Animal Spirits Podcast - Talk Your Book: Live at FARMCON

Episode Date: January 22, 2024

On this episode, Michael Batnick and Ben Carlson are live at FARMCON to discuss: the macro economy and inflation in 2023 and 2024, commodity trading with legendary trader Andy Daniels, how behavioral finance affects investment decisions, 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. Wealthcast Media, 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

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 animal spirits, Ben and I are live from FarmCon in Kansas City, Missouri. Was that fun?

Not Kansas City, Kansas. It was fun. There was a huge crowd. It was, I'd say, I don't know, 1,1,100 people in the crowd. Mostly farmers, a huge group of people. And the topics ranged from macro stuff to commodities to personal family planning and stuff they were dealing with. And so we had a, we sat on a panel where we did a live podcast. We asked some questions. They asked us some questions. It was a fun conversation. And I thought

it forced us to look at some of the issues that we discussed from markets to financial planning, to personal finances, to behavioral finance from a different point of view. Ben and I are not used to, believe it or not, we're not used to speaking in front of a thousand people. So it was definitely a unique experience for us. But I just want to give the audience, the audio audience, a quick background on who we spoke with because I don't think we did an introduction on the stage because everybody knew who we were talking to. So Kevin Van Trump is the president and founder of Farm Direction and the Van Trump report. Kevin is the one who is kind enough to invite us out there. And Kevin has built just an incredible community of loyal

followers and readers. And he puts out this daily report that has tens of thousands of of people reading that every day. Carter Williams is the founder of I Select, which is a venture capital fund that is, or venture capital firm that is investing at the intersection of ag tech. Is that the right way to describe it? You and I had breakfast with Carter and one of his partners talking about Zembek. He's almost the most interesting man in the world. It was a very interesting conversation.

And credit to him for asking us to breakfast at 6.30 a.m. thinking that we were farmers, that we would get up that early. He's, the card is that email the next day. He goes, so breakfast 630 or 7? I said, let's do 7.

And then when we sat down, I said, we couldn't do any other? And apparently Ben and I, it's a farmer audience. And farmers are up early. You said, I believe you said, that's an aggressive ask for a 6.30 breakfast. And then lastly,

we had Andy Daniels on. Andy is a legendary grains and weed and commodity trader and has seen a lot of ups and downs and live through different cycles. And so it was fascinating to get his take on all things. So this was wide-ranging. We went sort of all over the place with this conversation. It was a fun conversation.

We talked about markets and investing in financial planning and crypto and commodities and all these different things. So here's our live podcast for FarmCon. All right. Well, Kevin and the Van Trump family, thank you very much for having us. We're super excited to be here. We'll do a quick intro for us before we get started. I know you know the other three guys on the stage.

So my name is Michael Battnick. I am a managing partner and co-founder at Ridholtz Wealth Management, where a registered investment advisory firm headquartered in New York City, but we're all over the country, and I think we've got 60% or more of our employees are outside of New York. Ben and I run a podcast. We're co-hosts of a podcast called Animal Spirits, where we talk about markets,

and a lot of the things that we're going to be discussing to do. A lot of the questions and stuff that we're going to be talking about is probably very elementary to you on some of the farming side, but we have an audience of, I don't know, around 50,000 or so that are going to be listening to this. So forgive us if some of the stuff seems rudimentary for you, but we're going to try and keep it moving, keep it exciting. Ben, you want to give a quick intro? Yeah, yeah, I'm Ben Carlson. I'm a fellow Midwesternary here. I'm from Michigan. I'm a flower guy. Michael's a coastal elitist. Guilty. But, yeah, we're in a podcast where we just talk about life and investing. in markets, and the markets might be different than what you were all dealing with,

but I think the psychology is always the same. It's funny, the last macro panel was talking about all the risks and potential stuff that could go wrong, and our line of thinking is it's never what you think it's going to be. And that's kind of the stuff that we talk about all the time is everything people were worried was going to go wrong in 2023. Most of it didn't happen, and the stuff that people thought could go right heading into 2020, no one could have ever foreseen that this disease would change everything. And so it's always these things that come out of left field that really take you by surprise. And that's

kind of stuff that we cover on our podcast. Yeah, nobody thinks about upside risk, right? Certainly in a year going into 2023, nobody wondered, well, holy shit, what might go right? Everybody expected everything to go wrong. And for market prognosticators, people that speak in front of a microphone, there's like not, the risk reward is sort of asymmetric to being optimist. versus pessimistic. The previous panel, and a lot of that was stuff that's specific to the commodities market, but just in general, if we're up here, glass-half-fall, the optimistic take, and the market tanks, you're like, those freaking idiots were up here a year ago talking about, like, well, the things that can go right in the market fell, whatever. You're never going to

forget us for being the assholes who got it wrong. If we have a good year and somebody was pessimistic, like, whatever, all right, so they got it wrong, no big deal, but they were just trying to be helpful, just trying to, you know, save you from things that Mike are wrong. So with that, how many people just show a hands and there's a lot there's a big audience Kevin big turnout here credit to you guys how many people with the show of hands uh thought that there would be a recession a year ago like coming into 2023 show hands come on hands up guilty hands up what was that i don't know a lot of people in here maybe half the audience how how many of you did things in 2022 to prepare for a recession that never came in 2023? A bunch of liars in the audience.

Many less hands went up. All right, last question, I promise. How many think that there will be a recession in 2024? Not a lot. Not a lot. Looks like less than 10%. So we obviously didn't get a recession last year, even though 100% of economists thought. it, retail traders, hedge fund managers, pretty much everyone across the board. Kevin, we'll kick this off with you. What were some of the biggest takeaways from last year in terms of wherever you want to go, investing, life, trading, in a year that was so completely unpredictable. What did you take away from that? Yeah, I just think, you know, mainly is you have to be intellectually flexible. I keep going back to it. In our world, Andy and I always talk about

young bowls and old bears you know i said it many times for throughout the years and the older i get the more things make less sense to me because i'm probably not as intellectually flexible so we become more bearish you know i use my hindsight and i guess all the battle wounds and scars and all the bad decisions that never worked out and it just makes us more bearish naturally and so most of my older friends, hell, we were all, none of us made the money we should have made last year. Let's just, you know, let's put it that way. We didn't capitalize like we should have because we were holding a bearish tilt. And I don't know whether that's because of our age, our mindset, you know, but I see a lot of my son, my daughter, they're bullish as hell and

they're optimistic about a lot of things. And my friends and I are a little more pessimistic. And I'm sure I won't steal Andy's thunder, but, you know, a lot of people say it's the scariest time that they've seen to invest. So, you know, I don't know. It's like you said, it's psychology. It's just psychology. And you think things when they're not like they used to be, it really squirrels you up, you know. Everyone talks about intellectual flexibility.

