The Compound and Friends - "The Next Big Thing" and NFTs, Rising Rates, the legendary Mark Fisher and Joe Terranova

Episode Date: March 5, 2021

On this episode of The Compound Show, Josh welcomes Joe Terranova and his mentor, the legendary trader Mark Fisher, for a discussion about current markets, commodity rallies, how traders are navigating everything from short squeezes to breaking news and a lot more. Prepare for a heavy dose of Long Island accents!  Also, Josh's take on Non Fungible Tokens as "the next big thing" and what to make of this week's growth stock sell-off and spike in 10-year Treasury bond interest rates.  Be sure to leave us a rating and review wherever you listen! It means a lot. 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/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

I want to start out this week talking about NFTs or non-fungible tokens because I don't want my views on this topic to be misconstrued. I did a blog post this week about digital collectibles and how reminiscent a lot of the stuff we're seeing is of the Beanie Baby bubble from 1999. I even threw in Dutch tulip mania. I pulled out all the stops just to make the point that eventually what happens with these types of booms and collectibles is that opportunities come in and create too much product.

And when the prices stop rising as quickly as they were, because everybody has more than enough stuff that they're able to buy. These types of booms tend to fade away. to be a very important technology and even reorganize some of the ways in which services and goods and IP are bought and sold and even invested in. Because I am not an expert, number one, in the technology itself. I'm reading about it all the time. But I also think even if I were an expert, that doesn't mean that I would be able to definitively say where the technology would be going. And NFT, and I guess the most popular example of this would be the Ethereum blockchain-based NBA top shot phenomenon is very, very young and very early. And I want to share something that a venture capitalist wrote on his blog 10 years ago, January of 2010, that I think is every bit as true today as it was when he wrote it a decade ago. In fact, it may have even become more vital to understand.

Now, before I even get into this, I'm talking about Chris Dixon. And Chris is a partner at A16Z, which is everybody's favorite venture capitalist thought leadership firm. That's Ben Horowitz, Marc Andreessen. They have great podcasts. They're all over Clubhouse, chatting it up. And they have been early investors in some of the most important companies and technologies that exist in our world today. So Chris Dixon is a partner there. And he's been a personal investor in companies you've heard of, everything from Kickstarter to Stripe, Warby Parker, Pinterest, Stack Overflow, etc. So he was saying in 2010 – and keep in mind, 2010, this is pre-Facebook IPO. This is pre-Instagram.

I mean Instagram exists but Facebook doesn't own it yet and probably it has a million or two users at the time. And Facebook in 07, 08 looks like a toy. Instagram in 2010, 2011 looks like a toy. These are two of the most important businesses on earth right now. And not just important in terms of how much money they make and they make a fortune, but just important in terms of the impact that they've had on every industry all over the world and how people communicate. So – and they were toys when he was writing this. So this is Chris, and he's leaning heavily on Clay Christensen, and many of you know Clay Christensen's disruptive technology theory. Christensen wrote The Innovator's Dilemma, which is like the Bible in Silicon Valley.

So this is what Chris had to say. Quote, the reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a toy. This is one of the main insights of Clay Christensen's disruptive technology theory. This theory starts with the observation that technologies tend to get better at a faster rate than users' needs increase. From this simple insight follows all kinds of interesting conclusions

about how markets and products change over time. Disruptive technologies are dismissed as toys because when they're first launched, they undershoot user needs. The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn't see how it could possibly be useful to businesses and railroads, which were their primary customers at the time.

What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. Technology adoption is usually nonlinear due to so-called complementary network effects. The same was true of mainframe companies looking at the PC or what they used to call the microcomputer, and also how modern telecom companies looked at Skype. And there's a whole bunch of other examples that we won't get into. Here, this is Chris Dixon. This does not mean every product that looks like a toy will turn out to be the next big thing.

To distinguish toys that are disruptive from toys that will remain just toys, you need to look at products as processes. Obviously, products get better in as much as the designer adds features, but this is a relatively weak force. Much more powerful are external forces, microchips getting cheaper, bandwidth becoming ubiquitous, mobile devices getting smarter, et cetera. For a product to be disruptive, it needs to be designed to ride these changes up the utility curve. Okay. So in other words, you build something, it starts off as whatever it is, it's underwhelming,

but the external forces. So in the case of a lot of the technology that we use these days, cloud is a great example. You get a lot more resources upon which to build out that technology. When you think about these things as processes and you think about network effects, that's how things that start off as toys evolve and ultimately in some cases find their use cases as more people adopt them and the use cases get more critical and more serious and more profitable. So I think that's a really good heuristic through which to view the very, very early days of non-fungible tokens. And just this idea that we may have a new disruptive technology that allows us to pay for things in different ways. technology that allows us to pay for things in different ways. So an artist, for example,

comes out with new music, and this is actually happening with the band Kings of Leon. And they decide they want to release this new music to their fans in the form of digital files, right, able to be downloaded, but there'll be a finite amount of it and there will be authentication necessary. So it's not bootlegs of other people's files, but you actually own the music that you paid for from that artist. And it's this system of tokens that make it non-fungible, meaning you cannot exchange a Kings of Leon digital downloaded album for some other artist's album, right? It's unique. It's numbered. It's verified that you own it, right?

So this is the kind of thing that we don't know how much adoption we'll see. But the earliest version of this is, I think, like the most popular earliest version. You're seeing some art being digitized, right? You're seeing the Top Shot stuff, which is clips of NBA players slam dunking basketballs. I mean, nobody's taking that seriously as like, this is going to be a huge investable asset class, except for a very few, a very small group of people who are on the cutting edge of new technology. They seem to be really bullish about it. And look, they were very bullish about other things that didn't turn into anything.

Google Glass is a really great example. There was a time when the Andreessen gang looked at Google Glass like it was the next big thing, and it kind of fizzled out. So it's too early, I think, to have a very strong opinion about whether or not this technology will go from being just people trading clips of NBA highlights on a blockchain and be a very obscure thing. We don't know if this will escape that prism and find uses elsewhere. And if it does, it would make sense that it would start with sports and entertainment and areas where pretty much everyone is a consumer

before it gets into areas like, for example, financial services or the stock market where, yes, there's still a lot of consumers, but it's a smaller group and a more specialized use case. But everybody buys music or pays to stream music. Everybody watches sports. So it makes sense that something disruptive would start off that way and then ultimately move up the chain in terms of being useful for other things. So I think we want to not fly off the handle and go all in like this is it, this is the biggest thing ever, because that can look silly in hindsight. But we also don't want to be dismissive and say this isn't something that has the potential to be highly disruptive and important. So I like to keep my eyes and ears open. I like to keep learning.

