The Derivative - "Maybe I’m the Retail Idiot" with Bill Brewster

Episode Date: July 29, 2021

Dive into this fun chat with the equally irreverent and intelligent Bill Brewster, the self-made value investor in the style of Warren Buffet who dishes on twitter @BillBrewsterSCG hosts the Business Brew podcast in his spare time. We go into Chicago vs Florida real estate and taxes, commercial banking, TastyTrade and options, just how big of a Buffet fan you have to be to name your son Warren, Marvel vs Star Wars, the ultimate recurring revenue game that is cable companies, the brilliance of Disney+, how exactly can some random guy compete with huge investment firms, the dangerously gamified Robinhood, lessons learned from the pros, Cam Newton, not caring about drawdowns, owning poor franchises, the value trap, long term options, the Twitter machine, second order vs no order thinking, and of course, maybe just being some lucky retail idiot. Enjoy Chapters: 00:00-01:52=Intro 01:53-13:38=Options, TastyTrade, Law School and Value Investing 13:39-26-40=Wait til companies get cheap, then buy them 26:41-38:04=Some Lucky Retail Idiot & Disney+ 38:05-47:56=“The Buff Dog” would still Wax All of Us 47:57-01:06:28=The Business Brew Podcast & Platform concerns 01:06:29-01:16:35=Favorites From the episode: The Business Brew podcast, Arnold Vanderburgh Episode, Adam Robinson Episode Ice Man/Maverick blog post Follow along with Bill on twitter @BillBrewsterSCG and visit his podcast page The Business Brew Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest. And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk

of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. If there's truly good asset quality, I'm trying to be better about allowing the business to flex its optionality. And, you know, if I underperform for like a year or two that doesn't really matter. Professionals don't have the luxury of thinking like I'm about to think which is why I think retail actually has

an edge. If you can afford not to capitalize your gains right if you can avoid lifestyle creep and you can avoid things like getting tied to the number that's on a piece of paper a drawdown really doesn't actually matter, at least as long as it's temporary. We've got the brewmaster himself on the pod today, Bill Brewster of the up and coming business brew pod, where Bill talks with all sorts of super intelligent investors and other interesting folks, holding his own more often than not, which shows you just how deep his knowledge runs.

He's self-taught in the game investing and brings a rather unique view to those of us who think in more of a macro derivatives option pricing way all day, actually caring what these companies do and what their financials look like. How novel. So welcome, Bill. How's it going? We can maybe have a discussion on an idea I have. Yeah, let's do it. Not that nothing is investment advice. I'm just some random idiot. Don't listen to me about anything that I say. With that out of the way, let's talk about investments. Let's do it. Nice choice of the blue shirt today. I like it. Thank you. I like yours as well. We dressed to match. Didn't even coordinate it. Didn't even do it. We had Ben Eifert on the pod once and he showed up in a hoodie. So I ran into my closet to get the one hoodie that I own and we went with matching hoodies. But yeah, typically don't try and

match the outfits. He appears to be a very smart dude to me. I'd like to talk to him, but I'm pretty nervous that he'll run circles around me. No, he can go that deep in an instant, but he can also stay very surface level, which is great. Yeah, get him on. He's great. I like options. Actually, ironically, I came to value investing through options trading,

which is sort of a bizarre series of events. But I had gotten interested in law school in finance and got introduced to the guys at Thinkorswim, Tom Sosnoff and that gang. And I really, really liked how they taught what they were teaching. And I had gone to a number of seminars. I used to go to their building in Chicago. I think it was like 600 West Chicago, but I might be wrong on that address. But anyway, so I don't know. They taught me a lot about options trading. I lost a fair amount of money doing it. And then I got into value investing.

He's done quite well for himself. Done the same trick twice. Yeah, yeah. Actually, I think I'm going to talk to him, you know, all things. If it goes well, I'm going to talk to him on my pod in about a month or so. Nice. I got him on my list as well. But yeah, he sold Finkerswam and then Tasty Trade, right? Yeah, they just had some news that came out. I don't know if it's an acquisition or a merger, but yes, I like how they go to market. It's a smart strategy. Definitely. And so you mentioned Chicago. You were just up here for a while, June, July. So you have some Chicago roots. No doubt. I spent 16 years there, went to Loyola University School of Law and met my wife, had three kids. So I've got a lot of good memories there. Raged a lot, grew up a lot, lived on the North Shore for about two years. And then the

pandemic hit. Now I'm in Florida. Oh, so you were here right up till the pandemic yeah i uh i sort of knew that well i didn't know anything uh but in april of 2020 i had a strong uh i guess what i how i framed it to my wife is i said we're either going to be locked down and stuck in our house during the winter with three small kids and that could permanently impair our family uh or um i don't think that the schools would be open in illinois which i was wrong on but i i had a higher degree of confidence that florida would have schools open so i wanted my kids in school so we moved and we liked it down here. So here we are. Right. Or you were going to be one of the last seven people that owe the $60 billion in pension liabilities. Yeah.

So yeah, my wife grew up up there. And I didn't think that there would ever be a pain point big enough to make her leave. But the pandemic sort of created a catalyst. Nice. So you got a little income tax arbitrage there too. Yeah. It was nice. Cause last year I actually had a, I played a special situation and a fair amount of the dividends paid out after we moved, which was a good thing. Perfect. Um, yeah, my kids go up to school right up by Loyola, uh, sacred heart. Um, so up there all the time it's a little too far but um that's how it

works yeah yeah and then so in the city yeah i'm right near in kind of wrigleyville roscoe village yeah i was we were in lincoln park for a bit and then uh i my first real estate purchase was i i such an idiot i thought that um clib Clybourne and division basically is where I bought. Yeah. So when I bought, there were still like four towers up at Cabrini green. And the place I bought was super cool because we had this panoramic view of the city, but I, uh, I just swung and missed when I could have spent less money and gotten more house and Fulton market.

And what a mistake that was. What we do. The kids do baseball practice right at that field, right next to those condos there. Yeah. And the, I can't remember what it's called Stanton field or something. I'm like telling other parents,

I'm like, there's probably at least 50 people that have been killed in this like 200 foot radius here in the last 50 years that we're standing in. Yeah, that was not a not a great neighborhood back in the day. I, you know, I kind of thought it was inevitable that it would turn over. But then the Caprini turned into that target. And yeah, I just missed. It's still a little turnover. Well, Chicago real estate's not known for a lot of great things, right?

I always see these charts. We're always right in the middle. We're never the highest. We're never the lowest. Right in the middle. Yeah. Which some people win. And so at JD at Loyola?

