We Study Billionaires - The Investor’s Podcast Network - TIP 084 : Billionaire Ted Turner's Story (Business Podcast)

Starting point is 00:00:00 We study billionaires, and this is episode 84 of The Investors Podcast. Broadcasting from Bel Air, Maryland. This is the Investors Podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies. Your host, Preston Pish, and Sting Broderson. Hey, how's everybody doing out there?

Starting point is 00:00:30 This is Preston Pish, and I'm your host, for The Investors Podcast, and as usual, I'm accompanied by my co-host, Stig Broderson, out in Denmark. Today, we're doing a book, and the name of the book was Call Me Ted. And this book was written by Ted Turner, who's the wealthy billionaire, who did all sorts of things, which we're going to talk about here on the episode. But just so everyone knows, the layout of the show today, we're going to be talking about the book, Call Me Ted, for the first segment of the show, and then the second segment of the show, we're going to answer probably about three questions from our audience.

Starting point is 00:00:59 For the Ted Turner book, when we go through that, what I'm going to start off doing, Stig and I are just going to talk about Ted Turner's history, kind of the timeline of how he created the businesses that he created. And then after that, we're going to talk about the key things that we kind of learned from his experiences in his life, just kind of the highlights that we kind of took away from the book. So without further ado, we're going to go ahead and kick this off, and we're just going to be talking about Ted Turner. So Ted Turner got his start in a, I can't say he's 100% self-made, because he got a start and had a huge advantage. His father left him.

Starting point is 00:01:33 How much money? Did it say exactly how much? Yeah, just short of a million dollars, I think. Oh, see, I thought it was maybe a little bit more than a million. But it was around a million dollars. We could go with that. His father left him a fairly large inheritance, especially when you think about the time of that.

Starting point is 00:01:48 I don't know what the inflation value would be today, but that's probably $5 million or something in today's value, which is a significant amount of money to be left when you are 24, Yeah, 24 years old. So he did have a huge advantage when he started off, folks. So don't think that he did all this without having a jump. But the thing that you got to understand is for him to, and at one point in time, his net worth was as high as $10 billion.

Starting point is 00:02:15 I don't care who you are. To go from $5 million to $10 billion, you've got to know what you're doing. You can't be some guy that just gets lucky every single time. So he was a very good businessman. It kind of explains all the different steps and his mind. mindset throughout the book, but I did want to start off by clarifying that up front. So people know that. Now, one of the unique things that I think was interesting about his upbringing that maybe led to some of his success. So his dad was an abusive kind of person, although his dad was

Starting point is 00:02:45 abusive and he had like this love, hate relationship with his father. And in many ways, I think he was a lot like his father. But later on in his life, I think he started drifting a little bit further away from that behavior. So his father was abusive, kind of a real strong personality, very good businessman for the most part, and love to spend his time working in the business. So Ted kind of learned that behavior from his dad. Ted did some time in a military school as a young kid, his parents, he didn't live with his parents for most of his high school career. He was in a military high school. And that's where I think Ted got kind of his military regiment, if you Will. He was very on time for everything, had a really strong work ethic. It kind of took

Starting point is 00:03:28 him some time to get to that point whenever he first showed up the military academy because he talked about some of his antics and how bad he was when he was there, but then he had a major shift. But that behavior was kind of ingrained in him in a very young age. And he carried that with him into his life as a business magnet. So after he graduated, Ted went on to go to Brown University, which everyone knows is a fantastic school. But his senior year, he got kicked out because he had a woman in the dorms. And Ted says that that was part of it. But really, I think that's kind of what happened. So he had like a little bit of a spin. Do you remember what his spin was in the book where he said, yeah, it was something like he already decided to quit. And then he just thought,

Starting point is 00:04:11 why not have fun if I'm going to quit anyway? And yeah, I don't know. Sure. So that was the story that he told it's his personal book. So, you know, that was his side of the story. So it's good that you get the balance. So he gets thrown out of Brown and his dad was not, there was kind of a funny story where he was choosing his major at Brown. And do you remember what the major was, Stig? I can't remember what it was. It was something like, if not philosophy, then it was like classics or something like that. Definitely not a major that his father would prefer. His dad just wrote him this scathing letter. The letter was, kind of impressive that he read in the book. I was like, wow, his dad can write. What Ted did is he took

Starting point is 00:04:53 this letter and he got it published in the local paper there at the school for everyone to see. And I think it just shows you how colorful was probably the best word that described Ted Turner. So anyway, so he got thrown out of school. So he goes and he comes back and his dad wanted him to work for him in the worst way. So Ted goes back. He starts, he was like one of the directors of one of the branches of his dad's business. So let's talk about his dad's business. So his dad's owned a billboard company. So all the billboards in the south, a very large chunk of it in the Georgia area, his father owned all these billboards.

