The Compound and Friends - Bearishly Bullish

Episode Date: March 17, 2023

On episode 84 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Dan McMurtrie to discuss Credit Suisse, Silicon Valley Bank, treasury yields, short sellers, credit default swaps, the real reason Signature Bank got taken out, and much more! This episode is sponsored by Kraneshares. Learn more at https://kraneshares.com/. Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com 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 Josh Brown 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

Um, how do I look? I think you look really good. I think stunning. Can you get my brush? And brave. Here he comes. I really like this look for you. What up dude?

Chow down my mouth. What do you got? I'll do the glasses maybe for a moment. We just gotta get a shot of the wig, then you can take it off. You don't have to keep the wig. You still need the knife, dude. He's killing. Obviously, we take bank failures very seriously.

True. Where's his wig? I had a run on my hair like 10 or 11 years ago. It happened gradually, then suddenly. A run on the hair bank? Yeah. Yeah. Ooh. All right. Thank you, Nicole.

Let's see. Is this bringing you back to your hair days? I used to have flowy hair. Not quite like this, but Duncan, you've seen my license. I think I'm skipping the wig cap. No, you gotta put the wig on. Oh, no, you need to skip the wig cap. No, the cap, yeah.

What's a wig cap? It's the thing that puts your hair back if you have hair. This is amazing. Okay. That's not cheap. Oh, this is too good. The hairnet? I'm wearing this to the train. I mean, this is probably, like, a great way to not get mugged

because people are going to be like, that guy's crazy. That guy has people in his basement. Okay. This is, like, this is, like, very temporary, so is it time to put it on now? I think if you'll just wear it for the first, like, two or three topics. I'm very, no, I'm very sensitive about my actual hair. Okay, put it on, and then just, like,

do, like, a and then just like, do like a candid smile or something and I'll get a shot. This is fantastic. Wait, glasses with it. Glasses really. Hold on, let me. How are my bangs though?

Let me FaceTime my wife. This actually looks really good. The last time when she said no, you were like, what? You guys look like the original Ovalubus. Oh my God, this is too much. I had the green hair. I know you're using this now, but do you actually need a laptop, Sam, for the show?

No, I do not. All right, cool. I'll get it out of your way. Hi. Oh, you think you're Irish now? What do you mean? It's St. Paddy's Day. Yeah, I know.

How do I look? Yeah, that's perfect. The boys are trying to catch Lucky the Leprechaun tomorrow morning, so you could be him. Ooh. I think it works. Bye. All right. Okay, put the headphones on.

The headphones on, too? It looks like you're podcasting. All right. My eyeballs are under duress, but I'm going to fight the rest. You have to, like, swipe it to the side, I think. How does hair work? All right. Do we look pretty, at least? Ah! You bug. All right, I think. How does hair work? Alright. Do we look pretty at least?

Alright I'll put that on when we're done. That was you man. I didn't feel a shot. How would you feel it? I feel it in my ears. I like that it's happening to Michael though. Alright test. Can everyone? We good? Oh we good. The S&P 500 is up 160.

Hell yeah we're good. We're back. We good? Where's my mic at?! Alright, look up there. Oh we good, the S&P 500's up 160. Sorry to look serious though. Hell yeah, we're good. Trials. We're back. We got it? Yeah. And maybe like, what's the most Irish thing you could do? You know, like pose-

Tricky Guinness? Hoppy St. Patrick's Day to ya. Alright, we got it. Alright, this has gotta go. You look incredible. You gotta leave, you gotta leave yours. You look incredible. Can you at least do the sunglasses?

I need credibility, though. All right, hold on. Dan, I bought Google today. Congratulations. Thoughts and prayers? Thoughts and prayers. Why are tech stocks ripping? I don't know.

Maybe because the world maybe isn't ending. I don't know. There's a lot of I don't know right now. Well Josh knows so an update from the suburbs Last summer. Oh, this is good. I was growing tomatoes behind my shed as one does. Mm-hmm. No, tell him why tell him why? Why was I going tomatoes? Why would you possibly grow them behind your shed? Oh cuz sprinkles is like I don't want Sprinkles my wife. Okay. I don't want animals in my backyard and when you plant stuff, it attracts animals and bugs and we don't need that shit

and I pay a landscaper thousands of dollars. Why would you junk up our backyard? This is all true. This is like literally Sprinkles like, why do we need pots of shit in our backyard attracting, I said, what kind of animals do you think we're going to like deer?

It's the south shore of Long Island. They would never come here. I said, what kind of animals do you think we're going to attract? Like deer? It's the south shore of Long Island. They would never come here. So anyway, the summer goes by. I get bored with it. It's too many tomatoes. Nobody in my house is eating it. I can't eat 800 cherry tomatoes a summer. So I throw the whole thing out in like July, August.

It's like, all right, that was fun for 10 seconds. It's really not me. I don't have hobbies that require patience. The whole thing is a misfit with me. So you get rid of it. Last week, my kids looking out the window, the biggest, most pregnant, rabies-laden raccoon you have ever seen climbs up out of the shed.

So my daughter is 17. So of course she's filming the whole thing. Right. That's just- It's on TikTok already. Default setting is it's being filmed if you're doing it. Right. So sends a group text to my family,

just like, oh my God, what the hell is this? It's so big and so scary looking. And raccoons don't come out in the daytime if they don't have rabies. I don't know if you know that. I did not know that. Fun fact. So there's something wrong with it.

It's sick. Right? Okay. And probably pregnant. It's so fat. Anyway, long story short, the landscaper comes to the trap, puts the trap in, baits it with giant oversized marshmallows. That night-

Oh, the raccoons passed the marshmallow test. Right. So they didn't go for it. No. That night, there's a raccoon in the marshmallow test, so they didn't go for it. No. That night is a raccoon in the trap. We see it from outside the bedroom window. Like, all right, in the morning, Frank will come and take the trap away. The morning comes.

The trap is turned on its side. The metal is dented. The mud underneath the trap is dug up like there was a monster truck show. Can I just say good for him? I think he had help. I think another raccoon came and pushed the door open from outside. Or something bigger came

and he was the snack. This thing cannot get out. Like, the guy's explaining. He's like, did you let it out? Are you kidding me? He's like, well, somebody let this thing out because a normal raccoon can't get out of this trap. So they bring a bigger trap the next night.

We haven't caught anything yet. There's bacon and cantaloupe in it. This whole thing is like a Shonda. So your wife was right. So she called me up today. She goes,

this is why, this is why I hate you. You ruined our summer. I'm like, what do you mean? You ruined the summer. We're going to have to spend the whole summer

trying to trap this son of a bitch. Like, it's like a, it ate through the side of the shed. It's a good like children's movie comedy premise. No, this is like a real thing that I have to now answer for. Like, why did you have to grow tomatoes? I'll just go to Trader Joe's.

Like, we don't need tomatoes. You definitely don't need hundreds of tomatoes. And she actually ended up being right. At least the landscaper told her she's like why us this doesn't happen in this neighborhood he goes I don't know didn't you tell me your husband was growing shit behind the shed so anyway

congratulations you ruined the summer so that's what's going on just before we start we can't talk any of this never why would we anyway so that's a lot of fun and Before we start, we can't talk any of these positions. Fire, pass, fire. Never. Why would we? Anyway, so that's a lot of fun. And you live in the city, right? Yep.

Okay. No plans to leave anytime soon? Unfortunately, no. Oh, how's your foot? How's your leg? I'm walking again, poorly, but I'm walking again. You're, like, doing rehab and stuff? Yeah. A lot of, like, rubber bands and foam balls and stuff like that.

Every time you feel good, it starts to hurt again. So it's kind of back and forth. You hurt your ankle or your knee? I rolled my ankle and my foot broke. Doing jujitsu? Yeah. Yeah, that's why I don't do that stuff. It's a lot of fun until exactly that moment.

I'm just kidding. That's not why. Do you miss – how do you get your aggression out now? Just like smashing things, yelling at interns. Throw a lamp? Yeah. I just ordered a bunch of cheap lamps off Amazon. I just throw them at interns.

Okay, good. How many interns do you have? Not anymore. Okay. Yeah, because of the lamp problem. Because of the lamp thing. Yeah. Understood.

Yeah. Understood. That'll happen. We did just have a new full-time guy join, but I don't know if he's going to make it. Is he an analyst? Yeah. Okay. What do you need?

Do you need like – you need analysts. I just need people that can dig, that are just going to like love reading and calling people and going and visiting companies. Because you don't need administrative people because all that stuff is outsourced, right? No. We have a full-time guy that handles all that and then he works with some outsourced, right? No, we have a full-time guy that handles all that, and then he works with some outsourced people. And as we get, probably in the next year, we'll probably need one more person. But there's so many tools now that you're really needing

somebody that's managing those procedures rather than doing a lot of it. Physically doing it. Yeah, and also, like, past, after Madoff, nobody wants hedge funds doing their own books. So you have an administrator that does all that. Third-party everything. Third-party everything.

Do you have a chief risk officer? I am the chief risk officer. You have to be that. That's the kind of the job. Portfolio manager is the chief risk officer. I was making an SVB joke. It wasn't that serious. Oh, I see. Nailed it.

Hey, if you leave that wig on, then I can't call you bald Tudor Jones. That's a good one. That's kind of like my favorite. So wait a minute. That's good stuff. What if this is the best week for stocks in like

three months? Meaning looking forward three months? What if this is the best week we've had in the last three months? Don't you love this game? You do it for a living, so I assume you do. Yeah. The week that two banks went under and Credit Suisse had to be bailed out sparked the biggest NASDAQ rally we've seen this year. Makes perfect sense.

