We Study Billionaires - The Investor’s Podcast Network - TIP382: Investing Mastermind Q3 2021

Starting point is 00:00:00 You're listening to TIP. In today's episode, I invited the investing mastermind group. In the first part, we discussed Redalia's holy grade of investing and whether and how retail investors could invest using the same framework. In the second part, we discuss whether the rise of passing investing is good or bad for active investors, and if there's a silver lining, troubling hood, and the new generation of brokers, that might be commission free, but certainly aren't free. We talk about that and much but spot.

Starting point is 00:00:30 more. So without further delay, here's the investing mastermind discussion for Q3 2021. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to The Investors Podcast. I'm your host, Dick Broderson, and today I'm accompanied by our investing in mastermind group here for Q3 2021. So Toby, Jake, Wes, thank you for taking the time to provide value for audience here today. Yeah, kind of what? So, gents, the first topic here of today, that is to talk about the holy grail of investing. So Redalia is one of the billionaires that we have studied most here on we studied billionaires. And one thing that has profoundly impact on how I think

Starting point is 00:01:30 about investing was Redelio's concept of what he refers to as the holy grail of investing. So So in his words, it's 15 to 20 good uncorrelated return streams that will dramatically reduce your risk without reducing your expected returns. And one thing that Delio highlights is that individual assets within asset class can, well, usually about 60% correlated with each other. So even if you're diversified, but it's still in that asset class, perhaps you're not. So this type of thinking is very different than how many people often think about investing. So generally, many investors have the home as the primary asset.

Starting point is 00:02:05 any excess capital, they consider typically two different investment approaches. I know I'm really generalizing here, but you have one who are more active. Very often that would be in the stock market where that person would then pick individual stocks, typically in their home country. And then you have a more passive investor who would buy an index fund. But that's also very much in their own country and typically a market-weighted index fund. So that's sort of like the premise for the first question here. So if I can throw it out there, perhaps starting with you, Toby, do you the wholly greater investing mindset with 15 to 20 good uncorrelated assets. And you're already smirking here.

Starting point is 00:02:42 And you can also say this premise that Redalia puts up is not really valid. The premise, I think, is right. That's the general idea that you want as many different uncorrelated return streams as you possibly can so that your savings generally grow over time, whatever kind of environment you can front. If it's a 70 stagflationary, gold running, equities getting smashed, to pieces, bonds getting smashed to pieces, then you want to have something in that portfolio that's keeping your purchasing power at least up with. And then got other scenarios where

Starting point is 00:03:15 you've got like a late 1990s ball market or the ball market that we've just seen in equities. All of those things are unpredictable. And so it's good to have those return streams. That said, I don't do that because I'm a equity guy and I've only run equities and I just, I'm only going to be exposed to equities because I eat my own dog food, so I'm only invested in the things that I do. So I think it is a very good idea. I think it's probably a better idea. It's probably more important as you get older and further into your investment or into your saving career. But I think that early on, it's all right to have a little bit more exposure to the things you think you're going to work a little bit better and to concentrate, figure all that

Starting point is 00:03:58 sort of stuff out. Probably, where's this your man for uncorrelated return streams? I might not even speak to that because I used to teach portfolio theory back in the day and I didn't even know what I was telling these poor students, but like going back to basic portfolio theory, the whole concept like Harry Markowitz and then leading to cap him, all that follows is that, yeah, you just pull a bunch of uncorrelated stuff together. And even though they may all individually like go all their place, when you pull them all together, all the randomness goes away and you just make free money. And if you can use leverage, it works even better.

Starting point is 00:04:33 But there's two key assumptions that everyone learns. One is it requires leverage. And then the second one is that when the world blows up, the correlation structure stays the same. But as we've already learned and people always relearn, is leverage is not stable because you don't have access to it anymore. And also when S-H-I-T hits the fan is a lot of, things that weren't uncorrelated, become correlated. So I'm just now that there's really two asset

Starting point is 00:05:03 classes, you know, Chris Cole, who's Toby's buddy, he always, he's very good at explaining this. It's either your short ball, it's like you're winning when things are stable or it's long ball. Like it's losing when things are stable, but when the world blows up, you know, it tends to goes up. So I'm a big fan of diversification across two asset classes, short volatility asset class, which things that work when the world's doing okay, and then long volatility asset class, which is things that usually don't work, but work pretty well when, you know, the world's on fire. I'm coming from live this week from Capital Camp, so I've learned that the only real asset

Starting point is 00:05:42 classes are NFTs, blockchain, defy. That's a very popular topic at the moment. I think that the other part of, I totally agree, by the way, with what both Toby and West said, But I think another interesting way to kind of reframe the question is, do you really know what you're buying or not? And, you know, if you are kind of a no-nothing investor and you don't plan on wanting to figure out what you're truly owning, then I think trying to find diversified streams as much you can make sense. However, if you are, if you want to sort of understand what you own the business is or whatever product it is, I think that then diversification often ends up becoming diversification. and it's just a different mindset and a different way to, like, there's lots of ways to do this game smart. It's just, you have to sort of match up your personality and what you want to work on with the particular portfolio and not trick yourself into thinking you're doing one

Starting point is 00:06:33 thing and really you're playing a different game. I think you bring up a good point, Jake, because like I said before, most people have the vast majority of the wealth in their home and that's something they understand that it makes sense. And it's a different standpoint than, say, Redalio, where I don't know how many homes he has, but it's probably a very small proportion of his net worth that's tied into his homes. So I can definitely agree with that. But if I can throw it all back to you, Tobin, you said, you know, your equities only. And I think a lot of people feel that way, perhaps they have their home, but in pure equities. I think even Warren Boughta said,

Starting point is 00:07:10 like he would put like 90% in the S&P and then 10% in treasuries. But are you at all word that we're going to have a, say, 1929? And it's a. took 25 years to recoup that loss, just because your analysis was wrong, like 25 years is a huge price to pay for being wrong in opportunity costs. Is that something that you considered? There's a huge risk that equities, particularly U.S. equities, the most overvalued asset class in the world, and that the consequence of that overvaluation is a very extended period of. I think when I look at the S&P 500, if I use that Hussman method, I know that that's a, you allowed to say his name, but I like his method for valuing the S&P 500. He says, let's assume that