And of course, we all want to believe that we're going to change as the circumstances change. But after a year like 20, 23, if you came into the year, like, not fully exposed to risk assets, understandably so. Get 5% in cash. It's fucking awesome. Like, why do I need to take all of that volatility? this is phenomenal. And then the NASDAQ runs up 50%. It's very difficult to be like, okay, I was wrong. Now it's time to buy. Like that is borderline impossible. So Carter,

over to you. What are some of the takeaways and lessons that you're going to take with you after such a wildly unpredictable year? Well, we're venture capital. So we live in our own little hole in the corner of the universe. I think personally at the end of 21, 22, I think I traded more in a week than I did in a year before that and then we came into 23 and so I stopped paying attention to public markets almost completely

because on the venture side of things everything was turning right across board allocations were off by 80% and we had portfolio companies that were moving into the next phase where they even if we could pull the capital together we were one quarter of the capital in that cap stack

and all the other people weren't there. And so in terms of even being intellectually flexible, it was really an awful year because you're sort of like, what can we do? How do you manage the psychology as a venture investor? Because that's the kind of thing where most people say, listen, if I make 10 investments, two of them are going to do wonderfully, five or six are probably going to do nothing, and two or three are going to go to zero. So how do you handle that? I mean, because we're mostly in public markets. And UC losses, crashes, but you don't see a, if you invest in a stock market into, it doesn't go to zero.

If you invest in a new venture, you know some of them are going to go to zero. Yeah, so you move away from like microdosing ketamine to hero doses. You, I think you, you just work really hard with the teams to get through it. And the teams are great if they're really committed to figuring out how to get through it. And I think anybody who's run a startup knows there was a period of time we're like, this is something Bob Nimick told me once. He's like, yeah, sometimes you've got to cut back 70%, 80%,

and it cleans the business up at the same time, and it hurts. And so I think from a venture standpoint, my lesson is anticipate that and really work with the teams aggressively to get them to anticipate that it's going to get worse before it gets better. just live with it, but you're going to have to make the cuts and it's good for the organization a long run. Andy, how did, uh, 2023 turn out compared to where your head was at at the end of 2022?

Well, I mean, 2023, 85% of all the experts out there, economists and the like in the beginning of 23 thought we'd be hard landing and, uh, in big interest rates. And that would be the result. And it was just the opposite of that. We ended up up near the highs. I think what most people, myself included, missed was all the, you know, all the government money that's still sloshing around in the market that kept the market afloat at the same time, you know, the Fed raising interest rates and crude oil not being more, less up than down than up, kept the inflation side under check. So it was kind of a perfect storm. Now you have the likes of Powell out here talking dovish. you have the pundits now saying we're going to get anywhere from three to six rate cuts next year and you know and in good times are ahead and if we're going to have a landing it's going to be a

soft landing and it may just be a touch and go I you know I can guess I can appreciate and understand that you know there is six trillion dollars on the sidelines now and money markets biggest numbers ever but you know I there's still some things out there that bother the hell out of me and then one of them being, you know, we have over $7 to $8 trillion that needs to be refinanced. And our natural supplier of that liquidity, Japan and China are nowhere to be found. So do we really have the demand base within this country in a lowering interest rate environment to have people willing to take on those kinds of treasuries? I don't think so.

I, you know, what you tend to happen is when high valuations are usually exceeded by periods of lower returns. And that's probably a good part of the reason that guys like Warren Buffett are so cash heavy right now on the sidelines. I see too many black swans out there. I see geopolitical risk.

I see so many problems out there. I can't help but believe that all these factors combined are going to allow the economy to chug along without having any consequence. So I'm sticking with my knitting. I'm going to stay in treasuries. I may not get the return,

but I'd rather, you know, take the risk off the table and protect my capital position. And, you know, I'll be the proverbial gold bug as I always am. And Kevin, you've always told me, you know, it doesn't matter what you and I think. Find out where your kids think. They're the future and we're the past. And I have a son who's a financial analyst in New York focuses on the tech sector. And so he's got me all fired up about AI. which I've heard a lot of positive things about here today.

So I have quite a bit of exposure there. But other than that, I'm staying with some, or have been staying with some energy stocks, paying dividends, and T-bills. Well, you both bring up good points about the fact that when you get gray hair, you tend to be a little more bearish. And I think it's not just that people get more pessimistic. It's when you're older, you have more financial assets to deal with, and you go from wanting to grow your wealth to preserve your wealth.

And that's something we worked with every day with our clients. So how do you try to balance that need to, listen, I need to grow my money above the rate of inflation to keep my standard of living up with, I also want to preserve this capital. And I do not want to mess it up because I've lived through enough of those mistakes to see that bad things can't happen if you take too much risk. Yeah, no, I think that's the big question you have to ask yourself when you're building your own, you know, own home family office or your own wealth. I think you have to allocate some funds and some money that has to be by side only and just long. You just have to be long, whether it's SPY or the triple Q's or whatever it may be. I mean, you're going to have to have exposure just because the game's rigged to the upside. I mean, let's all be realistic.

I mean, you know, the bad stocks and the bad ones drop off. The good ones come in. It's like the game's clearly rigged to the upside. So the game's rigged. Show up hands. How many people think they have enough money for the money? They don't need to make any more money. Who's content?

We got one hand. Everybody is, everybody wants more. That's a reality. It doesn't matter how much you have, you want a little bit more. And that's the beauty of this country is that people go to work every day. Corporations are really good at squeezing pennies and keeping their margins where they are. Like, we're really, really good at making a lot of money in this country. So we spent a lot of time, Ben and I talking about Wall Street and corporate America.

And last year or two years ago, really in the pandemic, these companies were just gorging on debt. Microsoft was able to borrow basically at the same rate the Treasury was, you know, two and three quarters percent of whatever the rates were at. And so there was this weird paradox at play last year where obviously interest rates went up a lot, but corporate interest expense went down a lot. Well, that doesn't, how? That doesn't make any sense at all.

Well, it actually does make sense if you think about the fact that 90% of the debt for the S&P 500 is fixed long term. It's the same people, if you have a mortgage, you don't care. I mean, it sucks for your kids, but you don't care if you own your home free and clear or you have a mortgage, I'm sorry, and it's 3.5%. The 7% mortgage rates don't impact you. But this is a mainstream crowd that we're in. Nobody in here is able to borrow at the same rates as Microsoft.

So I want to talk about what it was like for you all in 2023, how everybody here was able to adjust to higher interest rates that might not have impacted Wall Street, but certainly impacted the rates at which you all barred from, especially, I'm assuming you guys can correct them from Ron that a lot of the lenders, the financiers in this business, it's regional banks, community banks. And in March, that was a hell of scary time. So what was it like for people in the room, if you could speak to them, Kevin, just living and borrowing and all that sort of stuff in 2023? Yeah, you know, Andy and I had the conversation last night, and I don't think anyone's scared. I mean, my opinion,

most of the people in the room are sitting flush with cash 20, 20, 2021, 22, unbelievable years. You had high prices, high commodity prices, and high yields, strong yields. It isn't like 12 when we had a drought and nobody had the production. I mean, we had good yields, good crops, and high prices, plus COVID money, plus the other money. So I think everybody's pretty flush. the problem is nobody goes market to market so everybody's sitting on their old crop corn nobody's priced it yet actually based on the new operating lines that are at 7, 8, 9% you know so and the price of land has gone up dramatically and rents are higher but we haven't

gone market to market on the corn you know or the beans or things of that nature and if you had to price them right here today last year was a bad year last year was probably you know the worst year you've had in a few. And so I think it's cyclical in our in our world. There's a lot of cycles that take place. And the last panel was talking about maybe the winter's coming and we're going to see some lower prices for a while and maybe shake some things out. But I don't think it's hit as of yet. But next year, that's what a lot of the talk is. If the operating lines and we're going to be borrowing millions of dollars on the farms and they're at eight, nine percent plus, There's going to be some game-changing, especially if you have corn sub-4 bucks and being sub-10 bucks.