Yep. So you've broken my streak of engineers turned investment managers on the pot here. So I don't, I mean, I just, I kind of knew law law wasn't my thing by the end of the first year, but then you're like pot committed sucking, sucking cost fallacy and all that stuff. So. Right. Did you ever practice or no? No, thankfully not. My mom, my wife did. I don't know why I called her my mom freudian slip there folks that's a

whole different pod that's right um and so uh then so got to jd wait i want to talk you went to auburn too so you're from yeah well i grew up in south florida i just i didn't i was too big of a pansy to leave the warm when I went to college. Yeah. Unlike me, I left Florida, Vero Beach, and went to Union College in upstate New York. Froze my butt off. Yeah, that's cold. Yeah, super cold.

The first year, there's like six-foot – they'd like plowed through the snow in the quad, right, so you could walk to class, and there's like six-foot ice banks on either side. I'm like, this is, this is terrible. And then, sorry, so you ran a franchise. Tell me what was that all about? When I got out of law school, I didn't, I knew I didn't want to go into law. I actually met with Tom Sosnoff and I said, you know, I really like what you guys are doing. I'd like to come work with you. And he said, you know, if you ever want to trade options, the barrier to entry is basically zero.

So why don't you go do something else for a while? And if you still want to come work with us down the road, you know, I'd be happy to have that conversation then. And I kind of talked to some family members and the people that I rely on for advice kind of collectively decided that starting a business would maybe be the best use of my time. In retrospect, in 2009, probably not the time to start a franchise. With my skillset, probably not the time to start a business instead of learn how to build one. And I also chose a flooring franchise, which was a pretty stupid choice. But outside of that, it was a great decision.

Well, I always look at those franchise lists and you're like, they're never really anything all that exciting to me. Yeah, I mean, look, the group that- It's like flooring businesses and stuff, but who knows? Well, the group that I joined, I mean, when I was doing the due diligence what i saw is that they they had built california closets they had built sort of pro painters they had built uh college pro painters you know what i sort of didn't um appreciate at the time because i was young and dumb is a franchise brand can be built on the

back of a lot of failed franchisees right um so i think they were you know fine people fine idea i don't like i still don't like the name of the franchise i probably should have passed based on that but ultimately not not the right thing to. Although I've talked to some private equity guys who had like 230 Little Caesars franchises across the Southwest or something. And they're like, it turns over in, I think they said about a year. Like I think you bought it for 250 grand or something and it would turn over in one year.

You'd get your revenue back. Yeah, well, that was not this. If that were the return, I'd own 10 and not be sitting here talking to you exactly uh so then stints at bmo and then went off on your own yeah uh what did that look like what are we doing at bmo uh i was underwriting credit so i worked in the uh food and consumer group for a little while. And then it was BMO Harris. It was the commercial side. And then I worked in commercial mid-market for a little while. So then, I mean, I just run my own capital.

I had an uncle that passed away and it changed my life substantially. Figured I'd probably have to figure out how to run capital in a way that I could hold through a period when everybody else was puking it because I thought that was the biggest risk to my life was 2009 happens again and I get scared and sell out at the bottom. That would cost me much more than I'd ever earned at the bank. So my decision process was basically figure out how to run capital. And the worst case scenario is I have to go work for a community bank down the road and that's not so bad. And I don't really care. And I took the plunge and so far it's going well. All right. My brother-in-law runs commercial

banking for a PNC down in Florida. So if you need, if you ever need to get back in there, I got a name for you. I, you know what, I kind of miss it. I miss the clients, at least when DEMA would allow me to talk to them. That was part of the reason that I left. But I digress. It was... Just hearing their optimism and whatnot? No, I just think it's super interesting. You just have a level of detail into businesses that you can't otherwise get.

It's all non-public. It's all very, very close. You're helping. What we were doing is, I think where BMO, especially BMO Harris is very good, is those clients that are too big to be served well by community banks, but too small to really be beloved by the bulge brackets. So you get like a level of sophistication that is pretty solid. Like we, I worked on a lead left $350 million deal for a dairy and like, that's, I mean, that's real money and that's a real company and it was fun, but you know, it's not, it's not JP Morgan's biggest client. Right. So, you know, we know that world. Well, our firm is smack in the middle of that world.

So now let's dig into your investment philosophy, how you view the world. You're interviewing all these great investors on how they view the world. You're interviewing all these great investors on how they approach the markets, but let's flip the script and ask you how you approach the markets. Yeah. I mean, it's very Buffett-y, I guess, in that I look for things that I think I understand and I wait until they get cheap and then I try to buy them and I guess that where I maybe morphed a little bit from when I came into the game so I've been doing this roughly for five years and I think I've known what I've been doing for about two and a half um and I guess that like I you know I passedFA, uh, I'm a CFA charter holder

or whatever, and that's nice. And, you know, I read these books to give me the philosophy and that's all nice. And then the problem is I just don't really believe any of it in the real world, which is not to say that, uh, the CFA education was like, I would recommend people do it. I would recommend that people read the theoretical books. But at the end of the day, to me, I don't care if there's some obscure micro cap that should be valued higher, but the market's forgotten about it. I think a much more important question is why the hell is the market going to remember it? Or what is going to make me as the minority shareholder put money in my pocket? Because I think that there's a lot of pitches out there that I see where people say, well, this is too cheap and this and that.

And I dig a little bit deeper. And more often than not, I see a management team that doesn't really care about minority shareholders or no real reason for anybody to care about the business. And I would say that my general view of life is value accrues to scarcity. So if you're pitching a pitch that could just as well be any other pitch with a different name, I just don't see why value accrues to it, if that makes any sense.

No, explain that a little more. So you're saying they need to have a- I have XYZ Industrial Company, and it's trading at 50% price to book. And XYZ, I don't know, commodity company or whatever is also priced about 50%. To me, there's this point where all these pitches are fungible and everybody thinks they have a 50 cent dollar and just like what makes one different from the other?

Everybody thinks there's some unique thesis. Everybody thinks there's some unique catalyst. Like if you just read through quarterly letters, there's like a, there's a thousand ideas at any given time that are, you know, underpriced. And I just think that I like,

I like to look for catalysts. So a name that I am somewhat interested in right now is Altice, right? It's super levered. It's a cable company. It's not growing. I get why people don't like it. On the other hand, it's like a $15 billion market cap. I think your free cashflow to common equity is going to be like, I don't know. I think what I saw the estimate today is like $1.8 billion or something like that. They guided to $1.5 billion of buybacks this year. So you're buying back 10% of your market cap in a year. And that's probably going to continue next year and the next year. And I saw a-

Better than Tesla, right? Yeah. Well, and I saw an estimate by a well-respected firm that said that, you know, something like north of 70% of their market cap could be bought in by 2025. It's hard to keep a stock low when it's fighting those kinds of fund flows. Right. And then, so like, to me, that's a, that's a, that's an idea that I can kind of get behind, uh, because I can see why the stock has to move. Um, and I'm okay with the underlying business. Well, I was just about to ask, like, do you need to have conviction on the

actual business as well? Oh yeah. Yeah. So if it's like a, uh, MLP or something and you're like, okay, this all looks like it's lining up, but you're like, I don't think fossil fuels are the future or whatnot might be a pass. Yeah. Yeah. I think so. And the other thing with MLPs is like, okay, so you get an 8% yield, but then you got to pay your own taxes on it. So it's not really an 8% yield. That's just kind of illusory, you know? So like your, your actual true duration of that bet is quite a bit longer than I think most people market the bet duration as, whereas like, this is kind of like, uh, I think it's, I think it's, it's either got to move quickly or, and by quickly, I mean, two and a half to three years or the thesis is wrong.

