Chit Chat Stocks - Anirban Mahanti - Cloud Adoption & Capitalism Without Capital

Episode Date: May 11, 2021

Anirban Mahanti joins us this week to discuss cloud companies and capitalism without capital. Anirban shows off his knowledge of the cloud and also breaks down what capitalism without capital means. Listen in after the interview to hear Brett and Ryan discuss today's show notes and everything else from this week. Let's go! Follow Anirban Mahanti on Twitter: https://twitter.com/7amahanti?s=20 Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Subscribe to our YouTube channel: https://www.youtube.com/c/ChitChatMoney Follow us on Twitter: https://twitter.com/chitchatmoney Visit our website to see more from your hosts Ryan and Brett: https://www.chitchatmoney.com Email us: [e-mail] Timestamps Interview 1st Half | (2:15) Interview 2nd Half | (18:36) Berkshire, Hindenburg & more | (42:44) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today is Tuesday, May 11th. Today we have an interview with Anirban Mahanty, lead advisor for 7investing, our friend. I guess we can call him our friend now. And we talk about cloud computing. We talk about his background. It's a lot of fun. Any highlights for you? Yeah, you can see why the team over at 7investing was so excited that he decided to join them as a lead advisor. We talk about cloud computing, which he's an expert in. He has a PhD in, I'm forgetting what his project, oh, video streaming was his project that he did his PhD on. And, yeah, I mean, he's just an expert in all things IT, all things technical. You know what I mean? Yes.

It was a great. A big background in academia, which bodes well, I feel like, for investors. Yeah, for the type of high-tech stuff that he likes to invest in. Overall, learned a ton. Definitely. That's all I can say. I learned a ton about the industry as someone that isn't an expert about it, and I think anyone else will. Okay, and before we get to the interview, we have our sales pitch. Sales pitch time. By the way, we're raking in the sales, so keep them coming.

You're paying for yourself, your own subscription there, when you subscribe to 7investing using our code CCM. And you're going to learn why 7investing is worth it with today's interview. So feel free to use our code. You get $10 off. I think we describe what they do more than enough times on here. But yeah, if you want to see Honor Bond's real picks, what he's investing in, $10 off with code CCM, you can check it out. All right. Without further ado, let's get to the interview.

Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guests is not formal advice or a recommendation.

Now, please enjoy this episode. All right. Today, we are welcomed by Anirban Mahanty. Am I saying that right, for starters? I think you're saying that right. Okay. And you are a lead advisor for 7investing, our flagship sponsor and friends of the show. So before we kind of dive into your strategy and some of the topics we want to discuss, why don't we talk about your background? So what drove you to investing? and sort of what fields were you in at the start? Cool.

Okay. So I am a computer scientist by training. I have a Bachelor of Engineering in computer science, a Master's and PhD in computer science. I was basically a researcher. My PhD thesis was on video streaming, if you believe it. That basically gives my age away. That was written in the year 2003, 2004.

So, you know, I'm from an academic family. Like, you know, my father is a professor. My brother is an academic. I was an academic. So I love, like, cutting-edge technology and like doing the research, which is, you know. And that took me different places. I studied in Canada, worked in Canada, then came back and, you know, worked in IIT Delhi in India. and then from there we came to Australia to work at National ICT Australia

which is essentially like a research lab set up by the government of Australia sort of private-public partnership sort of format and you know when I was in Canada I was doing some investing but not really like it was buying basically mutual funds and then I didn't do anything in the intervening period when we moved to India so I sort of missed the GFC in many ways which was very interesting You know, for me, the GFC didn't really happen, which is not really a good thing to say

because it's a good experience to have for the GFC to happen. And then when I got back here into Australia, I thought, you know, now we're in that stage in life where you kind of need to put some money to work to start building, start to build a sort of nest egg for the future. You know, we had a daughter who was like at that time about like nine months or six months old or so. She's now 12.

And that, you know, was an impetus. You know, we had more stability in our family, which meant I should start looking to invest. And I got in, you know, so I looked into investing. And like most people here in Australia, I was looking into a lot of speculative stocks, mining stocks and things like that. That never made me much money. And the interesting story is I have a very good friend here called Rene. He used to work for Oracle. and he

you know when they said you know what why are you investing in these mining stocks when you have a technology background you should really

be looking at tech stocks and I said oh that makes sense I can invest in Netflix because I kind of understand what's going on there and it was sort of like

you know it was like it was a light bulb moment in a way which I felt I felt really stupid about it because I really hadn't thought about

that angle at all largely because you know investing overseas from Australia seemed like a big deal you know you have to open an account.

A brokerage account was hard to open. You know, you have to transfer money. Foreign exchange is a big deal. But it's never a big deal if you want to try. So he got me started and he said, you know, hey, these are things that you should do. He mostly does ETF investing, but he's a good investor. And, you know, so we started sharing ideas.

And that's how I got interested. Along the way, I found The Motley Fool, which was, you know, which told me, gave me a very different take on what investing was all about, right? and a very common person take on how should you get around investing. And that got me really interested. So I was doing my research

and I was investing on the side and I was buying the companies that I was using every day, like things like Apple and Netflix and Amazon, the stuff that I was working on. Like if I was working on distributed technologies on the internet,

then it made sense to actually look at Amazon and maybe own some Amazon shares because they were into the cloud at that time uh you know early in the cloud journey so i was doing that and there came a point where i thought i've done research for so long i've got you know got written all these papers done you know graduated students supervised uh you know postdoctoral fellows done research grants got papers that got citations i felt like okay i've done that let me try to do something else and you know um so i wanted to get into investing as a full-time gig and i applied to

Motley Fool for a job. First time, I actually didn't get it. The second time, actually, somebody was good enough to say, okay, we'll give you a break. That was Joe Omega, who now runs Lakehouse Capital, which is a Motley Fool subsidiary, actually, here in Australia. He used to run Inside Value at that time for the Fool. He was looking for someone with a software type of background. That's how I got into the pool. I was in it full-time, learning what professionals do and applying what I knew from my background towards investing. That journey continued for a long time. Basically, I became a full-time investor in 2015. That's not that long If you think about it, maybe six years, seven years ago, it made the switch.

Again, it's an interesting life experience for me, having the switch to working for a completely different industry, completely different type of job, but very fulfilling because of the impact you can have by working with a different set of people and try to help a whole different community. It's very different from working from academics to going and working in finance, for example. Right. And then how has your strategy evolved since you started? And I guess how do you, you know, when you're evaluating what kind of recommendations, picks to make for seven investing, what are you looking for?