Starting point is 00:07:55 over a decade we go back to the long run average valuation and still get the underlying growth, which is about 6% a year and you get dividends on top of that, where you end up in 10 years if you follow that, if you follow that method. And at the moment, the last time I looked, it was predicting Ford returns of about 0.8%, and that includes 1.3%. percent of dividends. So that's a negative 0.5 percent on the index compounded annually for the next decade. Now, it's been predicting very low returns for a while, and none of those have eventual way to say you can do what everybody else does and sort of discard those, or you can look at the reasons why that has happened, and that's largely that the multiples have expanded faster than

Starting point is 00:08:39 earnings have grown for a very long period of time, an unusually long period of time. And often, when you get this overvaluation, the consequences lower returns and more volatility. So, yeah, I think that's a very real risk and I think it's probably pretty good bet that at some point that's exactly what's going to happen. So, throw it over to you there, Wes, assuming that you wanted to diversify away from a market-weighted, say, called Global Fund, you know, let's just say that it's just our home country, so we're already global. Which investing strategies would you follow or which assets would you add to your portfolio

Starting point is 00:09:11 if you bought into this whole great of investing type of thinking? going back to like the what's short volatility what's long volatility you know on that short volatility book is is what are things that do well during normal times well that's your house that's your human capital that's your stocks that's your pretty much everything most people own right so within that bucket you know i like to own cheap stuff and i like to own right now in particular just because i've been in the weeds of it like value in my opinion is evergreen, right? Buy with a margin of safety. So I would not want to buy passive indices right now, because if you look at whether it's a U.S. index, XPY, you know, it's probably

Starting point is 00:09:57 got like an operating income yield of 5%, which is crazy. And then international markets, maybe it's 6%, an EM, maybe it's 7. Like all of those are extremely expensive if you just buy the market cap indices, which is fine. But if you go into like cheap stock world, You know, in the U.S. market, you could probably get stocks that are still, you know, 10 to 12 percent, even at yields or operating income yields. But if you go into dev markets or EM markets, you could get like 15 to 20. So there's two times as much kind of bang for your buck opportunities in the value world out there in international markets.

Starting point is 00:10:36 So I just think there's a lot more opportunity. If I'm going to own short volatility, i.e. own things that blow up when the world blows up. At least I want to own things with the margin of safety that, you know, I feel have like higher expected returns. So that's what I do. Buy cheap stuff in the states and globally. And then buy, you know, we like momentum stocks as well because I got to hedge against the fact that, you know, maybe value stocks do get burnt to the ground.

Starting point is 00:11:03 So, you know, I just buy cheap stuff and buy winners across the globe for the short volatility book. We really stocks are like a smoking, smoldering rubble at the moment that you think. think they can burn down further from there? I mean, I don't think so, but as you know, like I've learned enough in lifetime to not believe in only one religion because sometimes religion is just wrong. And so I just diversify against the religions. Like obviously, I believe in margin of safety.

Starting point is 00:11:33 I believe in fundamentals. I believe in free cash flow. I believe cash is king. But I also understand that like Dakes at a conference where they're talking about inepties They have nothing to do with like cash flow and dividends and fundamentals and net present value. So I don't know. Maybe we're in a world where, and I think this is crazy, but maybe we're in a world where people don't care about valuation.

Starting point is 00:11:58 They care about flipping it like Ponzi schemes, basically, flip something that's shiny now that's going to be even shinier in the future to someone else who wants to buy it at a higher price. Also a valid investment approach. And so I'm with it, Toby. That's why I like value, but there's a risk that maybe fundamentals just won't matter for a lot longer than anyone can expect. I need a hedging for that, basically. Jake, let me throw it to you.

Starting point is 00:12:27 I always know what Toby's going to say because he's an equity's only guy, right? He's a broken record. He's a broken record. Man with a hammer. Right. So, Jake, other strategies or do you have any specific type of asset classes that you would add to? your portfolio? I'm kind of drawn more towards trying to keep things as simple as possible. So, like, I structure things for my clients actually where it's basically like within, if you're

Starting point is 00:12:55 going to need any money within the next five years, we're not going to invest that part of the portfolio. And anything after that tends to be equities. I would be open to bonds if I found things that made sense, but it's just kind of in my lifetime. Well, early in my life, I think there were probably bonds, but I wasn't doing a lot of training as a toddler. But for most of my professional life, bonds have seemed to be kind of high price to me, and especially relative to what equities would offer over a long-term holding period. So I tend to end up with kind of a barbell strategy where there's a lot of cash and liquidity for any needs that a client would have in the next five years from that portfolio. And then everything else is eligible for a long-term

Starting point is 00:13:36 hold equity type of investment. And that's just the way that makes sense to me and as simple So if you have more than five years, let's say, until you'd ever need to draw on that portfolio, that all of it would be theoretically available for equity deployment. Now, we can argue the timing or not with that cash and the pitfalls and that of that. But yeah, so I tend to have a fair amount of cash and not a lot of other more esoteric assets. You know, it's interesting that you would talk about that, Jake. So I had Toby on the show here not too long ago, and we talked about having a cash position, we talked about inflation and how we might think differently about inflation.

Starting point is 00:14:17 I don't know. I don't want to put worth in Toby's mouth whenever I'm saying this, but I sure think differently about the opportunity costs than whenever I started. I was taught the church of Buffett and Monger, and I'm supposed to have a ton of cash around and then I would then invest whenever that brilliant opportunity came along. Not a lot of brilliant opportunities really came along. And so I kind of also felt I paid a high opportunity cost with everything we see now, not just in the macro landscape, but just in general with the market right now, you already

Starting point is 00:14:45 said that you have a fair amount of cash. Like, is that like 10%, 30%, like, and how do you think about inflation when it comes to that? You know, I kind of view it this as a poker game in a lot of ways where the amount of cash I'm holding is like the chips in my stack. And then there's an ante that is, you know, the blind is comes around to me and I have to pay. And that's sort of the inflation. And I've been very, very thankful that the blinds have been low for a long time. of this poker game. It hasn't been that painful. Granted, the opportunity cost has been big.