And what starts first, the price, the business? For me? Yeah. Well, the only reason that I like this one is I've been involved in cable for a long time. So if I wasn't familiar with the space, I think it'd be a hard pass. And I'd probably just move along. I think you have to be comfortable with the business in order to play that game.

Like cable, TV, internet, whatnot? Yeah. Well, the real thesis is they're all broadband companies at this point. Video distribution is a shit business for them but everybody still associates it with video uh well not not everyone the cable investors don't but the colloquially yeah yeah um right well you're basically like yeah why am i paying comcast 230 a month or whatever um and i'm just right it's a necessity it's the new uh i can't remember the name of the pyramid right but it's uh it's now the base layer of that of internet access

yeah and i i mean you know it's not comcast isn't charging you that much right at least not for broadband um so then you get into well i could cut the cord and yeah that's 17 hbo's right yeah well and ultimately you need like we're recording on zoom right so so i need upstream uh upload capacity that i'm comfortable with and you need to be able to download it and i need to be able to download your feed and there's only so many pipes in the world that can do that effectively. And the cable companies happen to own many of them. Do you see that as, so for sure, scarcity, right? But can someone, what point do we get in when money's basically free where someone says, cool, I'm going to lay down a whole bunch of new pipe? I mean, you can always have some overbuilder, but I don't know that if I was was if you're like venture capital or some sort

of private equity i there are places that you can overbuild but like out of all of the pitches in the world yeah we're gonna go more cable yeah we're gonna like we're gonna hang fiber over comcast fiber footprint and then try to attract all of the customers that are already locked into a service for, and, and we're not really going to offer them much of a deal. Like I, it just, I, I think that it's a lot easier in theory than, than a reality. When it's the original recurring revenues, right? Like now everyone's trying to pivot all these businesses. We need, you know, service or a subscription. Let's switch to a subscription model.

They're the original subscription model. Yeah. Yeah, I think that's right. So, you know, when you, like, I mean, Altice has a lot of, they compete with Verizon in a lot of their geographies. It's not the easiest thing in the world to stomach. I'm not saying it's a layup, but I do think that when you have this kind of market cap and this much money flowing into it, it'll be interesting. So then what my mind starts thinking is options tend to

be priced on historical volatility, right? And you tend not to have some sort of skew in the option pricing, right? Or is that wrong? I mean, sometimes it exists. Highly dependent, but yeah, it depends. There's lots of skew right in S&P options because everyone's buying protection and whatnot. So yeah, for a single name, unless there's some big player

there probably correct so like if i have a view on the equity and i think this many shares are probably going to get retired over the next two and a half years and i think the option market is somewhat pricing it more on like a theoretical math problem do leaps make more sense than the common yeah and that's where i start to like, start to think about options. But it's weird. Like if you've looked into the options, I have no idea what you say are 15 billion. Like some of these companies, there is no option market. It's super thin, especially on leaps. And I've talked to some market makers, some prop firms here in Chicago.

They're like, Oh yeah, we don't, we don't really mess with that stuff. Yeah. I don't, well, I don't think that you can. I think on Altice, if you go out, I think like to 2023, the January 2023s, I think you can buy like quasi in the money, like call it the, I think the stock's trading at like 32 or 33 today, and I think the 28s are probably selling for four bucks or something like that. So to me, if you think the stock can get to 50 or something like that, you could probably get some leverage on the back end of that. But I do think you have to be… I think the spread is fairly wide. I don't think

it's something that you can day trade. Yeah. And so what's your target? It's in your Twitter profile, but I forget. So what's your target market cap? Oh, well, I just said it on the Twitter machine. I said, I like the idea of 500 million to $10 billion. Um, mostly because I think that those are businesses that you can actually like, um, hold for a while and they can actually grow out of the market cap that they, they have. Um, you know, some of these bigger, um, businesses that I, Disney's one that I own, I've owned it for a little while now. Not like a ton of time,

but I guess I probably bought it at like a $200 billion market cap. Now it's like 330. It's harder to compound off of 330 billion than it is off lower numbers, right? Well, unless you're Apple or Amazon, right? Like those always blow my mind like they've and even microsoft i think is up like 80 or something on a you know one trillion

to two trillion like that yeah for sure and i guess that but i guess that the uh one of the things that i that i would say to people they're like about that game, is if you say, well, Microsoft could do it, there's only one Microsoft, right? Yeah. I just pulled up the options chain. So it looks like Altice is at $33.96. And today the 2023-27 strike expiring January 20th is, it looks like the midpoint's like 10 bucks.

So what your breakeven is 37. Yeah, I don't know. I got to work the risk reward on that. And how do you think about talking about these big companies, right? If we're in a new world where I've heard you say on your pod, software is eating the world um right if we're in a new world where that creates a scenario where the big get bigger right the microsoft's the google's they dominate because they can purchase these companies and kind of push out the competition um right is there a problem for small companies to exist in that world right if we assume bigger

will always be you know bigger begets bigger does that equal smaller will be get smaller well i don't know that i'd assume bigger begets bigger in perpetuity um i mean i i don't uh i don't have a strong view on that like i made money in qvc last year like i'm not i i'm looking for random ideas i'm not i don't have any of these like grand thoughts that require a Mensa degree. I'm just trying to do things I understand. I heard you on a pod with Adam Robinson. Oh yeah.

Which was super good. But talking about the strange feeling that I get all the time where, you know, you're doing second order thinking and third order, all this stuff. And then you're talking with your wife's friend who made tons of money buying DocuSign or whatever. So how do you how do you weigh that? How do you think about that? Like a lot of times, you know, are we you too smart for your own good? Dude, I don't know. I might just be some lucky retail idiot. Like I have no idea. And I just try to remind myself that if I look around and I say, how are these retail people doing what

they're doing? I'm some guy that but for an inheritance would not be doing this and maybe i'm the retail idiot yeah uh so i don't uh you know it but if you're the retail does it be doing better than than those guys yeah well maybe i'm just terrible at it right i mean i i don't uh i don't know uh and i think that that's kind of like what this game is all about. I mean, it doesn't matter sort of what I think or what anybody else thinks or what my process is. What matters at the end of a lifetime is the scoreboard. And you're either going to be good or not based on how you scored. It's one of the beautiful things in the game. I think that where I really need to improve is I haven't had to manage through owning securities for a very long time.

