Animal Spirits Podcast - Talk Your Book: Back to the Futures Market

Episode Date: August 12, 2024

On today's show, we are joined by Jerry Prior III, COO & Senior Portfolio Manager of Mount Lucas Management to discuss what managed futures are, how portfolios can benefit from them, how managed futures are handling the Japan carry trade, diversification benefits of managed futures, the story of how the MLM Index was created, and much more! Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Past performance is not indicative of future results. The material discussed has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk Your Book is brought to you by Crane Shares. Go to craneshares.com slash KMLMLM to learn more about the Crane Chairs, Mount Lucas, Managed Futures Index Strategy, ETF. That's cranechairs.com slash KMLM. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion, and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only

and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. On today's show, we speak with Jerry Pryor. Jerry is the C.O. and senior portfolio manager at Mount Lucas, which created the OG managers index. I did not know that. I have heard of the MLM.

Manage Futures Index before. I never put two and two together. It was Mount Lucas. No spoilers, but interesting origin story. Yes, that's credit to you for knowing what he was talking about. I heard that, and I thought, I've heard of that before. That's, you know, I've read some books. It retains some knowledge.

PTJ. So one of the things that he said today that stuck out to me that I had never thought about with respect to managed futures was, what did he say? Stocks and bonds are negatively skewed. Is that what he said? Yes. The point was basically. probability is in your favor that gains happen more often than losses. But with this kind of

strategy, the losses may happen more than gains, but you have the bigger chance of a home run when you need it, I guess, is the idea. I think lower, so, okay, what I took out of that was because and the particular trend follow or managed future strategy that we're talking about today, which uses trend following as its main input, it's commodities, bonds, and currencies. So no equities in here. But yeah. And I guess the other point, this is that if you're looking for an uncorrelated strategy, you want that ability to have things swim against the current, which is exactly what a strategy like this did in 2022. Yeah.

And that's the way it happens. But unfortunately, as we get into this show, a lot of times that means people fight the last war and get into this kind of strategy after the fact. And you have to set the expectations up front that this thing is going to zig one other thing, zag one other things zig and zag one other things. And it's going to look like relative crap in an equity bull market, especially something like this particular managed future strategy that doesn't have the ability to go along equities. Right.

Right. So it is truly, truly a diversifier, non-correlated for better and for worse. When people hear non-correlation, they say, okay, good. In a bold market, I'll do fine. In a bare market, I'm going to be negatively correlated. No, no, no, no. That's not what it means. It cuts both ways.

It just means that you will not be directionally tied for better or for worse to, say, the S&P 500, for example. So, all right, enough of an intro. Here's our talk with Jerry Pryor from Mount Lucas. We're joined today by Jerry Pryor. Jerry comes from Mount Lucas Management. Jerry, welcome to the show. Thanks for having me, guys. Nice to be here.

Okay, tell us who Mount Lucas is and what you guys do. Sure. So Mount Lucas is, we're in the business of managed futures. It's a diversifying strategy. It's been around since the 1970s, 1980s. I actually was thinking about this the other day when, you know, thinking about it. you know, where managed futures came from and how to think about it. I think about like two guys sitting around in the 1970s or 80s saying, you know, the one guy being,

hey, I've come up with this new asset class. You know, it's a great diversifier to stocks and bonds. The other guy's saying, you know, what's it called? He goes, managed futures. That's cool. What do you do? Well, I invest in the futures markets. That sounds great.

You must be really good at predicting futures prices. The other guy says, no, not at all. I think the best way to do this is we're going to follow futures prices. We're going to trend follow and we're not going to predict them. All right, well, then if it's managed futures, you must have guys really doing a good job managing those positions. No, no, we're going to systematically do this. This is going to be a quantitative strategy. And what are we going to call ourselves?