I like to keep talking to people. And that's what I would recommend that you do before having a fully formed, very sta the Goldmine podcast where you can find Batnick's stuff and all of in a row or you can pick and choose which episodes you want to listen to. But you get the writer of the blog post actually talking about the blog post they wrote in their own voice. So it's very cool. We're having a lot of fun producing that. I also want to mention rising rates. A bunch of Fed heads spoke this week. Obviously, the move to one and a half percent interest rates on 10-year treasuries is rapid, happened very suddenly. Treasury rates bottomed last August at about 50 basis points, and so now

they've tripled. But I would just point out they are at 1.5% at the low end of a trading range that they had been in previously for 10 years. So the aberration was 50 basis points in August. The aberration is not now at one and a half basis points. This does not dismantle the stock market or completely reorganize the entire world. It's rapid, but it's not life-changing. And again, we're back at the low end of a trading range that had been in existence for a decade. I'd also point out prior to the pandemic taking hold of the globe in February of 2020, the yield on the 10-year was 2%. In the winter of 2018, was 2%. In the winter of 2018, the yield on the 10-year was 3%. So even in the last few years, we've seen rates at this present level or higher, and it wasn't aberrant. It wasn't life-changing or world-changing. It was just the difference in conditions. Now, a lot of the commentary is,

what does this mean for your portfolio, et cetera, et cetera? Well, I would say a couple of things. The first thing is it definitely starts to blow up some of the trades that were predicated on greater full. Like at 0% interest rates, it makes sense that the whole market turns into a big chase for stock prices that are going to go up and current income being of lesser importance. But when there's actually a risk-free rate that can be earned on bonds, bonds become more of a competition for dollars. So it makes sense that this week and a little bit last week, we've seen a big sell-off in the absurd multiple high-growth technology and consumer discretionary stocks that had worked so well last year because now cash isn't – money isn't free anymore. It's almost free.

It's not free. So that makes sense to me. The other thing I'd say is if you own bonds in your portfolio, you actually paradoxically should be rooting for higher rates, even if that means your principal drops in the short term because, remember, bonds come in as weights go up and vice versa, right? So if bonds are coming down in price and value as weights are going up, that's a negative short term for the bonds that you hold. But longer term, even intermediate term, it's the only way you're going to make any money. Because if you think about a bond's return, we're talking about high

quality bonds. So AAA corporates and government bonds, municipal bonds, you could pretty much set your watch to the fact that your next 10 years average annual return is going to be a pretty close match with the starting yield that you buy your bonds at. So if the 10-year is yielding less than 1%, you're probably going to earn less than 1% on an average annual basis over the next 10 years if that's a bond with a duration of 10 years. So if we know that that relationship is like 95% historically accurate, and you're going to have bonds in your portfolio for the foreseeable future, again, paradoxically, rising bond rates with falling bond prices actually does you a favor.

It helps you. And the key, of course, is rebalancing and continuing to add to your portfolio. So I think that's really all that needs to be said about it right now. I don't subscribe to the theory that we're moments away from an inflationary meltdown or anything like that. I don't think that's what 1.5% 10-year treasury rates are telling us. I think what rates are telling us is that the market is ahead of where the Fed thinks the economy is. Market thinks the economy is rebounding faster than the Fed thinks it is, or perhaps the recovery is stronger than the Fed currently thinks it is. And so you have overnight rates at zero, and you've got a 10-year yield at 1.5%, and you've got bank stocks leading the market. So there's a reason.

Banks make money now. So this is a change in environment. It's not a better or a worse environment. It's just different conditions. And I think people should probably calm down. And I want to point to Ben Carlson, who wrote a terrific thing on awealthofcommonsense.com. That's his blog. Ben is the head of institutional

asset management at Ritholtz. And again, you can find Ben's post also in an audio format on the Goldmine podcast, if that's how you prefer to get your information. But Ben points out that going back, data going back to the 1950s, in 13 of the last 15 quote unquote rising rate environments, stocks have positive returns. So the idea that stocks can work while bond yields are rising should not be controversial. For some reason, it seems to be in the media these days. And my job, my role is to make sure you understand the truth and are armed with that truth when you come into contact with the nonsense. And that way you can make better decisions for yourself. And oftentimes the best decision is not to do anything.

So I wanted to make sure we got to that. My guest today is amazing. This guy basically, he's like, I guess he's like a 20-year-old – 20 years older version of me, give or take. And he just basically takes over the podcast. Like he takes over – I'm interviewing him, LOL, and he just takes over. And there's nothing really I can do about it. But I just sit back and I let him go because he's super entertaining, legendary trader, very smart, very caring, just an all-around wonderful human being.

His name is Mark Fisher. Mark is the founder and CEO of MBF Clearing Corp. In addition to his leadership role at MBF, Mark is just an all-around influential member of the futures industry at large. This is from his bio. Globally respected professional trader, guest speaker at industry conferences, bestselling author of The Logical Trader, Applying a Method to the Madness. And Mark's been around a long time. His first job was at age 12.

He was a runner on the floor of the Comex. And Mark attended University of Pennsylvania's Wharton School. And that's where he earned his MBA. And he's been a trader ever since. Mark is, I think, one of the most knowledgeable people when it comes to what's happening in the markets, what are traders actually doing, because he's sitting in the middle of a lot of that activity. lot of that activity. And so I had him on the show to talk specifically about some of the stuff he's seeing in different commodity markets and the stock market, et cetera, some of the things he's hearing. I think you'll get a lot out of it. And I want to thank my friend, Joe Terranova, who's also in the mix today. And you'll hear a little bit from Joe and Joe's been on the show before. And Terranova got his start learning and working with Mark,

as did many other successful traders I know. And so this is going to be a very heavy dose of Long Island shit. Mark and Joe are from the five towns, which is about 10 minutes from where I live on the South Shore of Long Island. And you'll hear that we all have the same accents and voice inflections. But again, Mark's just going to steamroll over me and you guys are going to love it. You'll laugh, you'll cry, everything in between. So stick around for that. Last item of housekeeping before we get into Mark. Later, I guess you'll be listening to this possibly on Friday. But every Friday at 3 p.m., I've been doing this thing on Clubhouse, which if you have a login to Clubhouse and you're part of the club, I guess, we've been doing this thing called the Boiler Room.

Basically, I'm turning the tables on the fans. Rather than me pitching you a stock or an investment, I have the crowd pitching stocks to me. And it's been so much fun. My friend, Jason Raznick, who's I guess the king of Benzinga. I don't know if he's the CEO. I don't know what his title is. Chairman, founder. Me and Raznick jump into the room at 3 p.m. Eastern on Clubhouse. It's called The Boiler Room. You could look it up by following me at Downtown Jay Brown on Clubhouse. But we're having a lot of fun doing it. We're doing it every week. So it's five to seven minute pitches and back and forths with people telling me about their

favorite stocks, why they're buying them. And I try to ask smart questions, Razznick-esque questions, and we're having a lot of fun doing that. So look for that. And let's go right to Mark Fisher and Joe Terranova. right to Mark Fisher and Joe Terranova. The Compound Show with Downtown Josh Brown. How you doing? What a funnest financial podcast on Wall Street. How we're helping millions of people to make smart decisions,

grow wealth, and secure the bank. Welcome to The Compound Show with Downtown Josh Brown. Josh is the CEO of Ritholtz Wealth Management. All opinions expressed by Josh or any podcast guest are solely their own opinions All right. So we are here with some South Shore Long Island all-stars today. Joe Terranova's with me. You guys know Joe. He's been on the program many times already, and we've got a legend with us today. Mr. Mark Fisher is here, one of the most, I think, legendary traders that I've ever met,

and you guys have seen him on our CNBC show before the halftime report. But Joe and Mark go way back and Mark's agreed to come on and tell us what's going on in futures markets and a whole bunch of other stuff that he's working on. So we're really excited to have you here. What's up, man? I wouldn't do this for most people except for you and Joe, because I had to rechain my five-year-old's Little League practice, which is sacred, but I did it for you and Joe, because I had to rechain my five-year-old's Little League practice, which is sacred, but I did it for you and Joe anytime. So that's where we are.