So I'm just eyeballing it. You know what? Look at this. This is definitely the biggest week of the year for the NASDAQ. These are weekly candles. Bannock is so bullish. We're up for the year. He's so bullish right now.

It's not me. I mean the market. It's not me. It's the market. I'm just listening to what it's saying. You're just listening to the message of the market. He's so bullish right now. It's not me. I mean the market. It's not me. It's the market. I'm just listening to what it's saying. You're just listening to the message of the market. I'm just listening. I'm just listening.

I'm not trying to fight it. I go where it takes me. Like the evidence. All right. And I'm going in with the clock. How are we doing? We're good? We're looking great.

Everyone's ready to rock and roll? You know, I heard that line actually last night from Andy Garcia in a movie called Nightfalls in Manhattan, circa like 1993. You ever see that? Yeah. Richard Dreyfuss. I don't remember it, but I saw it. Oh, James Gandolfini? Oh, really?

It's on Prime. It's a listener recommended it. What episode are we, John? 84. Oh, wow. Look at this. Welcome to The Compound and Friends. Look at this. is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

Today's episode of The Compound and Friends is brought to you by our friends at Craneshares. They have a webinar on Wednesday, March 29th. There is CE credits available. Roger Mortimer, great name, who is a portfolio manager, is going to be speaking with Luke Oliver, who I've had on Animal Spirits. He is the head of climate investments. The webinar is about this. Josh, tell me if you got any thoughts. From high emitting to high growth, opportunities from companies transitioning to renewable

technologies. I'm in. When is it? It's Wednesday, March 29th, 2023 at 11 a.m. What's EDT? I don't know. That's Crane Shares. Eastern Daylight Time. Crane Shares with a K. The K is for quality.

Craneshares.com to learn more. Episode number 84, the St. Patrick's Day episode. And as is customary, we have our favorite St. Patrick's Day guest with us today. You might know him on social media as Super Mugatu. His real name is Dan McMurtry. Ladies and gentlemen, Dan McMurtry. Dan, you know, I actually quoted the real Mugatu yesterday.

Like the Play-Doh, molding my Play-Doh. Any type of dough. All right. Dan is the co-founder and CIO of Tyro Partners. It's a hedge fund that invests in the tech, healthcare, industrial, and consumer sectors, as well as a fan favorite, TCAF guest. Welcome back to the show. Do you get any feedback when you appear on the show?

People excited to hear from you? Occasionally. I mean, we get some. We always get. Occasionally. F*** you guys. We always get some nasty comments, but 95% are people just being like, oh, this is great, and we always get good responses.

What's the nasty comments? Hey, you have a career and I don't. Yeah, generally, more or less. Yeah, yeah. Or something like that. a career and I don't. Yeah, generally, more or less. Yeah, yeah. Or something like that. You could read between the lines. Yeah. Can you imagine being mad at somebody who went on a podcast?

I have just too much stuff to do. I don't know how people have time to be angry at people they don't know. I have enough people I know who I'm upset with. Oh, they have plenty of time. That's a good point. They have plenty of time. That's the problem. All right.

First things first. Everything's basically good now. Is that what we're saying? Not really. Credit Suisse is saved. Well, all right, let's just write in. No, write in. Write in.

This is the thing that happened just now. Chart on. So you could look at this chart of credit default swaps for Credit Suisse blowing out and say, holy shit, we're all going to die. Or, and I don't know who the chart came from. My apologies. There's no credit here to be given.

Or you could say, well, actually, credit default swaps at other European banks, UBS, Deutsche Bank, Sachsen, BNP, not exactly the healthiest banks, are not doing anything. There is no contagion outside of Credit Suisse. It is a shit bank. It was a shit bank.

Probably will always be a shit bank. It was a $2 stock last week. It's not new. Nobody's like blown out of the, right? Like nobody's, can we just, a definition for people that don't manage global macro hedge funds or are not financial journalists and don't really understand what CDS is, like in layman's terms, basically, these are people buying insurance against the solvency of the bank.

The solvency, the default risk, whatever, of an institution. And this is like where you would look if you're looking for like real stress. So it's just like put options on steroids? Like if you were bearish on Credit Suisse, you buy credit default swaps and now you just got paid?

Yeah, I mean, these are a lot more tricky than put options, which are also really tricky- These are not retail. No. This is international bank of settlement stuff. Like you have to- Like Duncan puts the shit on. Yeah, this is only Duncan level trading and higher.

Yes. Okay. So who is buying CDS on Credit Suisse? Is it mostly their counterparties in the banking world and or hedge funds speculating? Who else is in this marketplace? It's Bill Wang. I mean, it's mostly sophisticated. It's going to be banks. It's going to be a certain type of hedge fund. But I think one of the things, and this is similar with put options, once they get over a certain level of expensive, they don't offer you a crazy

nonlinear payoff. And so they become a lot less interesting to most people. And then you end up with a very specialized market. There are people sometimes who have to buy these things because they have to have insurance against maybe a counterparty or something like that. But the issue is if you have to pay some crazy amount to insure your counterparty, you're probably just going to stop trading with them.

That's right. That's a better insurance plan. Unwind and ignore. So Credit Suisse is what's called the GSIB, a globally systemic important... Did I get that right? GSIB. Globally systemically important bank.

Sounded weird coming out of my mouth. But how many are there? I think there's like 20 of them. I mean, this is obviously one. So this is one of them. So here are the numbers. This is from Felix Simon. Credit Suisse had total assets of $574 billion

at the end of 2022, down 37% from $912 billion at the end of 2020. Its asset management arm supervises another $1.7 trillion. Last night, its largest shareholder, the Saudi National Bank, said they can't provide any more capital because they can't own more than 10% of the bank. And the government stepped in. So that's what triggered this race to buy CDS is that the Saudis and I guess other sovereign wealth funds

were like keeping this thing afloat. Is that your understanding of it? I'm not sure. I mean, I think one of the key points of distinction that maybe is missed in like the Twitter discourse or some of the media is that there is a significant difference between a bank continuing

to operate under a certain name and there being any payout for the equity, the preferred shareholders, the bondholders, things like that. And so there are real scenarios where from a customer's perspective, there's not that much disruption in a lot of these firms, but a lot of other people get impaired. And then you have a bunch of these firms, but a lot of other people get impaired. And then you have a bunch of weird regulatory issues here where you can't own over a certain percent. The JP Morgan isn't going to be allowed to just buy every other bank. There's all sorts of weird pressure points here. Why did the Saudis feel the need to put that out there, that we can't buy anymore?

Did anyone – was this in response to somebody being like, are you going to buy more Credit Suisse? Probably. I don't know. Actually, maybe this is genius. Maybe they're like, we're out, and the government is on you. And so it probably worked. Maybe that was it.

This was a good moment to rip the band-aid off, I guess. You never know if there was a reason or no reason. Okay. Credit Suisse had a total assets of $574 billion. I just did that. At the end of 2022, down 37% from 912 billion at the end of 2020. I still just did that. Asset Management Arms supervises another 1.7 trillion in assets.

Did that one as well. Very good. Well done. All right. So I'm just trying to understand now. They got $54 billion line of credit effectively from the Bank of Switzerland, which is basically the government. And they had $200-something billion on deposit. So it's like they have access to the equivalent of 25% of their deposit base if, in fact, they need to draw on it, which probably eliminates the need for them to have to draw on it because

maybe whatever deposit or ex exodus they were worried about. What do we got here? Deposits. I mean, this is really something. Look at this. Holy moly. Yeah.

Oof. And it's obviously worse now. This is 400 billion to 250 billion. That's bad. Here's a great lead from, from Bloomberg. They said credit suites, his families have included a criminal conviction

for allowing drug dealers to launder money in Bulgaria. It was cocaine, by the way. Entanglement in a Mozambique corruption case. A spying scandal involving a former employee and an executive in a massive leak of client data to the media. Its willingness to engage with clients that some other banks avoided, such as disgraced financier Lex Greensill

and failed New York-based investment firm Archegos Capital Management, lost billions of dollars and compounded the sense of an institution that didn't have a firm grip on its affairs. So it's so global that they were, like, involved with crimes on every continent. It's really, I mean, it's highly impressive.

Like, if you say nothing else, it's very impressive. There was an article six months ago about a guy they hired whose job it was to run around the world and settle all these court – like just get – like bury this stuff, get rid of it. Was it Ray Donovan? It was not, but it's like a similar type of story. And I guess this stuff caught up to it before they had a chance to do that. So when you go like Monday morning or Sunday night, you're thinking about, all right, how is this going to impact my portfolio? Where's your head going?

all right, how is this going to impact my portfolio? Where's your head going? We don't really do a lot of financials, but I think that the big issue and the big question right now is really, is this going to have a domino effect where it affects credit availability for the rest of the economy? And as long as it stays isolated to an individual bank, that bank's shareholders, that bank's bondholders, there's not

that much risk. There isn't that much cross-leverage and cross-default issues that you had in 08. It's a very different situation. It's a little bit more like savings and loan. But the big high-level problem right now is you just had the Fed raise interest rates right in the last year. Now, people are talking about deposits, but not all deposits are the same. So if you have a checking account, you're getting like nothing on that, right? But if you have a savings account or a money market account, which you would, you know, a normal person would think is a deposit, well, you might be getting four or 5% on that right now. And a lot of money was sitting in checking type accounts where the bank didn't have to pay anything to have that cash. And what has started here is because there's some general anxiety, a lot of people are just

logging into their account and going, I think my bank's fine, but you know what? I'm just going to move over to the money market. And now the issue is when we're talking about deposits in terms of what it means to the bank, that's not entirely the same as you pulling your money out of the bank, but it's a lot closer to that than you'd think because all of a sudden they're having to pay 4% or 5%. Just keep the deposits on hand. Just keep the deposits. Yeah.