How about commodities trading advisors or commodity pool operators? Oh, that makes sense because you guys are only trading commodities. Oh, no, no, no, no. We're doing FX and bonds and, you know, we're doing equities and a little bit of everything. So kind of a kind of a bizarre name for an asset class. So, but, you know, that's what we do. Yeah, it's stuck to, it's stuck around. You know, I think we'd talk to a lot of people, you know, I had a range of, you know,

sort of a range of people that either never heard of it, have heard of it, know a little bit, or people that know a lot about it. So it's, the conversation is always interesting to have. Jerry, as you gave that intro, I was reminded of the scene from office space. What would you say you do here? Yeah, exactly. So I'm looking at the fact sheet and this stuck out to me, stood out to me, got stuck between stood and stuff.

This stuck out to me. $300 billion in assets and managed futures, mostly in private vehicles. This is traditionally been a strategy for family offices or high-neutral. worth investors. Correct. 30% portion of CTA industry assets under management and managed futures. What's the other 70? Because in my mind, CTAs and managed futures were synonymous, but obviously I'm not

correct. So what's the other 70%? I think it would be more multistrats of people not doing, you know, not doing managed futures specifically. You're using futures as part of multi-asset portfolios. So what exactly is the difference? So is this just like a potato, potato? Yeah, it's more diversified hedge funds.

Managed futures is pretty much, at least the way I think about it, is primarily accessed through systematic trend following. I think that's the best way or historically has been the best, most effective way of earning the risk premium in that asset class. I think actually you just nailed it. It's the systematic part of it. It's the trend following nature. It's the I don't really need to know what.

the Bank of Japan is doing or might do. Most of that information, of course, today's an outlier. But generally speaking, all of the information, all of the analysis that anybody could do boils down to price. And if you follow price and if you follow a trend, you're usually on the right side of the trade. Not always, of course, but over time. Yeah, it's, I think the best way to describe it in the way I talk about it a lot is that the futures markets exist for an entirely different purpose than bonds or equities and credit. If you think about sort of traditional asset classes like equity and credit, they're built to for businesses and companies. They want to raise capital from investors. Investors hope to earn a risk premium over time by participating in that wonder that

is capitalism so that, you know, those businesses and companies grow, you know, pay out their future earnings, you earn capital appreciation. The investment risk premium in stocks, and credit is, you know, very well understood. In the futures market for the investor, it's entirely different. Futures markets exist have existed for, you know, over 150 years. And they exist so that those same sort of businesses and companies can transfer exogenous price risk that they don't want, that that hurts their margins and could materially affect the way they operate their business. They go into the futures markets and they want to get rid of that price risk. Where we sit as investors, where managed futures managers sit in that marketplace is

we are acceptors of price risk. We are taking and we expect to earn a premium over time for that. So if you think about a corn farmer who is planting corn in the spring, he thinks, you know, if I can get the corn in the ground for two bucks in the current price of corn is three bucks. I'm going to make a buck a bushel, but not if the price of corn falls over the next six months. So he's going into the futures markets. He wants to lock in his price. He wants to run his business. He wants to worry about his business of farming, not what's going on in the price markets.

And that's the risk transfer that he's trying to accomplish. Now, in futures markets, that exist on both the long and the short side of the market, right? So for every corn farmer out there, there's General Mills, who needs, who is a purchaser of corn, has to have corn in order to put it in their corn flakes, and they're also worried about the price of corn and big changes in price materially affecting their margins. Same thing exists in companies in the FX markets, interest rate changes, banks trying to manage that process. So the whole point is you're almost like the investment bank that's taking risk off of

someone else's book. They want to lock in their price now so they know what it is so they can plan for the future. And you're taking the other side of that in terms. of the volatility and the time horizon and all that stuff. So you're taking the risk off of their table. Correct. And where we earn our premium as an asset class is when markets are moving. There's price dislocations across markets.

We tend to do really well when that's happening across a lot of markets all at once, which tends to happen in sort of the high stress, inflation, inflationary markets, deflationary markets, sort of after the tech bubble, after the GFC. or during the GFC, you know, COVID, you know, 2022, all really good periods for our asset class. But it's no surprise that it works that way, right? We, the way we invest through trend following, right? Where is, you know, the price is moving up. We get long and we stay long as long as it keeps going.