Because my tenure in the industry is pretty short. I would say that I am more of a trader than I would like to be an investor. But I will say I'm probably a longer term trader than most. I think I want to be an investor, but I like making money. So if I'm a trader that makes money, I'm going to be okay with that. You're right. That's the old trading pit saying nobody ever got broke taking a profit. But here's what I would say back to that person, though. Yeah, I've always argued that myself. Yeah yeah well like the way the equity math works is if you let things run like you know that's how you really have big wins is by letting things run

so i'm trying to improve on that and and being able to be uncomfortable with things a little bit stretched in valuation if the business is like so going back to disney i think that that valuation demands execution um it was concerning to me without spoiling loki for anybody i think that when i watch no i'm not gonna spoil it i wouldn't do that to people but when i watched the end, I was like, okay, now I understand whether or not the market is smart enough to project that or not. I don't know. But I can see how they opened up just like this wide reinvestment runway, for lack of a better term, that I would not have had built into some model. And if I was a precision seller, I would have sold. And I think that there's a strong probability that selling would have been the wrong decision. So I'm just kind of like, if there's truly good

asset quality, I'm trying to be better about allowing the business to flex its optionality. And, you know, if I underperform for like a year or two, that doesn't really matter. You know, I guess where I'm kind of at with it is I made 60% on Disney in under a year. So if I underperform for two years, years, don't I kind of deserve that? Yeah. Right? Your average stock should not return that all the time. But to then sell it and pay taxes and then recycle it into an idea that I don't understand as well seems like a fool's errand to me. And you have three young kids. You probably got Disney blaring in the house all day, every

day. It's mostly me man they're on youtube i'm addicted to uh marvel disney plus was was brilliant right like they just came in there and boom i don't know what that subscriber count is up to now but yeah i don't know i bought it when it was at like 55 million or something but i i mean ultimately i think that uh i i think that like with that particular offering when you just think about how how many characters they can ab test and how they can figure out how the audience is engaging with different characters and then you figure out well what could they do with the parks and how can they build out different rides and it's like i don't know you want have you heard uh scott galloway you ever listen to him

uh i do i've i've listened to scott less recently than i have in the past uh he got a little political for my liking but uh i do like his takes he's a smart guy yeah so on disney he's like this is the ultimate rundle i think he calls it right of like now say hey if you have disney plus you get free upgrades on the cruise ship and you get into the park earlier and right so they can tie it back to the physical world yeah way more so than anyone else can except amazon probably well it's like the old map that uh walt disney built and now you can kind of insert disney plus like right in the middle of that map uh if anybody looks at it it's how like all of the things feed with each within each other yeah and you're like they had a they had some alligator and loki like the entire purpose of that stupid alligator is to sell merch

and i'm gonna buy it um and so you're more of a marvel guy than a star wars guy uh yeah i don't want to say like yes because i'm i am uh under researched on star wars so it's probably the best way that i could say it my kid loves star wars uh he is he's sort of like watching it alone i would like to watch it with him but he's i don't know at school they like read some star wars books now he's like spoiling the whole thing for me so i'm kind of letting him do his own thing i'll send you our infographics which one of them is on my wall back here okay i like that yeah star the star wars fans guide to investing yeah so i feel like uh in what i do like buffett is kind of yoda and then like the traitor in me is is closer to darth um but maybe a young anakin you're struggling between the the light and the dark there yeah that's right yeah i think that's right

um and i'd i'd like to uh to err towards being on the force over the long term but um i mean yoda had an 800 year uh lifespan though. So, yeah, he a drawdown. He's unworried about any drawdowns. Yeah. Compound over 800 years. That's pretty good. Well, I guess like the thing about drawdowns that, you know, is like, what's it?

How am I? How do I want to say this? Is your like, what's your audience? Do they tend to be professionals? All over the map. Investors, professionals. But yeah, you say it however you want to say it. Yeah. Well, professionals don't have the luxury of thinking like I'm about to think, which is why I think retail actually has an edge. If you can afford not to capitalize your gains, right? If you can avoid lifestyle creep and you can avoid things like getting tied to the number that's on a piece of paper.

A drawdown really doesn't actually matter. At least as long as it's temporary. You're right. As long as it comes back. And, and the way that I think about drawdowns is like, okay, well,

if I take a drawdown in a scenario where the world takes a drawdown, I don't lose relative wealth. If I, up on a specific idea, then I will. But I'm always concerned with how I'm performing relative to the water level, as opposed to whether or not I have a certain number on paper. I don't really actually care about that very much. What do you mean relative to the overall market? Well, relative to overall wealth. Got it.

Because I'm trying to accumulate wealth over time. So I define that as spending power. Right. So the flip to all that is like if you bought Citigroup in 07, or even during the drawdown right it was at 600 or something now it's at 60 it's been 60 for 10 years so it's like the drawdowns don't matter unless yeah we're stating the obvious but that's the issue right of like how do you cut that risk before it just goes down and never comes back well like i think what what my answer would be is you have to watch the businesses

right so it to me there's a couple risks in in disney right which i've been talking about so there's the there's the risk that the business gets less that people that come from the world that I worship over-index the concerns on multiples. And some are clearly going to be like, oh, well, this is a late cycle comment. That's easy to say at the top of the cycle. But I think a lot of this multiple expansion has been driven by underlying business strength that people have just been really surprised by. Now, whether or not people are extrapolating that too far and whether or not that will continue in perpetuity is sort of a different debate. But for me, I just try to watch, I'm trying to learn how to watch the underlying securities that I hold and what their fundamental performance is doing.

And over time, I think that that's a more appropriate thing for me to worry about. And I think if you were holding Citigroup in 07, you took a huge permanent impairment in 09 and since then you've been building back to where you sort of thought you probably should have been when you underwrote it in 2007 but not even you're only 10 of what it was in 07 yeah i don't know what the business has done though like some of that might be multiple compression and relative i mean, I try not to like, I guess what I, where I would score myself is multiple, multiple expansion and compression is somewhat out of your control. Uh, it's also somewhat in your control, but, um, like if I, if I was right on a business and the multiple went against me a lot, and I really didn't think that competitive dynamics did, I just thought the

market was truly irrational. I don't know that I would score myself that bad. There have been bets that I've won on that I don't think are necessarily wins. That's just kind of luck. When you could be worried about the P multiple and not have invested since 2012, right? It's been high for a long time. So you mentioned Buffett.