And, okay, if they want to go buy long bonds, they're not getting 5%, right? And so if you look at a lot of banks right now, you look at basically what they were paying for the deposits last year versus what they were getting on all these assets they own, and they were getting, depending on the bank, loans, bonds, all that, less losses. They're getting like 2%, 2.5%, maybe 3%, right?

And they were paying 0.8%. So all of a sudden, as this is happening, across the board, banks' costs are going from 0.8%, 1%, somewhere down there, to the incremental dollar is 4% or 5%. And if you're a bank that's in trouble, you have to offer something above that because why is somebody going to take a risk when they can get 4% or 5% with no risk? Right. So the banks are kind of, in general, backwards right now on, you know, it's the opposite of like how people think banks work. Like right now, they are having to pay more than they're receiving to buy these assets, right?

And then earning less internally. Right. Yeah, this is the opposite of what the story was last year. Right. Like the end of last year, the story on financials was net interest margins will rise

because intermediate term rates are going up and funding is still cheap because there's so much money in the economy. People are keeping huge balances. They did rise. It kept going. People talk about the curve, and that's like something that everybody uses, and then it's not explained a lot.

But what we mean by that is that short-term deposits, short-term lending, short-term borrowing, your six-month to two-year T-bills, that rate is much higher than long-term interest rates right now. But that's also higher than what the banks are paying out. So they're still raking. Because people were leaving their money in checking. And so the issue right now is that if you're at a bank and you're just like, okay, I haven't looked at my bank

other than just checking my statements in a year. All of a sudden you look and you go, I'm hearing scary things about banks. I know what's going on. And I'm only getting 1%. You don't have to actually pull your money out of the bank to hurt the bank. If you just switch it into a different type of account where you're getting some yield.

They're making less. So Bank of America. They might be making negative. Bank of America got $15 billion in deposits after SVB failed. And I imagine that JP Morgan is the same, if not more. Somebody tweeted, I can't remember who, like a bad-ass move would be JP Morgan to take rates to zero. There's a technology aspect to this story, though, that there is no real corollary to

2008 in that it's never been easier and more casual to move money around. And that's probably something that's going to have to be looked at. And of course, there are going to be hearings on this shit and Senate Finance Committee and the regulators. They're all going to have to say, well, how do we make it so that a bank doesn't lose $40 billion in 24 hours? Right. Because that's a really big part of the story.

This is not like, you know, 20 years ago, if you really wanted to move money from one bank to another, you had to show up at the second bank, open a new account, then go back to the first bank, get a cashier, a certified check or something. Right. Or you had to enact a wire. This is a whole new, this is a whole new world where you can do that shit like from a bathtub on your phone. And that is, I think something that is going to be a bigger part of the story when they look back and say, how is it possible that a bank was healthy Monday

and dead on Wednesday? Crazy. To me, the story this week inside the markets are the lack of panic in junk bonds. Junk bonds are ripping today. They'll probably finish up the week. You're not seeing any stress in senior loan or bank loans. You're not seeing any stress in investment grade.

The VIX is barely moving. But where you are seeing a ton of volatility is in interest rates. Is that a technical term? We have a few charts. It is. We have a few charts on this. So this is the US yield curve for the week. John, chart on, please. I mean, this is madness. Not something that you expect to see, I mean, this is madness, not something that you expect to see, right? Just like total insanity there. The market is now pricing in 100 basic points of rate cuts by September. That's like overnight.

It went from, oh my God, they're going to do 50 to what if they don't do anything and start cutting? That's a huge pivot. So three weeks ago, after you got the PCE data, that's the orange line that we're looking at, you had Fed funds rate going out of all over 5% for the rest of the year into January. That's what the market was pricing in. And then boom, you got this panic over the weekend. And there we go. That's the bottom two lines.

Since March 15th, expectations for 5% interest rates. Gone. Gone. Gone. Just completely gone. So this is the conversation. Maybe this is why stocks are ripping is because people are saying, okay, the panic will cause the Fed to chill out a little bit. Although there's still a 50-50 chance of 25 or pause. Do you look at your holdings or your allocation through the lens of how interest rate sensitive is my portfolio.

Yes. Okay, but that also then can create opportunities on the long and the short side also. Right. So how do you think about that? Or how do you gauge that? Yeah, I mean, when you're looking at bonds, people talk about duration. Are you owning like short-term bonds, medium-term, long-term? There's a similar dynamic with equities.

If you own a growth company, the idea is they're going to pay you back a long way in the future. Now, the problem is if you can earn 5% every year between now and the future, the future becomes less interesting, more or less. And that's just a discounted cash flow, basically. But if you have a business that's producing, that's throwing off a lot of cash that's not really exposed to the economy, as the valuation comes down, you start to care less and less about what the interest rate is within reason. And then there are certain points, you know, there's certain levels on everything where at the end of the day, if the world doesn't end, you're buying, right? And so kind of the first exercise we're doing on every company is like, okay, the smash glass, the market's down 30% tomorrow, what price do we buy kind of no matter what, assuming that the world is not magma, right? And then from there, we try to build into what do we need to be sure about in

order to deploy risk capital here. And we do mostly things that are not super big weights in the index, things like that. So the stuff we do is a little, it's not necessarily less liquid, but the liquidity is very variable. And so it can trade really, really crazy relative to S&P large cap stocks. What, like big bid-ask spreads or more volatility? Well, it's more like, you know, if you're looking at stocks that are like one to 20 billion, which is generally what we tend to be investing in, you can have a month where on the average day, it trades 25 or $30 million. And then you can have a week where on the average day it trades $25 or $30 million. And then you can have a week where on the average day it trades $700 grand.

And during that week, if you need to move in or out, good luck. Because the price is going to go nuts if you try to move. I mean, people with Robinhood accounts can move these stocks on weeks like that. So right now, I mean, when we're looking at a lot of things that we trade, that's happening. Liquidity is super low. So as we're looking at these price moves, it's hard to tell what's in them because really, really small,

everybody's, I wouldn't say, I don't think Wall Street's scared. I think Twitter is really scared. If you look at most of the headline indexes that are up for the year, I'm not seeing that much actual fear from kind of big money participants because a lot of the type of risk we're dealing with right now has already been hedged out. But, you know, people are very anxious. And so there's not as much trading activity in a lot of the things that I look at. And so really, really small buys and sells, you're seeing. I mean, just look at like some of these stocks intraday.

I mean, they open up down 60 percent, then they're up 50. And then I mean, this is just an incredible amount of volatility. Are there stocks that you or stories where you would be short and then interest rates plunge the way they just have? And you say, you know what? This company might not be as challenged as I thought they would be a couple of weeks ago? Yeah. Or is that too sensitive to recent price? No, no. It depends what the type of company is.

And also it depends like why are interest rates being cut. What if it's like a green wig manufacturer? Right. For example. cut. What if it's a green wig manufacturer? For example. For example. Theoretically, a green wig manufacturer. Shamrock wigs. If you're talking about a company that you think needs access to credit and under normal circumstances can get access to credit, but credit is tightening and all of a sudden, if they lose access, they might blow up, Then you're 100% going to cover that short if interest rates start to ease. And there are things like that.

There are businesses that are not great businesses. They do like 5% return on capital. And all of a sudden, their cost of capital is 7% or 8%. So they're borrowing for 8%, and they're earning 5%. They're backwards. It's not impossible, though, that rates come down because the market's scared. But also, liquidity for these companies doesn't reappear magically. So, Dan, I want to get your take on liquidity.

And, like, people, I think – I'm sure there's a ton of retail traders that got run over in the last couple of days trying to be cute and catching bottoms and whatever. Yeah. So, I know you pay a lot of attention to this stuff, so I want your thoughts on this. What, like in the TBT, like being short the 30-year bond? No, I'm talking about like regionals specifically. But we could talk, I'm going to, through the lens of regionals, but just bigger picture, what are your thoughts on this type of dynamic? So this is from JP Morgan's financial trader, Barry. I don't know who that is. Zero Hedge was tweeting this. Quote, we are continuing to see supply in regional banks.

And while some long-only sellers are starting to cancel orders and go OTD, Quote, as opposed to beating a rival price VWAP or whatever trading metric is usually used. Those are out the window. We have started to see some buying on the margin, but supply continues to overwhelm demand on our desk. When they say supply buying on the margin, they're talking about the regional banks. Right. So just this idea of like buyers and sellers and duking it out, like, how do you think about- Who is selling all, like First Republic?

So how do you think about all this? Who is selling all that stock? Like, forget about there's no buyers. That's a good point. I'm trying to think of like who is blowing this stock out? It's the founding family that owns 30% from 1910? Or like bank ETFs? Who is selling this shit?

Well, one is bank ETFs. I mean you have a lot of portfolios, particularly on the big banks' platforms, they have these kind of like factor rotation portfolios that are pretty big. And I think there's a fundamental and a technical angle here. So the fundamental angle is, I think the concern about whether or not the equities of these companies are impaired, I think that's much higher than any fear about there being a risk with the bank in the way we just saw with SVB. I think, right? So a lot of these guys are looking at it and saying, okay, for example- You're saying the bank accounts are okay,

the stock price is not. The bank's ability to make money. The earnings. The company is not. Permanently impaired. The NIM, the net interest margin, and the EPS, earnings per share, are both potentially impaired

for a large number of small and mid-sized banks. Depositors aren't coming back. It's going to be – well, you're going to have to incent them, right? And the issue right now with everything in the market is – I don't know where the two-year is today, but 4% or 5% for zero risk. Not a little, zero. That hurdle is insurmountable for certain situations. But, okay, local bank of, you know, Cleveland.