I mean, there's going to be some fallout there. Is there more scar tissue there in this industry because you do lift some recycles because there's more idiosyncratic risk there? Because the economy, we've seen the recessions are few and far between now, right? It was 2009 to 2020, and there was a two-month recession. So really, the last decade and a half, we've had one recession since the great financial crisis, and it was self-imposed from the pandemic. So, but obviously within different industries, there are more ups and downs. And so living through those ups and downs, whether it be weather-related or commodity prices,

does that actually make it easier for everyone in here to withstand those? Yeah, are you guys better business people today than like your parents or your grandparents' work? Do you just have more – Sure. Ben's point scar tissue, more knowledge of how the cycles work? I think volatility is more extreme, and the cycles are a lot faster, right? Just like you're saying. And so if you don't get out over the tips of your skis too far,

you can withstand most of the cycles because they're going to come and go a lot quicker than we had seen previously. Or in the 70s, we were entrenched and no one could make it out of the storm. I mean, it just lasted too long. The winter lasted too long. I think here you've got to just be careful. Don't get over leverage, especially in this environment, just because the leverage with the volatility could rip your face off.

And what's the market's job when you're in a – an oversupplied environment, which were in an oversupplied environment in corn, for sure. You know, what's the market's job? Seek out and find the highest cost producer and rip their face off. Seriously. And never before has the world looked to America, as I've said before, never before if they look to America as the high cost producer. We are in a lot of ways.

We are in a lot of ways. So we've seen that. We became the ancillary supplier in wheat, and we became the ancillary supplier in beans. and now Brazil took the lead in corn exports. And, you know, we're the high-cost guy. So I think the market's going to look around the room. You're the high-cost producer. Be prepared.

You're going to probably get your face ripped off in the next year or so, year and a half. And that's the market's job. So let me ask a really dumb question. So forgive the naivete here. Corn prices have been cut in half from their highs. We prices are more than 40% off their highs. Is that in general, or maybe I guess it depends?

Is that bad for farmers? I would imagine that it's good for maybe cattle farmers where those are like some of their biggest input costs. But just talk about the dynamic of different commodity prices on different parts of your industries. Whoever wants to take that, Andy? You want to take it? Well, I'm not sure I understand the whole question. Yeah, I think he was just asking, we've had the big drop in commodity prices, especially corn, wheat. Beans are trying to hang in there a little bit, but they've gotten whacked pretty good as well. So, you know, how does that overall impact our industry? Yeah, it's a dramatic change.

Like I said, you know, we were, but let's back this up. Andy and I will both argue and tell you, we've traded corn more times when it was below the cost of production than when it was above the cost of production. So let's be realistic about how far back we want to look at data, whether it's the pick programs or how far back you want to go. There were a lot of times it was below the cost of production when we were. trading it. So that's what I say. You know, we've, we've had some good runs these last few years, but I think the world, and like people have talked, Ukraine's been able to produce, and they've had some big numbers. Russia, we're seeing more and more production globally coming online, better infrastructure out of Brazil to the north. Brazil's probably going to eat our lunch

infrastructure-wise moving forward. And, you know, those are some of the headwinds, though. Well, nothing cures high prices like high prices, because over the last two years, we've had such high prices and good yields, that that just led to more acreage expansions in different parts of the world. I mean, we're pretty much maxed out in our total acreage pie, but South America continues to grow. And I don't see that changing anytime soon. And in the process, they continue to take market share, and they are the low-cost producer.

And as Kevin said, we are the high-price cost producer. Andy, how much of your trading is fundamental versus technical? I guess you could tell me what the fundamental inputs are, whatever it is, whether and just, I don't know, all of the stuff that goes into that versus just looking at a chart and saying, you know what, I've seen this pattern before. There's more buyers and sellers or this moving out, or whatever the case may be. What are some of the inputs to how you think about trading? What's the last part? How do you, just the mix of fundamentals versus technicals when you're, when you're making decisions to buy, sell short, whatever. Well, I like to think I look at charts, but I certainly don't go by. I'm a, I'm a, I'm a, I'm a, I'm a, I'm a fundamental. fundamentalist pure and you know two plus two equals four and sometimes that works sometimes it doesn't you know in the good old days when we had a pit and things

were done by open outcry I think there was a lot more transparency to the marketplace and you could you know who was doing what when now you know I'd say 80% of the volume and the in the day-to-day volume in the commodity markets is more high-frequency traders algorithms algorithms creditors. So, you know, I don't have as much in common with those people. What I found is if 10 years ago I'd trade a half million or more contracts a year for myself, I'm trading maybe 5,000, 10,000 contracts a year for myself now, and assuming and taking the same kind of risk, because you just can't, they're going to beat you in the long run if you sit there and try to go

toe to toe with the computer. They're going to win. So you have to be more of a position trader. you have to be longer term in your thinking, and you can't go too far out. You can't trade next year's corn crop because there's no liquidity in the marketplace. So you have to stay pretty much up front and close by and, you know, have an opinion and stick with it and trade smaller. The tech side of things has certainly gone into Wall Street as well, and that's gone just not like you said from the quantitative trading side of things, but also Mike and I talk to fintech firms all the time, especially in the last 10, 15 years or so, it's constantly these firms coming to us saying we can make your job easier and more efficient. And we like

to say if we were running our same $4 billion wealth management business right now back in the 80s, it would have taken double or triple the amount of people, I think. So Carter, I'm curious for you. How has that technology changed things on these new startup firms that are coming in to try to make things more efficient? Making the actual startups more efficient or technology affecting the GDP? Yeah, kind of making the industry more efficient. Yeah, so I'm really confused about how the economy is working because I'm, you know, I learned it from real economists who got Nobel Prizes and things like that sort.

I basically am ready. I got an economics minor in college, not to brag. I'm basically ready to throw it away because everything they taught me is essentially useless. The last three years has proved it all wrong. When Larry Summers is wrong, it sort of confuses you. But I do think that when he's right, it confuses you. We're in KC. And the KC Fed issued a report, a really interesting report that basically said, every 100 basis point increase in the Fed fund rate reduces allocation towards technology investment venture by 25%. And they went on to say from a policy standpoint that the increases, and it happened,

dramatic decrease in venture, and that there's a long-term policy impact of that reduction in investment. And so we've talked a little bit near-term, long-term, I think one of the reasons we're more resilient today is because of total factor productivity, which basically means that you can use Google to solve your problems. You can use AI to solve your problems, and it's essentially free, and it increases your productivity. I can do more marketing today with Chad GPT quicker than something else. So we have consistently increased total factor productivity over the last several years. And as a result, when we run into a problem, someone can say, I don't need to buy a car. I can just use Uber. I still transport and I don't have to go spend $38,000 or $40,000 on a car. So my concern

long term is what we're going through right now will give us a technology deficit. I don't know if it's enough, but we will have a technology deficit over the next seven or eight years because chat GBT, which is successful now, was created really, well, I was a little quicker called seven, ten years ago, so that we're not putting the technology into production. You don't think there's enough overfunding in 2020 and 21 to make up for the deficit last year? Well, that's what the KC Fed asked. And so it's new thought, but there isn't anybody at the federal level. There's nobody at the Fed that understands

the coupling of total factor productivity to GDP to the time duration. And most people, it's a tough subject. And I don't I don't even know how to give anybody guidance other than the fact that we will see technology reduction.