And we, and that, you know, typically trend followers or have a moving average or some sort of close stop behind that. And the more things are moving, the more volatile things are, that is good for our business. That is good for our, you know, for our asset class. And typically those are bad periods of time in the equities and credit markets. When you get those really big stress periods, that's bad for stocks and bonds, good for us. And that's sort of where we fit in the portfolio. Within the futures market, do you know how much of it is? I would assume that the vast majority is dominated by actual commercial hedgers, whether you

mentioned General Mills or these giant multinationals that are hedging, whether it's commodities or interest rate risk. How much of it is, are the CTAs just a small portion of it or is it may be bigger than I think? Like, are you big enough to move the price? As an industry, I would think yes at times, but not when the market. markets are coming unglued, or ultimately the fundamentals of these things are going to win out in short periods of time on a, you know, on a day or, well, I'll tell you, let's look at, you know, what's going on in the markets today where we have, we've seen sort of a matter.

Yeah, slow, today's a slow day out there. You know, quiet day in August, which I thought would be a good day to schedule a podcast, you know. Well, I think this is actually, I think with an asset class like this, setting expectations is really important. So maybe we could use the current environment to sort of set expectations. So timestamp this, we're taping this Monday, August 5th in the afternoon. Markets have sold off pretty heavily the last week or so that, as I say on the financial news, intensified today. I'm curious how you view the pivots because there was a certain set of trends, and I'm not going to say I know how everything was working at every commodities market, but stocks were trending in one direction. Bonds were kind of, I don't

know, trendless, I guess you would say, how does a strategy like this pick up inflection points like this? Like, how long does it take for this stuff to realign in a strategy like yours when there is a big change in a fork in the road? Trend following is, as the name implies, we are following, so we're not predicting. There is a lag for us to hop on a trend. I always tell people, you know, particularly the way we approach the market way, in general, most trend followers approach to market. market. We use a longer term to look back period. You know, we're slow to get in, slow to get out. But because we're that over the fullness of time being sort of slow to get in, slow to get

out, you don't get chopped up as much along the way. You don't want to be jumping in and jumping out all the time. Correct. Yeah. So to me, this move starts around July 10th. What's going on now? That was sort of the top of, depends how you look at the currency. That was the top of the top of the the weakness of that you're, we'll call it the bottom of the bottom of the end price, at least in the futures terms, you know, you had a couple of currency interventions kind of go, fail, you know, because you have a wall of carry working against those currency interventions. But then we really saw the yen start to strengthen and the carry trade start to start to unwind. You add in, you know, sort of the Fed, the non-action of the Fed

last week, and then together with the unemployment report, and we just poured gasoline on the carry trade, which created sort of a systematic global de-risk environment. Is trend following going to catch that? Well, we certainly didn't catch the yen trade because, you know, we were short. We were short the yen. It's been a great trend forever. He had zero rates in Japan. You had 5% rates in the United States. Guess what happens in currency? It gets weaker and weaker and week. weaker trend following road that trend all the way down. Now that has rapidly unwound so that in our sort of parlance that, you know, that's what we call a trend reversal.

It takes us time to get on the other side of that. But what's also happened with that is it's also created a, you know, flows into bonds. We've seen a big sort of big long bond move here, which has been good for, you know, at least some of the trend followers, at least for us, it's been deep. or at least over the last couple days, as we are long held short and bond positions have started to, we had started to move into long bond positions probably in the last month or so. So some of the loss in the yen is getting picked up by the gains and bonds, but ultimately

what you got, you're sort of getting from trend following is that you're hoping in these periods, you're getting sort of non-correlated type of returns. I sometimes explain to people that, you know, if you're looking, if you think about in terms of, you know, a first responder, second responder, you know, historically bonds have been a really good first responder and an equity sell-off. Trend following is that second responder. Bond gives you that initial protection. You know, it works pretty quick, but then it doesn't continue to protect. You almost look at today, you go back to Friday, we had that big equity sell-off. and bonds were there. You had a really big positive bond move to, you know, protect your portfolio

than you get today. Stocks are still down, but bonds aren't helping you at all today. Now, you know, let's give it a few days, a few weeks. Let's see how these markets play out. But trend following, you know, like you saw in the GFC and in 22, you know, as time progressed, trend following gets on the right side of things and it allows you to earn, it allows you to earn returns or continue to diversify the portfolio after that initial impact. As Ben mentioned earlier, expectations are really important, especially when it's for something that's not as simple as, all right, bonds, I know that in a drawdown which bonds are still in,

I know that eventually just mathematically, I will get my money back. It sucks. It's not fun. I wasn't supposed to those money in bonds, but I hold my bonds, I'll get paid back. Stocks, not quite the same arithmetic relationship, but generally speaking, if you had the mindset of I will hold my stocks, and I will ride out the storms, they've, they've treated you well. Managed futures is a little bit different because it's a trading strategy.