Hawaii. We'll pick one. Actually, the Hawaii bank is – a friend of mine thinks it's very local bank of, you know, Cleveland. Hawaii. Pick one. Actually, the Hawaii bank is – I just made that up. It's very solid. A friend of mine actually likes the Hawaii bank. All right. Pull the trigger on that while he's talking.

Mahalo. I don't know anything about it. But, you know, Kansas. I accidentally typed up somebody was talking about the Federal Home Loan Bank of San Francisco. Yeah. And I was looking for, like, the bonds. Right. And I got the equity.

FHLB. It turns out there's a bank called Friendly Hills Bank Corp. This is exactly what you're talking about. It trades by appointment. There's no volume. Well, okay. But here's the issue, right? If you're a small bank, right?

And all of a sudden, in order for you to get more deposits, you got to offer like 6%, 7%, I don't know, 8%. Good luck doing that. Well, then at the same time, you have to go – when you lend money in your community, you got to charge significantly over that because you got to make more than that and you got to factor in losses. So that kills the economy. Well, if this became a system-wide issue, it could be a problem. Now, this is still a very –

So the borrowers have to pay 11%. They're not going to do that. Right. And it just – that's the one thing I think about. Now, we're not seeing any of the data. I don't think there's any reasonable reason to think that's going to happen currently. But that would be the actual bear case. It's not like 08 where there's a potential for the entire system to explode.

The real scary thing would be if just credit access everywhere shrinks really fast and it's way more aggressive than what the Fed's done. We have to agree without any data from this week yet, this is a watershed moment for credit availability for the year 2023. Things are not going to be the same next week as they were a week before this. Or am I overstating that?

I feel like maybe it's a contrarian take. Why is there reasonable doubt that this won't happen? Because I think it really depends depends what we're dealing with. And it's not like it was – there were – Silicon Valley is kind of a parody, right, of like some insane stuff. There's so many good headlines of like – It's perfectly named. Smoothie maker gets funded, right? There's a lot of stuff like that that's easy to make fun of.

But it's not like it was actually super easy for most people to get a bank loan. Anyway. Anyway, right? And that was one of the things. If you remember back like 2012, 14, 16, one of the things people talked about was the Fed was easing, but they couldn't really get lending going, right? Because the banks were still gun-shy. Right. And it's not like J.P. Morgan has massively expanded their lending to local auto dealerships.

Right. I don't know how much exposure there really is there. And I think that there's a logical reason to think that could be a concern. But I don't really see how much of a change is happening there. And then at the same time, the weird circular part of this is that all this fear is causing rates to come in, which is basically easing. Panic is bullish. Which is helping the bank's balance sheets. So I traded Charles Schwab this week, and the two-year treasury fell 100 basis points in two days.

And it's like, all right, let's say you were still worried about Schwab's treasury bond portfolio. Probably way less worried given the price improvement that they've seen on that portfolio. The two-year went from 3.7 back up to 4.2. This is why it's so chaotic, right? It's like, okay, so it's all fine. So it's all fine. So the bonds sell off again. So it's very, very circular. And I just, I mean, just to be candid, I mean, you'll notice I'm here today and not on my desk. We're just at very low, we have a relatively large amount of cash

relative to what we do normally because we're getting four or 5% and there's a lot of things we like and we have the investments we like long-term and we know what prices we want to add things on. But I don't personally, and this is somebody who, I am a professional at doing this,

I'm not interested in trading these things. This is a knife fight and there will be some winners and there will be some losers. But I don't think most people listening at home should be playing any of these games. Can I tell you something? I don't think this is even a great market for pros. No. Because the pros all had Silicon Valley Bank at a neutral at worst, but like the bank was fine today.

Like it wasn't really fine. There were issues with the, you know, the duration and all that. But like, it's not like a run on the bank was foreseeable. What was foreseeable, the short sellers nailed this thing, by the way. What was foreseeable was that things were getting much worse for this bank with every passing quarter.

But I don't even think this – I don't even think you could find a short seller who was like, there's about to be a run on this bank. I don't think anyone was thinking that it would turn this quickly. I give a ton of credit to the people that were short Signature and this. And I don't know how they do it because staying short these names after they've already fallen 30% and then getting another whoosh lower is like, it's gotta be scary to be sitting on a paper profit like that

and not take it. Yeah, I mean, we've had short positions in the past where you have that kind of the big short movie moment where the thing is down a lot and you do all this research and it's your moment of victory, right? Wrong. Stocks gets halted, opens up 250% in your face. You get a call, hey, your short's been called away.

That type of stuff happens. I mean, it's really sickening to keep these bets on. And then the other thing, if you have any risk management, is if you work anywhere, you can't run size in any of these trades. Even if you were running, and this is kind of my point to my team that we're discussing is, I'm like, are there things we could be punting around and trading? Sure.

But there's just no way we could do more than basis points. I mean, a quarter, 1% maybe in one of these positions. And what, we're all going to sit around here for three weeks just staring at the chart, trying to make 0.05%. When we get 5% on our cash, no, this is insane. This is a really stupid game. When you're getting 5% of your cash, it's not like someone's like, hey, you can make 6% in the stock.

Right. And you're like, oh, I'm in. No. You need so much more than that to justify taking risk. It's not a little bit. Yeah. That's right. And like, you need to show me like 25, 30 percent annualized type returns for me to even listen. Also, if you're short, if you're short a bank that gets cut in half, right? A hundred dollars a share to 50. Right. The percentage of that position in your portfolio grows commensurately with that gain. So then it's like, well, we should cover some because this is now a much bigger position. Well, if you're using puts.

If you're using puts. Yeah, yeah, yeah. Right, if you're borrowing stock, it's not quite the same dynamic. Well, so the thing is, if you're using puts, the position gets bigger as it goes down. Right. Because you're basically long the short is the way you think about it. If you're using a short position, you're probably not, I mean, most hedge funds are not shorting. How much equity would like a hedge fund typically put up against a short?

It's going to, it's going to really vary. Like an investment short. Right. But I would say that like anything 4% or larger is extremely rare. Okay. And so when I talk to people who trade at home and then they're talking about positions much larger than that, and I think really to go over like 2% of your capital on a short is really, really ballsy.

And it needs to be like – that's like – Why? Because theoretically the downside is unlimited in a short? Or is there another reason? So I don't want to pick on our boy here so nick over here wrote a piece this week and i was arguing with him about it we were debating but he was talking about concentration and leverage yeah and shout to nick i said i said nick leveraging concentration not the same and he was like but they're both they end up being the same but the key point I'd make about concentration versus leverage is

with concentration, there's two ways you lose money. You're wrong or you panic at the wrong moment. You got this big position in Amazon. It sells off. You sell the exact bottom. With leverage, and so that means if your opinion sways, you can lose money or if you're wrong. With leverage, if other people's opinion sways, you're done.

And you can lose everything. Not just that position. That's Tesla. The issue with your short, especially if you're short, illiquid things that are super high vol, where there's weird... Think about how many people are trading this stock. There's a chance that this stuff isn't going to settle right

and then there's just not going to be any shares available for you to be short. There's always a chance, like Volkswagen is a very famous one. Sometimes these things go up 150x for no reason before going straight to zero. And you could theoretically have a 1% short end up being a 50% hit to your fund.

Can you imagine? I mean, just like, ugh. Even if it's something you didn't even have that much conviction on. You're like, oh, my analyst thinks I'll put like 0.4% on because I like my analyst and he believes in it. And then all of a sudden you're like 10% of my fund is gone. So how do you think about using puts versus shorting a stock? Puts are generally.

Well, you have to get the timing right too. Well, the issue is the puts are generally way too expensive. What some people can do is you can actually, and you also have to, until recently, and this has been a big change for long-short hedge funds in the last year. For a long time, really until 2008, you were getting paid to short because you were getting cash back and then you got interest on that cash. And then for a long time, you didn't get any interest on your cash. Hedge fund managers used that as an excuse – a legitimate excuse as why it was harder to make money that way. Yeah. I mean you just had one fewer source of income. One of your side hustles

didn't work anymore. And now all of a sudden, you know, so if we have cash, what I would call long cash, if you just have cash in your portfolio, you're getting 4% or 5%,

whatever money market is. But if you short a stock and the cash you get from shorting it, you're not getting the full money market rate, but you're still getting like 4%. Okay. So you've got 4% in your favor and shorting it, you're not getting the full money market rate, but you're still getting like 4%.

So you've got 4% in your favor, and a year ago, you were actually paying borrow to short things, especially these high borrow stocks, these meme stocks. At certain points, you were paying like a 60% loan shark money type rate. That means even if the stock isn't working in your favor as a short,

you're paying 60%. That was one of Robinhood. Stock loan. That's a business. Now it's kind of reversing. The other thing you can do, back when that was happening, when you're having to pay really high rates to be short,

you might actually go short a put against your short. It kind of takes you out at a certain point, but it just covers the VIG you're paying to be short the stock. So if you were going to cover a stock, let's say- Why would you just own less puts? Well, no, you would be short the stock and short the puts. And so the idea is basically, let's say a stock at $50, and let's say we'd cover the short at 25. And you go, okay,

if we sell a put at 25, meaning it takes us out automatically there essentially, well, we get, I don't know, making up a number, $2. All right, well, that's 4% yield on a $50 stock. That's pretty good. And you can roll that. And it's the same way people sell covered calls. It's the same thing, but way riskier. Dan, so shorting is something that is not like formalized education in that. You learn it from being at a long short fund. So many more people start their career on Wall Street in traditional asset management where shorting is just not part of the curriculum of the things that you witness in your day to day. level of experience for the most part that know how the mechanics of this work, know like where the pitfalls are, know where those extra profit centers are, et cetera. This is not something that most professionals should be doing, let alone- These are professional psychos.