All right. So we're all very fortunate today. Hey, Joe, what's going on, man? I just wanted to get, you know, basically 20 seconds of word in before you guys begin, because I know I'm not going to be able to say anything for the next however long we do this, but I take no responsibility for what is about to unfold.

I want everyone to know that going into this. Okay, go ahead. Josh, I got to tell you one thing before we get started. Joe used to be my co-coach with my younger kids, my older kids in baseball, and he's responsible for three kids getting broken noses and having to take one. Which hospital did Michael Levy go to? Bank Franklin General. Right, you took him.

Okay, anyway, let's go. So we're starting this on an upbeat note. Hey, Mark, I didn't realize that you were involved with um island gardens and the lightning yes i didn't are you the founder of that or no what happened was island garden which is run by jim fox who does a tremendous job there yeah in fact i gave up my ownership this this year in the end of the last year for after being involved for 20 years, but I'm still very involved with the lightning. And we basically have through the lightning program at Island garden and through all that we've gotten about 575 boys and girls, full or partial scholarships that have come out of Island garden and the elite

program, which is running under the New York lightning is run by two of my ex employees at Joe Train, Dana Dingle, who is a power forward for UMass on John Calipari's Final Four team, and Shandu McNeil, who is a four-year starter and captain for four years at St. Bonaventure. And we've had a ton of kids go through our program. We've got a lot of kids coming up.

We started the same thing in Miami, run by Gary DeCesar now, who Joe will tell you about. That's a whole story for another time. And if you can't own an NBA team, this is the next best thing. This is the best way to give back. Yeah, so this is AAU basketball. And my kids' games are at Island. We play against three different Lightning teams.

My kid's on a level-up squad. And they're 12U level-up, and we play a bunch of Lightning teams every week. We're pretty much an island garden every weekend. It's more than an AU program because what we try to do is help kids help themselves and obviously help a lot of kids get out of trouble. Joe would tell you about all the trips you used to take with Corey Fisher and Sprewell.

I'll say these names. He'll be like, whatever. Corey Fisher, we haven't since he was in second grade. He was literally the best player in the country from fourth grade to seventh grade. He didn't really grow enough. He played for Villanova. He was a four-year All-American.

He was a McDonald's All-American. Majestic Map, who worked for me for 20 years, who was a McDonald's All-American who went to UVA. Julius Hodge, Francisco Garcia, Aidan Iger. The names go on and on, but really it brings a warm spot to my heart because this is the best way of actually giving back, but at the same time being involved.

Right, Joe? Would you agree with that? Sure. You left out Charlton Clark. Charlton Clark. Oh, my God. Carmelo Travieso. But, Josh, what the pleasure for me was training them

in the summer intern program. And you know what's funny? And Mark, there's no one better at financial literacy than what Josh does and his team at Riddles. But you have all these people that have created this illusion on Wall Street, which I saw Mark years ago break those walls down. There are no illusions with Wall Street. And we would basically bring these interns in, Josh, and they got it. They were kids that you instructed them and all you need to do was just point them in the direction, give them the information, and they got it. They understood. And that's the opposite. They saw the game quickly. They got it. Right. It's almost like they could see the court,

you know, how they would know where the open pass was. Yeah. Court vision. Josh, the best story that we have in the last three years, not the best person we think is Dana Dingle, his son, Jordan, who was gotten, who got about 40 to 50 college scholarship offers to go to mid majors and some high majors. One of the best kids you're ever going to want to meet, to mid-majors and some high majors.

One of the best kids you're ever going to want to meet. Stand-up person, stand-up character. And we convinced him that he should do more than just become a basketball player. And he went to University of Pennsylvania last year as a freshman, went to Wharton. His first game on TV, on ESPN, they played Alabama. They were 19-point underdogs at Alabama. Penn won. Jordan had 27. He was 19 point underdogs at Alabama. Penn won. Jordan had

27. He was rookie of the year in the Ivy League. Consensus, top 28. I think it was all freshmen in the country. And now because of the program, I mean, unfortunately, the Ivy League didn't play basketball this season, but he's gotten job offers for the

summer, and he's well on his way to not only fulfilling his basketball dreams, but off the court, you know, he's going to be a superstar on wall street in the next 10 years. I'm sure. That's awesome. That must be, that must be a lot of fun to watch these kids from a young age become basketball players, but then also become professionals. And also how to deal with life. You know,

it's not just about basketball life. I mean, one of the things that Joe used to do, we used to together at our internship programs. We used to take the first 20 kids that were over 18 years old, the first day of the internship program. We say, here's the deal. Everyone's got to go to Chicago. We'll get you the money. Whoever comes back first with the, what was it? That pizza from someplace wins, you know, wins $5,000.

And you'd have these kids literally have to figure out how to get to Chicago and be back in the office by 6 o'clock in the afternoon. And Joe and I used to figure out who was going to be the one to come back. It would always be somebody else, right, Joe? Yep. Josh, this time last year, I go up to Mount St. Michael to watch Michael O'Connell. You know Michael O'Connell.

He went to Chaminade. He now plays point guard for Stanford. He's starting as a freshman. He's a Long Island kid. So we go to watch him. Is that Tim's kid? Tim's son. So we go to watch Michael.

His other son played at St. John's. We go to watch Michael at Mount St. Michael Gym. And I've got my middle son Tanner with me. And we're walking. And who comes over to say hello? John Calipari. Oh, wow. What's he doing there?

So John's scouting the game. It was, it was a really, really good tournament. And, you know, John's talking to me about everything and Tanner's, you know, looking at me and John's talking to me about Mark and CNBC and Scott Wapner and you, and, you know, it was following the markets and Tanner basically gets tongue tied and Tanner walks away and he's like, how do you know him? And I'm like, well, in 1998, John was coaching in Island Garden clinics during the NBA lockout. And my son's looking at me like, what are you talking about? Wait, so let's wait. So let's back up because I want people to have a better idea, Mark, of what your firm is and what you guys do. And then we'll, we'll get into some market stuff, but like, tell us,

tell us like where you began your story. And then I want Joe to chime in with how he was kind of mentored by you and, and taken under your wing. So basically I was fortunate enough that my, one of my neighbors was, the Kamiya's exchange. And I used to see him come home with nicer and nicer cars. And somehow, cutting to the chase, I just forced myself in. And I worked for them as a runner.

You started at 12 years old. Is that right? Yep, 12. How did you get there? With him. I used to take that time with him. I was on the old Kamiya's exchange floor, then the new Kamiya's exchange floor. Oh, 12. How did you get there? With him. I used to take, you know, that's how I got with him. I was on the old Kamayas Exchange floor, then the new Kamayas Exchange floor.