What kind of analysis are you doing when looking at companies? That's a great question. So, yes, you know, evolution for me has been gradual, right? So if I have to think about, like, initially, like most investors, is when I was investing very early on in the game, I was looking at all these things. Oh, I'm going to look at PE ratios and I want to buy this thing

which has a PE ratio of like 15 so that it is not too expensive and things like that. And that often turns out to be the wrong strategy. I mean, because if you're looking at the most basic piece of information, then everybody has that piece of information. You have no edge, right?

And investing is all about trying to find an edge. so um so there was that piece which then sort of said okay i shouldn't be looking at you know i basically i shouldn't be a screener investor like you know where you sit on a um on a tool and you screen and then you land up with ideas uh at the same time i sort of you know i then sort of made a switch to okay i want to look at well-run big businesses right and stuff that i understood so And that works really well. Things like Apple and Netflix and Amazon, that works well. But along the way, what I sort of also discovered, and this was sort of a light bulb moment for me,

is that one of the things I discovered is almost anything that I had seen that is important in academic literature, and I'm just talking about the computing sort of literature and the stuff that I was familiar with, You'd find that there's about a five-year lag between when the academics are talking about it and when those technologies start finding their way into products and companies actually leveraging them for the win. In the late 90s, early 2000s, streaming was a big deal in the academic literature. We were solving all the critical problems that we thought were important problems from a technology point of view.

If you look at that period of time, you would realize, if you go back and you see, Netflix at that time was really a DVD player, right? It was really – no, I shouldn't say DVD player, but it was sending basically DVDs to people, right? It was not really online yet in that form. I also distinctly remember, as an example, in 2005, I had a student come to my office. This was in Calgary. She said to me, I had given her something to work on machine learning and network traffic

and machine learning. She came to me and said, how about studying YouTube? This is 2006. She's saying, let's study YouTube traffic. I thought, that is great. Let's study YouTube. That's actually one of the most impactful papers we landed up writing, generated 1,000-plus citations.

One of the first people to actually publicly study YouTube traffic got us a lot of it. But, again, that sort of shows that when people are talking about that stuff, that is the early sort of Web 2.0 evolution, the Web 2.0 just starting to take shape. To me, that sort of connected these dots and said, okay, these things that people today are talking about these Web 2.0, like Facebook and Pinterest and things like that, this is really Web 2.0 evolving over that time. We were talking about those things in 2005, 2006. That became sort of my focal point that you can find a lot of ideas that are in that sort of stage of evolution from the literature. I've been leveraging that, and that has helped

me sort of move into finding sort of small to mid-cap companies in the technology space. a great example I can give you is Tesla. So you think about what Tesla is doing. Forget about the cars and just think about energy. They're really basically an energy company making batteries, right? But I remember we were, you know,

in the literature looking at things like vehicle to vehicle communication. And people were talking about maybe even seven, eight, ten years ago about how you could have electric vehicles and they could have energy storage. And that actually, energy storage is

storage that actually can move from one location to another and can actually act as a source of energy delivery, not just as an energy consumption, right? So, right now, you think of electric vehicles as just, you know, you feed and then you consume, but they actually can become things that move around and then can actually become supply sources as well, right? Not just a consumption source, depending upon, again, usage. So, all of these sort of ideas exist, and the best minds basically take these ideas and they commercialize it. And if you can just find those companies that I have sort of just started commercializing those ideas and generated revenue. I think you can find a lot of ideas early enough for big multibaggers.

That's sort of where I've changed my strategies, which I look for companies that are some billion-dollar revenue, typically, but growing really fast, that are sort of at the edge, what I call not leading but bleeding edge of where the world is heading to. So that's how it has eventually changed, and it's a riskier approach to investing, but it can actually work really well if you're voluntarily tolerant and take a long-term horizon. Yeah, and for you especially, since you have the expertise in a lot of these industries, for, say, a generalist like us, a lot of people that kind of dabble in those high-tech things, people talk about that with biotech as well. You can get into trouble if you don't understand how these businesses work. That is true. Here's the thing. I really think that you don't have to actually be an expert to invest in these areas. I think the only advantage is it's a little bit of temperament. I think people get into trouble because people sort of leave stuff. People exit stuff on the first sign of trouble. The first sign of trouble could just be volatility. The stock is going down.

Stocks go down all the time. It scares you out because you just don't understand what's going on but that is a little bit of it's it's not necessarily about knowledge it's also about temperament right it's just i think people um you know wanting to be right more often than they need to be i think right but most people can you know figure these things out is what i think like it's not i'm not trying to say that i think i have some special uh special powers i think whatever i have i might have a little bit of edge in terms of understanding okay what is happening But I don't think it's something that deters other people from actually doing what I do if they just, you know, want to study it. And a lot of people, you know, you can actually, I think, FinTwit, for example, is a great place, right?

You see a lot of people who not necessarily are experts, you know, technical experts in certain areas, but they're doing so well in that certain area that they've decided to focus on because they are looking for that piece of information that other people are not focusing on. And then taking that sort of long-term horizon. And I think that's, you know, part of democracy in many ways, democratization of investing. I think that's fantastic. And when we were explaining or when we were sort of messaging before this, something you said you were a fan of is capitalism without capital. I thought that was pretty interesting. So do you want to kind of explain? Yeah.

And then why you like it? Yeah. So I'm forgetting that. So this is a book that there's a, I forget the name of the authors, but people can look it up. It's a book called Capitalism Without Capital. It's written by some folks out of the UK, I believe. They sort of touch upon this thing that the world has changed such that now, to build a company, you don't need humongous amounts of capital. The example would be that if you think of the great companies of the 20th century, like if you think of General Electric, it would need to build plants to build these huge turbines and things like that.

They build turbines for electricity generation. They build plane engines, right? These things require huge investment. Whereas, if you take a new-age company that's a software company, basically, it needs people. So, in many ways, the investment is now intangible, right? You need to find talented people, and you build a software once. So, there's a capital investment, human capital investment up front. But once you've built that thing, you can duplicate it an infinite number of times, right?

So that's basically, you can keep growing without capital. And I think that has changed the game in investing big time because a lot of the things that we consume today are intangibles, right? If you look at what we consume every day, we consume music, we consume videos, we consume NFTs, we consume digital coins, everything that we're doing now. People want to buy in-app stuff. It's all digital, right? And those digital things have infinite scalability.

That's what I mean by that. And I think that book is interesting because what they're talking about in that book is they have a claim that the way government bodies measure things like GDP no longer work because it doesn't really capture intangibles properly, right? So, we're used to measuring things, you know. So, their claim is that, you know, at a high level, the reason GDP growth is like 1% or 2%, it's probably not that. It's actually much higher than that.