Starting point is 00:05:29 And so that was their family business. So they were into advertising. So Ted's now 24 years old. His dad commits suicide. And Ted then becomes the president of the company, the primary shareholder of the company. And Ted just, I think a lot of. people from what he described in the book just thought that, you know, this young kid doesn't know anything's going to come in and destroy the company. He doesn't know what he's doing.

Starting point is 00:05:56 And Ted comes in and he starts making drastic changes, doing these expansion efforts, taking out loans and buying up other billboard companies and just expanding the business in a major way. So just to kind of give everybody an idea of the time frame of when this is all happening, his father committed suicide in 1963. That's when Ted was 24. And so through like the the late 1960s, Ted Turner began buying Southern radio stations, and in 1969, he sold his radio station to buy a struggling TV station in Atlanta called WJRJ Channel 17. What he was doing was, since they were in the advertising business, he felt like maybe he could complement that business with radio advertising that would complement the billboards. You know, it was a logical progression in his

Starting point is 00:06:47 mind of the expansion. He was also attracted to the TV industry. And so then that's where you could see he was slowly making this gradual progression into broadcasting and then to video media. One of the funnier things. So he changed one of the radio stations to WTCG. And that stood for Watch this channel grow. So at this point in time, you're probably in the early 1970s whenever he did this WTCG and he was, you know, really kind of making a name for himself. The company was really growing. And it was to the point where he was going to Atlanta Braves games and really kind of carrying on kind of a real young gun hotshot kind of entrepreneur in the town. And he's at this Atlanta's Braves game and he runs into the owner and, you know, they have a conversation and he's just really a

Starting point is 00:07:39 charismatic Atlanta Braves fan and they start talking with the owner. And next thing you know, he wants to sell him the team. He wants to sell them the Atlanta Braves, whose record at the time was horrendous. And the ball club was actually losing money as well. Do you remember the numbers that they were losing? They were losing like a million a year or something like that. Wasn't that right, Stig? Yeah. It was a lot, especially for the time. And thinking about how you can actually become a billionaire whenever you are buying a sports team that is losing a ton of money, even though they haven't accumulated wealth yet, I think that's very impressive how that's even impossible. You know, that's the thing that never really deterred him that I found in the book was

Starting point is 00:08:17 he'd buy these businesses that were losing money. And it pay a pretty high premium, I thought. I think would he pay for the Atlanta Braves, $10 million? Yeah. So I believe he paid $10 million around that number for the Atlanta Braves. They were losing a million dollars a year. And then he leveraged the heck out of the deal where he just borrowed tons of money in order to pull it off. and it was just really, that wasn't the only deal that he did like that. It was like deal after deal. He was doing these ones that really the cash flow wasn't all that strong. But you know what he was doing is he was buying companies that kind of complimented other

Starting point is 00:08:51 businesses that he had. So he saw the Atlanta Braves. He's like, hey, I own this TV station. I own this radio station. I own these billboards. I could really kind of turn this around because I own these complimentary businesses that could really make the Atlanta Braves take off. So one of the things that was huge for Ted Turner was he in 1976, now granted, 1976,

Starting point is 00:09:14 this is only like 15 years, a few years after he owned the company. He now owns the Braves. He owns all these TV stations. He owns all these radio stations. And he got permission from the SEC to use a satellite to transmit content of his local cable TV provider around the nation. So what he did is he took the Atlanta Braves. and he started broadcasting the Atlanta Braves through satellite through the entire United States.

Starting point is 00:09:43 So just the thing that, and I was going to talk about this more after we wrapped everything up, but the thing with Ted Turner was he was always complimenting his businesses. He never stepped into a lane that didn't compliment something else that he already owned or that was something that he could leverage with other assets that already existed within his company. So moving on, he did a Time Warner merger. Didn't really talk about the merger too much. Stig, did you have any specifics that you wanted to talk about with the Time Warner merger? Yeah, I think both the Time Warner but also the AOL merger afterwards.