Starting point is 00:15:16 But even then, I mean, it's not like value rip and I didn't. It's not like most of the S&P 500 didn't really do anything. It was only a handful of things that have really done it. And I was not in a place to appreciate those businesses. And so I didn't really deserve to get the gains from those. So there's always going to be things I don't understand. Those do well, then like, that shouldn't really bother me. So I've just been very, very thankful that the ante of this game has been, or the blinds have been low. Wes, I remember we talked about this, you know, some time ago in terms of ETFs and generally you want to be to be fully invested. How about you, like in your private portfolio? Are you sitting

Starting point is 00:15:55 like on a pile of cash? To Jake's point, like, cash is fine. In my opinion, it's a costly insurance vehicle. And there's potentially better alternatives out there that achieve. the same in-state, really? Because what cash is doing for you is it's creating optionality to be money good when the world's on fire. But the cost is you've got to sit in the bank account and you have the opportunity cost of capital and inflation all those other stuff. And so the ideal situation is how would I get access to insurance cheaper? And I'm not saying that there's only one way to do it, but I'm just a huge fan of using like, you know, obviously trend following techniques where, you know, maybe only put down insurance if we're in a

Starting point is 00:16:39 bad trend. There's a lot of times you can buy like different like long volatility products in option world where you can find people that, yeah, they're going to have some cost to carry, but it's not that high. But when the world blows up, you actually get, you get paid. And so now, you know, it's it's like buying insurance, but the insurance premium is not that high. So I'm just a huge fan of trend falling in general, like managed futures, but just, you know, specifically trend falling, managed futures, just straight up long volatility, like owning puts, but smartly, I could see working. And cash is also fine, too. So I would say you probably want to do like a mix of all those different things as a ways to kind of counterbalance your, you know,

Starting point is 00:17:23 your all-in equity book. So that's what I do personally. I don't have cash sitting around. I got managed futures. I got, I'm not going to mention it, but I own this fund that does long volatility, and I do trend falling. But for the most part, I'm long and strong, you know, our funds on equity side like Toby does. So I don't hold cash in big quantities. I think the other part that's important for me is that most of this game for me is trying to control my own psychology. And I really do feel like it's sort of me against myself often. And the cash is a way to really help me to stay patient. And there's a comfort to it that I think makes me a better investor. And so even if it is not, it's kind of suboptimal, the simplicity of it, I believe in those things too,

Starting point is 00:18:09 Wes. I mean, I think tail risk funds, things like that, like they make sense to me. But oftentimes, I'm trying to keep things simple so that my mind can rest at ease and I don't have to do as many. And then I can really focus on like trying to really understand the businesses. Yeah, that's, I mean, you're doing it the right way. Nine a hundred percent, mental game 1% we actually do. So you're controlling the 99% I think you're going the right method. 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've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people

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Starting point is 00:22:38 That's Shopify. com slash WSB. All right, back to the show. Let's talk about trend following. You just mentioned it there, Wes. So to me, I've never seen. invested in anything that was trend following. But I read up a bit on it here lately. And it seems to me to some extent to fit the bill of the holy grail of investing. I don't have 15 or 20 different

Starting point is 00:23:02 revenue streams. It would be great if that was the case. But that's not the case for me. And I was thinking whether or not trend following would really fall into that bucket, because over a long time period, it's not correlated with the stock market. It follows a lot of different and uncorrelated markets, if it's set up right, and yet you can achieve stock market like returns, and you can invest in smaller funds, you don't need to put down a down payment as you do it for your house. And one thing that might make this appealing is that perhaps it doesn't matter if we are in the biggest bubble in history.

Starting point is 00:23:34 Some people think we are, other people would argue that we're not. But in case we are wrong, the strategy appeals to me in the sense that you can make money in the direction the market is going. Obviously, you would then be very much long right now because of what's happening to while there's all markets right now. So if the stock market would crash tomorrow, you would still see a significant drop in your trend following portfolio. But you could then make money on the way down whenever that trend has shifted.

Starting point is 00:24:01 So my question is whether or not you consider investing in trend following it. I like Chris Cole's version of the world where everything's long vol and short vol. As I point out to Cole, when you long vol, you still got to figure out which one of the long vol assets you want to be and it's not quite as simple as that. He knows that too. He's written some good papers on that. But I like the way he thinks about the world. The idea of trend following is just that, well, the simplest version when you apply it in an equity world is that when you get that precipitous drop, which you do, which is like the tail end of most bears, when you get that big gigantic sell off that kind of ends it, that you're like magically plucked out and you're hedged

Starting point is 00:24:40 through that period. And you can find lots of examples that work really, really well. You can run S&P 500 back and use the simplest versions, the 200 day or the 10 month, which is the one that everybody recommends, and you can see how well that's done. Apply that same methodology to Japan. The beauty of it was that it kept you invested the whole way up the Japanese bubble as it ran up, up to 1990. And then it just plucked you out at the top. And as Japan was absolutely devastated, you survived and you've kind of done much, much better than anybody else in Japan by following these things.

Starting point is 00:25:13 The problem I have found with them is just the implementation of them is very difficult. And it's not a total solution in the sense that you do have these trend following hasn't been a great strategy over the last, Wes would know better than I would, but it has been a great strategy over the last sort of short period of time in the market because we've been whipsawed quite a few times as the market goes down. You put the hedge on, market goes back up, your hedge, take it off. It's just that's every single trend following strategy that I have a look at Corey Hofstein's dashboard where he tracks these things.

Starting point is 00:25:46 Any of these risk managed strategies like buying some vol trend following, being a value guy, holding cash, everything has underperformed for the last sort of 10 years because the market's been very, very strong and the heart of the tour, the longer and harder you've been through this whole period, the more likely you've outperformed and any kind of. risk management has hurt you and so it's always at this point where people are like, well, I've been doing this for 10 years and now I'm underperforming. I'm going to give it up and I'm just going to be long and strong. I might even get leave it long.

Starting point is 00:26:20 And I think that I kind of get the feeling that, you know, and I'm going to buy some other stuff. I'm going to buy NFTs and I'm going to flip those and Bitcoin. And I don't like assets where the basis of the valuation is what the next guy pays for it. I like assets where the basis of the valuation is something that I can individually just go and have a look at the underlying business. and then if the mark gets changed tomorrow by 50%, but the underlying business is the same,

Starting point is 00:26:44 then even though on paper, 50% poorer, I know that the underlying business is still great, and that might be a good signal for me to buy some more. I approach it like that rather than. I'm at the point where I just want to simplify my life. I don't want, I don't want VOL, and I don't want trend following. I don't want other things in there. I'm just trying to get to her because I'm okay with a 50% drawdown in the market.