There's productivity gains happening, and there's all sorts of things that we're producing that we just don't capture because our methods are not designed to capture that. And that's, I think, what we see in a lot of these new-age companies, right? They're all about intellectual property and scaling. Yeah, that's fascinating. I looked it up. It's by Jonathan Haskell, right? Is that the correct one?

Exactly. Just in case anyone wants to find it. Yes. All right. Before we move on, we're going to talk about cloud computing. A lot of questions on cloud. We've got an expert here, so we've got to ask. But before we move on, we're going to hit a quick ad break,

and then we'll be back on the second half. Cox Panoramic Wi-Fi includes advanced security to help protect all your connected devices. You'll get real-time alerts. Oh, like this one, so you don't have to worry about malware. Or when your kid downloads a song from a shady link. And now all your computer can play is... Red color, red color, where are you?

All blocked. Thanks to advanced security included with Cox panoramic Wi-Fi. Advanced security must be enabled in the panoramic Wi-Fi app. Restrictions apply. Welcome back in. Next, we're talking cloud. We have a lot of questions. Yeah, we had to cut them back just for time.

And it's something I feel like is thrown around a lot, but not everyone has quite the grasp on it. So one of the questions I kind of wanted to ask you is where you think we're sort of at in cloud adoption. I guess maybe if you could give us an inning. So if it's nine innings long, where do you think we're at? Well, I love this question. This is one of my favorite questions, actually. So I'll answer it indirectly.

If you talk to people, people will say things like about 15% to 20% of workloads are in the cloud now. And by workloads, workloads are a very broad term, right? The workload could mean things that you used to process in your data center or in your infrastructure that you had locally that you moved to the cloud, or it could mean things like just your data that's sitting in the cloud. The workload could mean a whole bunch of different things. Let's call it just processing and storage. People would say that 15% to 20% of that is in the cloud, but I think that sort of misses the boat. One way to think about this is Gartner has some data which would say that about $270 billion was the spend on public cloud in 2020.

That's expected to grow by about 20% odd in 2021. So, you've got $300 billion-plus. Now, contrast that with how much IT spending is there. IT spending is on the tune of like $4 trillion. dollars right and i think that sort of gives us a metric right so a lot of that it spent should actually go to the cloud no not everything right people are still going to buy computers and they're going to have you know whatever computer they want they're going to have their um you know handhelds and things like that it's going to be physical stuff that people buy but a lot of that

should go to the cloud so that that gives us a sense that's very very early stage and the the you know i'll quote an expert and so if you're quoting me i'll quote a bigger expert uh to give myself some validity so andy uh jesse just became ceo of amazon later to become ceo of amazon i don't exactly follow what's going on there but it's all good um he he was the ceo of amazon web services right and he when he's welcome in his internal letter to which of course got leaked um to employees about aws people saying that they're bringing back adam i believe slips slips key who was the Tabulo CEO and president, and Tabulo got acquired by Salesforce. So he's basically – and he used to be in Amazon, AWS.

So he's basically coming back to his home and just welcoming him. And, you know, one of the things that Andy Jassy basically indicated is that, according to Andy Jassy, 5% of the total spend that – or 5% of stuff that should be in the cloud are actually on the cloud. So if you think about it, if you put all of those things together, We're very much in the very, very early innings, first phase. First innings, one out of nine is where I stand. You just see that.

If you look at the big cloud spending and the growth at scale, if you think about Amazon, I think Amazon is on a $54 billion run rate just to annualize what they were doing this quarter. You think about the growth, 30%. how you can't grow at that rate from that scale unless the opportunity is huge right so i mean there's a lot of things that say that this is still very or very very early days yeah there's that friction to that it's not going to be like some viral thing like a say like facebook or something was back in the day where there's such a cost to transition where it's not like every

company is going to be able to do that over overnight am i getting that correct or no absolutely that's another that's that's a brilliant brilliant observation so yes there's be a huge amount of friction. If I am a bank and I've got my own data centers and my own infrastructure, I'm not going to tear it apart now. I might even be very, very skeptical. Organizational reluctance is a big deal. Those people who are managing their IT infrastructure locally don't want to lose their jobs. They would probably be happier if we had a hybrid arrangement where you can run cloud software locally, but in your own data center, in your own infrastructure, and then that sort of talks to the cloud, that's the way it's going

to happen, and that's the way it's happening. Yeah, there's going to be a huge – there's going to be just steady progress. I think what's going to happen is people are not going to throw new stuff, buy new stuff locally for their infrastructure as things require upgrades. People are going to move to a cloud, and this is going to just take time. There's going to be natural growth in the industry as well. So I think, yeah. Interesting.

Is there any kind of sub? I mean, cloud computing is obviously a huge category. So is there any sort of subcategory that excites you more than others? Yeah, okay. So the way I think about this is I like, you know, from my days as a computer scientist, I like to think of things as a stack, protocol stack, or in abstractions, right? So, the way I think about sort of big cloud providers, I think of them as the equivalent of the internet, right?

So, the cloud providers, the infrastructure as a service providers, they provide the building blocks for doing things. Exactly as the internet provides the building blocks for… The internet provided the building blocks for things like email. Then it allowed the building block for things like the web. It allowed for things like peer-to-peer file transfers. BigTorrent, for example, was a big one back in the day. now then it allowed for you know then it allowed for mobile to be developed and a lot of things

like you know facebook to you know evolve right you keep layering on the top so i think if you think about cloud i think the the big infrastructure providers they are like the internet equivalent and i think what you're going to get is on top of that so what what i really try to focus on is who's innovating some of the platform level right what applications are you developing that people really need, and that is going to get tied into people's workloads. So, my thing is, as a service is the big deal, and it's not necessarily software as a service, right? It could be network as a service, it could be database as a service, anything basically

as a service that runs on top and makes people's job easier, better, allows them to do different applications, new, novel applications. That's, I think, where the big magic will happen. of course the infrastructure players are going to grow because of that because you're going to build on top of that right so infrastructure players have a natural tailwind that's one way of playing it but i think it's just um you know like if you think about the flow of dollars right the the internet did not make any money right so the people who invented the internet you know the the climb rocks of this world they did not actually make any money people who built stuff

on top of the internet table. Now, that happened for various reasons. That could be another separate topic altogether. But I think the cloud providers will make money, but I think the more economic benefits that accrue to people building on top. So that's at least what I think. Again, I could be wrong.

No, that's fascinating. That's fascinating. Looking at the big three cloud providers, we see companies like Google Cloud. They're touting kind of their machine learning and AI competitive advantage, obviously because they're associated with Google. They have that expertise.

and how they can acquire customers, do the big three cloud providers have different niches they target or are they all just going after similar customers? Again, that's another superb question. So at a high level, I think the answer is that they're basically very similar. So the infrastructure providers

are basically infrastructure providers. Of course, they do other stuff. They have platforms also that they run on top of it and you can subscribe to those platforms. But they are very similar. I think there's a little bit of history here. So AWS had like the longest – you know, AWS has the largest share, right? And they have the largest share because they started first and they sort of had – you know, one of the things that Jeff Bezos will say is that it's rare to have two years of lead time in an area.