Starting point is 00:10:19 So think about it like this, he was teaming up with Time Warner. Obviously, his share of the company would be looted and then finally AOL. The whole process for me, I really didn't get it. I mean, I did it in terms of like a business perspective, but from a personal perspective, it didn't really make any sense. It's really clear from reading the book that Teterna needs to be the man. He really needs to be the one in charge. And that's completely understandable and I completely respect that. But since that is the case, I really can't wrap my head around why he would basically sell himself out of his own business. There's a really interesting story about Jack Welsh.

Starting point is 00:10:56 Tertan, he would tell his side of the story and then he would have like a friend or someone else that was that, to tell perhaps another side of the story or how he looked at the situation. And to Turner, he was talking about how Jack Wells, because at that time they were considering being bought up by GE, how he was not prepared for the meeting and he didn't know anything about what he were talking about. And for anyone that knows Jack Wells and can study what he's doing, for me to think about him coming to a meeting of that size and have no clue what it's about, no, that's just outrageous. I mean, it's not even serious to say something. something like that. Yeah, he had a quote in the book where he said, you know, what's that Jack Welch

Starting point is 00:11:35 know anyway? If it wasn't for Edison, he'd be a nobody. Yeah. Yeah, because what's really interesting is that in Ted's version of it, this is my company and I build this from the ground up. And then what you hear from the other side of the story, he's saying, well, I kind of felt like it was because Ted was giving a position as vice chairman or he was not the one in charge anymore. And I think Tartan really misunderstood the whole process. It didn't speak about the other shareholders. He didn't speak about the employees. It didn't speak about anyone but himself and how he felt like he was emasculated by

Starting point is 00:12:10 Jack Wells because he didn't want to give him whatever. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You got long days of daylight, incredible food, floating saunas on the Oslo Fjord, in every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing together

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Starting point is 00:16:35 He was the majority shareholder. He had all the voting power with any decision that was being made. The only reason I can think that he would want to do this is because it made him and his organization bigger. I think it was this ego thing, and maybe I'm speaking way out of turn here, but I think that maybe his ego got the best of him at this point in time because he just wanted to be able to say,

Starting point is 00:16:58 yeah, we're this multi-billion dollar organization at this point. But when he did that, the thing that he gave up with the Time Warner deal is he started losing that voting power and that controlling element to make the decisions anymore. And so now he's kind of along for the ride once he got into the Time Warner deal. And then when you start talking about the real disaster, which was in 2001, when Time Warner was purchased by AOL. So he was not involved in that decision whatsoever, as far as I'm concerned, based on the way he even described it in his book, where the CEO for AOL, the CEO for Time Warner, which wasn't Turner because he really kind of, you know, wasn't the decision maker at this point. They did this quick deal.

Starting point is 00:17:41 It was like over the weekend, they quickly formulated everything. no one knew about the deal, and next thing you know, AOL, who basically had no net income, but actually had a higher market cap because this was during the dot-com bubble. I'm really surprised that someone like Ted Turner that knows the importance of Caslow, probably because he bought so many that didn't have any Caslow, and he weren't more aware of that whenever he got bought up with stock. I think for him, he was, and you've got to realize, Ted Turner was always on the cusp of the new technology from the time he was young until this point in time.

Starting point is 00:18:15 So he saw how influential cable was to his growth as a company. So the new thing now is the internet and everything's going to be TV is going to be run over the internet and everything. And that's how people were thinking back in 2001 when this deal was done. Everyone's thinking the next thing is the internet. You've got to be there or you're going to be lost. And so I think even though Ted wasn't intimately involved in the deal, the reason he went along with it and the reason he was fine with it was because he knew

Starting point is 00:18:41 that they needed some type of internet business in order to compliment theirs in order to go to the next level in order to stay competitive. And so he went along for this deal and didn't really, you could tell by the way he talked about it in the book that he just wasn't comfortable with it, that he was asking these other people for their opinion, but yet he went along with it and voted for in favor of the deal. What really makes me sad about this book is that Ted Turner doesn't appear to be a balanced person. I mean, he's not. He's a very. He's a very much. He's accomplished so much. I think it's sad the way that he actually talks about his personal life and the personal relations. He had all the chances in the world to live alive with his true to

Starting point is 00:19:23 his values. And I kind of feel like he was living another person's life, perhaps his father's life, I don't know. And he really doesn't seem to be happy about the outcome of his life. I think it seemed like he tried to justify a lot of the decisions that he made, but he really wasn't convinced himself. There was this very sad story about his kids from the first marriage that lived with him. They couldn't live with the kids from the second marriage. So they're actually eating in the basement. And he said that, well, in a way, that made me sad. But I was really good at sailing.