You're a Buffett lover, I assume from your pods and hearing you and kind of

Yeah. Yeah. Yeah, I am. And Charlie, I heard you named your son Warren. I did. That's true. Yeah. So I think that that would that would man boyish. Yeah, I am. And Charlie, I heard you named your son Warren. I did. That's true.

Yeah. I think that that would probably put me in the Buffett lover camp. So what do you say to those who think he's just been around a long time and gotten lucky in a few places and his stock picking's not all that great? Well, they're idiots. Okay. I mean,'re idiots. Okay. I mean, he's a monster. He's the best.

You know, do I think that his, I think his strategy should change now that the size of the entity is so long. And people have been asking him for this for almost a decade. I think that there's a very reasonable argument to be made that Berkshire should be run like a levered S&P fund with the excess cash that it generates. I think the buyback that he's implemented over the past 12 months somewhat mitigates that concern because he's eating his own entity. So on a per share basis, it's kind of a faster grower than otherwise it may look from the top line. But yeah, I mean, look, I think that if I was going to take a shot at his record, I would say over the past 10 years, he's struggled to keep up with performance of the S&P and he required the bet on Apple in order to do that. So if you believe in replicable

processes, and if you believe in base rates, what's the probability that he's going to find another Apple, which is now the biggest company in the world and has been probably the best performing stock since he bought it? I think it's hard to argue that you can bank on finding that over and over and over again. So if that's the case, maybe the strategy should shift. But make no mistake, if you give him, if you make him young, you give him his current brain, even make that brain age like most people's brains, I think he waxes all of us with a smaller pool of capital with enough time. Yeah, he's a genius. Based on what? On just his picking of the companies or his overall skill? To me, his greatest move was basically selling options, selling Gamma, selling SKU by the insurance

business. He's got all those liabilities, but he's taking in those premiums and reinvesting them into long call options on the other businesses. So to me, that's a bigger piece of his success than the actual companies he's picking. Yeah. Well, I don't deny that that's part of the success, but a lot of people blow up selling premium. Yeah. Yeah. So he never has. And he's bought the right call options a lot of people buy calls that expire worthless so uh i don't care what you reduce it down to you get him in any type of financial game i think he outplays the field i he's he's a savant and i think that people that like don't acknowledge that are kind of haters and whether or not he's like too old or too big is a different discussion. Yeah. What do you think happens to Berkshire when he passes?

I think it probably, I think they start doing a little bit. I mean, if you look at like what Todd and Ted have done, I don't study them as close as other people do, but I do know that, I mean, like the snowflake IPO was pretty public. I like their bet on restoration hardware. I think they saw something that was changing when it was not obvious to the market. They were later than Bill Miller. He may have been who tipped them off on that one. But I think that they probably are going to be purchasing companies that on current multiples make the

existing Berkshire shareholder base a little bit queasy. If that shareholder base gets queasy and sells the stock, I'm excited to buy it from them. Yeah. And have you been out to the meeting? You've been out to Omaha? Yeah. Yeah. I heard it. It's awesome. My buddy here in Chicago keeps telling me we got to go and just make a trip out of it. It's super fun. It's like the best networking event in finance. It's amazing. Yeah. And what was my last thought on him? I think that was it. Look, I just think when people try to reduce his record to some levered beta or he's selling SKU and buying, or selling premium buying calls, I get it.

But he figured all that shit out before we even knew how to put a term to it. And it took years and years and years for people to even decode what he did. And I think that if you gave him a small pool of capital and time today, like with his skillset as it exists today, I still think he'd just run circles around people. And I think in 30 years, people would look back at the record, decompose it and be like, well, wasn't he just this? And it's like, yeah, but there was only one of like,

isn't Jeff Bezos just a guy that created a bunch of infrastructure and used working capital in a way that and out executed everybody? Like, yeah, but in retrospect, it's super easy to reduce a record to uh a theoretical paper agreed um can you get him on your pod the buff dog i don't think so i'd love to i wrote him once and he wrote me back and that was super cool oh nice yeah get your uh mic and equipment and go sit in that dairy queen that he goes to and you know yeah i you know i um i don't know that i'd want to meet him uh for real although i think i probably would i don't know

right there's some of that of like the the stardom will come down to like oh he's a real person and real flaws and that kind of stuff yeah but but i think that like what really bothers me about the Buffett fans is when they go there and they ask him like life questions. I think if you're like a real fan of his, you realize that he had a lot of personal struggle. And maybe you can argue that he learned from it and he's sharing in his older age. But, you know, I'm not sure that I decompose my I, uh, decompose my heroes. Right. So I, I didn't name my kid Warren because like Buffett is wealthy or I want him to be Buffett. I named him Warren because to me, uh, Buffett is a guy that always went about life the way that he deemed fit and he sort of marched by his own rules and then when he was older he gave back to society by teaching and i think that like that's the

actual giving like 90 yeah yeah although he's not doing it during his life but i also understand his argument that he wants to compound i i kind of you can argue that one either way but um that's kind of the legacy that I want. And that's what I admire about those guys. I've been asking this to a lot of caddies

that golf with young kids, like 18, 19, 20, 21. I'm like, would you trade places with Warren Buffett right now? But today? Yeah. He's got like three years

of life left. I know. Max. No, fuck no. That's crazy. A third of the people say yes. They're like, yeah of life left. I know. Max. No, fuck. No, that's crazy. The people say yes. They're like, yeah,

85 billion. Those people are idiots. Right. And I'm like, you're going to college, man. That's worth $10 billion. Your next two years in college alone is worth,

right? Yeah. Well, this is, that's crazy. You could, I mean, there's a pretty easy way to disprove that offer them like $5 million to cut

off a finger. And I bet they'd keep, well, maybe, maybe they lose a finger over that. But Tony Robbins does this exercise where he's like, what do you value your health at? I mean, I wouldn't trade my back for any amount of money. I have a bad back and yeah, don't do it. It's terrible. So the idea of like trading years of life for money is insane to me. Well, for sure. I bet if that was a real thing, right, you'd get at least a third of the population would say, yeah, sign me up.

Yeah. I mean, it also depends on what you can leave your heirs and how desperate your situation is. I get all that, but no way. If you said to me, you can have $1 billion and be 60 versus currently your situation, then it kind of becomes a harder equation because at 60, you can have like pretty good years of life ahead of you. But 90, no way. Yeah, I agree. I was, but it's a fun question. People like, hmm.