AWS had like five years or six years. That's a huge lead time in a competitive – you know, in a free market, you're not supposed to have five, six years of lead time, like where your potential competitors didn't even wake up. They built stuff up, but the other big guys, like Google, for example, they have an engineering talent. They already had data centers across the world. You can transform those into GCP, which is what they've done. If you think in terms of the services they offer, they're very similar. They have specialties here and there.

If you are, as you said, wanting to run machine learning algorithms and you want to use the the TensorFlow libraries, and now that's like a Google speciality, it's not that you can't run it anywhere else, but people would first – if you're thinking TensorFlow, you're going to think GCP. I think that plays a role, but I think there are other things that are more important, and that would be sort of a go-to-market strategy. If you think about it, talent is not a limitation for you because you're a big player and you can spend and build infrastructure, you can price it competitively, then the go-to-market

strategy really matters, right? So Amazon, I think, in the beginning was very hesitant on hybrid cloud strategy, right? Well, so if Google went and said, okay, you know, GCP said, okay, the Google cloud platform said, well, we are happy to support not just hybrid, so we'll allow you to run, enable you to run the entire GCP stack locally. Not just that, we'll also allow you to be multi-cloud, right? That sort of helped them build their way. Now, if you are an enterprise software provider, then you have like in a way of sort of, you know, winning enterprise clients.

So it's just really about go-to-market strategy. AWS had a big, big lead because of developers. Developers just loved it, right? And that was how it got uptick. So I think right now I feel like I don't think that they have any particular edge, each one, but it's just the go-to-market strategy. The market is big and you can't win everything. And then you can't do everything, right? I think I'll use an Elon Musk line.

I think the main limitation for progress is basically a lack of quality engineers. I mean, if you want to develop everything that you want to do, you need quality engineers, right? The way I explain this is there is nothing – like people say, oh, that company is a leader in AI. I would say that Apple could reproduce everything that Google does tomorrow if it wanted to. Money is not a problem. The main limitation is acquiring the talent to actually do it and then basically putting

it together, right? So, I think that's the limitation in terms of talent and sort of your go-to-market strategy which results in what is important is the key differentiators. The final point I'll make is the go-to-market strategy also aligns with things like, if I'm a retailer, do I want to put my infrastructure on Amazon because Amazon might compete with me, right? And if I'm a health company, do I want to put my stuff on GCP? Because, you know, what about data privacy?

So I think each company has a different niche that they can, you know, sort of, you know, use to leverage for sales. I think that's really what's happening there. Is there, I mean, how, like once someone's on a certain cloud platform, do they switch off or is churn like really low? Is it kind of too – you get too intertwined with a certain cloud platform? So, I think once you're in a platform, you have spent the resources to put things on. I think churn is low, right? I think what's increasingly happening, though, is multi-cloud. People basically would say, well, why should I have everything on different parts of the organization?

I'm going to use something from here, something from there because that allows me more flexibility. It just – I can also pitch one vendor against the other vendor and try to get a better deal. So, I think it's a multi-cloud is really what's happening. But these things, if you build on it, it's a lot of investment. So, you put the investment in. I think you're not going to – it's pretty sticky that way. I think it's pretty sticky. And as long as these people keep innovating, I think it's just hard.

It's very difficult to steal users by doing the same thing. You have to have a go-to-market strategy. You have to offer something that's different that they can't do on one platform, some advantages and so on. That's where innovators, I think, come into play. If you innovate, you're right. Again, the question would be, well, why can't they do it? Again, ultimately, everybody has a focus and everybody has limitations in terms of how many engineers they can hire and how many quality people can you have and so on and so forth, right? So, that's where really the beauty of big market is that a lot of people can win because it's a big market with a lot of innovation potential.

Right, right. And you answered this a bit, but how would the big three cloud providers get disrupted? Is it just going to be small attacks or is that moat just insanely strong? Well, I think they're more insane. These are like big companies, right? I mean, if you take a look at the balance sheet of, say, Google, right, one of the biggest things I think that is fundamentally, I think, sort of different from like maybe 20 years ago is none of these companies have a huge amount of debt. They don't need a huge amount of debt. If they have debt, it's basically they've got debt because they wanted to, you know, juice their buybacks or something like that.

Right. Right. And they had some issues with, you know, accessing capital. But these companies don't need a huge amount of capital, and they don't have debt, which usually gets people into trouble. So, I think they can continually innovate. So, I think it's very difficult to disrupt them in their game. So, if you want to disrupt these people as an infrastructure or service provider, I think it's very difficult. Some people can, those people who have a large footprint.

If somebody like, say, Facebook decided that they wanted to build an infrastructure as a service play, if they spent a lot of money and effort, they could. But not everyone. Maybe Apple can, but not everyone can. Not everyone has the potential and ability. I think the key is not trying to disrupt these people, but one of the things about innovation is that the best way to win is to innovate somewhere else. You're not going to innovate and out-innovate Apple in smartphones or wearables or device technology or anything like that.

You can out-innovate Apple only by building something completely different that is not necessary. Those are very – I shouldn't say necessary, but that is something that people haven't yet imagined that they need that would supplant what people use today. That's the type of innovation that can happen that threatens them. But again, these companies are so big with so many lines of revenue that they can miss a thing, a big thing, and they can still be okay, right? So, a lot of these big companies, Apple, for example, these are in such a fantastic sport that people just underestimate what they can do, and they always think that it's big, and therefore, it's ripe for failure.

But these are not the same big companies as yesteryear's big companies. Yeah. You look at all the big cloud providers and they're all big tech. It just automatically makes me think you can't get in this industry unless you have tons of capital to throw at it, unless, I guess, you look at it from a different angle. Would that be right? Exactly. Exactly.

Exactly. You have to innovate. You have to find an innovation angle to out-innovate these people. These people are always trying to innovate and get into other things just because their Their revenue base is so big, right, for them to actually get growth. They need to, you know, like Apple wants to make maybe cars because you can only sell so many smartphones, right? That's, I think, the dynamic at play here.