Starting point is 00:19:54 And here is how much I won. And I was actually the only one to win this award four times. And I was like, did you really say that your own kids couldn't eat than sitting in a basement all by themselves? And then you tried to justify it with winning four awards in sailing. There was just a gap there in my, at least how I perceive values in the world, but there was something missing. Yeah. And Stig, I saw it the exact same way.

Starting point is 00:20:17 Like, this was a really interesting book from the vantage point of seeing how a person took, you know, a modest amount of money relative to what he grew it to. And just all the business decisions, all the moves, it was really interesting from that landscape. But the part that was really disturbing was what Stig addressed. It was interesting. At the end of the book, he started talking about how. how important his family was to him and how he was sitting there thinking about each one of

Starting point is 00:20:43 his kids and their grandkids. And you could see at the end of the book, the thing that was really important, after all these moves and all this other crap, it was really his family. That was the thing that was the most important thing to him. And it was probably the thing that got neglected a lot. I can't talk personally, but from what I read in the book, that was the impression I was left with was that it was just a total neglect for the most part, for all. those years of the most precious years of his kids. And man, what a learning point for people

Starting point is 00:21:15 that would read this book to think about things from that context and really be able to put what's important in your life first, opposed to last. A fascinating read. It was very long. Oh, my gosh, this book was never ending. I kind of enjoyed it. It was okay. It definitely wasn't one that I would go around telling people to read or recommend real strongly. Some of the things that I did want to cover as far as business. So if people want to take away business points here, we briefly talked about his branding. He was very good at branding. And it wasn't just the one example that I described with the CNN. There was others that he was very smart with his branding. We talk about this all the time, the importance of running your own business and how much

Starting point is 00:21:56 of an advantage that gives you for thinking about investing. We talked about this a little bit, how he was making bold moves, using lots of leverage. He was always looking at things more from from a growth standpoint than a value investing standpoint. And so a lot of the times on the show, we're talking about things from the vantage point of a value investor. You know, find a company that's very stable, has really good cash flow that's trading at a low multiple.

Starting point is 00:22:27 That's like the basics of value investing. Ted Turner did pretty much the opposite of that. He was finding businesses that didn't have much cash flow that would complement an existing arm of his business that had huge growth potential, like moving to cable news or, you know, whatever. That was an interesting dynamic to see somebody really pull this off successfully because usually that's a low probability type event. And you didn't really see him get caught up in the probabilities of this

Starting point is 00:22:55 until later on whenever the AOL deal went. His net worth was, call it $10 billion-ish at the time when that went off. And then within a year later, it was already diminished down into the, what was it at, $2 billion or $3 billion or something like that. He had, I don't know if I'd call it luck or what you'd call it, but he was very successful from a young age, clear up until that point. He really didn't have any major mistakes or setbacks.

Starting point is 00:23:21 It really kind of pulled him off that wild ride to the top. Yeah, because I don't know how to really describe Ted Turner. In like a better words, I might say something like greed was really driving him, probably also a vision. But I really want to elaborate this because I think it was when he bought TNN, he was saying it did have enough capital to get the station up and running, but it couldn't run. Like he had enough really to get it started. And then he said, then I can always raise more capital or borrow more money. But I kind of need to show that I can get this up first before I start leveraging that even more.

Starting point is 00:23:56 So I kind of feel like he was just climbing the ladder, wherever it was leading. And then he always felt like because he has been so successful all the time by people. bending anything on just one thing. He could just continue that. And then finally, with the AOL, perhaps the Time Warner Deal as well, he couldn't do it anymore. He might get carried away. And he was definitely not one of those diversified and missed the type of guys. He was really concentrating and he was leveraging all that he could. The last point that I wanted to highlight from the book, and I really like this. And it was surprising to me with his personality when you're reading that he would have this opinion. But he never really wanted to get involved in businesses

Starting point is 00:24:37 that didn't have like this goodness factor for society. He never wanted to air TV shows that were violent or something that weren't wholesome for people to watch. CNN, he wanted to, if it bleeds, it leads kind of mentality. He wanted to take that out in news. So he had this, that's one thing that I really did admire about the businesses that he ran. And I think that a lot of people when they maybe start a business, maybe might not be thinking from that context. And I think that's a really important note for people to take away from this book is that is something that I think is vital to the success of a business, is that it has to be something that is a win-win for not only the business owner, but also society and the people that would be taking advantage of whatever