Oh, wow. Then I went to Wharton. And then I was really supposed to go to Brown Sixth Year Med School, but I went to Wharton instead. And I did my thesis paper on a trading model called ACD, which was the original system that we still use today. I paid a girl's tuition, Rhonda, who Joe knows, to go to school and take all the notes. I used a girl's tuition, Rhonda, who Joe knows, to go to school

and take all the notes. I used to come down and take all the tests. I graduated summer, come on, undergrad and grad. When I wasn't there the last year and a half, I was on the floor. And I met Joe because Joe was working. Obviously, I'm not in the best, how should I say this, physical shape. Okay, let me stop you. Let me tell the story. Can I tell the story? Yeah. Wait, I'm drinking a soda, by the way. I don't care. You can drink the soda. So, Josh, I go the traditional route after graduating from college. I get a job at J.P. Morgan, Swiss Banking Corp., which I don't know if you remember that.

Bonuses come out. Our desk crushes it. I'm on a government securities desk. What is this, 90, 92? What is this? This is 1989, 90. Okay. So our desk crushes it, right? And we get our bonuses. And my bonus is literally less than 1% of what I know our desk generated. Guy puts his arm around my shoulder. We're on the trading floor at 222 Broadway. He says,

you see all the way over there? I said, I don't know what you're talking about. He goes all the way over there. The amount that you guys made on your desk, someone lost. And that's why your bonus is no good. At that moment, I knew I was done. So what I did was I grew up in Valley Stream, had a lot of friends in Hewlett. One of my closest friends growing up was Rob Weiss. If you ever saw the movie Amongst Friends, Rob is becoming incredibly- Five towns, legendary film. Great movie. So Rob was just so entrepreneurial, and he kind of taught me that along the way.

So we had some friends, and we were going to open this gym. Remember Head to Toe Fitness, Mark? Okay. With Brian. Right. So we opened this gym. I was behind the scenes as kind of- I put my money, and I knew we were all going to lose my money.

There's a gym on Peninsula Boulevard? It was on Broadway. On Broadway. So here comes Mark, arguably the most inflexible human being I have ever met in my life. I still am.

We try and stretch Mark and he's like awful. So the. So the Superbowl is about to be played. Mark, I don't know if you remember, it's the Giants and Buffalo. And Mark tells me Buffalo is going to crush the Giants. The trend is your friends. Do you remember that? And I said, Mark, I played football. I've been around football my whole life. Giants going to win the game. Defense is going to win. Long story short, if I remember correctly, you traded the game. I'm not going to reveal the name of the Wall Street guys, but this is when you were actually trading.

We were trading play by play. Play by play. I wouldn't say who it was. Mark does well, comes back to me, says, hey, you want a job in the commodities exchange? I go out, go down the first day, Josh. See the energy. See where you own your performance. Mark always used to say at the end of the day, you get a report card. You own your performance. Are you on the New York Merck?

Yes. Yes. Okay. Yes. So I go down there, I say, sign me up. This is for me. Mark had the gold badge and there were a couple of guys. It was Ski from Goldman Sach me. Mark had the gold badge and there were a couple of guys. It was Ski from Goldman Sachs. He had the gold badge. A few guys had a gold badge. So Josh, what that meant was you could go and trade on any of the exchanges because there were multiple exchanges down there. And that's basically what I did from that moment on. I basically was- Half my audience doesn't even know that there even was a New York Merc. This is like what Chicago had and it's and it's the pits it's like trading the futures trading commodities trading live money um in

person which is like a dying or lost art but like that was the thing back then that that was the thing and there's three names that you know when i went down there they were on the floor trading gary cone was in the metals pit right mark yes was it wasn't blank fine uh no commodities trader no okay he wasn't in the pit lindsey lowen's father was trading down there yeah my my goal from that's from my town from america yes and if you know the builders in the hamptons, Joe Farrell was down there as well. Right, Mark? Yeah. Paul Jones was down there.

Oh, wow. So here's where I want to go with this. What's different in futures markets and trading in general, you know, then versus now? And Mark, maybe you could talk a little bit about where you sit in the current markets and what the firm does and what your role is right now. Okay. So my role really hasn't changed. We still trade proprietarily. We have about 40 individuals that trade with us. We trade everything from crude oil to power markets to securities. And basically, I trade a lot when I think there's a special situation.

Otherwise, I'm like a fire chief, Josh. What do I do? If you're one of the guys who trades with us, if you're doing well, the fire chief doesn't come to you and say, Josh, congratulations, your stove works, your lawn's working. They leave you alone. All that ends up happening is when trouble brews, my job is to yank the hell out of you and cut you off before you cut yourself off and

obviously also sometimes you need to help you need to push you need a little push sometimes you need an emotional push i've been to more psychiatrists with traders that you can even imagine right right joe i've been to people therapy sessions with the craziest things but that's my role. Okay. And it helps me. I make money. I help them. And that's what we do. The thing that's changed is when the markets traded on the floor and there were a lot of negatives to the floor and a lot of positive for us, the disintermediation to trade was a lot bigger, which means the speed of execution that was so fast, so much faster. And I would argue worse that because of this, what happens today could never happen back then. If Josh, you wanted to put an order

into by crude oil, you would call your broker up. He would then call the floor. He would give a slip to the clerk. The clerk would give it to the broker. It would take what would seem like forever. Okay. Just like if you would want to buy a house, if you want to buy a house, why didn't houses go up and down in value? Because you got to go ahead, hire a broker, you got to do an inspection. Mortgage, title, right? The whole thing. It takes forever. Think about if you could just go ahead and

press a button and sell short or increase the value of Joe's house. What would happen to the housing market, right? So what's happened because of the speed is why May crude went negative last year, right? So what's happened because of the speed is why May crude went negative last year, right? To some degree. It's why all these cryptocurrencies go crazy

because if there was more I hung up. Hold on. Let me see what this guy wants. This could be a problem. Good time. What's the matter? You're on camera. Go. Okay, do it.

Yeah. Anyway, the point is, everything now is so much faster, and because of that, people don't have time to react. My thinking is that if you just slow everything down a little bit, okay, number one, even the playing field, that level of playing field, and you won we have phones. We don't have high frequency trades pouring in from all over the globe. Arguably, you make the point, you probably don't go negative on crude because people have more time to stop and think about, wait a minute, there's got to be somebody willing to take delivery. No.

What would happen is the floor committee would have stopped the market. Right? Just stop. Instead of all these different things that happen. You know? I mean, what happened in power two weeks ago i've been thinking about this energy i you know people don't feel energy to be the most volatile market but you think about it what market has gone from twenty dollars to negative forty in one day and what market's gone from fifty dollars to nine thousand in four days power and and crude oil, right?

I mean, that makes anything look crazy. But again, I think slowing everything down, especially in times of turmoil or volatility, would help every market. How do you do that? Is it rules? What's the way to make things the way that you think they should be?

Okay, the exchanges have the ability and the mechanism to do it if they want to it's called a throttle you just throttle the market so it's not a halt no it's a throttle it just slows everything down you know listen josh i don't know what goes on in your house but in my house whenever you know my wife i get throttled every night exactly right you know the deal i'm not going anywhere i'm not doing anything. Right. Well, you know, and when you get with your kids, let's just all take a little. Let's all take a break. Right. Right. Let's just slow down. I mean, you never win an argument, but at least you got to. Right.