Andy, go ahead. I kind of had a question to go along with that for Carter. And I think it's relative to this room and in the audience. You know, Carter, I got involved with I Select Your Firm back in 2014 or 15. That was the same year that Dow and DuPont marched and then 17, you had Syngenta and Ag Chem. And then in 1819, you had Barron Monsanto. And when those mergers all occurred, they were

busy streamlining themselves into new entities and absorbing. And so they stopped the R&D process. And that opened the door for entrepreneurs and startups across the ag industry. And we saw that flourish. Tons of startup companies at AgTech started growing out of the out. And you guys have certainly represented a lot of those as they've gone through the seed A, B, and C rounds. But very few, if you look forward and where we are today, have made it out of that startup environment

and to the public markets. And the few that have, frankly, haven't done worth of darn. So I guess the question is, what advice do you have? I mean, Kevin, you've said this for so long. Getting across the farm gate, getting adoption by, you know, by the ag world is virtually as tough of a thing as you can do. And, you know, with the big boys, they have the access, they have the trust, the confidence of the farmer. But how do these startup companies cross that moat? How do they get into the, get to the other side?

Do they do it through JVs? They do it through partnershiping. What's the secret formula? Yeah, I don't know if it's secret, but we're at a, it's a good book that everyone should read called the fourth turning that sort of explains these dynamics of demographics and time periods and socialism, all that kind of stuff. And I think we're at a point, Kevin, your chart of, if I look at what we're doing in the venture world, we have been trading share with about three million acres. all the startups in ag tech have been going out and working on the same three million acres or so of row crop and consume you know when i sit down and talk to like matt morland he's like he's he's a guy he's that guy listening to all these new technologies and figuring out how to it the thing we haven't

done and this is now is the time to do it it's in the down stroke that is the best time to shift productivity is we're moving into what's referred to technically it's the early majority phase. So we've got three million acres. You had the chart. You got the crossing the chasm thing, and then there's probably 40 million acres of people that if they list to another farm or producer

are going to adopt the technology. And when we look at like biologics and we look at a lot of technology that we've developed, I'll say from a venture standpoint, Craig Heron, ask Craig Herron later on, he may have a different opinion. Where technology-wise, I think we generally understand the technology and the risk around biologics

and how to get adopted and or how to make them work. What we don't have is the adoption. And we've got to not get the first guys that have been adopting to get it. We've got to get the next wave of people to adopt it. And in this room, this room probably has more power to affect that decision in this industry than any group in the country.

I mean, right in this room, we, what do you think? We got a million acres? Oh, yeah, sure. So the decisions you make, they're people in this room that listen to those early adopters, and I think if you're trying to figure out how to invest, there's a little bit, I'll say how I'm changing my investment when the downstroke. I downsize, I change, you know, I improved my own productivity. I think right now, what I think is important, the guidance we're giving to our startups is you've got to change

your sales team. Hire kids from FFA or higher kids understand what the hell's going on on a farm. and, you know, I hear this out of the farm credit banks that they're working with farmers to help them understand how to use technology. But right now is a really interesting opportunity while everyone's sort of stumbling around to really take another look at some of these technologies and open up that next wave. And the next wave, I'll go off in a little bit of a rant here. How many people have started taking Wachovia or Ozempic?

I'm not. I'm not. You're not yet? You ready? So there are drugs coming online that are going to cause weight reduction. So is everyone going to just stop eating corn? No. What's going to start happening is we're going to shift a little bit of nutrition. And one of the debates is going on is like, are we going to start making crops that have more nutritional density? Are we worried more about protein? And so there's a shift going on.

And so there's a point of confusion. It's at these moments in time, when everything is, going crazy and the planets align that's the fourth turning part the planets start to align and all some people are saying i've seen a bunch of you seen the three million acres use of technology it's starting to make sense i've got people explaining to it on my terms i'm talking to farm kids instead of some guy from mit about how to use this on my farm i'm starting to see the productivity of it nestley is starting to pay a premium the climate stuff as tom willis said the climate stuff is starting to line up, that people are willing to pay a premium.

The whole sort of shift of how that works and how business works is, I think, going to change in 2024 and 23 and may jump over to the next wave. I want to explain one thing to you guys, maybe that the crowd knows and Carter, I'm not sure, knows, maybe, but human psychology still plays a big role in everything. And so everyone always asked me, why is the farmer so slow to adopt? we have the few that are just early adopters and they'll try anything and try it or whatever but the masses are slow to adopt because of this somewhere along your line five generations ago someone headed west and homesteaded and worked their ass off and did the unthinkable and took your family to where you're at and now you're steering the wheel you've got the wagon the last thing you want to do is what run the wagon off into the ditch run the wheels off the wagon. You're not going to wreck the family farm. Well, someone comes to me with

this or this. Sure, shit, I'll try it. This ain't going to wreck my family. They're going to wreck my life. This is where you were born, your kids were born, your grandkids were born, all down the line. Last thing you want to do is somebody come to you and tell you, hey, I got a biological, you don't have to buy any more real fertilizer or anything. Just throw it out there, and your crops will be fine. Yeah, sure. I'm not taking that risk on my family, on where I grew up, and where my dad and his dad and his dad grew up. That's why you're slow to adopt. I mean, a lot of people, we'll all sit up here and say, oh, a farmer needs to adopt faster.

Well, bullshit. I'm no one's going to do that. They're not going to do it because your family's at risk, your history's at risk, and there's a lot more to it. Just like when I went to Chicago and everyone, Andy, we were talking last night. Nothing more, nothing more bearish than a bullish farmer, right? And I don't want to make anyone pissed, but I went to the, When I first showed up in Chicago, I didn't know a damn thing about Tray.

I was just big and tall. They wanted to hire me on the floor because people could see me. And I like to fight. I remember I'm asking if I cared about fighting. I said, shit, I love to fight. So, you know, they hired me. I didn't know anything. And they said, kid, you're going to do great.

Your family and everyone is farming and your friends are like, just do the opposite of what they do. You're going to do awesome. And I thought, man, that's a shitty thing to say. And I thought about it through the years, like I've always told you guys, it doesn't tell you're bad traders. It's just different. You're trading your life. I mean, you're trading your family's heritage, your life.

So you're going to hesitate a little bit more. You're going to be a little more certain. You're going to be slower to adopt to new technology. Your secondary loop observers. We all want to see someone do it. Make sure it's okay. And then that shit's not going to wreck my family over here. Like I said, we'll all get on this or do that.