Starting point is 00:27:05 I'm happy with my investable assets going down by 50% because I get no, I'm not using them for at least 25 years and probably longer than that. That brings up a really good point, Toby. I think a lot of these things, like Wes said, they're kind of insurance products, right? And one of the things that you're sort of insuring against is quotational risk, like having the prices move on you and then you not being able to kind of handle it psychologically, maybe making an unforced error. Well, if you know what you own and maybe you have a lot of cash that you feel good about deploying at that time,

Starting point is 00:27:37 which sort of softens the blow of watching your other holdings going down, right? Like, you can get excited about the new things that you're buying for cheaper. And you can stomach the volatility and the quotational, like you could self-insure that quotational risk. Both directions to up as well as down. Yeah, right. So I think that's how I view is like I'm trying to self-insure that risk rather than look for someone else to insure it for me.

Starting point is 00:28:02 Whenever people are hearing trend following, perhaps they're thinking which five stocks have spike here recently. They should run out and buy that or like I just want to debunk any kind of myth. It's like a lot of things like I'm a value investor. What's that mean? Like do you own Amazon? You could be a value investor. So it's really important to define what you mean, which is basically your question. So there's really, there's a million flavors of trend falling. And I'll talk about two that are kind of the most important. The first form of trend falling is just long-term trend falling for risk management, get out of the way of the car wreck trend falling. And that's where the basic idea is, and we've studied this on every asset class that you

Starting point is 00:28:48 could possibly get data on, and it works everywhere in some sense. Where what you're going to do is you look at a risk asset class. If it's in a long-term trend, own it. If it's in a long-term downtrend, get out of the way. That's simple. why do you do that? Well, almost all left-tail events of 50% type drawdowns are going to occur, obviously in situations where this asset cost is in a poor long-term downtrim. And so you can apply that on every single market over every single data set across time.

Starting point is 00:29:24 We've done it. We've got all kinds of posts about it. But we have a really important post called trend falling, the epitome of no pain, no game. Because to Toby's point, if you think value investing is hard or momentum investing is hard, how are you going to feel when you're running like a trend-followed equity strategy and you've underperform for 20 years? Not that great, right? And a lot of times you're in cash while your uncle's like, you know, he's doing high-fives on how the S&P's up like five times, right?

Starting point is 00:29:55 You're going to feel like an idiot. And trend-falling is just it is the most painful trade possibly that I've ever. found on the planet Earth, but it also is the trade that I have the most confidence in for long-term survival. Follow trends is a good way to survive because by definition, if something's working, you're in it, and if not, you're gotten out of the way. So it's really hard to lose your ass, basically, in just general trend falling. That's one form of trend filling. It's very simple. You could apply it on your equity book or whatever, easy to implement. The other form of trend falling, would be things that are supposed to deliver what they call crisis alpha.

Starting point is 00:30:37 So where the prior form of trend falling, which is just long-term super simple trend falling, is for risk management purposes. It's not going to prevent you from losing money. It's just the idea is it may prevent you from losing over half your money. And maybe only lose 20 or 30 percent, but it's just risk management. Crisis alpha trend falling is much more high frequency, usually runs long, short, and goes across like commodity complex, bond complex, and everything else under the sun. Those systems are designed to, in general, on average, you don't do anything.

Starting point is 00:31:13 You just get chopped up to death and frictional costs, and you may make a little money, you may lose a little bit of money. But they're designed to actually make money in the stock market, I mean why they call it crisis alpha. And that genre of trend following systems, which is generally called like managed futures, is you may be daily rebalancing or weekly rebalancing. You're going to use much shorter time window trends, like maybe do like a hundred-day look back as opposed to like 250 or 300-day.

Starting point is 00:31:43 And again, it's just those are designed not to make you money, but just straight up insurance, right? And they work. Like, we run it. Like they go up when the market totally blows up. But the problem with those, of course, is you get destroyed and frictional costs. They're super hard to understand.

Starting point is 00:31:59 if you don't know what you're doing, like the Jake's point, probably shouldn't be invested in it. So I'm a huge believer in managed futures for crisis alpha as well, but I would also am a huge believer in behavior, you know, drives everything. If you don't understand what you're getting into, if you don't know why and how it works, you should just put money in cash or bonds and do your diversification that method. Those are two types of trend. Long-term trend falling for risk management.

Starting point is 00:32:28 Keep it simple. And then, you know, high frequency, more complex, trade a lot, trend following that's usually deployed across tons of assets in a long, short context. Also cool, but not for everybody. Could you provide some numbers if you done some research on it, like how different portfolios have done with, say, trend falling taking up five or 10% of a portfolio? And then also, like, perhaps if you thoughts on, should you diversify within trend following, if you do allocate, say 10% of your portfolio into trend following. So in general for like the risk management form of trend following, like let's say you want

Starting point is 00:33:04 to own equities, but you don't want to get your face ripped off at some point. Anytime you deploy long-term trend following rules, they don't trigger that much, right? So de facto, you're basically a buy and hold in the asset class, but it's only in protection for like extreme events. So usually when you look at those time series, whether it's, you know, Japanese stocks, Australian stocks or whatever, it doesn't really matter, you're going to typically achieve close to the same expected returns with half the drawdown. However, that's just back testing. I always tell people, listen, you're buying insurance. So you probably shouldn't have an expectation

Starting point is 00:33:42 that over a long-term cycle, you're going to get the same expector returns with half the drawdown. We say, hey, you're probably going to get a lot of the expector return, maybe 80, 90 percent of it. And yeah, you probably well protect against, you know, the big Kahuna drawdown. But you're going to be eating massive behavioral pain because like the relative performance thing, because there are no free luncheon. So that would be my expectation for like a long-term trend. It's basically buying hold with an airbag, right? And you're going to probably get half the drawdown with, you know, maybe 80, 90% of the upside.

Starting point is 00:34:16 Now, on real trend falling, like the more high frequency crisis alpha version, where you're trading, you know, whole commodity complex, gold, silver, palladium, blah, blah, blah, like the more complicated kind of managed futures products. Those strategies, I would say, are not going to be able to contribute. I mean, they do in a back test sense. A lot of times that comes from like the historical benefit of who put the cash in a T bill that used to make money. Now they don't make money anymore.

Starting point is 00:34:44 What I always tell people is I would not expect a high frequency crisis alpha focus managed futures fund to make a lot of money. If you get flat, that's awesome. But if it provides that insurance where it goes up 10, 20 percent when the world blows up, that's insanely valuable. And if you're not making anything, if you're basically getting insurance and you don't have to pay for it, that's awesome. It is the best way to kind of think about these things.