That's exactly what the markets need psychologically. And that basic principle is missing. And to argue it, I really think that it really you wouldn't lose much volume i think you'd have more volume trade because people would have more confidence in what's going on so what's the counter argument to that because i feel like people probably made a lot of money when the the energy the electricity markets went haywire there's an opportunity to fade that you know it's not going to last forever so like isn't that the other side you couldn't fade that by you know, it's not going to last forever. So like, isn't that the other side? You couldn't fade that, by the way. That was the one where you couldn't fade because that, the power market is set by ERCOT. It's not by speculators. It's not by you and me.

So what we're trading is just what we think ERCOT's going to come out for the power, but ERCOT sets the power. And there were daily contracts. So each day would expire. So for instance, two weeks ago, one day expired at $9,000. $9,000 per kilowatt hour? Right. And the next day, kilowatt was trading $25. So it wasn't like, you couldn't get short. It was not like, you know, for the next day.

I mean- The contract just expires. Each day the contract expires. Exactly. So who loses on that when the electricity market goes that way? The consumer who pays that end price? The consumer, unless they locked in prices. Okay. The utilities that hedged against power that they were producing that couldn't produce the power.

So basically think about if you're a gen operator who produces power every day, you know what you can produce and you sell short futures to lock in the price, and then you can't deliver on your power. Well, now you're short in a market you can't get out of. Right. Did things go quite as haywire during Sandy, or was this the wildest thing you've ever seen in that market? I don't know that market at all. No, that was, I mean, there's been a lot of crazy things. That was in the top five. I think Mark, the example was Katrina. So Josh, we were able to price and transact largely with the floor being the mechanism in which we did it

during Katrina. The volatility was extreme for the better part of 90 to 120 days, somewhat similar to what you've been experiencing in the energy markets, in particular in Q2 of 2020. Would you agree with that, Mark? Yeah, I think so. They seem to be going away from the direction that you think they should. No, they're going fast. And it's fine to go fast as long as everything is under control. But the markets need a fire chief, not me, but to just say, okay, everything's too volatile. Let's just slow down. Just like at home, Josh, take a deep breath, right? Not shut them off and not a circuit breaker. Just make it, disintermediate the markets, make it slower. Yeah, I guess from my perspective, when I think about futures,

I understand the benefits of liquidity and speed and all these things, but it almost feels like if you're about to make a decision, long or short, any commodity or futures contract. Or stock. What would be the difference if it took two minutes instead of two seconds, other than a speed advantage against another trader? I think two minutes is obviously a lifetime, maybe too long. But it's not even two seconds.

It's a millisecond, right? I mean, I don't know if you guys can see, if I bang the table, in that period of time, 8,000 transactions took place. There's also a difference in terms of the ability to study leverage. And leverage is the word that we haven't introduced here. But when you're transacting so quickly, you don't have time to risk manage leverage. When there is a longer period between your transaction, you could actually look at leverage and understand what that leverage exposure is. Josh, I could say one thing. I got to segue for one second because that's what I do

best. There could be a lot of people that consider themselves to be risk managers. I consider myself to be a risk manager. There was never a better risk manager than Joe T because anyone that could deal with the psychosis that went on in natural gas when it was crazy with Eric Bowling. Right. Eric used to work with us. Right, Joe. I don't know how Joe's even still here today because what went on and what he had to deal with. Remember, this is all not electronic. This is all mechanical. What is this when it went from two to 13? Oh, no.

Amaranth thing or this is earlier. Every day. Every day was another circus. But all of it, Josh, and I think this is very important to understand, is that everything that we did was following a system. And I think that's different than what people interpret or they intuitively believe. I think they believe that when they look at someone like Mark, Mark's just sitting there and making decisions and saying, oh, my stomach feels like I should do this, or my stomach feels like I should do that, or the same thing for myself. That's not what at all was done. In fact, when I went down there in 1990, you know the first thing I did? I learned three letters, Josh. You know what they were? ACD. So ACD is the foundation. There was a pyramid, Mark. Do you remember? That was the foundation of Mark's rules-based approach towards opening ranges and closing ranges and things like pivots and utilizing moving averages. We were using

moving average fake outs before people were even talking about moving averages. We were using moving average fake outs before people were even talking about moving averages. Yeah. The reason why people think it's all gut instinct, most people's initial exposure to anything to do with commodities is trading places. And then that YouTube clip of Paul Tudor Jones, like on a giant 80 cell phone, he's going, get me in. No, get me out. And I think he's tried for years to get that clip removed from the earth. But that's what people think. But let me give you two improvements that can be made to the market. And I've been arguing them with a lot of different people for the last year about them.

The first one is to help markets out. There should be what I call an RFQ market, a request for quote market. That's transparent to everybody. What do I mean? Okay. So I could go ahead. And if I want to buy half a million shares of stock or a million shares of stock, or I want to buy 2000, these 23 crew features, I should be able to go ahead. I'm looking for a market in 2000, December 23 crew, or I'm looking for a market in a million IBM. And everybody who could trade

that size, who could trade the size of the order, seize it and gets to react to it. Okay. So not just four or five people, but everybody in the market sees that like an auction and that block auction will allow transparency. So people that, that have the, the bandwidth and the, and the capital can now trade with anybody anonymously. That's the first thing. The second thing is, and I know people may disagree about this, is I don't like the end-of-day auction process that happens on the securities exchanges. And I happen to like how the futures exchanges handle it. to like how the futures exchanges handle it.

If I want to go ahead and buy 200 crude oil at the end of the day, and I want to buy the Selman price, I put an order on the trading at Selman, and I buy 200 crude, or I sell 500 crude, or buy corn, or sell corn. It's easy. But if I want to go ahead and buy 600,000 shares of IBM in the closing print, John Q. Public doesn't see it. The only people that see that are the floor.

And if you're enabled for certain, there should be a mechanism in place so that everyone can see, okay, there's 200,000 to 2 million shares of Tesla to buy. There's 6 million shares of them to sell. And everyone can make independent decisions with the same amount of information and can trade against it.

And the current securities markets lack that. And I don't understand why. Do you think that that would really have a big impact on John Q. Public's ability to manage his or her retirement portfolio? Or is that maybe not even necessary? I don't think it's for the retirement portfolio, but for the active traders that they're out in the world today which is now what it's 20 million joe how many people are trading a day in this country now it's big again too many it it went away and now it's as big as it's ever been okay so whatever number people are back why they're all back they are they are all back it's their this time it's

their kids but josh why should it be that that information should not be transparent to everybody why should it be when tesla got rebalanced that day into the S&P 500? Why shouldn't everyone have seen what was going on in terms of the order flow there? Why don't certain people see it? Well, the new traders, they're not even trading with the market. They're trading with the house. They're trading an inside market. They have principles inside the house selling them stocks that they're buying.