Let alone retail. Like these are the, some of these people that have made money consistently shorting stocks are like elite. Would you say they're like the Navy SEAL of Wall Street? Would you say that? No, I have too many friends. I can't gas them up like that. They would never.

No, but you have to be really fucking sophisticated to do this well over multiple market cycles. Well, I would say a few things. Like one, yes, there's a lot of ways this can go wrong. Even the best of the best who've done it for a long time get hammered. The absolute returns you make shorting full cycle tend to be rough. even the best of the best who've done it for a long time get hammered. The absolute returns you make shorting full cycle tend to be rough. It doesn't really make a ton of sense as a standalone product or a standalone strategy. And then the other thing that I think doesn't get brought up enough is that the psychological toll of doing it.

If you think investing long is hard, it rips you apart. And a lot of- It It makes you root against things going well generally a little bit, right? I would say it a different way. You have people sometimes who buy a stock, and you'll see them on Twitter and other places, and they will believe that there's a conspiracy against their stock for whatever reason. Now, when you're short a stock, there actually is a conspiracy. Every single person at that company is working to beat you. And all of their business partners, when you're short of stock, there is actually a group of people who are working together to beat you. You know that going

in. And the system also, you're also betting overall that the system's not going to take things higher, which it will. And so there's a lot of things against you. And also betting overall that the system is not going to take things higher, which it will. So there's a lot of things against you. Also, this is the other thing that's kind of dark about it. Let's say you actually stumble upon a real fraud, like really bad guys. A lot of these guys just get away with it. I used to spend a lot of time looking at these exciting things because I think when I was younger I was like, oh, it'll be like these books I read. Like a mystery. Right.

And it seems cool and especially, man, when you find something and you're like, I sleuth this out. It feels awesome. And then they never go down and you pay a lot of interest on your short and it's just an agonizing, stressful process. And in the meantime, you didn't just buy Google

for the last 20 years. Which you also would have made money on. You just go insane. Do you think Tesla did that too? Probably half a million people. It's a psychological black hole. He did a lot of things that most company CEOs

wouldn't even have the guts to have done. Right. And like one after another, things like fell his way. Pulled it off. And then he got so big that, sure, I'll pay the fine. I don't give a shit. I don't know if there's anyone on the planet with bigger balls than Elon Musk. Yeah.

I mean that guy played like a Game of Thrones win or die style game. And thus far, he's won. like a Game of Thrones win or die style game. And thus far, he's won. And so I just think that there are certain games in the market that you can play. Short selling is one of them. Messing around with these bank stocks in our day during a crisis is another one.

It's not, you're taking a lot of risk with your money and that's a really serious thing to understand. But more importantly, you're taking- You should know what you're doing before you play that game. Even before thinking about whether or not you know what you're taking a lot of risk with your money, and that's a really serious thing to understand. But more importantly, you're taking – You should know what you're doing before you play that game. Even before thinking about whether or not you know what you're doing, you're taking real risk with your mental health. And I've seen serious pros have to, like, go literally live in the mountains alone

because they're, like, broken spiritually, psychologically, and physically from doing this. You see guys get into short selling and – or get into, like, not short selling, get into a specific short. And then you see them two months later and they've put on 30 pounds and they've been chain smoking.

And I mean, it breaks people. It's a very special type of person that can do it for a long time. Yeah, I agree. These people should be saluted just in terms of like what they have to endure. They go up against bad people. There are elements of the government that want them to lose money.

There's a lot going on there. It's incredibly difficult. Do people ever short a company that they like, or is it usually emotional, like they don't like the company? I would say that the probability, with a few very notable exceptions, the probability that you survive for a long time as a short seller, if you only short things you dislike, is about zero. You know, there's like

maybe like 10 or 15 people that that's all they do is short like bad people. But it's way, way harder. Most short sellers, they're not like, we short stocks, right? But we don't short stocks because I think the company is a fraud, or I think it it's a zero or I think the people are bad people. I might short a stock because there's two companies in industry. They're both killing it. The last quarter, this one company had like an awesome, awesome report. But for some weird reason, their margins were like twice what they're going to be normally. And then the other company had bad margins that quarter. And they're going to catch up. And so over the next year, they're going to be normally. And then the other company had bad margins that quarter.

And they're going to catch up. And so over the next year, they're going to reverse. And then people got really, really gassed up on one company. And so a lot of the companies that we short, we've been long other times. We'll go, okay, for the next year or two, it's been so good. Like there were a lot of things after COVID where it was so awesome. Everything was great for them. And we were long them for years.

And then by like the end of 2020 or 2021, we're like, this is the top for sales, the top for margins, everything. And it's going to take two or three years for this to work through. And it was also trading at 50 times earning or something. Like live entertainment? All sorts of stuff.

And so the reason you're shorting it right is not even necessarily, for us, we'd obviously like to make money on the shorts. But part of why it is, is you're basically borrowing money against that stock to buy another stock. Yeah. Right? And so if I think, okay, there's no way this stock can do amazingly next year, but this one can, I can borrow against one and use it to fund the other.

But it's not because, like, I think the company is going to fail or anything like that. Right. That's a different category. Some of the best shorts actually are just stocks that you think can't go up much. You don't even necessarily think they're going to go down. Sometimes you find stocks where you're like, I don't really think this is going to go up or down more than 10% or 15%, but I can borrow against it and buy other stocks. So I want to talk about stocks that have gotten hammered recently and get your take on this.

So year to date, these are winners. I'm talking about buy other stocks. So I want to talk about stocks that have gotten hammered recently and get your take on this. So year to date, these are winners. I'm talking about the reopening stocks. We're talking about cruises, hotels, airlines, casinos. They've all been- Experienced stocks. They've been monsters this year. So year to date, we're up 12, up 30, up 10, up 20, blah, blah, blah. Okay.

Over the last five days, however, they've gotten pummeled. So my question to you, Dan, is, is this a read-through to the consumer finally being at the end of the rope? Or perhaps are these stocks just pulling back after a monster run? No, this is almost entirely basically not hedge fund positioning,

but it's positioning. It's way too soon. We talked about earlier about potential concerns about credit and all these other things. It's just way too soon. We talked about earlier about potential concerns about credit and all these other things. It's just way too soon to see any of that filter through to actual consumer behavior. If you look at the casinos... But Bob Madison, the stock's getting ahead of it, or you're saying

it's something else entirely? Well, I would say with particularly the casino stocks, because I cover those pretty closely, they have predicted like, I don't know, 12 of the last five or 12 of the last. They trade on China. It's like a whole, it's a whole different thing.

It's going back to like, this is just basically positioning and opinion and people being like, and a lot of it's now like people selling or shorting because they're like, what are other people going to think will lead? So it's like what you just said, but it starts to loop on itself. Let's use, here's United Airlines. Right. Okay. The last six months, United is up 20%.

I assume inclusive of this. In the last five days, it's down 15%. Yeah, but like- And they had a profit warning. But so look at United, and they all look like this. It was just after the bank thing, it was just a waterfall. Yeah. Well, United specifically, though, warned on earnings.

But they all look like this. Yeah. But the other thing, you know, for a lot of people, the way they structure their portfolios is based on volatility as the way they measure risk. And so when volatility goes up or implied volatility goes up, which just happened, what are you doing? Are you fluffing it?

I think he's going to take it off. I'm taking it off. Are you braiding it? I'm getting a headache. When volatility goes up, it causes net. Do you know who you look like now? Me? Like, not to brag.

This is a good thing. Paul Schaefer? Yeah. Yeah. You look like Schaefer. What was that, Letterman? I can see it. You got it?

Just like him, yeah. Just like him. Relax. We all look alike. All right. Volatility causes people to take positioning off. And I think that's – and it's very – again, it's very liquid. So a very small amount of buying and selling can move these things.

Then it's a little bit self-fulfilling. And honestly, like who has the guts to step in and be like, no, I want to put a line in the sand and buy a ton of Delta Airlines right now. Not specific to Delta, but just, you know. Here's the next big catalyst. By the way, HRD close. No big deal. No big deal. Next big catalyst.

FOMC next week. We already have CPI. CPI came in okay. No problem. Some of the strategists have used this week as an opportunity to rethink how many more hikes they think are left. I think Goldman said probably none now.

That's where I am. I mean, what the hell do I know? I don't think there should be more. Again, what the hell do I know? Here's Bank of America making the case for three more hikes. This is Ethan Harris. A number of press reports have pointed out that the drop in two-year treasury yields in the last few days was the biggest since the stock market crash of 1987. It's also considerably bigger than the drop in yields around the Lehman bankruptcy.