Well, I think that that's an interesting topic to kind of like riff off of because that's like, to me, that's a clear cognitive problem based on some sort of internal like greed or insecurity about money. Because I think if you're rational about like how much of your life you're trading for very, it's, he doesn't even have the good years left. Yeah. Like,

it's not as if, you know, you're some 23 year old, that's going to go out to clubs and find all these hot people and like really live it up like what are you going to do when you're that old and there's right over even 500 million like who really could right it's not like it doesn't matter because it's 85 billion i'm willing to go to 85 years old well what are you going to do you're going to go to the turks and caicos so a bunch of young people look at you like you're like you you can't even enjoy the money at that point you're just

like flying around in a plane that doesn't matter I agree so the podcast so you started it had a great first season what was the motivation has been, give us the lowdown. Man, I guess I've been trying. I was asked this question yesterday, and I'm not sure that I have a great answer. I think that at the core of why I like doing podcasting in general and why I like radio is I'm super interested in people. I really, really love investing. I like talking to people about volatility trading. I like talking to people about equities. I like talking to people about credit. I just like how people

think about betting. I hadn't seen a lot of podcasts that came into my ear that, um, you know, sort of like addressed finance to me became like a package product and it kind of pissed me off. And I was like, all right, well, can I make this what I would want to listen to? It's the old Tim Ferriss, make content for an audience of one. And the other thing is, frankly, if I'm any good at this, I only am good because I stand on the shoulders of giants. So to be able to have a network that is a network that's willing to share their knowledge, that's important for me to try to distribute to people that don't have that network. And I think that that is a very real service that comes out of people sharing their minds. I am going to do everything that I can to not turn it into people's promotional

material because that's what really pisses me off about finance. And something that I take a lot of pride in when people ask me, I had a guy that wrote me like super thoughtful email. And I'm really appreciative of the fans and the people that are writing out or reaching out. But, you know, like he said, he said, I wish you should have more guests that people know about. And part of the reason that I hadn't found you is you have a lot of guests that nobody knows about. I like that. I don't want to be the, you know, I no disrespect to like Bill Nygren or any of these guys. Right. But if they have CNBC, they don't need me. Yeah, exactly. And, and,

you know, like Greenblatt is a guy that I give anything to interview, but the interview that I would want to give Greenblatt, I don't know that he wants to give um yeah like jim rogers and it was that he was like going to all the same talking points that he does on yeah and i'm like come on give me something new and it didn't have it was still yeah and like yeah i i think so too but um i don't know i i i would be conflicted about airing that um only because i mean i would do it right but i'd be like shit like that's you know kind of what i'm running from so we'll see we'll see and i don't you know i'm sure if your retention numbers are anything like some of the

podcasts that i've seen in mine uh people may or may not be listening now they probably churned off but uh no we did they go pretty far through they got to get to the end to hear who your favorite star wars characters there you go i get i mean i get some uh i'd like to do marvel if that's okay uh yeah but um i uh i i get into life a little bit on the podcast too. And for those that may or may not know, like my family suffered a tragedy last year. Uh, my cousin-in-law was the Robin hood trader that,

uh, took his own life. And I just think that there's a lot of mental issues that go along with, with, uh, trading and managing money. There's a lot of psychological things that people need to really be not, I don't want to say on top of necessarily, but aware of and how that stuff

can influence you. And I think there's a lot of failures that are forgotten when people sort of tell their own story. And I don't expect people to come on the podcast and just emote and talk about failure all the time. But if they're willing to go there, there was one guy, Moses Kagan, he's a great guy. And he was talking about building his business and how it basically cost him his marriage, you know, and to be able to have somebody be that open and then have a conversation about what it was like to, you know, get through that. Right. And people might look at them now and they say, oh boy, you're this GP at this huge real estate fund and you

must have everything. It's like, well, that dude gave a lot too. Yeah. It's the iceberg fouls, right? You see the success above the water and there's a huge baggage underneath. That's right. I've got him on our list too. Oh yeah. Moses is awesome. Yeah. Yeah. I think you'll like that. he's a cool dude um and sorry about your cousin i just i had forgotten about that till just now i remember you uh what do you i don't know if hold robin hood to blame for that is the right terminology but do you think they're over gamifying it and it's it's an issue uh yeah i do um you know i as look they um i i've sort of said my piece on them uh in a number of different formats and i think that what i what i add to what i have said in the past

is uh they had a choice whether or not they were going to fight my family and try to prove causation and at a minimum create a fair amount of pain in the trial. I think we had a very strong case, and I don't think that people really wanted to see me or my family on the stand. So I think it was a good idea to settle, but it's not something that they had to do. And then they did it. And I'm appreciative that out of a very shitty, shitty situation, some moderate amount of less shitty occurred. And I respect how they handled settling the case. And to the extent that what they put out in the shareholder letter after that week that we were at war, to the extent that that's implemented, the world can be a little bit better for it. But the amount of trading of options and crypto within retail

and specifically on that platform, I'm not going to say that it doesn't concern me. I think it's something that we should all be a little concerned about. My buddy's a high school teacher in Michigan. During the GameStop thing, he texts me. He's like, I got a student in my office crying, basically like on suicide protection

because he bought these GameStop calls. He lost all his money. He's like an 18-year-old. He's in high school. They have no idea what they're doing and they're getting into this stuff. Well, I think like, you know, for the specific situation that impacted my life, you know, according to the complaint, I never saw anything. Like I never read the emails myself, but, you know, my to the complaint, I never saw anything like I, I never read the emails

myself, but you know, my cousin-in-law got a capital call and then he responded and he, he needed help and nobody responded. And like, that's not okay. Right. But, uh, they do say that they've fixed it and I don't trade on the platform. So my, my war with them is sort of over and I hope that other people police them because it's, uh, it's not, not my fight to keep. And the, have you seen, we're getting way off script here, but the, uh, like, uh, teenage girls, suicide rates are like through the roof. But to me, it's all this gamification of Tik TOK and Facebook and everything. Right. And they get, we're just in this financial world in this example, but they're right. The same thing as a capital call

is if someone called her a, you know, fat or something on some platform. Yeah. Friends are making fun of her and she takes her own life. So it's like, it's a bigger problem to me across, not just on Robinhood, but across all these platforms. Yeah, I think there are separate issues,

but I agree, generally speaking, that the interaction of social... I mean, I went through, I had to take a break really from the podcast, but also just kind of like to decompress after last year. And part of getting the podcast launched was I really felt like I had to push it, you know, and by pushing it, I was on Twitter a lot and I felt the need to respond to different fans as much as possible. And, you know, before I know it, I'm like waking up every two and a half hours and checking my phone. I was like crackhead, uh, you know, and, and that was, yeah. And that was scary a little bit to be like, what happened to me? And when did it happen and how did it happen?

So I'm still on Twitter a little too much, but I think it's a little healthier now the way that I'm treating it. But that's what most junkies would tell you. Yeah. Well, do I go to Twitter anonymous one day? I don't use the notification. So I couldn't imagine. I mean, I have not trying to be like

i have so many followers but i have like i have 29 000 followers now if i had notifications on it just be like constant barrage um and then who what are some of the biggest lessons or have you implemented anything you've heard or learned on the pod into your own structure into your own investing yeah well i think that think that there've been a couple things that I think I used to believe that I don't believe anymore. One of the most nefarious things I think most sort of like typical value investors can think is like, oh, you don't need to model. I mean, that's crazy to me in retrospect. I think you can buy certain things without modeling, especially in a time like March of 2020, you can kind of throw a dart at the right time and win. But I don't drive without a model anymore.