They don't even see the market quote. And they don't – they're kids. They don't give a shit. They're buying $80 worth of Tesla. So you could show them a price improvement of a nickel and they wouldn't even notice. So I think that's been the rationale for a lot of this stuff. That's my view about the securities markets. Before you ask me, I'll tell you what I think is going to happen to Bitcoin. In a perverse way, Bitcoin could even get even more expensive than why people think. Because I think that eventually, you know how New York State wants to basically now have gaming everywhere, marijuana legal, because everyone

needs the revenue, right? But if Bitcoin production is so energy inefficient, you're going to see some type of carbon tax on the production of all these cryptos, right? And that carbon tax is going to be waylaid onto the buyer of the thing, which is everything's, well, that's going to affect crypto. I think, well, it's going to make it even more expensive. I'm so happy you said that. So what I wanted to ask you, I was going to ask you about Bitcoin and energy separately, but let me ask you always one question. One of the things perversely that happened with some of the Biden administration proposals and some of the things that they want to do immediately, shutting down energy production

on federal lands and stopping some offshore stuff and cracking down on a lot of the things that the Trump administration was like, go ahead and do. Perversely, that actually makes the price of oil higher, which leads to increased investment. So if you were to have a carbon tax on something like Bitcoin mining, which seems like most of Congress doesn't even know what Bitcoin is yet, so it'd probably get away without that. But yes, that kind of thing produces scarcity. It doesn't dampen the enthusiasm for production. Okay. So I wanted to ask you one of the new concepts going around these days amongst asset allocators is that Bitcoin is the new gold. It's taken the place of gold. Gold no longer has a

purpose in a portfolio because you get all the same benefit with Bitcoin, but it's also portable. Gold's not. I find it hard to buy into that argument over the long term, but I understand over the short term that a lot of people are coming around to it. I wanted to ask what your thoughts were, given how long of an experience you've had trading things like silver and gold. given how long of an experience you've had trading things like silver and gold?

I think that what's going to happen because the argument against gold is that you can't take gold into a store and chop off a little piece to buy something, although- Or flee a country with it. Right, or flee a country with it, right. So I think that there's going to be a group of people

that are enamored with crypto. And I think that population is growing every day. I think there's a lot of people that still gold, silver, copper. I don't know this, you know, again, platinum, because of what's happening now with the, you know, with those hydrogen cells, right? All those things will stay there. But I also think what's going to happen is someone's going to come up with

some type of crypto that's going to happen is someone's going to come up with some type of crypto that's going to be metals based a gold based crypto a copper based crypto i mean i i'm i'm willing to tell you this because i'm not going to do it but someone's going to come up with something that's going to have the best of both so why could why couldn't state street just take gld and turn the shares into tokens like if that's what we're talking about is like people just want to trade a coin. Josh, someone's going to do that. It should be you.

You and Barry. Go ahead. You, Barry, and Joe. Just give me your royalty fee. Wait, you can give me your royalty. You can send me a tuna fish sandwich once a week to Florida. Seriously, that's what should happen.

Someone's going to do that because that combines the best of both. Because you have like people that just, they want to be involved in crypto. And then if you tell the gold people that are straddling the fence, hey, now you could have them both. He's writing that idea down. No, no. But there's something about that.

So the knock on crypto is no one can understand the tangible value behind the crypto, correct? Well, there isn't any. Okay, hold on. It's a commodity isn't any. Okay, hold on. It's a commodity with no use. Okay, hold on. Okay, at the same time, everybody likes raising money in an ICO, crowdfunding way, right?

Less regulation. When I grew up in the five towns near Joe, my dad was in the supermarket business. I'm very familiar with coupons. You remember coupons? Sure. So about two and a half years ago, we started with this idea called Indicium, which is basically taking contingent value rights and making them

into contingent product rights. So what we did is I probably invested in like 40 different biotechs. And I'm happy to say that, okay, I've made a lot of money in the last couple of years, but I could have done just as well without all the ups and downs, right? Putting it into securities. But the point being is there has to be a better solution to fight, to fund biotech than what's gone on. And what I think is going to happen is we've come up with this idea called contingent product, product rights,

which are nothing more. You sent me that link. I still don't have a clue what that means. You got to like, really like explain it, explain it. Well, really what all that is,

is basically saying, okay, Josh, here's what we're going to do okay you're a drug manufacturer you need to raise 40 million okay in return instead of giving away equity because the more equity you give but i'm tiny i don't have any drugs on the market i have an idea right you haven't or you're in phase one okay yeah okay okay or if you're a small biotech and if josh if you know a small biotech needs to raise money and their price is ten dollars and you know they need to raise 40 million where's that stock ending up at two dollars right because they do the time first of all but so the first thing is that or you could go ahead and do the royalty route right where you can give away

percentage of royalties either way by issuing equity or by giving away royalties in order if your drug is successful you have to price that drug at the yin-yang in order to make everybody whole, correct? Yeah, because you're either splitting it with Pfizer or you diluted the shit out of yourself and your shareholders. Okay. So what's the third way? The third way is I give you $40 million and you give me $40,000 that's called contingent product rights, CPRs, which means if your drug gets approved by the FDA two, three, four, six years from now, I get X amount of rights to product. The cheapest form.

You just print more medicine. You just print more medicine, which I get the right to either sell on an exchange or if I'm a patient, I get to use. And you make the medicine at a much lower cost than what you're selling it for. Right. Because the last mile of printing the medicine is the cheapest part. Are you diluting your shareholders by doing that? No.

Are you going ahead and giving away royalties? No. All the cost is in the R&D. Yes, exactly. Right. There's no cost in making more. Right. And so by giving away these contingent product rights, okay, everyone does better.

The manufacturer, in our our case would have to would have to cap his price okay and sell it at a lower price so every society better so i'll give you a perfect example and i may be throwing someone under the bus but it is what it is we're on a podcast right yeah it's fun the cystic fibrosis foundation which you know which is a tremendous organization went ahead about 10 12 years ago and gave a ton of money away to a company that had a transformative drug for CF. And the drug has been a success, okay? The Cystic Fibrosis Foundation

has received in payments publicly from the sale or whatever, the foundation. So they took our money. We donate money to the foundation. They took our donation. Let's say I give a 10,000,000, and we get a write-off. And they gave it to this company. And the Cystic Fibrosis Foundation has received back over $4 billion

for our donations. $4 billion. Minimum. It's more than that, but let's say it's $4 billion. The problem with that is, you know what that drug, I mean, obviously they help a lot of people and they subsidize people. You know what the average cost, I believe, the drug to be for a CF patient is right now? I don't know.

On an annual basis, what? Oh, on annual? Yeah. 30,000. 30, 40? Keep going. Higher? Keep going.

Come on. Over 250,000. That's wild. Now think about this. And also, think about this. When I made my donation to CF, I made a $1,000 donation. I got a $1,000 write-off, right? Yeah.

If I took my $1,000 and gave it to a manufacturer to create the same thing, and I get these rights to the drug, and they give me X amount of product. And then if God willing, the price succeeds, I donate those rights to the CF Foundation. My $1,000 donation is not going to be a charitable write-off of $25,000, right? Because I've got an extra amount of product, right? And the cost of the drug, because I haven't gotten any money, all I got was product, is going to be much less.