Starting point is 00:25:22 the product or services that you're selling. So that was the last highlight I had for the book. Okay, so our first question comes from Benjamin Tupper. Hey, Preston and Stig. Thanks again for your podcast. I really appreciate it. I do have a question. Jim Rickards was talking about holding physical gold. I like a lot of Americans,

Starting point is 00:25:40 have the majority of my savings in a 401k that is limited to just mutual funds only. Are there any mutual funds that you would recommend that would be close to holding physical gold? Really appreciate it. Cheers. Bye. It's a great question, Benjamin.

Starting point is 00:25:55 And I love talking about goal, especially after we had Jim on for those two episodes. That was really awesome. I did a quick scan whenever I listened to your question and I really didn't find anything in terms of mutual funds that appealed to me. It's probably also because I don't like mutual funds in general. But one thing I really thought about was that you want to hold fiscal gold and you just have to be sure that even though you might find in a mutual fund or an ETF that's saying that they're backed by fiscal gold, it doesn't mean that you can convert your shares of

Starting point is 00:26:27 that fund into gold. So really to use the teachings from Jim Ricketts is only the gold in non-bank custody that is physical gold. Just remember that if that's something that you want to do. And since these two episodes, we've gotten quite a few questions about gold. And it has been really, really interesting because Preston and I have previously beaten up gold. I'd say, I actually think I've changed my paradigm when it comes to gold. But I would really like to elaborate that before you think I'm turning into one of those gold nuts. I don't see gold as an investment.

Starting point is 00:27:07 And the interesting thing is that Jim Ricketts actually feels exactly the same way. Gold should not be seen as an investment because it has no yield, but rather as insurance. And I found that point really interesting. So does that mean that I would put 10% of my portfolio in fiscal gold? Probably not. And here's why I think someone should and why I don't. If you really have a lot of money and you're not super young. you don't have a lot of marginal utility in terms of compounding, say, a billion dollars.

Starting point is 00:27:36 It really doesn't make so much of a different if you compounded by five or six percent. What you really worried about if you have a billion dollars, I would assume, is that you would lose them. That would really, really be bad for you. Now, how can you lose a billion dollars if you have them in great stocks, great bonds? How can you lose that? Well, you can lose that if the monetary system, as we know it today, gets completely distorted. If the dollars that we know today vanishes, if it gets hyperinflation, whatever, that would be really, really bad for you. So for people like that, it would make a lot of sense for me that they would try to ensure that portfolio.

Starting point is 00:28:13 Now, so from my perspective and perhaps also a lot of the investors out there, besides a portfolio that I have, it really doesn't make any sense for me to invest in gold. And also giving the prospects, I think I have. So I looked it up. How much does it cost to store fiscal gold? If you have at least 5,000 pounds, which is obviously a decent amount, but it might be 10% your portfolio, is that something you should do? Well, the annual fee insurance for doing that is between 50 and 100 basis points. So between half a percent and 1%.

Starting point is 00:28:46 So basically, you're paying, called just to be conservative, 1% to not get any return on your portfolio, that part of your portfolio. For me, being relatively young, have a lot of human capital in a phase where compounding means a lot to me. No, gold doesn't make any sense to me right now. And I'm really curious to hear Preston because I don't know if you have changed your opinion about gold as well after speaking to Jim. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why Vanta is a game changer. Vanta

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Starting point is 00:32:21 charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. Well, to be honest with you, I really liked your response. I pretty much agree with everything that you just said, Stig.

Starting point is 00:32:39 I see it from a very similar advantage. I think it is an insurance policy. I think that that's how people need to look at it. And I think it's an insurance policy against central banks. And people basically saying, hey, I don't trust central banks. I think they're going to actually implode the financial system. It is zero yield. I think we've got to be very clear and people need to understand that it's not something that produces any type of yield to it.

Starting point is 00:33:03 I think it's just something that you have to look at. I really like, the thing that I can say that I did like about Jim Rickert's discussion, to me it made a lot of sense when he started talking about the difference between nominal rates and real rates. And whenever you see the real rates start going negative, that's whenever gold performs. Well, that made a lot of sense to me that discussion. Where before I never really looked at it from that context, I never had anyone really explain it to me that way.