But these big things, I think it's a lot more difficult than people think. And, you know, I commend everyone that makes the leap of faith. And I know you got a lot of pressure, suicide rates. are high in farming, everything else, and there's so much pressure to not be the one, to sell the farm or to wreck it. So there's a lot more. There's a lot more to it than just adopters. I want to make sure that we get to some of the exciting stuff that Carter's looking at. But Kevin, you spoke so much about family and obviously farming is a very family-oriented business. We do a lot of family planning and estate planning and generational stuff for our

clients. But I'm curious, how are some of the needs for planning different from farmers than somebody that doesn't own such a this type of a business how were there what was that just what are what are some of the the planning things that farmers deal with that most Americans that are not farming deal with so like we have clients like the sexy stuff to talk about here is the trading and what's going to go up what's going to go down and people who come to us for wealth management think they need that stuff too it's like what stock should I buy what you know what am going to change my allocation this year when 95% of them just need the financial planning stuff they need to know am I going to be okay transferring assets

state planning and tax planning, insurance planning. I'm sure that people in this room have all those lawyers and tax consultants and stuff. But how do you deal with the psychology that you mentioned of passing it on to the next generation and maybe the next generation wants to do something different? Like how that's the stuff that can, especially within family, can be very tricky to deal with. Yeah, and that's what a lot of families here face. I mean, are the kids going to come back to the farm? Do they want to carry on and do what you've done and your fathers and forefathers have done before you and how's that going to play out. I tell everyone, farmers are the biggest risk takers of anyone I know. We're all gamblers. I mean, everybody out here, you're gambling on the

weather, you're gambling on the crop, you're gambling on the price at the end of the crop. I mean, everything's a huge gamble. And so I think the farmer's a big risk taker. But I like, but I also think the farmer, the common threat amongst everybody in the room is their family. I mean, leaving a farm to a better family. And I think that's where we're at, you know, and that's what everyone's trying to do. So I think that's, you know, everyone faces, every farm's different. Everybody faces their own trials and tribulations. But like I said, I think it all comes down to trying to leave it a little better for your kids and the grandkids. Carter, this morning, we were talking about some of the Ozempic stuff that you're talking about. So every year, I look at a long-term

chart of the S&P 500. And as Andy was discussing, the world is a scary place today. I don't know if it's scary than it's ever been, but it feels that way. But the world's always been a scary place. And there are always really compelling reasons why you should take less risk, why you should hold more cash and less risk assets. There are always a million, I mean, think of it right now. You could come off 20 at the top of your head. And as I was putting this together, I thought, what about the flip side? Like, what are some reasons to buy? And I thought, like, oh, my God, it's really hard.

It's really hard because bad news are like events, right? it's headline stuff and all the progress that we see most of the time it's snails pace it's very very very slow and progress is not a headline which is why we one of the many reasons why we tend to have a bearish bias as investors but thinking about some of the ozempic stuff and the AI stuff that we're about to live through it's not too often that you have like actual catalysts like reasons to buy and i'm not saying that ozempic is bullish for the smp 500 specifically, but just generally, like, there was a ton of magical things happening. Yeah.

And Carter, you see them every day. So can you give us maybe some reasons to be optimistic about the future? Yeah, I think what it takes to develop new technology is a fraction of what it took. You'll learn when JJ's talking this afternoon. He flew the F-18. I worked on the F-18 for 10 years, really, to first flight. Now people are developing new aircraft in like a year and a half or less. When we're looking at drugs, they're accelerating.

When we're looking at crop genetics, Spenson is able to do the work that Monsanto takes 15 years, 10 years to do. They do it in four. So all that's speeding up, and then if you really start looking at what AI is doing, it just makes it so that you can get the job done a lot faster. And once that starts happening, some data, analysts were like, you can't give normal humans like AI tools to be able to do a data analysts. You need a data analyst to do that. It's like, no, the subject matter experts need these tools.

And even if they make some errors, you're going to get a lot more subject matter experts digging in on it. So I think I'm very bullish on the fact that technology is going to continue to correct all the stupid errors that are people in Washington are executing. Every single thing I hear in Washington that bugs me, I'm like, I don't really care because AI and this other technology will fix it before they screw it up too bad. So maybe Washington is Cadarious Tony, but Venture is Patrick Mahomes? I didn't hear that. He's been trying to squeeze in a Chiefs joke all day.

That's right. But I did it, like, if you look around and people are, there's a lot of people who are very unhappy with a lot of our institutions in this country. And I think the one that has basically come away unscathed, especially these past few years and probably gotten stronger, is something like the stock market and the corporations. And I think it's because they have this singular goal, which some people may say that's a really crappy way to look at life. But they really do. It's like we're going to innovate. We're going to have progress.

We're going to get better. And I think obviously that starts real early with the companies you're investing in. And then it morphs into the public markets. Microsoft is a machine. I mean, and I know, we had hired for a weird project to do some AI stuff, the guy who's now the head AI guy in LinkedIn, and I've spent some time closer to Microsoft recently. And they really are an honest machine of productivity that I think is good. And people can come, and Amazon, as much as people can bitch about it, I mean, they just plow through problems and deliver scale. And I, it's just awesome.

In agriculture, I'm not, why don't we have that yet, which is sort of, you know, to some degree, we've invested in 75 companies and I see those 75 companies as a piece in that puzzle. But we don't really have an Amazon or Microsoft per se in nutrition. Like, this is a very horizontally integrated disparate system, and my guess is at some point in the future, I don't know what the date is, will solve the nutrition problem and we won't have diabetes. Diabetes will be cured, cardiovascular disease will be cured through nutrition and better food within the next 50 years, if not sooner. So are we possibly not making a big enough deal out of these kind of drugs, is my takeaway?

Say that again. Are we not making a big enough deal out of these drugs that could? Oh, I think that there's a lot of, the other problem we have, you think technology adoption is hard in agriculture. Think about it in CPGs. This is funny. I mean, we see this. So OZEPIC is a 25% reduction in calorie and a 45% reduction in processed food.

The CPGs who make processed food say we don't think it's going to affect our business. The head of Morgan Stanley's CPG business says, I don't think it's going to affect our business. The people I know that are working in Nesla, like everybody in the C-suite is on Wachovey, like getting losing weight. So, like, and even at ADM, same thing. They're all on these rugs, and they're all losing weight, and then they're saying we don't think it'll affect our business.

And it, I don't know, it just seems a little weird. People are getting ready for retirement, and I think that there is unwilling to adopt new technology, and I still think, you remember what I caused a little bit of trouble talking about ADM and cargo getting in trouble maybe in the future. I still think that their business has got some, a few years ago I raised it, I think their business has got some shuffling going on.

Yeah, and I think like Carter says, I think, you know, don't listen to what people say, watch what people do, so speak, and like Carter's saying, there are a lot of people taking the shot and taking the drugs, and I think they're going to continue to get cheaper and cheaper, and you're going to see more and more people probably take them unless there's some blowback medically, but, you know, it has to matter at some point.

has to make some type of dent. I don't know how far out in the weeds that's getting, but I think it has to change some things. Just a final point, there are like 10 more of those kinds of things that we're going to start showing up faster. Like if we think about it for us, many people in this room might have been the PC, or maybe I'm a little dating myself there, or, you know, we've had some of the iPhone. I think those pacing of things are like, oh, I got to rethink how I'm running my business dramatically. It just feels like whether it's drugs or treatment or food or technology, that that's going to speed up. Your sense is that a lot of these established businesses are going to be very slow to change because their cash cows still are making money,

so they're going to be the last ones to get on the train, basically? It's a lot of reason for them to be slow. And when the Gen Z steps in, again, this is something JJ may cover is it's really hard to get good talent. I just don't know between talent and the mix of people. And I don't know, It's really getting confusing, but I think technology's going to win at its speed. So the next generation thing is interesting. You in the last panel were talking about Bitcoin a little bit. Andy, I think it was you who said you're a gold bug and what did you say? You've pissed more money away in gold than your worth or something?