Starting point is 00:35:12 Now, as far as allocation, what I always tell people is, okay, you got 80% of your book and stocks. and you're going to do a 5% trend-flying allocation. Well, you know, if 80% of your book is in stocks and they go down 50% and you put 5% in managed futures and you expect it to really do anything, you're just insane. And so the weirdest thing, and I actually personally run my book like this, even though it's totally insane, is managed futures exposure should be a massive component of your book because you need to counterbalance the equity.

Starting point is 00:35:48 book, right? Because if you're 80% stocks and 20%, let's say, your aggressive Minge futures player, you're realistically, you're still, you know, 80% 90% of your risk is short balled and you have a little bit of protection. But if you really want to truly balance like the chaos, you really need to be more like 50, 60% Manage Futures program and then 50, 60% in equities, but no one does that. So in my opinion, a 5% allocation to trend following your managed futures. is just a waste of time. You might as well just put it in cash and, you know, feel warm and fuzzy. Anyone can understand cash. Like, I would say it's either go big or go home trade. You either believe it and you do it or just hold money and cash and move on. But that's my

Starting point is 00:36:33 personal opinion. There's a lot of implementation. I think of it like crisis offer and I think of crisis suffering. I think the trend following, correct me if I'm wrong, see, but the trend following that, you're sort of talking about that 200 day, using it as a hedge against a big drawdown, and then comparing that to something like Crisis Alpha, which is someone who's long vol in the futures or the options, and they're going to give you, on the big drawdown, it's going to give you the big payoff. And you're sort of hoping that they, roughly they achieve the same thing. The two things to what, Jeff, or if you're exposed to that, the crisis alpha particularly, if you have that big drawdown, as Wes points out, these things, mostly they

Starting point is 00:37:09 just break even over long periods of time. Well, that's a good, that's a great manager who gets you to break even over time. The advantage of it, the reason that you do it is that you have that monster drawdown, all of a sudden your third pocket appears and it's got a whole lot of money in it. But then to take advantage of it, you have to be able to get access to that capital and redeploy it long and rebalance your book back to that starting setting. If you can't get there, then it hasn't performed its function. It's sort of just, it's popped up when the market was down and you felt good, but you didn't achieve anything. It didn't get you any further ahead. The thing with the trend following, the longer term sort of risk managed stuff, you have to understand what the thing is and you have some implementation risk in that as well in the sense that when the like a March 2020, I don't know which ones worked and which ones didn't, but there will be trend following funds that if there are a very long term and they're checking in once a month, are we on or off for this month? And there's nothing wrong with that. If you do it more frequently than that, you might find that you. The challenge is always how much of your cost over time.

Starting point is 00:38:10 time, how much of your burning on premium or how much are you burning, getting whipsword versus your payoff. And you have to kind of decide, you may be able to do a 5% allocation, but you got to recognize that that 5% allocation, so you give it to someone like Mark Spitznagle, Mark Spitznagle is probably going to burn your 5% allocation over, you know, over a month or so, and you might have to re-up again for the next month or two with another 5% allocation, because that's what those things do. They've got this extreme positioning that the premium and bleeds off really quickly. And so nothing pretty quickly.

Starting point is 00:38:43 I think it's more like 2 to 3% per year. I've tried to do it. Long vol, options on futures, balanced against a value book. That's a terrible idea because you can have this period of time where both sides of your book are underperforming. And if you don't get the big payoff,

Starting point is 00:38:57 then you're just burning premium for a decade. And you end up with that, you've achieved the same outcome where you're down 50%, but you haven't had the big drawdown. I'm sort of with Wes in the sense that there are no free lunches. You just have to kind of get comfortable. with your own personality and the function and implementation of the tools that you're using and recognize what they do. And know that there's always a risk that you do all this risk

Starting point is 00:39:19 management for a decade and you get to the same point that you would have been being down 50% or underperforming by 50%. All of that said, that's kind of why I've gone back to just trying to simplify my life as much as I can. We have time for a quick story of one of the best third pockets I've ever heard. It naturally comes from the goat, Mr. Buffett. It's the depth of 2008 drawdown and everybody's losing their minds, right? The world's coming to in. Warren sells puts $5 billion worth of puts. He gets the money that second that he can go do whatever he wants with. And those puts, the way they're structured, no collateral required, no European-style option. And the average duration is 13 and a half years from 2008. So even if the S&P was down, I think,

Starting point is 00:40:08 40% from there, right? And this is all nominal as well, right? So like 3% inflation alone and even retained earnings is going to carry you well above probably wherever it is flat for that 10 or 15 year period. He gets like the cost of capital at that point for him would have been about 4%. And that's in the, if the S&P was at 40% below in 13 years from 2008. I mean, just one of the absolute all-time amazing third pocket plays that I've ever heard. And he didn't have to pay for it beforehand. Nope. Money in the door that day while prices were at the best that at least I've probably seen in my lifetime. One thing I wanted to add here real quick is Toby brought up a genius point that most people forget is if you're going to do diversification, you're going to do crisis out.

Starting point is 00:40:55 If you're going to allocate these long haul things, you have to rebalance into the world that you own that blew up. I've noticed this time and time again, people are like, oh, I just owe them 60% this, 40% of that, buying whole. No, doesn't it. Like, you need to, the whole point is you've got to be able to actively rebalance and take advantage of your third pocket or your cash. And if you're not willing to do that, it's an even worse idea. Like, I'm sure Jake here, you know, he's got his cash, but he's got a plan and a program and a system that when the world blows up, he's ready to use it. What most people do is they have their crisis alpha, they have their cash, world blows up, I just need to hold that cash. So unless you have a plan to actually take action to implement on the whole point of owning crisis alpha, it's also a waste of your time, which is something that Toby brought up, which is hugely insightful

Starting point is 00:41:54 and important to reiterate here. It's not buy and hold. You have to actually do stuff when the world's on fire. otherwise it's just going vanguard funds, have a nice life. Yeah, West is totally right. I mean, there's this idea of like a Ulysses contract. And if you remember Ulysses was this explorer and he was sailing, this is mythology, so it's not a real person.

Starting point is 00:42:16 And he was sail past the sirens. And they wanted, of course, their singing would draw the captain of the ship to steer into the rocks and crash, right? And that's how all the sailors died. So what Ulysses did was he tied himself to the mast so that he could still hear the sirens, but he couldn't turn the ship. So you need to probably create some Ulysses contracts with yourself about if something gets down to this price, I'm going to buy it.