Starting point is 00:33:31 But that really made a lot of sense to me. Now, whether that's what happens in practicality, you know, time will tell. I know in the United States right now, rates are going into the negative territory for real rates. So it'll be interesting to see how gold performs if that would persist and see if Jim's thesis is accurate. So do I have some gold? Yeah, I took an ETF position really small. I mean really small in my portfolio, you know, like a couple percent if that. So it's not like I have a big position in it.

Starting point is 00:34:03 I'm watching it. I'm learning. If you had tuned in the podcast a year ago, you would have heard us destroying anything discussing gold. But we're trying to keep an open mind. I think that Jim was an incredible guest. You'd be hard pressed to find anybody on the planet smarter than Jim. It's a very, very interesting discussion.

Starting point is 00:34:23 And I love Jim's book on gold. It was fantastic. It was a very interesting read. And he brings up all these arguments and how he kind of has a counterargument to every one of them. So if you're wanting to get a better balanced position, man, I'll tell you, I would research him more. Okay, so our next question comes from Trey. Hey, Preston and Stig. This is Trey.

Starting point is 00:34:45 Had a couple quick questions. First one is for Preston, especially who I know is invested in SJB and also gold. And my question is, if you add the expense ratio of those two positions, you're already at about one and a half percent. I know in the Tony Robbins book, it recommends one in a quarter or less. I was curious if you take that into consideration when you're looking at positions like these or if you consider the expense ratio less because it might be a shorter term play and you're expecting your fees to average out over time. My second question was about dollar cost averaging.

Starting point is 00:35:18 I was curious if you had any rules of thumb in regards to when to allocate more capital if the asset has dropped a certain percentage or how to kind of effectively manage the commissions involved with getting into a position over and how to be strategic with that. All right. Thanks a lot, guys. Bye-bye. Okay. So I want to start off by saying that this is not a pick that I recommend for people to have because it's a short position on high-yield bonds. It's something that I discussed in a show probably in December, I want to say. I believe I bought this at about $28, $28 and $20, somewhere around in there. And here, I'm pulling it up right now. at $27.32. So I am down in this position relative to the S&P 500. I'd say I'm losing to the S&P 500 by

Starting point is 00:36:11 a couple percent, maybe 3 percent or something like that. So so far the position really isn't performing anything that's scary, if you will. It's not like I've lost a lot of money on this. I still own the position. I still have a lot of confidence in the position, to be honest with you. I think it's going to do extremely well moving forward. I'm going to continue to hold this until I, you know, I don't know when, but right now I'm very comfortable continuing to hold this. The reason I did this is because I wanted to kind of document my first time really doing short positions on the show and kind of talking about it.

Starting point is 00:36:45 So I'm really glad that you asked the question so that we could bring it up again. So the thing that has caused the position to perform kind of not as good as I was expecting right out of the gate was because oil prices have really kind of had a little bit of a recovery lately. Oil right now in 15 April is about $40 to $42 a barrel. And when those oil prices are coming up, the expectations there's going to be a lot less defaults. And so this SJB high yield bond fund actually does worse because it's doing the inverse. And I'm sure I've confused the heck out of everybody at this point. But just real fast, because oil is performing well and there's not an expectation for default, when you short a high yield bond fund, it's going to do.

Starting point is 00:37:27 worse. So if the market conditions worsen and things go in a bad direction, the expectation is that this fund would do very well. So I will continue to keep people updated. So keep prompting me on this. And you know what? If it ends up being a bad pick, I want to definitely talk about that with people. So this is the most important part of what I'm about to say. You have to have a lot of conviction behind any pick that you put on. If you don't have conviction behind a selection, you will sell at the worst possible time because you don't understand what's happening. So that's why I don't recommend this for most people because me personally I have a lot of conviction behind this trade. It doesn't bother me in the least bit, but that's me. So whenever you put on, whether it's this

Starting point is 00:38:14 play or any other position, you've got to have that conviction behind or else you're not going to be in a good position. The second part of your question was the position size, whether you go in more or not. I think that also has a lot to do with your conviction. So let's just say this position here. Let's say I had a lot of conviction and let's say it moved against me. I would be inclined to probably add to the position. And I think here's another thing. I think it's important for people to step into a position initially, kind of slowly. Like let's say that SJB ticker. I had a, I really thought it was a good pick. Even if I thought it was a fantastic pick, I should probably step into that kind of slowly, and as it moves in a different direction or whatever, then you can