Is that the quote? Mike and I like that one. Is the best case for Bitcoin at this point? Because the narrative changes on it every year. Is the best case, though, just millennial or Gen Z gold? Is that the best hope? that it's just this store of value, and we put more faith in this technology and this code than we do in a yellow bar.

That's what I believe. I believe the world moves around the stories it loves and believes in. I mean, and that's what moves the world. And I think the younger people, you know, just like you said, I think they believe, they like the Bitcoin better than the gold story. Let's put it that way on the younger side. They just, they see more built-in value or they sense that there's more value there. I don't know if that's true or if it's not.

not true. Like I said, I'm just trading it. Did you immediately recognize Bitcoin as trading like a, I mean, it's so volatile that this, this is a, it acts like a commodity. Did you sense that immediately? Well, yeah, I think anything to trade any trader trades anything. How I trade baseball cards to Pokemon cards to, I'll trade Bitcoin, you know, I trade Bitcoin. And I just see it at scale. And like I said, I, at this period in time of the time window, I, I don't see a big, big seller in in in the space at the moment so you know that's why we're staying bullish through here i think it could stay bullish for quite a while and uh until you suck a lot more people back in and i think you have a you got to understand it's not just buyers from here in the united states

or america i mean you have you know a lot of global buying as well you got a new president in argentina that's going to change and try and peg the pace uh try and flip the dollar and peg to the dollar get out of the peso i think you have people there that are going to be interested in putting money into Bitcoin as a safe harbor or gold or whatever it may be, but I'm dead. I'm with you guys. Eighty-five percent of crypto transactions are outside of the United States. And I view crypto sort of as a commodity. Obviously, it's not consumed or used like it is, but just in the sense of supply and demand. For sure. And to your point about who are the sellers, the crypto maniacs will never sell. It's a religion. They will never sell.

60% of Bitcoin today has been held for over a year. And a lot of it has been held for a lot longer than that. So do you think that the marginal buyer will outstrip the marginal sell? And I think that's a pretty easy decision not to say that it's going to go up in a straight line. But I think that's why you do have crashes, though, is because the prices are set on the margin because all those religious people who hold it no matter what, they're just never going to touch it. So I think that's why you have these air pockets. Because if, if If someone just steps away for a little bit, it crashes immediately. Yeah, the float is effectively, you cut out all the people that are just not trading. Well, that's why I say it's so dangerous of a market. It's, you know, it's not for the faint of heart. And it's massive air pockets. I mean, it's just like the rice market or some of our trade just like a commodity. So a billion dollars of leverage come out of it this morning.

I mean, crazy, crazy numbers. Speaking of investing in ETFs, there's an ETF for everything, like effectively everything. Not Bitcoin yet, but it's coming. farmland is one of the oldest asset classes, investors, even normal people that are not farmers, not say that farmers are not normal people, no offense, but everybody wants to invest in farmland. The problem is it's difficult because it's all private placements. You have to go through private companies. Most people do not know how to do diligence on the managers, on the underlying assets, the farms themselves.

Now maybe we don't want cheap beta for farms. like maybe beta in farms is a terrible idea. But I'd be curious to hear your all thoughts on how investors can, should, will get access to farmland in the future. Will there ever be an ETF for farmland? Let me take it. Yeah, you know, you guys know mine. I'm bullish farm ground.

I've been bullish the last, hell, I don't know, 20 years and followed up many people on stage that were bearish and said we're in a bubble and we're in a bubble and we're in a bubble. And again, it trades like a commodity. I'll ask you this. How many people in the room are waiting on a pullback to buy land? Yeah, I know. Don't raise your hand because it's everyone.

So it's everyone. Well, that's not how it happens in a bubble. In a bubble, there's no buyers underneath the market. If the market breaks, there are no buyers. I'm promising you, there's a lot of buyers still in farmland. I'm curious, what is the reason people think that farmland is in a bubble for? Shit, because it's higher than it's ever been. Okay.

But it's just like the housing market. It's psychology. It's say a piece of ground comes up, continuous to a farm or our farm or whatever, and my dad could have bought it at $3,000 an acre and it sells for $4,000. That's it. We're never probably ever buying it because the next time

it's going to trade for six or seven and he's going to be pissed that he didn't buy it for three or four. Well, that's the question I always have for people who say, you know, housing prices are unaffordable and if I buy now, I'm looking like an idiot, right? Do you think housing prices are going to be higher, lower in 20 years. It's probably the same with farmland, right? For sure, farmland, because there's new utilities every day coming up for farmland. New utilities, meaning, where are you

going to get all the solar? Where are you going to get all the electricity? You guys are seeing it happen. You're taking away good prime farm ground and putting in solar farms. And the cost of solar is coming way down. The price to buy the land they're paying is going up. There's going to be new utilities for farm ground. And that new utilities is bringing on more buyers, not more sellers, more buyers. And when you have a market where you have more buyers and sellers, it's not in a bubble at any time. And, you know, let's be realistic. For rich people now, it's cool to own a farm, and we've seen it. And now you've got rich people that think it's cool to own a farm. You've got all kinds of other investors who are buying ground for different utilities. Look at Amazon,

look at good. Where are they put in their data centers? How many of you call me and told me that, hey, you ain't believing in this shit. They sold a piece of ground right down the street for me, prime farm ground to Amazon or one to host their data. Just like we keep the crude in Cushing, they're going to keep the data in the middle of the United States for military, for all kinds of reasons. And that's where it's going to, Carter, you can tell them, you've seen it. I mean, we've seen it come across the pipe. So I'm bullish farm ground. I couldn't believe, myself, we saw interest rates spike to where they spiked, and we've had our highest sales of farm ground. I mean, think about that. That's crazy because everybody, every brainiac academia that I spoke behind,

it had every damn PhD letter behind, you know, behind their name. They all said we're in a bubble and prices won't sustain here. And yet we've continued to move higher and higher. And they said, oh, if interest rates go up just a little bit, it'll crack the hell out of these land prices. Not the case. It didn't happen. So I think you may be in a land cycle that surprises the hell out of a lot of people. This may just be the beginning. And I know a few other people that are thinking something similar to... So like that, Michael and I have been talking for weeks and months now that if mortgage rates, which got to 8%, if they get down to 5, we're going to see a flood of activity in the housing market. I don't know if it means that housing prices are going to go up

again like they did for a few years there, but we think that there's enough, the demographic wave that you talked about, Carter, there's enough young people these days that have been waiting and they're sitting on the sidelines waiting. Is the same thing? Is that similar dynamic here if I think for sure and everyone has to keep in mind farming where you have an extra buyer is if the ground's continuous or somewhat close to your proximity of your farm you may get one maybe two shots your entire lifetime or your kid's lifetime to buy it well guess what you're going to buy it if you've got the means and you got to read you're going to do everything in your power to get it bought and I'm thinking demand is outweighing supply and it may continue

for a while as we see this shift in transition to clean and green and everything else. So there's going to be people. We're seeing a lot of ag people wanting to go backwards into the channels and buy farms from an ag business standpoint. One thing that sort of came up was if you had equity, where would you apply it if you're a farmer? And it was a conversation like would you apply it to technology? Would you apply it to your farmland? Would you apply it to the co-op to help the co-op be more efficient? And every single person was like, I'd buy more land, which then says there's a new way to

corporatize co-ops and maybe change that. There are other parts of infrastructure. So there's another element of this is if everybody wants to, everybody who's got equity capital invest wants to buy that farmland, the other parts of the supply chain, how that gets funded and how that changes its productivity to make the farmland more productive is a question. And then we're getting to the point between some of our portfolio companies, and I think Carter Malloy is doing this, is like, how do we understand the real productivity of the land? Right now, the land's sort of, you've got these things, like, hey, it's continuous, I'm going to buy it.