I wasn't really aware that we had a bigger drop than back then. He says, here we draw two lessons. We got this up. The market response seems way overdone relative to the financial event. And then two, the Fed has not done hiking rates. The similarities to 1987, basically there was like a pause in the rate hike cycle and then it resumed right back up again. It's not clear to me what the stock market would even like at this point because i could see both narratives the fed pauses and does nothing after people are expecting 50 basis points as recently as a week

ago the narrative is either the fed's done but you know game on right or oh shit they know something we don't know things are yeah i don't know win, uh, in the real markets and which will win on finance Twitter, but I could picture, couldn't you picture both versions of that? Yes. I think, I mean, I think they're going 25. I think you want to bearishly buy on that news, right? Is that, is that the only way to do it? Can you bullishly sell? Yeah. Yeah. I think you want to bullishly take profits with, with, I don't really know take profits. I don't really know what the response would be. I'm pretty sure I know what the bond market response would be. Probably more of what we're already seeing, but maybe muted.

Stocks? I don't know. Dow up 1,000? Wait, if what? Or down 1,000? If what? If nothing. No hikes.

So if they pause, I think you're overthinking it to think that people will be scared. What do they know that we don't? I think if they pause, the Dow's up 1,000. But if it's down 1,000, would I be shocked? Of course not. What do you think? What do you think?

I don't think they're going to pause. I mean, I'm not betting on any of this. My opinion is I don't think they're going to pause. But if they did, I think we'd rally. I think we'd probably rally regardless because it's just uncertainty out of the way. Well, how about this? What about positioning?

You like to talk about positioning. I just have no idea. The thing is, positioning data from yesterday means very little. Fair. But this is long-term. Goldman Sachs' prime global long short ratio fell to a new multi-year low, now at 170.6.

What is this measuring? This is longs divided by shorts. I mean, how exposed their hedge funds are, right? Dan, am I stating that properly? I'm not sure what the specific one is, but that looks about right. So basically, people have as many shorts to longs as they have in –

it's pretty extreme short positioning. Or just short relative to long. Same thing. All right. But my point is the momentum, if we get – momentum can feed on itself very, very quickly. I think people are in opposition for a rally. Do you think that's fair to say?

Yeah. People are definitely not generally positioned. What are these tweets? I didn't put this in. Dan, did you? It's zero hedge. I assumed it was zero. No, no, no, no.

The next one. The next one. Okay. FRC equals the ultimate contrarian investment right now. Did you put that in? Oh, yeah. That was the point we talked about earlier where there's just this issue of how do you justify?

You have to justify stuff right now versus what you can get on cash. And then as you go out, you really just need to make sure you're getting paid for the risk you're taking. I don't think we need to go through that particular tweak. We already talked about that. So this is interesting from Quintanilla. This is from the JP Morgan desk. The desk is eerily quiet outside of financials. Investors continue to grapple with deteriorating fundamentals.

financials. Investors continue to grapple with deteriorating fundamentals. Everyone is bearish and positioned accordingly, making shorts hesitant to press and contrarian bulls hesitant to buy. My mind is now wrapped in a pretzel. So, Bush? Exactly. What do you even do with that information? Hopefully nothing. Hopefully no one's doing anything. Put this chart up. Stocks and the S&P moving together. This is like a good- This is five-year rolling though, so it's a bit of a weird time period, but still. It's a good refresher though.

This is like exactly what happens when there's tension or a fear in the market. No, but I think- No, no, no, no, no. Forget about this, Josh. We're looking at five years. Just if you go from 1995 to today, the slope is upwards. I think this is what a lot of people that are mad about index funds and ETFs

are pissed off about. The ETF effect is that it's gradually going higher. Is that stocks are moving together? And how else do you explain this? It depends how you measure it. I mean, it's just changing. I think if you're looking at the way they're calculating this, it's definitely going to look like that. There are still other areas of dispersion. But I think kind of average day trading, there's just – in terms of the number of buys and sells that are determined by passive versus anything else, it's unambiguously a much larger share of the market now. And the way I think about the market, I think this is a little bit hyperbolic. But I think active management is a minority now. The way I think about the market, I think this is a little bit hyperbolic, but I think active management is a minority now.

I think that especially when you have times where things are relatively illiquid, active as an aggregate entity tends to move all at once. Everybody gets scared. There's just this weird dynamic, and I think it's part of why you see a puke and then when uncertainty goes away. The question is, let's say the Fed does pretty much anything next week. I don't know what exactly they do that makes large pools of discretionary money wake up and go, okay, now it's time to sell. A large pool doesn't have to do it. It's at the margin.

Right. But I mean, are the 401k contributions going to adjust themselves? That's one way. I've been saying that for 12 years. That's permanent. So when things are illiquid and you already had a vomit, if the selling – you don't need additional selling. If the selling just slows, there is this consistent bid.

And if that ever reverses, look out below. But as long as that's continuing – It never will. It's trillions of dollars. It's coming in regardless of what the Fed does. By the way, I hear people in the headphones say, just wait. For what? It's not happening. 401k outlawed by Congress. People are not going to say, hey, you know what? I don't want to contribute to my retirement account tomorrow. It's never going to happen.

Well, I think in order for that to happen, things would already have to be so bad that that's a smash glass emergency situation. And I was talking with a friend of mine who kind of thinks that eventually the passive move will reverse. Never. And, well, the argument I had with him is I said, he said that would happen and then I think the market could be down 80 or 90 percent. And I said, no, no, no, no. I think if the market is down 80 or 90 percent, then that happens. That's exactly right. You know when I stopped contributing to my retirement account?

If a meteor strikes us tomorrow, then I'll hit pause. Would you even think about it? It's every two weeks. It's every two weeks. A certain dollar amount, come hell or high water, is going into IRAs, 401K. It's just going to happen. Buybacks are another area where, I mean, we now have 10 years worth of data, up markets, down markets,

good economy, bad economy. If you're waiting for that to happen, you can wait forever. Right. You're waiting for buybacks to stop supporting the S&P 500? Are you f***ing crazy? Like that's, look what we've already seen. It didn't happen during COVID. Right.

You think, what is the reason why all of a sudden that level of support will go away? Well, I think one of the things is if you look at the last 10 years, every time there's been a freakout in the market. Yeah. I think what net happens is active management loses more market share to passive because they freak out. Yes. They sell the bottom. They make dumb decisions. Or, you know, and this is part of the other issue.

There are some active managers that are very good, where over time they actually do outperform the market and yada, yada, yada. However, if you're a client who is not engaged with markets, you don't really care. And if you are engaged with markets, the heartburn a lot of them get from watching that guy whip around along the way versus just, okay, all this happened and I still just made a reasonable return on the S&P. There's still just this natural game theory problem from the customer's perspective of just going to passive. And then the issue is that every time we have one of these big volatility shocks –

You lose 10% of the active crowd to passive. That's true. And then the second the active is done panicking, the market just starts levitating. It's not a coincidence that on the heels of the GFC, Vanguard, BlackRock, and StageStreet became the number one, two, and three asset managers in the world.

Right. It's not a coincidence. Dan, I want your opinion on this. I forget who told me this. I was in Miami a few weeks ago, and I think I was talking about this with Tom Morgan. Shout out to Tom. Tom's the best.

So this really hurt my brain, but I want your take on this. Somebody was on, I think it was Bloomberg, talking about the democratization of finance or whatever. I hate that. But just this idea that if every American started to invest, let's just say we just said every American started to invest, let's just say we just said every American gets auto deposits, whatever.

Instead of doing active investing? No, just into the market. Even if it's S&P 500, just into investing. If every American all of a sudden invested, returns would have to go down because if we're just dividing up the pie, everyone would own a thinner slice of the pie. Or average PE multiples would gravitate closer to 30 than 20. But so the reason why I found this somewhat compelling, or at least why it hurt my head,

is like, all right, well, if there are $225 worth of earnings per share. Right. And there are a finite number of shares. The more people that are involved, the less shares I have or the thinner my slice is relative to the overall pie. But there aren't a finite number of shares. No, yeah. Well, that assumes they're issuing new shares every time. Not everything's like Bitcoin, Michael.

There's no finite number. There is a finite number of earnings. There's a finite level of earnings. Yeah. So if everybody is in, does that – is this completely – Why is there a finite level of earnings? Well, the S&P can only earn what it earns. All right, let me help you out.

If everybody starts investing, theoretically, everyone has capital, which means they might spend more in the economy, which means earnings might be higher. We just – I mean my – I don't know, counterpoint. My point would be we just – We injured his ankle with this question. We just ran this experiment. This was COVID. We just did this. Everything went up. And here's the reality.

Passive has a lot of great things for it. It's a great solution for most people and it probably provides a better outcome overall. But it also not only doesn't think, it can't think. And we are getting to a point where you are starting to really choke out anyone in the market that's allowed to price. And so you have these things happen where you have what happened last year and the year before, and it's happened as long as markets have existed. Everybody's coming in. Things are trading based on vibes, headlines, whatever. Memes. You know, whatever. It just flows.

And then when you have something that grabs attention on top of positive flows, it can go nuts. But these things become totally dislodged from earnings. And then whenever there's a change in liquidity, you have these crashes. And I think there's a reason the market is this very smooth momentum and then elevator down pattern. We're not seeing – I think the main difference in the last 10 or 20 years is really since 2002, 2003. You're not seeing these grinding, chopping extended periods.

Really? You're seeing these ramps crash. I do think there's a question of because one of the things that I disagree with some of the blogs I read is that a lot of people are using back to 2008 or back to 2000 or whatever when they make these arguments.

Nobody means to make an improper argument, obviously. If you go back further than that, the way prices have moved the last 10 or 15 years is very different than most of history. But wait, but don't you, the crashes that we've seen, so COVID, December 2018, I believe it was. Don't you think these crashes would have occurred

if it was only active managers? Oh, it'd probably be worse. My point is not like where we ended up. It would probably be worse. My point is not like where we ended up. It's more this like no decline period and then it's just really just the momentum pattern and then the puke and then the momentum pattern and then the puke. And there's this weird thing of like it's a game that's being played repeatedly and whoever wins the last game gets to play the next game. And the losers don't get to play the next game. But what's driving that game?

