.040 --> 0:23:28.840 yourself are compared to are compared to monkeys. You know, 0:23:29.320 --> 0:23:31.440 it goes back to the Grandam Walk on Wall Street. 0:23:31.520 --> 0:23:34.440 Bert Bert mart Peel, who I believe you correct me 0:23:34.440 --> 0:23:36.280 if I'm wrong, was the first to say that, uh, 0:23:36.760 --> 0:23:40.520 you know, a monkey throwing darts at a newspaper stock 0:23:40.600 --> 0:23:45.000 listening page could probably equal the performance of um, your 0:23:45.040 --> 0:23:49.080 average fund manager. Shure enough. This year, not so much monkeys, 0:23:49.119 --> 0:23:52.080 but they're Simeon cousins. The apes really took over the markets. 0:23:52.119 --> 0:23:55.480 You had the word Apiacht Club, you had the amc 0:23:56.160 --> 0:24:00.200 uh long crowd calling themselves the Ape Army, and that 0:24:00.359 --> 0:24:02.720 that a bunch of other APE n f T projects. 0:24:02.800 --> 0:24:05.720 So year of the Ape, I think Planet of the Apes, 0:24:06.040 --> 0:24:08.960 and I wonder if it goes back to Bird's monkeys 0:24:09.040 --> 0:24:11.000 throwing the darts. Maybe there's a connection there. I don't know. 0:24:11.720 --> 0:24:13.480 But what's the beddest thing you saw this year? John? 0:24:14.480 --> 0:24:17.119 I'll give you to one meme related and one non 0:24:17.200 --> 0:24:20.240 meme related, and the meme related one is obviously the 0:24:20.480 --> 0:24:23.959 greatest meme stock of all is tes La. Obviously has 0:24:24.000 --> 0:24:26.240 lots of wonderful things about it, but it does behave 0:24:26.280 --> 0:24:28.800 like a meme stock. I think the fact that Elon 0:24:28.920 --> 0:24:31.600 Musk has now become the world's richest man, when he 0:24:32.400 --> 0:24:35.639 spent a lot of time on Twitter advertising that he 0:24:35.800 --> 0:24:38.800 was going to set up in a new university called 0:24:38.880 --> 0:24:43.560 Texas Institute of Technology and Science, and he was really 0:24:43.600 --> 0:24:47.560 looking forward to selling people the merch with that on 0:24:47.640 --> 0:24:50.639 his shirt. The fact that somebody with a sense of 0:24:50.800 --> 0:24:54.040 humor that's still stuck at the age of about twelve 0:24:54.800 --> 0:24:58.600