Starting point is 00:38:59 maybe add to the position if it goes down because you have a lot of conviction and you're just adding to your position and you're lowering that initial entry price. Something that I think is also important is if you don't plan on owning something long term, which we like to own things long term, we like to own things literally forever because we don't pay any capital gains tax on it. That's the Warren Buffett model. An example of something that I wouldn't own long term is this SJB, because because it's a short. I don't plan on owning this a long time. I plan on owning this like a year from now. So when you own something and you plan on selling it and you don't plan on owning it forever, I think that as you start getting further and further ahead in the position, you slowly

Starting point is 00:39:39 take more and more money off the table. And that's a trick that we really learned from Jack Schwager. He talks that some of the best traders, people that are traders, not investors. That's how they do it. When they get further and further ahead in the position, they're taking more and more money off the table. So I'm not one that condone trading at all. I'm kind of playing around with it for fun. And that's why I don't recommend it for people because this is an investing podcast. But it's interesting stuff to talk about. And I think that people might get some interest in talking about some of that. So Stig, did you have any other comments on the last part? Yeah. So about the dollar cost averaging, I would like to respond. It's really in terms of thinking about dollar cost

Starting point is 00:40:19 averaging for the market, the stock market as a whole. That's a question that we are part a lot. And how would you invest on average when you have, say, $10,000 now? Should you invest everything at once or should you gradually dive into it? As you ask, Trey, like if the market drops, how much should I put into the market? Is there any difference? So I think if you don't have any conviction about the stock market, but you just want to be invested, perhaps you are right now, you're invested in individual stock picks and you think, hmm, that's probably not really for me. I should probably rather be in something like dollar cost averaging where I can relax more. I might just roll it over into the low cost ETF.

Starting point is 00:41:01 And you can get really low cost seven basis points and nine basis points, really, really cheap ETFs because you are fully invested. You still want to be fully invested. Just roll anything over if that is your strategy. But if you really want to do dollar cost averaging and also you want to be fully invested in some point of time, but you don't want to put. everything into the market right now because what will happen tomorrow, what will happen in a half a year from now. What you could do is to look at your size of the portfolio or the investable amount you have

Starting point is 00:41:32 today and then say, how much do I expect to put aside the next, call it 20 months? And then I would simply just say, I will pull up Shillus PE. We have linked to that a few times and we will do that again and say if the stock amount is priced above the average Shiller PE, I might just take that some, so that would be $10,000 plus 20 times 500, and just say 5% into that. If it's above the current market price, if it's above the historical average, and if it's below, I might just put in 10% a month. As it looks right now, you will probably be rolling out your entire investment into the dollar cost averaging approach and in 20 months doing like that.

Starting point is 00:42:10 It is a very popular question. I know a lot of people are saying, this is really interesting what you do on the podcast, but I'm really not into the specifics I'm investing. I really just want to focus on other things, even though I think it's interesting. So that might be your way to gradually transition into being fully invested using dollar cost averaging. All right, guys, we got to wrap things up. Guys, this means so much to us to get questions like this and the participation. If you haven't checked out our forum, all these people that are asking these really intelligent questions are all contributing on our forum as well.

Starting point is 00:42:42 If you haven't stopped in there and asked some questions and talked about some of your investing picks and ideas, let me tell you, there's some smart folks there. And if you want to go to our forum, go to Warren Buffettforum.com or you can go to our Investors podcast website and there's a link there on the navigation menu to get to it. So we highly recommend that. If you want to ask a question and get it played on the show like our two gentlemen today, go to Ask the Investors.com. And there's a little button there where you can record your questions. Also, we did this review of Paul Me Ted. We send out our free executive summary to all the people on our email list. And we do this two times a month.

Starting point is 00:43:20 And we also talk about our opinions on the current market conditions. So go to our website, the investors podcast.com. There's a link in the navigation bar where you can sign up to be on our email list. We don't send any spam or advertising. So it's all about you. It truly is all about you. So if you sign up there, we'll send those out to you. And it's like a five-page summary of each book that we read.

Starting point is 00:43:41 So that's all we have for you guys this week. We just want to thank you for listening. And I will see you guys next week. Thanks for listening to The Investors Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.w.com. Submit your questions or request a guest appearance to the Investors podcast by going to www.

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