I think it's the – The Federal Reserve. Well, I think there's several dynamics. It's very complicated. There's a rotation from active to passive. There is a reduction in the diversity of frameworks being used on the active side. You've got Federal Reserve, cost of capital. And generally, like also the other thing that I think maybe is missed is with rates going

to zero and returns getting compressed, part of returns getting compressed is there isn't enough room for fee. There's not enough room for fees or expenses there on the return. So if you're making 5%, you can't pay 150 basis points of fees, which means you can't afford to have people checking things or evaluating risk. Where have returns gotten compressed? Because the S&P is up like 13% over the last decade or whatever it is. Well, I'm talking about in terms of like, let's ignore stocks because stocks are ultimately priced based on opinions and flows. But let's look at maybe fixed income or something where there's actually shorter-dated fixed income, where you're talking about actually a cash yield, right?

We're talking about just cash yield, not prices on opinions. As that yield comes in, you know, if you're earning, if somebody comes to you and says, hey, guys, I got a real estate deal for you, it'll make 50% a year. You'd probably say, get out of my office. But if you didn't say that, you'd probably call somebody and say, hey, can you take a look at this and like do some diligence and make sure this is legit and you're willing to do some diligence and make sure this is legit? And you're willing to spend some money to make sure this is for real. And you can do that when you're going to make 50%, right? You could do that when you make 25%.

But if you're making 4%, you cannot afford to do diligence. Yeah, it's a huge chunk of the return. Well, so now that Fed funds are over 400, do we think that we're entering a completely new regime? Well, that's the thing. If returns in terms of yields blow out, then all of a sudden there are vigs left for a lot of different types of things to happen. But it will manifest itself. You're not going to get back the second and third tier broker-dealers with all the analysts covering all the stocks.

But isn't that good? You won't get that. Isn't having interest rates mean something good? It should. The theory would be that it leads to more intelligent capital allocation. I think that's out the window. I think that's over.

But I just think like, because the issue is yields compressed, capital's gone to very, very large institutions, and then you just have a cost problem. Like JPMorgan Chase is not lending to like a car dealership in Topeka

or something like that. They don't have the willingness, the manpower. It's not worth their time to do a— To vet that dealership. To go vet a pet store in St. Louis. So this is the worrying thing about regional banks going down. Yeah, now it's the issue. Because they will do that.

Yeah. It could dial up income inequality and things like that as well. If all of a sudden small local businesses have much harder access to capital, but there's absolutely no impact on larger businesses. Yeah. The banks will lend to people that don't need to borrow it in the first place. That's the rule one-on-one of lending. Lend to people who don't need the money. Hey, can we talk about Barney Frank?

Dude, this is the best thing ever. Oh, Barney Frank? Oh, let's do this first. Okay. I mean, we're... All right. No, Barney Frank. Oh, let's do this first. Okay. I mean, we're- All right. So- No, you go.

So Larry Summers tweeted, SVB committed one of the most elementary errors in banking. Borrowing money- He's so smart, you guys. Borrowing money in the short term and investing in the long term. When interest rates went up, the assets lost their value and put the institution in a problematic situation. So this got quote tweet dunked into oblivion.

I just want to read some of the quote tweets because they were amazing. Somebody said, is this a bit? Somebody goes, first rule of banking, never do banking. Somebody else wrote, former treasury secretary learns how bank works. Somebody else wrote, I have to assume the former treasury secretary meant something more nuanced and it was lost on Twitter because he literally, he literally just said that an elementary error in banking is being a bank. All banks borrow short and lend long.

That's the model. That's fractional banking. So Larry Summers replied to himself, as one does, and said, responding to some of the comments here, of course banks borrow short and lend long, but properly managed and supervised banks

limit duration mismatch between liabilities and assets. So they're kept, whatever. It doesn't matter. Great, great, great, great tweet, sir. Why? If you're Larry Summers, what is the upside? I understand the downside. Somebody gets really pissed off and like physically wants to harm you.

And then anything else that could go. What is the upside? This is a bit killed me. I was, I was cackling. The upside is he gets 500 likes. Is that what we're talking about? Is that why this is done? Can anybody fill me

in? Maybe he gets endorsements. He can become an influencer. What, like Gatorade? I mean, he is influential. He doesn't need anything. He was in the White House. Do you stay with Larry Summers? As long as I've been aware of Larry Summers, he's the whole, he doesn't need anything. He was in the White House. Do you stay with Larry Summers? As long as I've been aware of

Larry Summers, he's a guy, he's like a Kardashian. He's been famous for being famous. Yeah. And like, I'm aware that he did very serious things. Also saying crazy shit. Yeah, he just. It's like a Skip Bayless vibe. No, he was in the social network. Was he? I don't know. He played a role in Zuckerberg

quote unquote stealing Facebook from the Winklevii. Yeah, I mean, I don't know. He played a role in Zuckerberg quote-unquote stealing Facebook from the Winklevii. Yeah, I mean, I don't – He like mediated as a student. I think it is – I think he is positively benefited by further attention. I'd put it that way. All right. Barney Frank says they shot Signature Bank in the head Sunday night.

Well, that's a fact. To send a message about crypto. There's going to be a lawsuit about this. It's a fact? Well, okay. That's my opinion. Let me set this up. Let me set this up.

Everybody knows who Barney Frank is. He's one of the more entertaining members of Congress. The most. The most. During the financial crisis of 08 and Dodd-Frank, the legislation that came out of that, it's named for him. He's a senator from Massachusetts?

Yes. Yes? Okay. He's on the board of Signature Bank. Whoops. He gave a really interesting interview to, I think, New York Magazine. And this is— Oh, wait. Is this in 2018? No, it's now.

Now. Now the question is, why do they— Why do the regulators seize Signature Bank on a Sunday night and close it? But wait. Hold on. There's an important point here. Barney Frank rolled back his own regulation. I think he was involved with loosening it up. They, so, so the, for banks to be like extra heavily regulated,

if they had $50 billion in assets, they were considered in that tier. He lobbied for it to go up to $250 when he was at Signature Bank and they were at $47 billion in assets. Yeah, of course. All right. Now the question is why did they react so harshly to what they said was our, meaning Signature Bank's, inability to give them the sufficient data? I believe it was probably to send the message that even though we were doing crypto stuff responsibly, LOL, they don't want banks doing crypto. They denied that they is the New York

Department of Finance or whatever. They deny that in their statement, but I don't fully believe that. Somebody ought to look and see. I wonder, why are we the first bank to be closed totally without being insolvent? And if so, why? I think the DFS, the state of New York,

people should have an answer to that. Hold on, let Let me finish this. That's why I speculate that using us as a poster child to, quote, stay away from crypto was the reason. There's an old French expression. They were interested in the 18th century, how strict the discipline was in the British Navy. And in one case, the British Navy executed a guy for a – this is Barney Frank – for a relatively minor infraction because they were worried about the behavior of all the sailors. And the French said, oh, those peculiar English, they shoot one man to encourage the others. And that phrase, pour encourager les autres, people understand what that means.

That's the only reason why Josh read this. He just wanted to say that. And I think it's probably working. So he – this is a guy that was a senator and wrote some of the most important financial legislation in American history, has a conspiracy theory that Signature Bank was raided and closed over Bitcoin.

Is it that far-fetched? I don't want to say it's a fact. I would track that. But it is of my opinion that- You think it's true? I do think it's true. So why are there any companies left doing any kind of crypto?

Who? What banks are doing crypto? Somebody's banking Coinbase. Okay, JP Morgan. Somebody's banking Gemini. JP Morgan. They're not going to shut down JP Morgan. Okay, but Signature was like teetering and then you get in there?

I think I saw like 25% of their business was crypto-related. Why do New York state authorities want to close a bank, want to hurt crypto badly enough to go shut down an otherwise solvent bank? The government is not being very crypto-friendly right now. I understand. What if the bank, though,

was actually in trouble? Isn't that possible, too? Yes. He doesn't seem to want to admit that for reputational reasons. Yeah, but I would point out we have had some explicit high-profile failures recently, right? And both another bank, FTX, things like that.

And we don't know what regulators and cops, let's just say, found there. And so we really – Oh, signature might be dirty. Yeah, we don't know, right? A hundred percent. I wouldn't defend it. And I don't think that I would be shocked if a politician on a board was aware of everything a bank was doing. And so what he's saying may be completely reasonable from his point of view.

But he just doesn't know what they were really doing. And they may have found some like – Money laundering. Money laundering. Worse. We don't know. I'm sure there will be enough lawsuits to litigate this. It's all going to come out. It's all going to come out. Whatever that bank was up to,

there's a reason they were killed. What if it's just crypto? Maybe it is. It's beyond the pale for the government to shut down a crypto institution? I think them, no, but here's the thing. I think them doing it – I think if it was just a we want to send a message to crypto, them doing it right then is a – Hey, they denied it had anything to do with crypto.

So how does that send the message? Like they responded. If anything, it's emboldened. And they said, no, we didn't do this because of crypto. Bonded. If anything, it's emboldened. And they said, no, we didn't do this because of crypto. Well, I would challenge anyone to find a crypto true believer who, as a result of them closing signature, is now like, you know what?

I'm actually good on crypto. Yeah. I'm actually, you know what? I thought crypto was a prudent investment. But after seeing signature be closed by regulators, I decided. This is crypto people's time to shine because crypto is at a 52-week high while legitimate banks are failing. Is it though?