Starting point is 00:42:40 I even prefer to do it for myself with like valuations. Like, I like this company. If I ever see it at 8x, whatever multiple, I'm going to buy it, right? And I keep back of that. And I think that's really like, make these plans while you're sober, while there's not headlines filling your mental space while it's quiet and easy to think about it. And don't wait until you're in the heat of the battle. I'm sure Wes, you know, that saying about, like, the more I sweat in peace,

Starting point is 00:43:04 the less I bleed in war, right? And I think I'm trying to sweat right now while it's peaceful so that I don't have to worry as much about it. And I just stick to the plan. I know it's a good plan because I put it together while I was sober, right? Don't wait until you're in the middle to, like, come up with, okay, what do we do now? Guys, I think this is a good segue here into the next topic about active and passive investing, emotions, all the things that comes with that.

Starting point is 00:43:29 So it seems like these days that there are more active retail trading that ever. Let me just start by giving you some stats here. So in 2019, we had 59 million Americans who have accounts of one of the seven largest brokers, and that number has since searched. We are at around 96 million, and 20 million of them are just opened here in 2021. And so if you look at the total trading flow, retail is an all-time high with 40%. So, still, all of that being set, we still see passive investing on the rise. If you look at the S&P 500, 18.5% of that is held in passive ETFs and mutual fund indexes.

Starting point is 00:44:10 So we've seen what looked to be a singular trend for decades. And so even despite this search in retail trading, we've seen more money be invested passively. So is that an advantage or a disadvantage? Let me throw it to you, Jake, if you have an increasing share of the funds being invested passively. And I ask you because you pick individual stocks. So, I mean, a couple things. I think I'm very ambivalent about the rise of all the kind of, call it Robin Hood effect

Starting point is 00:44:39 for lack of a better term. On the one hand, I love the idea that young people are investing, you know, taking an interest in owning businesses and like saving money and putting it to use. And I think it's terrific. I want to encourage that. However, I can't help but feel like a lot of it is, resembles gambling maybe by design as far as some of the dopamine hacking that happens. And I find that to be very distasteful. So while I like the idea of the encouraging people to invest, the execution of it thus far and a lot of these apps has been, I find it to be disappointing. So as far as

Starting point is 00:45:17 once the money comes in from outside and maybe like less sophisticated is passive or active. I think for most people, unless you have a real active interest in wanting to understand, like, get into this stuff and, and kind of live it, and I think passive is a totally appropriate thing for you to do. Now, if you are into it, then I think, like, it's active is still very reasonable. And granted, I like, this is a motivated reasoning for sure, because it's like what I like to do. But there's, like, sort of two sides of the debate. Like, there's the flow debate, which is, like, God, if everyone's going into passive, those, they're just buying all of the S&P 500, let's say, therefore, that's the only thing that's

Starting point is 00:45:53 going to ever work and move. And if you're out of an orphaned stock that's not in an index that's getting passive flows, well, good luck to you ever being able to recognize good return. I think that that is true in the short run, but a total advantage in the long run. And you have to have the faith that what I'm buying today, even though it is an orphan and not part of indexes, the underlying business value is accruing. And the fact that no one is looking at it because they're just all passively indexing is an absolute godsend for an active investor. So I think that both sides of the debate right now have framed it as if, you know, call it kind of Mike Green's melt-up theory of that it's just, we're just going to keep going up.

Starting point is 00:46:36 And it's because there's just passive flows all the time. Yeah, I think over a short time period, that's absolutely true. But over the long period, you couldn't ask for a better setup as a stock picker because if no one's looking at all of these businesses and no one's bidding them up, like, that's my dream come true. So I think it's just, again, it's always about coming back to setting like what is appropriate for your psychology, what game are you playing, and then picking the strategy that fits with what you're trying to accomplish and where your strengths and weaknesses are. The two questions is passive in the sense that you're just investing into an index fund and you've thought about your allocation beforehand and you're getting some exposure to

Starting point is 00:47:14 all of the right things. You've got your asset mix. That's going to be perfectly fine. You've already recognized that there are risks in S&P 500 has a risk of going down 50% at any time. International stuff's in the same basket. The bonds might underperform if we get some inflation or interest rates go up. There's no, just to keep on saying, where's his favorite line, but 100% endorse it, there's no free lunch. You're going to be, there's no way to, protect yourself against everything or outperform everything. The other argument about passive distorting the market or destroying the market. I'm kind of with Jake on this, and I've been saying this for a while,

Starting point is 00:47:46 but, you know, this scenario is not new. You can find there's a Piper Jaffrey article from like 1999 called the Endangered Species List, and they followed up a year later with another one called Darwin's Darling's. Basically, they were just pointing out, hey, look, with all this tech stuff going on, there are all of these Russell 2000 companies, so that's the smallest 2000 of the Russell 3,000. And some of the ones at the bottom are pretty small. Look, there are companies that are growing their earnings or revenues like 30% a year, and you can buy them on an EV multiple of like five.

Starting point is 00:48:14 And this is crazy. They were just pointing out the fact that this existed. And then from that, there was that activism and private equity boom in the early 2000s where they all got taken private or they got approached by activists to have them do some sort of value-enhancing maneuver. And then all of the actions started happening in those smaller companies. And so, you know, for a period of time, everybody in the market was a value guy and an activist.

Starting point is 00:48:38 And that then value did extremely well. And it attracted a whole lot of guys probably like me. and probably like J2. I don't want to hang you fade on that one. We talked about it at the time where I was like, oh, values really, value works all the time and it does really well. You've got to do his stomach those, the tech boom like late 1990s, and they never come around very often.

Starting point is 00:48:58 Here we are in another gigantic tech boom with people trying to justify why it's going to go on forever. I kind of think that when there's opportunities out there, you just got to take them even if the market doesn't recognize it for a long period of time afterwards. So I think it's a good thing. from a selfish perspective, whether it's good for the market as a whole, I don't know. That's a slightly different question to the Robin Hood question, isn't it? I don't know if we,

Starting point is 00:49:22 do we get off topic there? No, let me throw it over to you here, Wes, because we do have a Robin Hood question here next one to go. But before we do that, I know you're really in the trenches with your fund. So I'm sure you thought about this question. It's something that I've, is it an advantage or disadvantages to the active investor that we now see this secular trend. And it looks like it's going to continue. Yeah, I mean, I think in the end, investing boils down to dollars and cents, not whether it's labeled passive or active.