Mathematically, it has to be less. Because all got was product. It's going to be much less. Mathematically, it has to be less. So all the drug company wants is the funding costs for the drug. Right. And, and the person giving them the money can take the payment in kind, like in the drug that they end up producing. And so what ends up happening is that if you and I,

if you have less partners in a business, you could price things cheaper. Right. Just make sense. Right. That's basically what it comes down to. Do you see a lot of the future funding of drugs from small drug companies going this way? I'm going to go out on a limb and tell you, Josh, in five to 10 years,

this is going to be the future of biotech. And I'll go further with you. Think about teaching hospitals. Let's take John Hopkins or Montefiore or whatever. I want to hire Joe Terranova to come work because he's got a great molecule, right? And I'm Montefiore. And Joe says, well, you know, I'd rather come work for you

than Big Pharma, but do you have $40 million to develop the drug? Montefiore doesn't have $40 million. So Joe's forced to go work for somebody, you know, for Big Pharma. Under what we're doing here, Montefiore can go out and raise the same $40 million by issuing the same contingent product rights saying, okay, we're going to give away these things in return for medicine,

you know, in return for free product, right? And now every not-for-profit can now – you know where the Moderna drug came out of, Josh? It came out of UPenn. What did? The company itself was founded from there? The COVID drug, that Moderna, it came out of the labs of UPenn. What did? The company itself was founded from there? The COVID drug, that had came out of the labs of UPenn. But UPenn couldn't go ahead and it didn't have the money or at that point, the expertise to go and develop it. Now, UPenn, Hopkins, Mass General,

University of Miami could now go ahead using this formula, right? Issue the same contingent product rights in return for money and now develop their own drugs. I mean, obviously they're not going to distribute them or manufacture them. That's still going to be big pharma, but at least the science of it doesn't have to be given. And you know, a not-for-profit

doesn't have the same motivations and needs as a for-profit company does. But does the development of the drug, is that not enough? Meaning, do you need the big pharma partner to help you get the drug throughout the FDA approval process? No, do you need the big pharma partner to help you get the drug throughout the FDA approval process? No. In fact, it's just the opposite. You only need them to manufacture it. To get through the approval, no, you don't need them. You wouldn't

need them for the lab part. You wouldn't need them for the testing part. All you need is manufacturing, distributing, and marketing. Gotcha. So that's fascinating. So you're doing that with investors or you're doing that on behalf of yourself? We started this two and a half years ago. We're about to do our first one. And I'm happy to say this, you know, everything Joe and I have done is always, you know, you buy this, you sell this, you make money, you lose money, blah, blah, blah. Here we're really impacting people's lives because my point is, how do we get more drugs to market in a fair place, more efficiently, still incentivize people to do it and make make sure that the U.S. is the low-cost place to do it, not the high-cost place for medication. That's really what it comes down to with that.

So you seem like the kind of person that when you get passionate about something, you seem to go all in. Like you got passionate about youth basketball, and you ended up owning like one of the preeminent organizations. So now it sounds like this is something that's really caught your attention,

and you don't seem like the kind of person who could dabble. No, I don't. I can't dabble. I can't dabble. Joe, wait, if you're from the five towns and you're successful, you don't dabble. It's one way that you know that. Right. That's right. Hey, let's clear this up once and for all, by the way. This is an ongoing debate and I live 10 minutes away from the five towns. What are they? Cedarhurst, from the five towns. What are they? Is Cedarhurst, Hewlett, Lawrence,

what are the other two? Woodmere. Okay. That's its own town. It's not part of Hewlett. No. Cedarhurst, Inwood,

Hewlett, Woodmere, Lawrence. Inwood. Okay. Right. Okay. And the last thing I wanted to say, which is why I really want to come on also is because my best traders have

come from my internship program. Yes. I'm hoping you're a podcast. We're about to start something called the MBF risk championship series. I don't know how we're doing it yet. I haven't figured it all out. I've mapped it out, but I need to bring in new blood and the best way to bring in new blood to

trade. I don't care what they trade. I don't care if it's insect racing. I don't care if it's, I don't care if it's crude oil. I don't care if it's crypto. I don't care if it's socks, as long as it's ethical and legal. That care if it's stocks. As long as it's

ethical and legal, that's all I care about. But to that point, and I'll ask both you and Josh, why does everyone have this perception that the crypto craze, the Reddit craze, the Robinhood craze is bad? I go to a conference. I look around the room. Everyone in the room is old. We need a younger generation to actually be interested in the financial services industry. But that's not financial services industry. They're not investing. What I want to do is I want to take the five best crypto traders who train small amounts of money, educate them in terms of risk management tools so that they're not going all in for one thing, but use their innate skills.

You and I know, Joe, in 10 minutes, we could tell if someone's going to be successful in that, right? How many things, you know, there's four steps to the decision-making process. Accumulating data, right? Analyzing it. Deciding. Implementing. The faster you are at that with a risk-based system and with risk management skills, the better of a trader you're going to be. How are you going to find these people

and how are you going to sort through them to find like who you're looking for? Great question. Josh, I just, that's what I'm on your, I figured your podcast, from your podcast, you're going to get 150 people saying, I want to go work for Fisher. Hook me up.

The best idea for you ever. You can't even imagine. The best idea ever. Batnick and Ben and I did during the month of January, we did this thing, Beat the Compound, where it was three of us against anyone who wanted to enter. And we worked with this company, Wealthbase, that also runs a version of this for Fidelity. It's the best trading simulator on earth. And it was free for people to come in and the leaderboard, and you could see how they

did their trades so here's what i found wait how'd you do we as as a group the three of us on average we beat the median player in the game but i dragged the average way lower for our our crew we got bailed out because we started f***ing around with gamestop and amc of course we did josh well we wanted what I want to do is I'm going to take a bunch of traders who trade their own money. Not a lot of money. You want them to be live money. If it's just OPM money, if it's just other people's money, doesn't work. But Mark, where do you find that smaller bunch from? I'm saying you need to, you need to sort thousands to get to 20. I'll figure that out. You know, like you said,

I just gave, I gave you the you. But here's what I do. What we need to do is I need them to trade their own pool of money. I need to watch them on a 15-minute delay, whatever the case may be. And then from that pool of psychopaths, pick the best 100, put them in some kind of judgment series, bring that down. I say, guess what, Josh? You're going to trade your money, and I'm going to trade, and you're going to trade my money four times as big as you trade your money.

And once you get used to it and you're good at it, now you're going to go to eight times my money. And I'm going to take you and you're going to take a percentage of my money, right? Of the P&L for free, as long as you take risk in your own P&L. And we're going to help you along. You know, what do you do with the diamond in the rough that you find out of this out of this process? What happens for them? That's how I make all the money. That's how they,

so then you, then you hire them. That's exactly. I want to hire my best traders. What came to this program? What Joe will tell you, we used to have this thing. We used to keep stats.

And I would tell you that when we used to have, let's say 125 traders, 40 people every Monday from the opening bell to one o'clock in the afternoon would lose money. And Joe and I finally figured out why are they losing money? Because they're unhappy at home, right? So we would say to them, guess what? We would pay them not to trade Monday mornings because we don't want them letting out their problems with their girlfriends, their wives. So Josh, let me put that in language that everyone could understand. So what would happen?

It's true. It's true. But what would happen is if they had a rules-based approach, right? Yeah. If they systematically looked at, they analyzed risk, and once they understood what the risk was, they would accept the risk and they would go out and they'd transact on something, right? So basically what they would do on Monday is that they would lose that risk and they go out and they transact on something right so basically what they would do on monday is that they would lose that discipline and they would lose that approach because they would kind of step away from the environment and be outside the game and maybe maybe they'd spend too much money they don't get their shit together until tuesday or

wednesday right right right that's me i get it that's me i don't i schedule podcast interviews for monday you know what I mean? I got it. I got it. All right. But before we push out, I got to ask one question. All right. If I could do this.