That's a reason. But then the other thing that's going to start coming up is the productivity of this is a bit higher. We know it's higher. I can more easily get long-term contracts. Those kinds of information flows are going to increase. and differentiate the price of those, if we get into more marginal questions about price and performance. But sort of a net operating cost type of perspective is going to start showing up in the valuation of that land, like it does with commercial property.

Sorry for the non-sequitur, but as we wrap up, I just wanted to ask you, Carter, you invested in a company called Bond Pet Foods? Why is my pet food so expensive? I feel like I'm paying 30% more than I was like two years ago. Why is what so expensive? Why is Pet Food so damn expensive? All of a sudden. I have no idea. We invest in Bond Pet Food because, because we were looking at synthetic biology to create proteins, and that was a good early adopter market. So dogs are less discerning, and synthetic proteins. My dog is an early adopter.

What? My dog is an early adopter if I protein. Now, I did. I was with some friends recently, like, how can I buy a whole cow to feed my dog? I was like, what? It's like, yeah, I just want to buy, like, a whole cow and then freeze it because I want to feed my pet better. And so that is part of the market. We haven't fully explored, but people are, we treat our dog pretty well. But in the particular case, upon bond, it's the

early adopter market. Please, pet food expert, please, stand up. Reason pet food is so expensive is because you've done ships for people. That's what I said. That's probably, because people love their dogs. Yeah, have you been like into tractor supply in that whole I mean, it's a really, they sort of, why is there a tractor supply in Westchester, Westchester, New York? I mean, like, there is a certain culture of like, I need to have chickens and everything for no good reason that people do. That was a good answer. You basically just explained, you explain capitalism because you dumb shits will pay for it. Yeah.

All right, well, it's 2 o'clock. It's been an hour. This is so much fun. Kevin, Carter, Andy. Van Trump family. thank you so much for having us. We really appreciate it. I don't know if we have time for we're wrapping up. Yeah, we got any questions. Anybody have anything? What's your guys' favorite trade? Oh, I was telling you before we started. I mean, I take pride in the fact that I've made

some horrendous trades, just absolutely horrendous. I spent a decade ago, I shorted Amazon a bunch of times. That was a good one. Three weeks ago. So I have Moderna on my watch list. Anytime like a monster stock fall 70% I keep it on my watch list and I just, I pay attention to it. And I saw Moderna, to stop falling. Just stop falling. Stop going down. Stop crashing. I actually caught a downgrade. I think had a decent day. I said, you know what? It's time to buy. But I also, I keep these names on a short list. I don't, like, I don't mess around. I keep it on a short list. I'm not trying to get cut in half again. So I bought Moderna. Two days later, it was down like, I don't know, eight, nine percent. It said, eh, punt. Three weeks later, it's up like 70 percent. So

I don't know if you want to listen to me about my trading advice. Ben's a target date fund guy. This guy's the most boring. invest in the entire world. Listen, I'm a probability-based guy. The stock market is up 75% of the time. Three out of every four years on average the stock market is up. And a lot of people come into us and saying, listen, the stock market was up almost 30% last year. It has to crash, right? And it could, of course, because there's a lot of times when you have a good year and then a bad year. But there are so many instances where you have a 20% up year and a 20% up year. My favorite statistic I'll leave you with, the stock market over the last 100 years in a given any calendar year is up 20% or more.

more often than it's down. So pick any year. It's up more than 20%. More often than you have a negative year. And I think a lot of people, it's hard to wrap your head around the fact that most of the time the stock market goes up, but sometimes it goes down.

Yeah, I totally agree. I think the odds we saw a number the other day. The odds are going up 30% or about 19% and the odds of it going down 10% or like 13%. So like you said, yeah, I mean, it's for next year. It's skewed to the upside. It goes back to the psychology. I'm going to steal, this is a take from Ben.

So credit to Ben, there's no Zempick for a decision-making. with your money. There just isn't. And people were so risk-averse. You can't possibly buy now, right, after a 30% rally. I can't buy now.

Because you're so afraid of getting rugged. High prices are not bearish, at least in the SMP 500, maybe in commodities. Totally different. But an overwhelming amount of demand for improvement, for lives to get better,

for corporations to earn more money. It's a one-way street. And yeah, there are definite, you know, there's painful pullbacks and recessions and risk and scary shit. But you just got to find out, like, some way, to force yourself, to take risk, and to mitigate you being your own worst enemy.

And it's hard, right? It's easy to say. It's really hard to do. Well, we always said, and Andy, it's agree with me. All the traders. If you're bullish, you're like a cheerleader. You sound dumb and you're just a cheerleader. And if you're bearish, you know, notoriously, you sound really smart.

That guy knows what he's talking about. Yeah. The bear. The bear always knows what he's talking. Because he's reciting all kinds of things. And it just sounds, it sounds smarter. So. It's worked for John Maldon.

There you go. I agree. For your sales. Any questions? Anybody got anything? Jordan, anybody got any question? I think a couple of people had some questions on interest rates. Where do we think rates are going? Yeah, rates, 2024. Well, the panel before us was, it's funny because it was so bearish on commodity prices. That actually made me bullish on things like stocks and bonds. Because I think if commodity prices are going to continue going down, that means rates are probably going to go down and inflation is going to keep going down. And I think for interest rates, that's probably a decent thing that the Fed's probably going to cut, I don't know, three, four, five times this year. Yeah, you know, Andy and I were debating last night in the room, you know, Fed could cut, but that doesn't necessarily mean real rates are going to drop aggressively. I wonder that. Andy's worried that, you know, we have to sell treasuries.

And if China and Japan aren't in being big buyers and we're going to drop rates and rates are going to go lower, where are you going to, who's going to, who's going to, who's going to. be the buyer of the treasuries, correct? A lot of goddamn cash out there. Well, there is, but there's more debt than there is cash. I mean, just money supplies way too high. Oh, it's great. Yeah, money supplies strong. So, yeah, I guess

consensus is, what, three to five rate cuts next year? Quarter points? Well, one of the tell ones that we had going into 2023, as I mentioned in hands earlier, like, everybody was bearish. Nobody was expecting anything. And we didn't really get much from the S&P 500 in terms of earnings growth. It was basically flat up one to two percent. but multiple expansion was responsible for all of the gains. It doesn't mean the gains are fake, but, you know, less bad news is now priced in.

And so if we don't get a soft landing, and if we don't get the rate cuts, then stocks will fall, I think. So we'll see. Yeah, I agree. Well, cool. Any more, or that is? Yeah, will we see an open AI IPO this year and how do we think it will perform? Where are you guys? Open AI IPO.

I mean, their corporate governance is obviously a little screwed up. They tried to push out the founder and CEO their, what is it, of $100 billion valuation? I mean, some people seem to think that AI was the thing that kind of saved the stock market this year because it was a lot of those big tech stocks that really led the way Nvidia was up, I don't, 250%

last year or something. I don't know if they wanted to take that thing public yet. Yeah, I don't, won't pretend to be an expert on that, but it is going to be interesting what happens with the IPO market in general. Last year, obviously, it was just a really shit year by any measures, especially compared to the bubbly years of 2021. The AI stuff is going to get silly.