I think it's like flying without a compass. And I think the other things, I guess that what I've done, my, my biggest shift is to focus much more on business quality rather than stock price and multiples and stuff like that. I think I was, you know, I said that I, I didn't know what I was doing or for two and a half years and I've been professional for two and a half. I think I've only been like moderately professional for, I don't even know maybe i'm not now that's what we focus on on this podcast less than six months moderate professionals yeah yeah well the great i'll be like your perfect uh your your target audience right you know i i just think um there's uh there's just an element of i I need to focus on the things that matter.

And what that entails is like very deep work on the businesses that I want to own. And only then does a multiple matter. Because I don't think that I know, I don't know how to contextualize a multiple without having all the qualitative understanding. And a lot of these modern tools, right? You can filter for multiples and prices and be like, cool, here's the three stocks I should buy. Yeah.

Yeah. And like that game to me, a computer is just going to beat a human in that game every single time. Because the really arrogant part about like just looking at a multiple or whatever and saying without really understanding the business is uh like the only edge that i think you can be exploiting in that particular method if you're not a computer is you can say like i have higher emotional

intelligence than the market does and that to me is like highly arrogant yeah um now i maybe buying any stock is arrogant like i would not disagree with that but at least uh the qualitative stuff i think is where you develop the emotional edge for lack of a better term, because you actually know what you own. Um, or I shouldn't just internalize it and say, I know what I own, but you know, there's certain things that, uh, I, I honestly don't know as well as I need to know. So it's a matter of getting up to speed and now I'm back in the saddle and that's what I'm using a lot of my time to do. And how do you think about like, there's no way you can compete with some big, huge firms

that have, you know, staffs of 50 and can dig into these companies and hire private investigators to follow management around and do all this, right? Like, how do you view that of like, I don't need to compete. We can both make money or what's your view on that? No, I mean, dude, I forget about a big firm. Like, I get on these Twitter spaces a lot. And I talk to guys and, you know, I think I know cable. Those dudes like no cable.

Yeah. And it's terrifying sometimes to me because here I run a book that is, you know, more concentrated than many do. It's not some crazy concentrated book where I, you know, I'm not, I'm not skilled enough to tell you that I know the best bets in the market to make, right. I'm just not, and nor do I care to be. Um, so you're never going to see me be, I was 20% inate last year that was a big bet um but it was just so cheap uh the uh you know i i just um i forget where i was going yeah what was the question i don't remember either we're not concentrated what's the end of the uh of just how do you view competing

against these oh with all their resources yeah so i mean I, I don't get paid on a high watermark. Yeah. I don't, I don't, um, I need to get my family to retirement, right. I need to make sure that my kids can continue to eat. I need to make sure that, uh, they feel loved. So to the extent that Disney is a little bit overvalued and my forward returns are lower, like that just doesn't matter to me as much as it matters to 0.72.

Right. If you want to perform the S and P by 4%, who cares? Yeah. Like now, you know, uh, for,

you know, I mean, for the curious and we'll see if I keep doing this one day when I, when I stop, uh, for, you know, I mean, for the curious and we'll see if I keep doing this one day when I, when I stop, uh, performing, but I do think like I've talked myself down enough that it makes some sense for somebody to wonder, well, who the hell am I listening to? We can't really talk about performance on here. Okay. Well, you know, I mean, it's, it's gone well, right? So, um, the, the only reason that I was going to say is I have no interest in running outside capital now or ever. But the what?

I'm sure if you've been getting those questions, like, can you run my capital? You get some of those. No, it's just people are kind of like, what's your end game? Right. Because I got this podcast and what I want to use the podcast to do is elevate the people around me. And, you know, if you're like, well, what does he get out of that selfishly, eventually sponsorship, and I find myself in the idea flow. So it's kind of a satisfies the intellectual curiosity. Like, yeah, like, I don't, I don't really want to park my money on the in the SMP and just kind of go away and eat bonbons and whatever. And I wish that

I could tell you that I'm some guy that like wants to give back to society in every way, shape and form. But what I really am is a guy that just wants to cut up about investments all the time. And if I can figure out a way to distribute quality education to an audience, like that's where I get fulfillment from. Love it. Who are the three of your uh anyone who hasn't heard your pod three episodes they should definitely go listen to well arnold vanderberg's number one uh that guy talked about life in a way that uh i i think everyone should listen to that episode um adam robinson i have mad love for he's a great guy.

Man, you're making me choose about my children. Right, I was just panicking in my head. Like, don't ask that back to me. I don't know. I don't know. We'll leave it at two and I'll ask you. The rest, yeah. Yeah, we'll leave it at two and ask you for two or three people you'd love to have

on. The buff dog and Charlie mugger. I'll tell you, here's what I'll say about my guest list. I am really, really, Jen Ross is a cool person to listen to. If people want to listen to somebody, Jen Ross is a cool person to listen to. I just, I really appreciate that people came on and took a chance with me and that they were willing to just talk.

And I think that all of the guests are super unique in their own way. And the type of people that are saying yes to this show are the type of people that I want to continue to talk to. Um, as far as three that I wish that I could interview, uh, I mean, I'd like to interview Bill Miller. Um, but really there's a woman at his firm named Samantha that I'd really like to interview because if I can get a peek into how they think and also highlight a woman, that would mean a lot to me. I want to highlight more women. So that's goal one.

And as far as investing styles, I'd probably want to interview somebody like david gardner if not david gardner um and then i don't know there's got to be somebody else there that's cool in a vol world like chris cole or somebody like that i think it would be super cool and i for there you go yeah i actually i have been written down on my little guest list that I need to reach out to. Yeah, he's great. So is Chris. Chris is coming on here in September. Chris is boys with Toby.

And Toby is the guy who put me on podcasting in general. So I got mad love for Toby. So if you're good with Toby, you're good with me. Got it. Toby who? Carlisle. Oh, I don't know. He's a great guy. Oh, yeah, yeah. I know. Tobias, yeah. Yeah. Toby, you're good with me. Got it. Toby who? Carlisle. Oh, I don't know. He's a great guy.

Oh, yeah, yeah. I know. Tobias, yeah. Yeah. Toby, yeah, yeah. All right, moving on. Favorites. We just do some quick fire, ask you some questions, give me some answers.