And it's one of the most effective diversifiers to a total portfolio. But one of the challenges with real world investors, which is what we're dealing with, is that it's a line item. And when it's not, when it's uncorrelated in the way that you don't want it to be uncorrelated, you're like, well, what is this? Why am I short sugar or soybeans or whatever? So how do you talk to investors about the ups and downs and how it fits and how you should look at it within the context of an overall portfolio? I think what you said about real world investors is true and the line items is true.

I mean, I think that's the biggest challenge for our asset class. You know, if you look at an optimizer or if you're a CFA or an asset allocator and you're taking a stock bond portfolio and you're running managed futures returns through it, guess what? The optimizer always wants managed futures. optimizers love managed futures because they don't have any behavior bias and they don't have you know they don't say oh you know maybe I shouldn't rebalance here maybe I shouldn't Harry Markowitz would have loved and managed features is that you're saying absolutely every time every time you look at it in a portfolio it helps it helps lower portfolio risk it helps lower portfolio draw down almost every time you put in a in a portfolio or

through a back test or anything like that the problem with managing futures is, okay, it's a problem. It's a, it's either a bug or a feature, depending on your perspective. Yeah, it depends on your, on your perspective. It's a, it's a positively skewed strategy. Sounds nice, right? You know, stocks and credit are negatively skewed strategies, right? So what does that mean sort of as a real, real life investor and how I, and how I live with this portfolio on a day-to-day basis? In a negatively, a negatively skewed, thing like stocks, you have more observations above the mean than you do below the mean. But the ones below the mean are your left tail events. But they only happen

every once in a while. On a day-to-day basis, you are getting padded on the back for owning stocks all the time. You have more good days, more days above the mean than you do below. It feels really good. You're getting consistent reinforcement that you've made to write decision. A positively skewed strategy is different. It has more days below the mean than it does above the mean, except that it tends to have really positive tail events. That's sort of what managed features is trying to deliver to your portfolio.

It's why it diversifies stocks and bonds so well. You're pairing up a negatively skewed distribution with a positively skewed distribution. But on a line item basis, it doesn't always feel good to own that positive distribution. It can be frustrating. And your tail events are few and far between. So you spend a lot of time going, guy, this thing just is not doing, you know, my stocks go up every day. And this thing, this thing just sits there. You don't have to go back that far to see the tail event.

So I'm looking at it. So your strategy, if we haven't even mentioned yet, the crane chairs, Mount Lucas managed futures index strategy. Take her. ETF. KMLM. Correct, correct. Not going to lie. It kind of sounds like an airline.

Is that fair? Maybe. So I will say that the MLM is for, you know, the name of our for Mount Lucas Man. What's with Mount Lucas? Is that where you guys are located? It's a good story behind that. I'll do it quick. So it won't burn too much time.

But we, so we were found in 1986. And we spun out of a firm called Commodities Corp, which goes back. Oh, wow. Paul Tudor Jones. Correct. Yeah. So one of the founders of Commodities Corp was a guy named Frank Vanerson, who came out of Princeton. And he had a dentist thesis in the wheat market.

He got together with this guy at Helmut Weimar, who had done his thesis in the cocoa market. They were working at Nabisco in the hedging department, thought they could, you know, go manage money and formed, you know, got together with a bunch of other traders and started Commoddies Corp. And Commoddies Corp was based in Princeton, New Jersey. You know, Frank was there, a guy named who was our co-chief investment officer, Tim Rudderow, came. to work from her in 1979 as a soybean analyst. Frank and Tim were working at Kamai's Corp. In 1986, Eastman Kodak's Pension Plan had come to Kmai's Corp to run a managed future strategy.