Starting point is 00:49:52 So the things that matter always matter, fees, taxes, and frictional costs. And so even though the best active strategy might be able to crush the soul of like the worst passive strategy, if the fees, taxes, and frictional costs aren't managed, you still might be better off doing passive, right? So that's something we always want to be concerned about on any investment approach. What are we doing and what's like the net benefit to it? But I certainly agree with these folks here. And it's something that Ben Graham talked about like 70 years ago.

Starting point is 00:50:25 In the end, it's a weighing machine. Like the facts matter. It's not a Ponzi scheme. At some point, cash flow and actual business matters. Now that is that point, Wes. When is that? I'm waiting. The market is crazy for another 20 years, but at some point, the weighing machine matters.

Starting point is 00:50:47 And so that's something to consider whether you're active or passive. It's not whether it's active or passive. It's what are you buying? And fundamentally right now, what you're buying when you buy passive is a bunch of extraordinarily expensive, high gross prospect, high sentiment. It's got to be perfect to work investments. If you're cool with that and go for it. If you have horizon, you have discipline, you believe in the weighing machine, and you can access

Starting point is 00:51:15 the exposure, cheap, efficient, after tax, blah, blah, blah, you know, I personally think that, you know, we're in a situation where the opportunity and active is actually enormous, but the cost of exploiting it is enormous in the form of behavioral problems. Because it's very likely that, you know, anyone who tries to, you know, do something cute is going to have to sit for 20 years when your five-year-old cousin is like, why don't you just buy NFTs, dude? So, I mean, that's the trade-off. Like, to Toby's point, there's no free lunch. I think it's all an age-old debate that, you know, people have forever.

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Starting point is 00:55:19 So, Jens, I really look forward to to ask this question. So, childmonger has said of the commission-free trading. app, Robin Hood. Yes, it is one of those episodes where we're talking about Robin Hood. And so, he has said, it's a gambling parlor masquerading as a respectable business. So let me just tear up to you. Charlie, tell us how you really feel, right? Jake, do you agree with Charlie and is there a silver lining? I tend to directionally probably agree with Charlie. The silver lining, I think, is, it's true, like West just said, like lowering the fees on any product like that should hopefully leave more meat on the bone for the investor. Now, whether the hidden

Starting point is 00:56:04 fees of front running or whatever it is that how, by selling order flow, what that actually takes a bite out of the meat that's there for the investor, I'm not sure I even know what the answer to that is. I don't know how much that skim costs, but, and it does feel a little disingenuous to say that it's commission-free trades, which, okay, that is true, but it's not free trades. Those are two different things. So don't say free trades. That's not true.

Starting point is 00:56:29 It's commission-free trade. But yeah, I mean, like I said already, like it's certainly, and this is my own bias, speaking of how I see the world and how I want to do this, but it does encourage a short-term kind of behavior, I think, probably too active of a trading relative to probably what the research would suggest is a good cadence. Yeah, it's a modern day version of the bucket shops that were around in Jesse Livermore's Day, where you basically can get access to margin and, you know, they've simplified it. So do you think this is going to go up and buy this thing, which is an option, which, you know, up over, yeah, up over what period, a week, a month, a year, 10 years? Like, there are some businesses that I feel reasonably confident will be bigger businesses in five years time.

Starting point is 00:57:13 You know, whether that stock price is going to be higher at the end of the quarter or not. Like, I flip a coin, I've got no idea. And I don't think that there are very many other people who have figured it out either. Maybe Jim Simon's figured it out, but I don't think there are very many other people who figured out that short term stuff. Yeah, I don't really like the way that they've set it up to encourage people to over trade because I think that it's people who are in sort of, a lot of them are in desperate straits and they're looking for some way out. And they're using that as their way out. And I think that ultimately they'll probably get hurt. And then the silver lining might have been well, it's drawn all these people into the market who wouldn't otherwise be in there.

Starting point is 00:57:50 But if they get burnt really badly, are they going to come back or are they just gone forever? Ultimately, you're better off viewing it as like a savings vehicle that you save into overtime and you get growth in the underlying assets over decades, not sort of weeks or months or quarters or even years. So I don't want to, you know, rain on anybody's parade. If you're having fun doing it, then have fun doing it. but just recognize that there is also a downside, and we haven't seen one since March 2020 when a lot of these people have come in post that. So, Wes, you don't come off as the stereotype of the person sitting on your phone all day, training 14 days options on Robin Hood.

Starting point is 00:58:30 I see you not there with the criticism of Toby and Jake. Is there anything positive to say about this development we're seeing right now? So I usually explain to people like, hey, investing is 9% based. behavioral, 1% operational. And on that 1% operational, this stuff is amazing, right? If you're an investor, your fees, your taxes, and your fictional costs are insanely low via, you know, these brokers, ETFs, what have you. However, you have a huge benefit on the 1% of investing, but on the other 99% the behavioral

Starting point is 00:59:06 side, the costs have been magnified, right? you can now trade for free. You can trade seamlessly. Anyone can access the information, which just encourages decision-making and activity. And so I think on net, it's probably going to be the most painful

Starting point is 00:59:24 atrocious money-losing exercise that, you know, a lot of people will ever go through for the rest of their life, unfortunately. But like the to always point, it'd be a good lesson. I used to do that. I used to gamble all the time. And now I learn not to do that. So everyone's got to like,

Starting point is 00:59:40 touch the flame sometime. And I encourage people to do that when they're young and kind of broke. Because if you get some resources, you don't want to start doing that because then you lose the whole kitty. So, you know, there's cost and benefits to everything. I think one of the reasons that real estate has been traditionally a pretty good wealth building vehicle for a lot of people is that because the transaction costs are so high and it's hard to get in and out of. And I think for the average person who they can make their mortgage payment and it turns into sort of a forced savings vehicle then, like they basically borrow $300,000 and then pay it back over time and you get $300,000 at the end. So this is very much the opposite

Starting point is 01:00:23 of that. I mean, like you said, if you're diligent and I view that I'm building my little empire every single day. And like the fact that I can create and pare down my empire and whatever the image is in my head of what it should look like for almost zero cost, anytime I want to do it, is an absolute amazing thing for an investor. But like any tool, it can be used for good or for not evil, but not for your benefit. And so you just have to be very careful, just like a, you wouldn't give a scalpel to a two-year-old because like, sure, like we do surgeries with scalples, but you could also disfigure something. And I think that these these tools now are are very powerful in a similar way and can be horrific if used correctly, but also dangerous if