Favorite Chicago pizza place? Ooh. You know, this is going to gonna piss people off but it's the truth giordano's okay yeah a lot of people try to get me to go to p quads but i'm just not a p quads guy oh i love p quads that's me i know that's a people get mad but i think they sold it twice it's not as good anymore and there's always like an hour and a half wait to get in there but uh i like giordano's i'm a cheese guy but i'll tell you what the og answer would have been is it was at chicago's that was out like the late night pizza joint that you could order till like 4 a.m yeah um yeah i know what you're talking about when i lived in wrigleyville we'd like

order once a week and then we'd all pass out before they got there and they'd continue to bring us pizza the next week. I love those people. Thank you to Chicago's favorite investing book. I, you know what, I use it the most. It's not directly an investing book, but it's a psychology or influence the psychology of persuasion by Robert Cialdini. I, a lot of the bets that I make are through a psychological lens. I would say if I have any edge, it's, it's overlaying, uh, psychological biases on top of leverage, which is a setup that I really like. Like if you, so QVC, I keep going back to it, but if you really understand the consumer,

the average, well, not the average, but their super users are as likely to describe the host as family as they are hosts. And if you have that kind of a connection plus a whole lot of leverage, I think you have a scenario when it gets cheap enough that you can make a lot of money. Favorite non-investing book, although that was sort a shantaram shantaram yeah shantaram's dope i don't know it yeah check that out what's the genre uh it's really really long

it's about life and love and drug dealing and gun running in India. All right. You had me falling asleep and then and drug running. And yeah, no, it's a really cool book. The guy, I think the guy claims that it's like loosely based on a true story. I suspect it's much more loosely than based on. But Brad Pitt, I believe, owns the rights to the to the movie. And that that book is

sick all right put it on the list uh favorite auburn football player all time i gotta go with cam newton we paid him and he paid off did you pay him as that came out oh that's what people say that's the game supposedly some of these guys now are making already millions of dollars on their instagram and stuff some of these college athletes yeah imagine cam back in the day would have printed it yes favorite movie i hear you talking movies quite a bit on the pond i don't i mean that's such a tough question no i, I'm just going to say Zoolander because if you go by just sheer volume of watches, it would be that. Growing up, we watched Friday a lot.

I mean, obviously, I think a movie that I really didn't appreciate until I was quite a bit older, as far as Gump, I don't think that I saw the whole thing until I was like 24. And then I was like, oh my God, this is amazing. And then Top Gun's awesome. Like I've heard you mention Top Gun. We have a blog post on Top Gun as stocks versus futures or something. I'll send it to you.

Oh, yeah? Yeah. Right. I think stocks are maverick and like alternatives are iceman right stocks are volatile and going on iceman's just systematic gonna kill you um and lastly usually has favorite star wars character but i'll modify it for you and favorite marvel character i mean the problem with star wars is i just don't know that much right so i'd go with like obiWan or something like that. But in the Marvel and MCU, I'm going to go with Thor. I'm a big Thor fan.

Fat Thor was pretty funny, but Ragnarok Thor would be my most favorite. Yeah. Ragnarok's like people hated it. Now it's like iconic. People love it. Yeah. Ragnarok's dope. Yeah.

And now the new one, that same director is doing it, right? Yeah. Yeah. It's going gonna be sick yeah i like ragnarok i like guardians guardians is super funny they got they got some good stuff we i went with my mom's husband that's a whole nother story but uh not my day um to see that guardians of the galaxy i'd never known i don't think i'd ever read the comic or known anything about it so i'm just going in cold yeah dying laughing we're like oh we're going to a sci-fi thing getting in that mode but

didn't know it's going to hit me with the comedy yeah that's the thing it's like a funny movie yeah so i gotta ask you something now why uh why is uh alternative why are alternative strategies Iceman where equities are Maverick? Explain that to me. I'll have to go pull up the blog post because I can't remember it exactly correctly, but it was just much lower drawdowns, much lower volatility. And especially when you pair them together, they make a great team was kind of the thesis there. Yeah, this is what Jason's talking about. Jason Buck's talking to me about, and I think there's a lot of merit to this that I should probably consider more diversification.

Yeah. Yeah, for sure. Right. Like it's amazing to me. You can do it with just stacks. Like I'm a terrible stock picker. I hung it up long ago. So it's, it's amazing to me always just to meet someone who's like has that skillset and can pick those out. Well, I, I want to be very clear. I someone who has that skill set and can pick those out. Well, I want to be very clear. I don't know that I do.

It's really not like false modesty or something. I have constant imposter syndrome. Or if you read Taleb, right? Like, hey, you could be great for 17 years, and it was still all just fooled by randomness, right? It was all like how the Plinko game worked out and you you came out on the right side but if you played it 17 times over again you might come out on the wrong side yeah and i and uh to be perfectly candid i don't really trust people that don't that like have over yeah like people that don't distrust their record a little i don't trust those people yeah and that happens in the hedge fund space all the time like no what do you mean i run this

hedge fund and i have a hundred percent of my liquid assets also in my head yeah which is okay um it's great i love the conviction but like what if what if you're wrong like protect your family protect all this other stuff um yeah i think that's right and and i think that the other thing that um i the getting to a level of comfort is different than keeping the level of comfort and uh i had a really weird 2020 where some things worked and it was odd to have the success that I had. And it wasn't in SaaS. It was in some of these beaten up companies that worked out. And now, it's closer to, boy, do I really want to take this risk? Or is there a smarter way to smooth out things and get more diversified? And those

are the conversations that Jason has started to push me to. And I think those are probably much more worthwhile conversations than, you know, which stock is the perfect stock to pick? Yeah. Well, if you want to like expand your mind and worry about like the government collapsing or dysphagia or whatever, some of his ten dollar words um he's the guy right he'd be like well yeah what if this fails what if the banking system like well at some point i'm like well what if an asteroid falls on my house like there's only yeah yeah and i think i i do think like there's an element of some of these hypotheticals who really cares yeah right just above bunker level though right like so it's like

you could go full weird and be in a bunker but yeah he's highly functioning they're like no i don't want to live in a bunker i want to live in my life and not worry about my investments so how do i protect how do i have the bunker mentality without being in a bunker basically yeah the uh the one that i like is when people want to protect against the end of the world and it's like see you're going to be what the king when everybody else is in despair, you better figure out how to train yourself to defend yourself. Yeah. And that's the gold bar thesis. People that I know that want physical gold. I mean, I get it. And I'm not disparaging of that. But I can tell you, Bill Brewster walking down the street with a sack of

gold gets his ass kicked and then the other guy owns the gold yeah it's like what do i even own uh that's another blog post i'll send you when uh north korea had the bomb or whatever all that jazz and it was like pascal's wager of selling ball in a nuclear attack it was basically like go ahead and sell it. Cause if no one's going to collect anyway, right? Yeah. Cause if it happens, we're all dead.

Right. Yeah. There's no counterparties to pay. Exactly. Um, cool. Thanks so much for your time. This was fun.

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