Bitcoin is like $25,000 right now. I know you're a huge fan. I know you're a huge crypto fan. Well, no, it's just like, okay, we have one bank that matter. We've got some non-Taylor banks. Dan, let me answer you in the style of a pomp tweet. Yeah, okay. Are you ready?

No. Not one blockchain requires FD, okay. Are you ready? No. Not one blockchain requires FDIC insurance. Is that good? That's a good pomp tweet, right? That is good. Name one blockchain that requires FDIC.

And is that a fact? I think that's a fact. Yeah. Shout out to pomp. Where are we going next? No, we're going to do this Dalio thing. It's too long.

TLDR, he's potentially bearish. Did you have fun on the show today, my friend? We learned so much today. I bearishly got bullish. Did you bearishly get bullish? Okay. I start out the day like that.

So, all right. You rocked it today. And we want to wish you all the best with your longs, your shorts. Your legs. It seems like you're having fun. I know you can't talk about anything you're doing that's good. Let's not go over any lines. But it seems like you're in a good place.

Everything's going to be fine. Look at you. Look at you. Said the non-Silicon Valley Bank customer. Said the non-Signature Bank customer. All right. Let's do favorites. And then I think we're going to go to the Pebble Bar.

Are you down? Are you coming? Sounds good. Are you in? Yeah. I'll start. I'll start. I love 90s movies.

There, I said it. That's really a bold take. No, wait. No. There's more. What about 90s hip-hop, though? There's more. So, On the Way Home.

On the Way Home. Yes, I do like that, too. On the Way Home from Chicago, I watched a great Chicagoan movie, The Fugitive. How f***ing good is that movie? Great movie. Still rocks. Yeah. Still good.

I haven't seen it in a while. It's so rewatchable. Tommy Lee ising good is that movie? Great movie. Still rocks. Yeah. Still good. I haven't seen it in a while. It's so rewatchable. Tommy Lee is really like the movie. And so does Harrison Ford. It's like a very unusual Harrison Ford role. It's the only role

where he's not like a gigantic personality. He's sort of like understated in that. Dr. Richard Kimball. I also, as I mentioned earlier in the show,

watched Nightfalls on Manhattan. It's on Amazon Prime right now. Gandolfini, Andy Garcia, Richard Dreyfuss. It's about, it's the DA's office? Yes. It's like internal affairs, courtroom drama, dirty cops. I love that shit. Love it.

By the way, Your Honor's pretty good. Your Honor's season two? Pretty good. It came around. And lastly, lastly, Howard Linsen did a podcast on everything that he missed. It was awesome. It was awesome. He missed like I gotta check that out. Oh, all the investments he missed out on? Yeah. Zynga. Who was the guest on that he missed. It was awesome. It was awesome. He missed like- I gotta check that. Oh, all the investments he missed out on? Yeah. Zynga-

Who was the guest on that? Himself. Just freestyle? I gotta listen to that. Zynga, Twitter, it was great. So just Howard being self-loathing for an hour? Yeah, it was so good. That sounds great.

Howard does self-deprecating better than most. Yeah, because it's legit. And it's funny. Yeah, it was good. I listened to the Acquired podcast, did a whole episode on LVMH. They're great. Those guys are great great it was two hours 45 minutes and basically what they do is they read like they both read the same books they read like five or six books on a topic

yep and they just go in and it's a fairly unstructured conversation at the end there were takeaways like what could other entrepreneurs learn from this yep Yep. The Bernard Arnold story is f***ing incredible. Like, I don't know how it's not a movie already. I don't understand. This should be, this would be,

if this were a Netflix series, Who would play him? Bernard Arnold in the 70s and then the 80s and then the 90s. Jared Letta? People don't even understand.

He owns, no, no, no. I don't think so. I think you want to use the Frenchman from, Chalamet? Well, Ocean's 13. The bad guy is a French. Oh, no, no. I don't think so. I think you want to use the Frenchman from – Chalamet? Well, Ocean's 13. The bad guy is a French –

Oh, yeah, yeah, yeah. What's that guy? Vincent Cassell? Cassell. That guy kills. He might be too old now. So the story of Bernard Arnault who now controls – Oh, it's a great call, Duncan.

This guy's a great actor. Yeah, and he's French. 70% of the luxury market or some crazy number. Basically, he owns everything that's not Gucci. Like the entirety of – so those guys did a great job. I highly recommend everybody check out that episode. The second one is Michael and Ben had Dr. David Kelly from J.P. Morgan Asset Management on this week. It was their Talk Your Book episode this week.

You guys were great. He's amazing. That was like a macro conversation that was like actually worthwhile. He's amazing. That guy knows what he's talking about, David Kelly. So check out Animal Spirits from this Monday if you didn't get it. Duncan, you listened to that or you just edited it? I haven't yet.

Okay. Check it out. Very, very good. Very good episode. John, you edited it that or you just edited it? I haven't yet. Okay, check it out. Very, very good. Very good episode. John, you edited it? Yeah, I was on the background. It's like one of the few that you were actually

listening to as you were doing it? You were into it? He was great. He was great. Yeah, yeah. I thought it was great. All right, Dan, bring us a favorite.

All right, well, I got two. You brought up movies. I recently rewatched a movie that I'm going to argue is the greatest movie ever made. It's not the greatest film ever made.

Okay, movie. I'm not a film guy. Is it going made. It's not the greatest film ever made. Okay, movie. I'm not a film guy. This is going to have Adam Sandler in it? Face Off. Face Off is good. I was going to guess The Rock. I swear to God. I've only seen it once.

I think I probably watched it 10 or 15 years ago. Cage, Travolta. Cage, Travolta playing each other. Sean Woo, the director? Yeah, and then they're playing each other, playing each other, playing each other. It's a face pouncer. It is so insane. It is.

And every scene, it seems like the writer's room was having a bit going where they'd write a scene and then they'd bet money on who could top that scene every scene throughout the movie. Everyone is trying to one-up the last scene and there's no CGI. It's all practical effects.

How great is the jail with the electric boots or whatever? Yeah, yeah, yeah. The magnetic boots. So Nicolas Cage ripped off, face-off Con Air and The Rock in like 36 months. Yeah. What a legend. Yeah, incredible. ripped off face-off, Con Air, and The Rock in like 36 months. Yeah. I mean, what a legend.

Yeah, incredible. And Snake Eyes, which was not as good. Did you smile when, on the Super Bowl, the T-Mobile commercial with Travolta?

Oh, yeah. Like, you haven't seen him do anything for a while, and then he just pops up in this random wireless phone commercial. He's like Mr. Cleaned Up

and ready to go, yeah. But he crushes it. Oh, yeah, I like that guy. I thought he was auditioning to be Bruce Willis now. I thought that was what was happening. He's like Mr. Cleaned Up and ready to go, yeah. But he crushes it. Oh, yeah, I like that guy. I thought he was like auditioning to be Bruce Willis now. I thought that was what was happening. He's a great-looking Walt. So I'd say that'd be my movie is just rewatch that. It's incredible.

Speaking of Bruce Willis and John Travolta, I rewatched Pulp. I mean, I've seen that a billion times, but I haven't seen it in probably 15 years. We can't go down a Pulp rabbit hole. No, no, no. I'll just say one thing. It's so much. Aged incredibly, incredibly, incredibly. But it does feel a little bit old.

I mean, it is. It is an old movie. 30 years old? Yeah, it is. It is. I love that movie. So my other favorite would be Rick Rubin released his book after a long time. Not the great guy.

I own the book. I haven't read it, but I own it. He created it back. My, like, this is investment advice. Instead of, like, trying to day trade this market or whatever, go read own it. You create it back. My, like, this is investment advice. Instead of, like, trying to day trade this market or whatever, go read that book. It's an incredible book. While you day trade. It's an incredible book on investing.

Really, anything, any craft you have, it is just packed full of things where you're just like, oh, duh, I should be doing that. It's just a lot of wisdom, really, really insightful stuff, a lot of good process stuff. I think he said he wanted to try to write a timeless book, and it's one of those things you read it through the first time, and you're like, if I read this in two years, I'm going to read a different book. It's kind of a mirror. So definitely recommend that one.

Dan McMurtry, ladies and gentlemen. How about that? All right, so that was the first half. We're wearing these wigs to the bar, right? I'm not wearing that wig, so there's no way. Do we have anything else to do or we get out of here? That's it. That's it.

Happy St. Patrick's Day. Happy St. Patrick's Day. Hey, where can we follow Dan? On Twitter, at SuperMugatu? Yes, sir. Is anyone telling you to change your handle now that you're, like, respectable? Respectable? He brought us f***ing green wigs.

True, you're not respectable. You brought these. Michael, just remind me, you're like respectable or? Respectable. He brought us green wigs. True, you're not respectable. You brought these. Michael, this is my idea. Michael, just remind me you're not respectable. All right, Dan is at SuperMugatu on Twitter. Anywhere else? You're not writing, are you? Good.

Keep it all inside. I don't have time. That's what I always say. Bottle it up. Yeah. Until it's too late. It's Irish tradition. All right, Dan, we love you.

Fan favored. Thank you so much for coming back. You're the man. Hey, everybody, have a great weekend. Thanks for listening. Like and subscribe., we love you. Fan favored. Thank you so much for coming back. You're the man. Hey everybody. Have a great weekend. Thanks for listening. Like,

and subscribe. We'll see you next time. There was like a few times. I, yeah, I, I, I, I know it was,

it was me up. Cause I would start answering questions and then I, I, no, it was, it was f***ing me up because I would start answering questions and then I would click it back and my brain, the needle just came off the record.