Starting point is 01:01:04 abused. Well, I said, Jake. So for the last question here of this round, I wanted to throw it over to Toby and Wesley, perhaps starting with you, Toby, because often on the show, we talk about individual stock picks. We don't talk a lot about ETF investing. So I wanted to ask you now that we have both of you here, what's the best and the worst thing that has happened for retail ETF investors in recent years? The change from, this is sort of a technical thing, but the passive ETFs had a capital gains tax

Starting point is 01:01:35 advantage over active ETFs that got removed in the last year. So an active ETF can now be run with the capital gains tax exemption, which it's the main reason that you run an ETF, or one of the main reasons. Like it has this liquidity, which is fantastic for investors that they can get in and out multiple times through the day if they want to. And then the trades of the manager don't create capital gains tax implications for the person holding them. They make their own decisions about when they incur those capital gains tax. So I think that stuff is fantastic. It makes them the best vehicles. I think that makes them better than mutual funds. They're better than LPs. They're better than managed accounts. From that perspective, they're great. And I think

Starting point is 01:02:16 that there's the active change will see a lot more managers who had been in mutual funds or even managers who've been in LPs. And I know a few who are doing it, who are transition. across into ETF structure, which means that anybody would be able to get access to them where previously you needed to have some sort of like asset level. To be in an LP that was going to charge you a carry, which a lot of these guys want to do, need to be an accredited investor, which is a, they've just changed the threshold recently, but it's like millions of dollars in investable assets, which most people don't have. But you'll be able to get access to managers through ETS like Kathy Wood, you know,

Starting point is 01:02:49 great manager. She's run that portfolio really well, run it up. and there's $50 billion worth of money investors with her. So a lot of people have participated alongside her. I think that there are lots of value guys who are probably starting ETS now. I think that there's one of them or a few of them will have a really good run over the next few decades. And the average investor will be able to participate alongside them. So I think that that even though that's a technical change, the practical implications of that are huge for the average investor.

Starting point is 01:03:19 As for the worst thing, it might be that there's all of this new competition coming in. in value ETFs from these new managers, some of whom are going to do really well. And I like it as more of an exclusive club, selfishly. But I'm joking. But I think it's a great vehicle. And so I think it's all good. I literally do three or four calls a day with people that want to launch ETFs now, because we're a manufacturing business where we help people get the market.

Starting point is 01:03:45 And to Toby's point, there are some amazing talents coming to market. it were normal in the old days that have been a hedge fund, tax inefficient, high fees. And now you're going to be able to access, you know, these great talents at low fees, global access, tax efficiently. Right. So it's amazing. ETAF's great for investors. But to our prior conversation, what is so terrible about ETF?

Starting point is 01:04:11 Well, it's the same thing as terrible about access is now you can trade it every day. You can move in and out of it. Like it's, that's the issue. It's a behavioral. problem. So even though the investment opportunities and the cost to access them have came dramatically down, it doesn't matter because people are going to screw it up by day trading the value managers now. I start to feel like Jack Bogle here. People screw things up because they're people. You could bring the horse to water. They don't drink it. They just avoid your

Starting point is 01:04:45 advice and go eat cyanide, I guess. Maybe you guys could cite the CGM. mutual funds results from 2000 to 2010 as an indicator of how how bad that behavioral friction is. Ken Hebrner's fund. That's Ken Heapner, yeah. That's in quantitative value, isn't it? It was like the fund outperformed by 18. That's why I'm teeing it up for you guys here. The fund was an 18% a year and the individual investor and it was 11% of year negative

Starting point is 01:05:12 because the fund had that, the fund was volatile and had this gigantic run up at the end. And so most people just traded it the wrong way when it was up. they sold it when it was, sorry, the other way around when it was up, they bought it when I was down. They sold it turned an 18% compound into 11% negative. Ben Johnson, I think he's one at Morningstar has a cool study where they look at like over 10 year period like the best performing funds. And then they look at how like the Morning Star rankings and all that stuff go. And literally like the top performing funds that usually it's the case that only two out of three

Starting point is 01:05:45 years they outperform the market. So they usually in a 10 year window, they have seven. years of like egg on their face. But that's just, that's how it normally works. Like in order to outperform, you have to do crazy weird stuff and have Horizon. But, and so there's just a tradeoff. If you want to win and be the best over the long haul, you got to do weird stuff and it's got to be unique and you got to be ready for like the stats say, seven out of 10 years.

Starting point is 01:06:12 And that's not fun for a lot of people. It's just a fact of the marketplace. All right, Jen. And so this has been a great conversation. As always, we'll never have a chance to hang out with you. Before let you go, I'd like to give all you an opportunity to let the audience know where they can learn more about you. Wes?

Starting point is 01:06:30 Alfarchitect.com. And if you want to launch an ETF, ETFarchitect.com. Pretty simple. All right. Jake. My investment shop is Farnham-street.com. Got a book Rebel Allicator on Amazon. Kind of fun podcast with Toby every week.

Starting point is 01:06:48 our value after hours. That's, yeah, just say hi on Twitter, Farnham, Jake 1. And not too hard to find. Although I should probably try to be harder to find something. J.T. undersells his book. He got Charlie Munger read Jake's book and liked it so much. He gave him a call. He called him up and had a chat to him, and he's trying to help him make it into a movie.

Starting point is 01:07:07 So if you haven't read that book, you should go and read that. It's a good book. And you should come to Acquireusmultable.com, which is my website, where the podcast that I do with Jake is hosted, you can hear him, hear the man who spoke to Charlie Munger and hear what he has to say. I run two funds. One is called the Acquirus Fund, Z-I-G, that's mid-cap and large-cap U-S.E-S. Value-E-D-E-V-V-A-Lew-A-C-T and Deep-S-Lew-E-V-L-E-V-A-C-D, and deep-V-R-E, same strategy, just in a different, in a different universe with a little bit more diversification.

Starting point is 01:07:38 And I have, I'm on Twitter at Greenbacked, G-R-E-N-B-A-C-K-D. I think that's it. Fantastic. All right, as always, make sure to follow us. If you're watching this on YouTube, make sure to subscribe. And, Jens, I guess I'll see you next quarter. Sounds good. Thanks, stick. Look forward to it. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve financial independence.

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