So it's a very interesting time to watch these companies because it's a very, very different dynamic, I think, to like, you know, what ExxonMobil was or, you know, General Electric was or one of those companies of the previous generation that were the big companies. i think the dynamic has changed right so yeah they're in definitely a better competitive positioning um than where x on mobile or ge was for sure uh ryan yeah yeah i guess this question is a little unrelated but we kind of you sent this over before but talking about tech valuations

broadly um i guess where do you see them uh i mean we just talked about how we think there's huge runway for growth. So, I guess, has the money come first or is it kind of too much of a premium valuation or just what do you see? I mean, the valuations are premium. If you're paying 30-time sales for stuff or 40-time sales for something, they're expensive. There's just no doubt about that. I think the way I think about this is a couple of different things. If the runway is big and huge, I think you can still win from current valuations. I think as long as the company delivers, I think you're going to be fine. If the company doesn't deliver, you're going to lose. But that's always the case with investing. I think the other thing that is

very important, I think we have reference bias all the time, right? The way our brains work is that we have reference bias all the time. So we think about valuations, we look at all the current S&P, PE is blah, blah, blah, whatever, let's say 20, right? And that is much higher than it has been historically. But interest rates have also never historically been 0%. And I'm talking about the Fed interest rate. I mean, worldwide, everyone has interest rate basically at zero and promising it's going to stay at that level for a long time. There is no inflation like has been in the past. And that possibly is because we are maybe importing deflation. Because globalization is a relatively new phenomenon in that sense. I mean, you're basically buying the

cheap stuff from everywhere. So how are you going to get inflation? Inflation basically means product cost has to go up. Stuff has to be more expensive. But if you're buying the cheap stuff, I'm going to buy the shirt from India and the TV from China, you know, and then the TV from China is more expensive, I'm going to buy it from, you know, Vietnam, it is really, really difficult to see how that, so I think those are the big differences. I mean, you know, 5%, I think, was like an average Fed interest rate, like, if you look at like, I don't know, 70s onwards, right, until like, maybe the 2008. So that's a big difference.

I think we have to factor that in. But the – yeah, so, I mean, would I be happy with lower valuations? Yes. But if I have to think about returns, I try to think about what my alternative asset classes are. And I don't have very many – you know, I can't buy government bonds because they're going to give me absolutely negative returns. I can buy junk bonds and I can risk it, or I can buy assets that produce something and, you know, hope to be better than that, right? And I think every valuation is stretched in that sense, right? Whether you're buying like a well-established company

or a new company, they're all high valuations relative to what they've done in the past. But I think there's a reason for it. So I don't worry too much about it is the way. And, you know, and I think it works for me because I'm still putting money into work, right? So, you know, with the valuations high, I buy some. With the valuations low, I buy some.

When there was pullback, like today, I tweeted out, I bought a bunch of stocks. And, you know, it's zero brokerage. You can buy a little bit of a lot of the things that you like and great. Yeah, it's really easy to dollar cost average currently, or at least compared to the past.

But we'll hit the wrap-up questions. These are the ones we ask every interviewee. First one, what's one financial saying that you disagree with? One of the things, I don't know who this is attributed to, but this is used quite often. Nobody ever lost money taking a profit.

And I think this is probably the worst piece of advice you can give Because, you know, if you take profit every time, like, you know, Netflix, imagine Netflix over the last 20 years, you took profit every time it went up a little bit, you know, let's say doubled. That's how you miss the multibaggers, right? I mean, so, you know, you absolutely, and the other thing, the related fact is that, you know, there's a skew in the return distribution, right? So there's a Pareto distribution for returns, 20%, maybe 15, 20% of the stocks generate maybe 75, 80% of the total returns. If you keep selling your winners all the time, you basically are ensuring that your returns on average are going to be worse because the big ones, you've sold and probably you kept your losers around. Absolutely, stuff that's not working out, it's okay to pull the weeds, but I think you should water the flowers, not clip them every time that the rose starts budding outside.

It's also, I mean, and it gets hard, like if you, you know, if you really like a company and you trade it when you make money, I think it's really hard pill to swallow to get back in at a higher price because you're going to anchor to it. All right. Last question then. What's a piece of advice you have for anyone that's considering a career in investing? A career in investing, I mean, it's a great career. So what would I say?

I would say first, you know, focus on learning the basics. I mean, it's really useful to learn the basics, read the books, read Warren Buffett. Even though I don't invest in Warren Buffett, I disagree with a lot of things that he would say right now, but I think there's a lot of knowledge that you can get from Buffett Munger and other people who sort of speak, who basically have demystified the basic structure and operations of investing. I think that's very, very important. The other thing I would say is that always be learning.

That's true for actually anything, right? As human beings, we should always be learning and trying to learn new things. And the final thing is investing. I think you have to be humble. You have to be humble to accept that you're going to be wrong and you're going to get things wrong and you're going to look like a fool. That's important. And the final thing I would say is be flexible and be willing to adapt, right?

I mean, what worked in the 20th century is not going to work in the 21st. What works in the 21st is not going to work in the 22nd. And I think even in shorter time periods, maybe like 20-year time slots, 10-year time slots, things change. So, learning and being flexible and adapting is really, really key. So, those are some of the things I'd say. No profound advice there. No, it's okay. It's okay.

Well, I think that's all the questions we have. I'm all good, yeah. Oh, where can anyone find you? Yeah. Yeah. yeah so uh yeah so so you know i'm on seven investing all my picks um are on seven investing now so at seven investing is a great place to follow us uh you can follow me at on twitter at seven a mahanti um and that's you know i will be i i'm try to be on twitter and i try to answer

even if people send me you know dms i will answer them and if somebody asks me something i will answer them um so yeah twitter is a great place i think twitter is underrated from what it can deliver i know you guys are on twitter right i mean it's again twitter is really underrated and you know everybody who's interested in investing should really be on twitter there's a lot of cool stuff happening on twitter oh for sure and uh and if you want to see his pics feel free to use that code yeah we'll have to plug that yeah ccm for a discount but uh yeah thank you for spending the time uh appreciate it thank you guys for having me welcome back in uh thanks again to honor bond for coming on really appreciated it uh next we have

our show notes i got some good stuff nothing too exciting kind of funny stuff there wasn't big news this week outside of the dumb uh well i wouldn't call it dumb especially there was a lot of crypto news i guess in that wild world that's going on right now but in real like the investing world Really kind of a boring week, but we'll try to hit some stuff. There's some earnings, but eh. Yeah. All right. Well, my big story this week, huge.

Berkshire is dead. This week, major indexes or major exchanges indicated that Berkshire Hathaway's Berkshire A shares stock dropped more than 99%. I've known this thing was a fraud since the Solomon crisis or the Solomon debacle. So what did you think when you saw this? Yeah. I mean, they were anticipating it, right? Yeah.

Because the NASDAQ or whatever the exchange was couldn't count up that high. Kind of impressive. I bet they were smiling at headquarters. Yeah, I think it is ironic that tech couldn't handle how valuable Berkshire was. But apparently the exchange computers have a limit to the maximum number of digits they can handle. This was written about in the Wall Street Journal a few days before. For some reason, because of the way they communicate prices, the NASDAQ has a maximum price of $429,496.73. That's the most it can handle.