Michael and I had someone reach out yesterday, and it was this email saying, hey, here's my resume. I'd love to work with you guys. And then below, it's at PS, that entire email was written by chat GPT, which I don't know if it was lazy or inventive, but I think it's going to get weird out there with some of this stuff. And I don't think our minds are prepared for it. with the videos and the stuff that's going to come along,

I think it's going to screw with us. Yeah, all the deep fakes and everything? Yes. Especially with the election coming up, that's going to get nuts. Yes, my assumption is everything is fake until proven otherwise. I think you're right. Yeah, I would agree. What do you think, Carter?

I'm waiting for a candidate to run who doesn't exist. You should be all do it. The entire is, just make the whole thing up. Yeah, that could be for sure. It sort of feels that way, doesn't it? that way sort of definitely what's the consensus out there where you guys are at what who's going to be right what's it trump Biden and what do we think i am i stay very far away i think our only thing that we tell clients is because you see these sentiment indicators right depending on who's in the

way out of the rules controlling congress or senate you see one group their sentiment goes way up when there people win and one group there goes down and and we always say just you can have whatever political feelings you want but do not allow those feelings to enter your portfolio because that's a lot of time when people make the biggest decisions because a lot of it is so counterintuitive too about, you know, the stuff that they promise in their, in their campaign speeches is really what happens in terms of getting stuff pushed through and creating laws and making changes. And so our- Nobody wants to hear this, but politics does not matter to the stock market.

Like, it just, it might matter in the short term in some cases, but it just, the Fed tried to slow the economy down and they couldn't. And the Fed is much more influential on the- economy than whoever's in the White House. So market goes up, market goes down, presidents come and they go, you cannot find any back-tested way to make money off who's... If there were levers you could pull, if the president could pull a lever and say, I'm going to make gas prices going on and the stock market go up, like they would do it, right? And it's just there's almost a $30 trillion economy now. And it's kind of like turning a

battleship and it's really hard to control at this point. I think the best analogy I ever heard is a long time ago is over at the Fed, Nestor, George, we were talking. And, uh, You know, the Fed's like a 10-speed bike. I know some of you heard me use the analogy. I explain it to my kids, and I think it's, you take something complex, you make it simple. It's usually the best. I think it's like a 10-speed bike. The Fed's going to make, you know, the gears harder to pedal when they want to slow the economy down or decrease the money flow.

And then they're going to make it easier to pedal, shift the gears down when they want to expand or get more dubbish. But the one thing to watch is the guy just driving the bike, which is the U.S. consumer. if they put their hand on the brake it don't make a shit of difference what the Fed does I'm telling you if they put their hand on the brake and squeeze no matter what gear you're in just remember that and if you look the last year

if you want to look back we were all looking at the economy and all like they were saying and talking economy and Paul did it didn't make a shit of difference the consumer didn't put their hands on the brakes and didn't squeeze the brakes hardly at all Is anybody making their vacation decisions based on who they think is going to be in the White House?

To your point it's consumer makes up 70% of the economy economy. That's the thing. That's it. If people are going to keep spending money, and if there is an Olympics of what we do best, obviously we're going to win a lot of sports in summer Olympics. Spending money is the thing that we do best out of any other country. For sure. This relates a little bit back to the technology strategy stuff. So the more that someone can enable their own productivity gain through these tools, the less macro has an effect. And it's sort of an open topic. Somebody sent me a note saying, like, can you, answer the question how, in my farm, I should, how much I should allocate to new technology.

And I don't, that's been bugging me for the last few days and, and I'd love for people to give me feedback on how they make that decision. But I think that to equip yourself in today's economy, you have to be better at making the business decision about how you leverage technology to improve productivity. And if you master that, and when I look at like generational change, I normally find the next generation is really, that's a thing. Like, they're better at, like, Braden. I think there's some story, maybe he's Braden here. Like, when he's 13, he was, like, fully blown with blackberries and everything

running the farm, and Ben was sort of like, what are you doing? But the next generation's ability to do that, and I think for everybody who's running farm with all the technology coming down, if there's something we can do to help you better make that decision. We want to be doing it. I'm not sure how you're making that decision now. And that's something that we're going to work on this year is make it easier for people to make a better decision on technology adoption. Cool. I want to do one thing. Andy, what's your favorite trade going on it? Not rice. I bought some natural gas this morning, not to ease it out. But tell the audience why you're bullish natural gas. Well, I'm bullish natural

gas. It reminds me of uranium in 2019 when we're trading at 20 bucks, and it was below the cost of mining, and now today it's 65 bucks, and it's profitable. And so it's kind of found a balance. Can it go higher? Sure, but the big move's been made. Natural gas is a completely similar beast. You know, a big picture, it's way too cheap. In the U.S. we're sitting here at 250 futures. Europe's at $8 and parts of Asia are at $20. You know, on a molecule basis, U.S. natural gas is the cheapest supply of energy on the planet. It's the equivalent of $18 a bushel crude and, you know,

crude oil and natural gas in Asia is $100 plus. So I think that, you know, the problem is that you have a finite amount of demand locally, and it varies as you go into colder winter seasons. You also have a limited amount of export through LNG. Right now there's 11 billion billion billion BTUs that are exported a year. We had a snafu last year that took one of the plants down. This year, or in the next three years, in North America alone, there's going to be 13 billion million BTUs of new capacity coming online.

And that's a game changer. I mean, you can buy it for $250, you put a dollar into converting it to liquefy it and ship it. You can turn on the printing press and let them roll. You know, I think that we're not really increasing our supply of natural gas. We're just, you know, prices reflect. We have an overabundance, but we're not prepared for that kind of new demand that's going to come on with these new plans starting in the next eight months all the way through the next 36 months. of up to, you know, doubling our current capacity.

So, you know, if you get a cold winter this winter, and there are forecasts out there for the Eastern Corvill to be above, or Eastern U.S. to be above normal temps in Europe as well, and there are others against that. But if that were to occur, by the spring, you could be looking at $6, $7, $8 natural gas. And I can't think of a commodity out there that has the capacity to double, triple, or quadruple from here.

This does. And if it doesn't happen and we have another, you know, normal or a warm winter, then it's just being delayed, but eventually we're going to go a lot higher because of this new capacity that's coming online. And at a minimum as a producer, I'd be a big buyer of covering all my natural gas needs out as far as I can. The downside has very limited potential to it. That's the way I see it. Andy, for that trade, would you be in futures or some of the public equities or what exactly? How would you trade that? I'm pretty, I'm pretty much stick with future. So that's the way I look at it. But I think there are going to be plenty of

equity companies that are going to benefit dramatically from this. And, you know, I leave it to guys like you to figure that one out. Cool. Thanks, everybody. Appreciate it. Thanks. Thank you. Thank you. Thank you. Thanks again to Kevin for having us on the stage. It was really fun. The coolest part about the stage is he had this huge desk fit for a king, I guess, or I don't know what it was, but it was a very cool setup. Everyone there was super nice. We even got some free swag from the ag swag store which is a store that they run like this stuff so thanks all for having us there.