George, you have my ADD as a kicked in altogether at this point. I should be. By this point, I fear to be off. Dad, keep going. Josh's ADD is actually just as bad as yours. I've worked on CNBC long enough to know. But it's a long island thing. It's in the water.

We're all really good friends with Scott Wapner. So I don't think he's going to get upset by me saying this. But so Friday, I think it was Friday, I happened to watch Josh on CNBC. And Josh basically, perfectly, passionately said everything that I've been saying in my communication with advisors through Virtus, which is, why are we freaking out about inflation? Because that's the big thing right now, inflation. It was awesome. It was perfect. So you lived through real inflation, Mark. You traded inflation. Is this what we're trading now? The inflation that you traded? Not yet. What's the freak out about?

You think it's going there though? I don't know if it's going there because so many people, the only reason why I think it may not go there is because so many people think it's going there, right? I think that, you know, the debasement of currency has been going on forever. If you really think that inflation is only, you know, that's a whole other thing. Is inflation really only 1.6%? Where is there only 1.6% inflation? That's a bullshit number. That's a bullshit number. We've had 5% to 8% inflation in everything.

We just had home prices go up 12% nationally in one year. It's not even in the calculation. Josh, when you go to 388 restaurant, you tell me the bill's the same. Come on. Come on. Are you crazy? Well, 388, the bill is whatever you know depend depends how well how well do you know the owner the bill with joe is pretty modest right

you know that but yeah but everything so the whole thing's you know this inflation thing is all how they come up with the owner's rental i mean the whole thing's a joke they forfeit to whatever you want but the thing that i concern myself is, I think that more and more, because of this dysfunction in our financial system, that China and the yuan are becoming more and more, are going to become more and more significant to how, in terms of the reserve currency. And that really scares me to some degree. Well, that's their goal. And you look at how they handle the index companies, the way they got MSCI to triple and then ultimately quadruple the rate at which they hold Chinese securities in these indices. Right.

Because China knows that's the route to get more dollars into the company's market caps. You got to get them bigger in the indices and make them part of the benchmark. They're doing that with the yuan. They're doing that with their stocks. Right. And yeah, I think you nailed it. And we think that we had some sort of a coup by getting them to open their markets up to us. What they're really doing is attracting foreign capital and setting their own rules for it. And I agree. That's going to be a big issue for this generation and the next generation. The inflation thing's interesting.

I wanted to ask you as a last question, if you were to tell people who are trying to trade for themselves, even if they're not doing professionally, but they just want to like have a good basis for making decent decisions on a regular basis. What are like the top two or three principles that you would tell people, look, don't even start if you're not doing blank? The way I would answer that question is this, before Waze and all these Google Maps, how'd you learn your way around Long Island? You got in your car. All the time.

It got lost, right? And when you got lost, you figured out where to go, right? That's right. So I think what has to happen is for people, they have to put a small amount of money, a small amount of money into the market, not play money, real money, but nothing significant. And they need to get lost, right? And they need to figure out, okay, what am I doing? What am I doing wrong? Because if you get lost and you're willing to get lost enough and you like getting lost and you like the whole business, you will then, I don't care if you went to Harvard, Hopkins, Hofstra, or nowhere, you're going to figure it out if you have the passion. And the beauty, the greatest thing about the markets is you don't need to be 6'10 and weigh 250. You could be, I don't know, I'm 5'8 and a half. Maybe now.

Maybe I'm, I don't know, shorter now. Right? You could be, you could be five, two. You could, you don't need to be, you could be white, black, because it doesn't matter who you are. The markets don't care. Every day you get your report card, but you need to spend the time. People get the mistake, Josh, that what you do for a living or what Joe does is, you know, doesn't take a lot of work. You guys work harder than anybody. No one sees that. Right. They just see you on TV. Scott asked a question. You break this guy. Joe sits there with his tie, you know, fuffering around, you know, it's all right, but they don't know how much work comes into that. Right.

You know, they see John who I love John to Jerry the most talking about another option monster trade thing, but no one sees how much work goes into any of this stuff. They just think about, you know, it's the same thing as an NBA player. They think Steph Curry just goes out there and scores 35. They have no idea the amount of hours he practices. Right. So you, and you can't read about other people's mistakes. You have to make them. No, that's exactly, exactly right. You need to make your own mistakes so that you can figure out how to go. Agreed. So the best time to make those mistakes is when you're a kid. You could replace that money with new income.

Right. You know, learn to trade at 60 is not ideal. No. Learn to trade at 12. Joe will tell you, my son and his friends, they used to play poker in my basement every Friday night to 4 a.m., right? And I used to sit there and I would go downstairs and figure out, okay, who lost the most money?

And I would try to lose the money back so the mother didn't call me that night and say, you know, my son lost $60 at your house, right? I mean, this is what went on. But that's the way you learn. Not at 35 years old when you have a mortgage and a house payment to make, right? You can't do that.

Or when you're 65 living on a retirement income. No, when you're young, between the ages of 14 and 24 is the optimal zone. So then I think to just bring things full circle that maybe even if there are negatives, having 20 million new brokerage accounts opened up in the last year and having this influx of people in their 20s who are taking risks, having fun, learning by doing, losing money, you know, picking themselves back up. Maybe that's like the silver lining that comes from pandemic summer. Like it's hard to find one, but maybe that's one of them. Well, I don't know. I mean, listen, I know a lot of people that

have suffered tremendously during this crisis. But again, I do think that there are a lot of people that I know who have learned, who are learning, not learned. Because again, I do think that there are a lot of people like I like that I know who have learned who are learning, not learned. Because remember, the one thing the good thing about we do is every day I learn. I learn what not to do, what to do. But I think, you know, you've hit it on the nail head. You need to make your own mistakes and learn from your own mistakes. Not listen to me or Joe or you. You got to do it by let us help you.

But you got to learn your own way. You got to find your own path. I agree with that. Mark, Joe, I want to thank you guys so much for coming on. Joe, you did get a couple of sentences in and they were impactful. Mark, you're the man. Josh, look how you and I dressed and he's still in the same tie,

the same shirt, the same, you know. He looks good though. He does look good. Josh, my hair's grown back. Josh, when's the next time you know. He looks good, though. Josh, when's the next time you two are going to be on CNBC together? I don't know. This week? Whenever you're on CNBC together, you got to tell me, Joe, we want you to just get up and loosen up. Just roam around and show it. Because he's a

great athlete also. Although he did lose to me in a 50-yard dash about 15 years ago. He won. Run that one again. Try that one again. Hey, Mark, where do we send people to either learn more about the trading challenge if that's up yet, or

can they subscribe to something where you're putting out alerts of what you're up to, or not really? Not yet, but when we do, we'll let you know. But your viewership would be a perfect audience for what we're trying to get. All right, so you guys will let me know when there's like a landing page for this. Yes. And I'll make sure to get it out.

When do we get the invite to come back again? What? Come back on the show? I'll see you guys tomorrow. Come back. You can't. It's not Monday. It's next Monday.

This is the off day. I got to go. Goodbye. All right. Bye, guys. Good to see you. Thanks for listening. Check us out at thecompoundnews.com for daily investing and market insights. You can watch all of our videos at youtube.com slash thecompoundrwm.

Talk to you next week.