And Berkshire's A shares surpassed that, I think, last Thursday. And when it happened, a bunch of the exchanges showed Berkshire's stock dropping 99%. Yeah, it divided it by 100 or something for some reason, right? Made for great meme content. Yes. People were saying this is why you don't invest in risky assets like Berkshire. That's why you only invest in Dogecoin, yeah. Apparently, I think the Wall Street Journal coined it, the stock market's version of the Y2K bug.

Pretty funny. I'm not really sure how this ended up getting resolved, but it looks fine now. Question, this is pretty much unrelated, but I saw it this week on Twitter. I thought it was kind of interesting. Do you think if Berkshire was what it is today, back in 1956, So when Buffett started his partnerships, Buffett would have owned them. Like if Buffett early on was pitched Berkshire. Nope.

No way. Yeah, I agree. 100% no. He'd be in SPAC arbitrage. Yeah, he'd be in – yeah, yeah. No way he would be in Berkshire Hathaway. I mean there's nothing wrong with it, investing in it, but it's just different styles.

He was a lot more aggressive if you read the history. He was in the nitty-gritty. Yeah, yeah. He was a lot more aggressive, taking huge positions and things that were, yeah, arbitrage, stuff like that. Or even just really, I guess, he was an all-over, all different types of styles. And, again, it's nothing. I think Berkshire Hathaway is not a good investment here. I have no view either way.

It's just not the style he would have had when he was younger. Yeah, agreed. When do we get to a million dollars a share? A few years' time, maybe? Five years? Ten years? I think that's when he should retire. I think he will step down.

bold prediction he steps down after it hits a milli oh god that would be that'd be what a way I mean if it's a million dollars

that's a great way to go out yeah he's already the best of all time but if he had a million that would be one for like

the history books you know what I mean like when they write that down it brings more authority and I guess maybe some glamour although he doesn't

really care about that but it'll probably reach a million this year yeah definitely he's still trailing I actually wonder

what's better you've got your bet against uh what was it big tech versus berkshire i think yeah i'm winning yeah i i didn't bet on it i just had a poll i think 80 of people chose fan mag uh at the start of this year to beat berkshire over the next three years so far they're likely losing but i think it's gonna be a good race they're probably i mean both groups will probably do well all right what's your story okay well this one is what we've been talking about for the last few months hindenburg research takes down another SPAC, the research team that exposed Nikola, is back at it again, exposing PureCycle Technologies.

So PureCycle is a pre-revenue company, as you might expect. A SoulCycle competitor? No, no, no, no. PureCycle is like PureRecycle. Not a bad name, but they're talking about how they will revolutionize the plastics recycling industry. The PureCycle team, and I'm just reading off the notes here. I didn't read the whole report by Hindenburg.

Sorry, I'm not going to read that 30, 40 pages if it's not something I own. But the PureCycle team has taken six companies public, resulting in two bankruptcies, three delistings, and an acquisition after a 95% drawdown. So history, his track record's pretty bad. One of the SPAC sponsors is Roth Capital, which is the firm who infamously brought all the China frauds public, if you remember, in the China hustle. The one where they had the parties with Snoop Dogg and all that stuff. I think once you get the – if you get the musical artists at those – remember those big events? If you remember the China Hustle, there was that California firm with all the – That's usually a bad sign.

If you get the musical artists at an investment firm, I think as an LP, that might be an indicator. It's kind of like that divorce thing from Paul Tudor Jones. I think that came up earlier this week. What, the fund managers don't do well? Yeah, if a fund manager gets divorced, they're not going to be in a good state of mind. And it's kind of an indicator that you might want to take the money out from that point on. But there's also, yeah, if a musical artist or a celebrity comes on board, that might be a sign that their eye isn't necessarily on the ball.

And that was documented in the China Hustle. Their eye was kind of, well, it was on the ball, but a bit fraudulently. And then Craig Hallam, the other SPAC sponsor, who was the banker investor that took him public, gave the stock a buy rating on the day it listed. which is a bit of a conflict of interest but that's not technically illegal it's just a little immoral in my opinion and now pure cycle is down 56 percent uh since it went public and the market cap is still 2.9 billion dollars so it looks like we can go down 50 percent kind of like nicola we can go down 50 percent just kind of in perpetuity here just you know we're gonna get cut in half

we're gonna cut in half again we'll probably get cut in half again here that's it's a testament to the froth yeah when does this stuff i'll ask again when does this stuff become fraudulent it's always fraudulent the sec just doesn't do anything about it josh wolf always the autopsy never the diagnosis yeah chino seems exactly right when he says the golden age of fraud i mean it feels like it can't get more ridiculous than this stuff um i guess we've seen some of the the really bad cryptocurrencies that are made up as a joke now but i guess you never know it seems like there's 10 times as many schemes out there exactly like pure cycle technologies that just haven't gotten exposed yet with the prevalence of what probably the last, I don't know, year

or so, how many SPACs have gone public? Like 500, 600, something like that? It is interesting. You know, you think about if this happened in 2002, like I guess I wasn't around then. So just say 2014. You know, when that stuff kind of happened then, it was – it felt like people knew. Like this was like – like it wouldn't even – I think Jake Taylor maybe talked about it. Maybe the valuations aren't as crazy, but the stupidity is unparalleled in this market.

Or like I would say maybe ignorance without like stuff like that or – It's where the capital is allocated. Dogecoin, Titscoin. And these things don't – there's no – it just feels dumber. Yeah, for anyone that doesn't know about the coin stuff, Ryan is not joking when he said that that second coin there, that is a real one. He's not making that up. Yeah, I mean it's just people are – I don't know.

It just feels like a – maybe it isn't as irrational in terms of like standard valuations, but it just feels dumber. It feels – yeah, it's crazier. Well, I guess we can't compare personally. And the frauds that are getting bid up, that's kind of the stuff, I mean, to tie it back to what we're talking about. That's where it makes me question the overall market. Yeah, and then Josh Wolf had a conversation with Carson Block, the founder of Muddy Waters. I read a profile on Carson Block, and it was funny that they were talking about how he's kind of a man on a mission, right?

and they had passed back like a like a bench like a like a bench thing he's like yeah you know i can bench 315 it didn't come up in the conversation i thought that was really funny cars that i love you for listening but uh that that was quite funny but they were talking in their conversation about how there's known frauds out there like nicola gsx that one that was manipulated by bill hawaiian archegos that it seems like the floor is like five six billion dollar market cap Like that's the zero. Like who is still holding these things and why aren't they selling? You know what I mean?