That was an ERISA plan. You had to be an RIA. Kamai's Corp didn't want to do it. Frank and Tim said, hey, let's, you know, let's spin off. We're going to do this business. We're going to take managed futures to the institutional world. We're going to get registered with the SEC. What do you want to name?

commodities corp sat in a farmhouse outside outside of princeton on the corner of mount lucas road and and poor farm road and if you if you want to start a commodities trading advisor you don't you don't name it poor farm so it was so it's mount lucas road to princeton new jersey so that's that's where the mount lucas got okay so back to the tail so i'm looking at your returns of this strategy and so in 2022 when stocks were down almost 20% depending on looking at bonds are also down double digits. That was the worst of all years for stock and bond portfolios, right? They're both down. Bonds didn't hedge. Your strategy was up more than 30%. So that in that tail event, that is the outlier, to your point, the diversifier. And then the

next year, the stock market comes back and your strategy is down, eh, 5% or so. So it kind of lags, but you have that counterbalance. I'm curious, the behavior, after a really good year like 2022, did you see a bunch of inflows into your fund because you had a good year? I'll say, Ben, his investors, they'll give you 2023. All right, a great year that they're bad year, but in 2024, they paid some of the ass again. Right, right. And that's where that positive skewed distribution comes in, right? But do you see investors jump in after the fact that you have a really great year in 2022?

Do people see those returns and go, ah, I should have invested that, and then they pour money into it? We do. I mean, clearly 22 was a tailwind for us raising assets for sure and for the industry. in general, we, you know, for what we, in our space, called the sort of lost decade was the teens for us. You know, you had a really low volatile zero interest rate environment, you know, during the teens, not a great space for people that are generally long volatility like us. You know, having been through this cycle, so I'm, I'm in my 27th year with Mount Lucas. Mount Lucas has been clearly around like four decades. We've seen the, you know, sort of the cycles

of managed futures. And, you know, clearly we're, you know, I'm a true believer. So, you know, I believe more than most. I'm very careful about how I described a strategy. I spend a lot of time, you know, helping people understand when should I expect managed futures to make money? When should trend following make money. When, when shouldn't. Well, there are trends. Yeah, when there are trends, when there's more volatility in the market. And guess what? When these things are happening across a lot of markets at once, you're going to see our best performance. Like, But what you get from us is the ability to perform in different types of environments. You know, bonds worked great until we had inflate, you know, for 40 years, it was, it diversified

every single time the stock market went down until we had inflation. And then all of a sudden, you know, most people's investing lifetimes, they hadn't seen a world like that. I haven't been around long enough, but the guys I worked for had been around long enough. You know, we knew that managed features was going to. going to work in an inflationary period because, you know, we go back to the 70s and 80s and why? Because you could short bonds? Because you could short bonds. Yeah. I mean, that's that's, that's the big thing. What if you look at anybody's portfolio, what has the ability to short

bonds? What asset class can short bonds? It's not much. And there's not a long commodity simultaneously. Correct. Yeah. So we do actually show, I don't know if we show a chart a lot. I might be in the in the fund presentation. But you look at how we made money in 2022. We were short bonds, long commodity, short bonds, long to dollar through that period. If you look at the index that are strategy tracks and you run it back to 2008, in 2008, we were short commodities and long bonds. So it's that sort of ability to access two sides of the district long and dollar during that period as well.

But it's an ability to access two sides of distribution across these, you know, big liquid asset classes. One of my partners always says that, you know, we, you know, managed futures tends to pick up crash flows, right? So when the world's crashing, those sort of events are flowing, either sometimes they're led by other asset classes, but they are flowing into the currency markets or flowing into the bond markets or flowing into the commodity markets. and what managed futures does is sort of pick up those cash cash flows. Well, Jerry, this is obviously not something that you can control. You do the best that you can to put the message out there to let investors know that you should probably invest not before. I mean, I'm sorry, before and not after managed futures goes on a great run.