Yeah, I find it – a drawing could be worth more than Nelnet or Boston, Omaha. I don't know what Boston, Omaha's market cap is now. But like there's companies with real assets and a lot of operating income. But the idea – Hundreds of other ones. Those are just two random – yeah, random examples. the idea of a rendering of a truck you know it just feels like it and it's post exposure of the fraud yeah that's the whole thing that blows my mind yeah it's post exposure which is insane

yeah the and what's crazier is that these things that are known frauds i'm very confident in saying that they're going to do poorly in aggregate um but if they operate in difficult markets yeah if fan mag you know yeah they operate in difficult market they don't have any uh if fan mag continues its run and kind of you know the s&p 500 keeps doing well the people are that invest in these things are going to be quite like it's fine if everything goes down everyone's like oh whatever everything was overvalued but if the actual stock market continues to whatever compound at 10 which who knows uh and these stocks go down 90 these frauds i mean people are going to get very very angry yeah who knows though all right um my next story it's not really a story but it's kind of an

anecdotal evidence segment um it's titled is microsoft office dying uh some professor he might have been like a teacher's assistant whatever he's from harvard he's from harvard so yeah he's studying his phd or i don't i'm not really sure but he tweeted this week that none of his students he's like grading papers all the time uh really use word anymore uh he said when they're asked to turn in assignments as dot doc files they just end up converting them over from google docs or pages i can attest to this um there's just a little bit of friction with using word i don't know how to pinpoint it but what costs money well yeah in college it doesn't really but i mean it's tight in you get office you get the office suite included kind of yeah so i mean

if you're with if you get the email yeah that's the thing i find interesting is that the office suite is usually included in college packages and they're still using g suite um i almost always use g suite for pretty much anything now and i think google has easier inroads to the end user um i don't know why it just it seems like google docs yeah i mean everyone i knew and my call at the engineering college we'd all use google drive for everything 100% of people 100% of people did it yeah I don't know why

we all had access to Office 365 it's weird the product's not better or anything it just ended up happening I don't know why that's why when I think it was last week you asked which big tech company is still going to be the most relevant in 30 years that's why I hesitate to say Microsoft

now I know there's obviously other elements to the business but does this matter for Microsoft? Like I don't spend – on a daily basis, I don't spend that much time using Microsoft. I can't think. I don't think I do. Maybe I do and I don't know it.

No, probably not. It probably doesn't matter because most of the time they're just attaching Office 365 to big enterprises or universities or whatever anyways. I know if you're working at a big company and you think we're crazy, but most people our age just don't use it. Yeah, individuals use Google Drive. But again, I mean, if they lose that market, they still get the enterprise, and it's, what, a tiny part of their business? So I wouldn't be too concerned about Microsoft. But, yeah, it's definitely a—

They also said Google—they said they use Google Docs or they use Pages, which I think is a Dropbox thing. Oh, Pages? No? Brady's shaking his head. Apple. Oh, he's saying it's Apple. Oh. Apple.

I think they have a Pages, too. Yeah, you're the Apple user. I don't know. Well, I don't use Pages, but— Yeah, this angle of evidence, people will probably be like, oh, it's overrated. It's definitely true. Big time. It's 100% true. What that means, I really have no idea.

All right. What do you have? Okay, yeah. So, again, not much relevant news this week, so I thought I found this interesting blog post from Focus Compounding, which is a blog and a podcast that if you like our show, you'll probably like them as well. It was talking about the difference between durability versus moats. So a lot of the times when I think people are discussing it, whether on purpose or inadvertently, they seem to think these are the same thing. But the way they defined it, and I think it's true, is that moat equals competitive positioning versus rivals, so other companies in your industry.

And durability is long-lasting demand from your industry or these companies' products. So just to give some examples, maybe you can think of any too. I don't know if you have any off the top of your head. It's not too easy of a task, but Comcast or Charter or cable companies or broadband or whatever have strong moats, right? You can really easily define the moats there, but people question, and I'm not sure if they're right or wrong, the durability of the broadband industry over the next decade with threats from, I guess the biggest threat people talk about is 5G. It's kind of an unknown threat. So there's a strong moat within there, but there's a question of the durability of the product.

And then to flip it around, you get a little bit like grocery or basically any food company in general. There's a highly durable industry. Everyone's going to need food forever and ever and ever as long as there's humans. But a lot of the times one would likely worry about competitive positioning within the grocery or food industry. It's not sure where some, you know, some ones you could argue you could have them out, but you're not really sure whether any companies have really strong competitive advantages. And it made me think that ideally you want companies that are ones that have both. So some potential examples I thought of off the top of my head would be cloud infrastructure.

So AWS, Azure, Google Cloud Project. Certain entertainment companies, Disney, Nintendo, a few others where there's, you know, durability. Everyone's going to want to be entertained forever. And then competitive positioning with the brands and IP. And then certain engineering and design software tools. So there's Ansys. So Autodesk, there's a lot of others where the need for these products are going to continue and they have strong competitive advantages through extremely high switching costs.

So it's a lot. What do you think about that? Yeah, I think they define that stuff right. Ideally, you definitely want both because I don't know how much durability it does for you if it's just increasingly fragmented as more and more demand comes. So it's like, yeah, you want to find a company with both. I would say Match Group maybe fits into that, where you've got both. Yes.

I would say the demand for that is going to continue. Yeah, social networks in general as well could be one, although sometimes you worry about the – I have a tough time evaluating social networks. It's kind of not something – it's not a game we typically like to play, investing in them at least. So I don't know about them. But, yeah, Match Group I guess you could argue.

I was trying to think of other ones. I don't know. Do you have any other examples off the top of your head? Not off the top of my head. They used McCormick as a good one, which makes sense. That is a good one. Brand plus durability. Maybe Starbucks? I don't know. I don't know about the durability stuff.

I know coffee drinkers are shrinking, right? I don't know. Yeah, yeah. I thought I heard that somewhere. Yeah, you can make the tobacco argument a bit where it's a declining industry maybe, but I think it's a lot more durable. Highly moaty with less durability potentially. Yeah, that's a good one too. All right.

Yeah, it's kind of an interesting topic. Another thing that I saw this week on Twitter was it's kind of about marketplace competition. It was Dan McMurtry. I think his ad is like Super Mugato. He kind of published his thoughts about this, and I thought it was kind of just worth talking about. He says that Tyro Partners or his fund doesn't really think of markets as competitive or adversarial in the traditional sense. And I think we're seeing this all the time now. There's all these bull versus bear narratives, like they're wrong, so that means the bulls are right, or the bulls are wrong, so the bears are right.