But listen, you do what you can, and investors do what they do. So I say that to say that at the beginning of 2022, there was give or take $30 million in the ETF. And then, you know, you were the. You were the umbrella in the rainstorm and the assets 10xed in just one calendar year. Yep. Yeah. And that's the way it goes.

I believe in the strategy. But right place, right time helps too when you're raising assets, right? So I give, you know, another thing I talk about is, you know, we had just come out of a period in the teens of pretty mediocre performance at best. Again, you know, zero interest rates, bonds aren't moving around. There's no interest rate differential between central banks. Currencies aren't moving around. It's not a great trending environment. But from a portfolio construction standpoint, you're winning because your stocks and bonds are just going, they're just marching up every single day as they were.

I give a lot of credit to the folks at Crane, who we were talking to about bringing our strategy to an ETF. And he said, you know, we think this is a core asset allocation. There's going to be we're going to return to a world. Where this is going to work, we can do it in an ETF, because it's sort of a nice structure. Because it is underneath the ETF, it is, they're all liquid markets, right? So there's, you know, we can get, we can bring, we can bring this to the market in a, you know, a cost-efficient ETF structure. And they, and they were buyers, you know, coming out of the lows, right?

So they, you know, we started this in December 20, but the process had started a good, you know, six to nine months before that. So here's a softball for you, for being ahead. They were ahead. So we had that ETF out there when we really needed it. So what did Crane Share see in your process that they wanted to take your strategy and turn it into an ETF instead of just making their own? Sure.

Well, for us, it was our history in the industry that, you know, we were managed futures first shop. We had an index that was created, you know, that was built to measure those returns to futures investors that was created in 1988. So there was sort of a length of history in the business a credibility that Mount Lucas brought to the manager space that ultimately they thought they could leverage into raising assets. Jerry, is the strategy that you'll have been running for decades at this point, the strategy that you have in, I guess, private placements, is that the same thing that you do inside of the ETF? Is it similar strategies? Correct. So this is the, you know, the MLM index strategy.

We do variations on that index like you would do in any other index. So we do have some clients that want to run it. So the MLM index that the ETF is tracking is sort of the original recipe. It does not include equities. But we do have a version of the index that does include equities. We also run a commodities only version for a client. So the product we're talking about today, that's it's commodities, currencies, and bonds. Correct.

So truly, truly uncorrelated for better and for worse. Correct. And our feeling on the equity, trend following equity side, you know, again, we created this 1988, equity indices weren't really that big or that broad at that point. But we never did include them in the sort of the original index. Most of that is sort of a client-driven decision, right? Nobody owns managed futures by itself, right? They own it as part of an asset allocation or a core asset allocation.

It's something that they can have in their portfolio. It's liquid. It works really well in periods of stress. And because it's liquid, you can sort of monetize that diversification and bring it back in the portfolio through rebounds. Yeah, people already have their stocks. Correct. And people already have their stocks.

So the last thing they want is their diversifying instrument to be really long. stocks right before the stocks blow up. And, you know, we're seeing that a little bit over the last week or so. So, you know, we're down a little bit because we've been hurt by the yen, but that's mitigated a little bit by the bonds. But the managers that have stocks in their portfolio, you know, those stock positions can get pretty big. And now you have a diversifying allocation in your stock bond portfolio.

that's just another big stock position. So if we were into enter into a sustained bear market here, yeah, those managers are going to are going to get out of their long positions and they're going to get short. And, you know, if it was like a 2008 scenario and I'm not predicting anything here, I'm just running hypotheticals, yeah, they're going to get short and they're going to do well from, you know, and they're going to continue to diversify going forward. But in these moments, in these difficult moments, yeah, the last thing I want in my portfolio, my investor portfolio, is to be long stocks with the diversifying allocation. Jerry, if people want to learn more, where do we send them?

KFA, you can either go to mal lucas.com, so it's m-t-l-u-c-as.com or kFA funds.com or even cranechairs.com. So any of those will get you to our fund. Perfect. Thanks for much, Jerry. Appreciate it, guys. Okay, thank you to Cranechairs. Thank you to Mount Lucas. Remember, check out Craneshares.com. Do the forward slash KM-LM to learn more.

Do that. Oh. Email us, Animal Spirits, at a compound news.com.