The GameStop stuff, you know, that has reverberated to a lot of other parts of the market recently, yeah. Yeah, and a few quotes he has. Investing is a game where you compete against yourself more than anyone else. He also said you and your teams are the ones that will hurt you, not some shadowy figure trading against you. do you think this do you think concerns over who's on the other side of the trade get overblown yeah if you're on the long side it doesn't matter if you're on if you're on the long side and you're in it for the actual intrinsic value of the business so the cash it's going to generate and eventually hopefully return to shareholders or you sell through buybacks or whatever um if you're

long a company should not matter and if you have you know whatever i guess if you're short it matters sure it definitely matters if you got you got to understand that for sure someone can just you know i think tesla is a prime example of that yeah you can be short for all the reasons you might think are right but if a tweet can mess up your timing it's hard to do anything about it but most of the people listening i assume 99 of the people listening here just go long so yeah or own you know buy stuff uh so i'd say it really doesn't matter you're just playing against the psychology yourself or that might be weird so do you do you think you would be better off not knowing who's on who's either on your side i guess or shorting let's say say say you're

going long stock would you be would you feel better not knowing who else owns it oh yeah i think it would help yeah that's because that eliminates confirmation bias in a sense no yeah it's the downside of of these online communities where i think the benefit is idea generation um you know from our from even our show that's kind of our whole point of doing this show is idea generation for us and others and then through other of the other online communities it's really great idea generation but the downside is definitely that where you get into groups confirmation bias someone that you someone doesn't like it and you don't think they're very intelligent so you think oh well they're blah blah blah or someone's long something and you

don't think they're investing analysis is usually very good so you're like you disregard that i've done that where i'm like oh this is dumb that person's investing uh yeah and it comes back to the that's a big one yeah i think we talked about this with jake taylor where if you don't like you are a part of a team you are not a part of any team you basically just want to it's not block out everything but it's almost like you don't want input once you've acquired the skills like this probably takes a decade or longer you know what i mean if you acquired the skills that you're confident and you actually want you actually want no input from anyone else because it can just cloud your judgment either way but it's really tough to do and honestly

there's downsides of not communicating with people uh great all right uh you got a last story here yeah so this is a funny one a bit but i kind of want to make it a serious discussion as well i guess we hit on it earlier about the fraud stuff so today i kind of this was the first thing i saw when i woke up well no no i try not to i try not to look at i try to wait a little bit before looking at twitter in the morning but when i opened it for the first time to check anything i saw that tom brady posted a laser eyes photo if you don't know uh what that means is that when you put those red eyes over yourself uh online it means that i think you're part of the crypto community you kind of established yourself as like you're on the team you're on

the team in the cult you might want to say um and this is one of the big and constant examples lately of non-finance people getting into crypto um he updated you know with that laser eyes image Am I crazy or pessimistic or being too – I don't even know how to describe it. But this is all inadvertent pumping of crypto. I mean is it ever going to come back to securities fraud? I mean when did we start allowing people to do this with no repercussions? Well, there's not – I feel like there's not that many. There's not too much legislation around it because it's relatively new.

There's not a framework for dealing with it. But there's not really a lot of precedents. Brady is not a good example because he didn't really do anything except the laser eyes as kind of a joke. I'd also— But there's other way worse examples. I'd also be concerned if I didn't, like, subconsciously think that Tom Brady might be a decent portfolio manager. I think he might have the skills for it. Yeah, he seems a bit—well, I don't want to—he's obviously very good at what he does, but he seems, you know, he's a bit emotional.

I think Belichick seems like a better portfolio manager just because he's the most unemotional at adding and subtracting assets. but are selling assets. I don't know. Brady's the analyst. Belichick's the portfolio manager. I think the thing I find the funniest about it is when you see this stuff, instead of people being like...

The instant reaction from crypto community is, this is great. This could drive our prices higher. The more, the merrier. It has nothing to do with the... I don't know. It has nothing to do with... Yeah, the community is just getting bigger.

Everyone's joining this stuff. I think the turning moment might have been August 2018. And if you don't, I don't want to say what I'm referencing here because a lot of people like the company that month is mentioned in. But in August 2018, there was a certain tweet that I think kicked off the era of no securities fraud violations. I think that might have been the turning point. Well, there's securities fraud violations, but I think the role that social media has played in that, I think people are starting to realize that with the right social media backing, you can make a lot of money.

Yeah, and what about Robinhood with the, like, bark, bark tweet? Like, with the rocket ships, you know? Yeah, but then their systems failed, and they wouldn't let them trade. I mean, how many – whatever. What about all this? SpaceX is launching the DOGE-1 mission to the moon, a real mission. I mean – I don't know.

That's not like – I don't think it ends well. Well, here's the thing. How is that not – I don't – You know what I mean? Maybe. I don't really care, and I don't think it –

I mean, shouldn't you, though? We don't want frauds out there. Come on. Does it have any bearings on your results? No, no, no. So then, yes, it's the golden age of fraud, but we're not dabbling in that. So it doesn't really matter to me, at least. Well, I think –

I hate to see it. I hate to see people get exploited, but – Yeah, I mean, yeah, it sucks to see people get – Listen, if you're buying a digital coin because there's a moon, whatever, some rocket going up and someone tweeted that it's good, you deserve to be. You deserve to lose your money. I mean, I hope. I have no sympathy for that. No, you have to have sympathy for them.

I have no sympathy for the people pumping. I think they should get, I don't know what should happen. But it seems like, come on, people are more innocent. You know what I mean? Like the people, you know what I mean? They don't know what's happening. I guess if I were introduced to finance today, maybe it's easy to go down the wrong path. And the thing that happens is people, say they get screwed out 90% of their money.

And it's a small amount, so it's not a big deal. But then they think that the whole securities market is a fraud. You know what I mean? And they're like, oh, I'm never going to do that stuff again. And then they ruin their whole retirement, whatever. I just think it's setting up terrible incentives. and it's just you know

people are expecting to get rich quick there's no way it ends well I'm honestly on the monger I'm almost at the monger

point of it where it's all just like it's just you have no respect for it it's just all bad yeah

but who knows I could totally be wrong before we wrap up the show a little update I've been reading

the Wall Street Journal for a week now as you know I subscribed to the print edition still haven't gotten the physical print apparently delivery

to apartments it's not easy yeah I was looking I'm looking forward to the second the second hand on the print so

yeah so once I get that figured out good customer support mildly good customer support though still working on that

but yeah I'll let you know how it goes plenty of good tidbits I might keep this around for the rest of my life but that's going to do it thank you all for listening

thanks again to Honor Bond for coming on the show yeah we are general partners at Arch Capital so we may have secure

positions and securities discussed. Clients might have positions and securities discussed on the show. We are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or recommendation. We appreciate you guys listening. We'll see you next time.