Mike Green and Mike Taylor | PNL For a Purpose

[00:00:00] Welcome to Excess Returns, where we focus on what works over the long term in the markets.

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[00:00:07] long-term investor. Hey guys, this is Justin. On April 30th, we interviewed 24 guests in

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[00:00:49] As always, thank you for listening. Please enjoy our conversations with

[00:00:53] Mike Green and Mike Taylor. We are very excited you decided to join us today.

[00:00:58] We're happy to be here to support Susan G. Komen. We're also excited to have somebody

[00:01:01] that your colleague Mike Taylor just called, I believe tall, handsome and brilliant.

[00:01:05] You said handsome. He's right about the tall part.

[00:01:12] I actually had the pleasure of listening to Mike talk. I think he's,

[00:01:16] everybody forgets how incredible he is from just an insight standpoint.

[00:01:20] Really privileged to consider one of my good friends.

[00:01:23] Yeah, he is really smart. I mean, the ability to blend macro with what he's doing on healthcare.

[00:01:28] It's very, very cool what you guys are doing with Pink.

[00:01:31] He's really, really smart, but it is actually important that people understand that he was

[00:01:35] the single last person admitted to Gettysburg State University in his class. So,

[00:01:43] brilliant was not what he was known for early on in life. He was a snowboarder.

[00:01:47] He ultimately changed the trajectory pretty amazingly. So,

[00:01:53] one of my favorite interactions on a regular basis.

[00:01:57] Well, it's good to get you on here and get a little bit of the inside info on Mike here

[00:02:00] after the fact. I represent the non-snowboarder demographic.

[00:02:05] So yeah, I'm a riskier myself. But anyway, yeah, we only got 30 minutes that we probably

[00:02:09] should be going. Just a reminder to everybody, we're here for Susan G. Komen. If you're

[00:02:13] watching on YouTube, there's links to donate. If you're watching on Twitter or on LinkedIn,

[00:02:18] you can come to YouTube to either one of our channels, Spock AMA or XS Returns and give.

[00:02:21] And if you can give, we greatly appreciate it. So Mike, I think we want to start off

[00:02:27] in macro with you. We're in a pretty interesting space right now. We've seen at

[00:02:32] least the measured inflation numbers have come up a little bit. The higher for longer camp seems

[00:02:36] to be winning in the markets a little bit more now. More people seem to be as Andy

[00:02:40] Constant calls it the island. More people seem to be moving over the higher for longer island.

[00:02:44] Can you just give us your take on where you think we are right now?

[00:02:47] I mean, look, I've been very straightforward and candid about this. I think one of the unique

[00:02:52] dynamics that's going on right now is people very much want things to be bad, right? They

[00:02:57] want things to have high inflation. They want the Fed to be trapped. At the same time,

[00:03:03] they're using that really as a narrative to describe why markets are higher, right? The Fed

[00:03:08] is ultimately weak. The Fed is going to be forced to cut. The Fed is going to do X, Y and Z.

[00:03:14] And meanwhile, this idea that inflation is persistent and continuing certainly can be true,

[00:03:19] but it is absolutely a projection. If we look at the underlying components of inflation,

[00:03:24] the areas in which we're seeing inflation today are the follow on components to it, right?

[00:03:30] And so I'll just give a really simple example that I've watched people through before.

[00:03:33] But if you think about what happens to auto insurance, for example, when the price of a car

[00:03:38] goes up, the cost to replace that car under an insurance framework goes up as well. Ironically,

[00:03:45] you're not paying any more for insurance. You're insuring a more valuable asset and you

[00:03:50] should see your insurance costs go up to reflect that. And unfortunately, that is what

[00:03:55] we're seeing at this point. We're now seeing the pass through effects of higher auto prices,

[00:04:00] higher auto part prices that are already in the price level into things like insurance.

[00:04:05] That's a regulated industry. And so the insurance regulators are looking at it from two

[00:04:09] standpoints. One, we have to defend the profitability of the insurance companies because

[00:04:15] we want to make sure that they're viable in terms of meeting the coverage that they have

[00:04:20] sold. And so they will allow a price increase of this type of magnitude in response to the

[00:04:26] increase in the costs that are realized that showed up as very poor fundamental performance

[00:04:30] for insurance companies roughly two years ago. But the difference is high insurance prices

[00:04:38] don't cause auto prices to go higher. Right? So we're at that second stage in this. In fact,

[00:04:44] what high insurance prices do is they cause auto prices to fall for the very simple reason

[00:04:49] that people turn around and say, hey, I'm not going to buy a car. And it perversely shows

[00:04:53] up unless you hedonically adjust these things. Who are the people who can't afford to insure their

[00:04:58] cars? People who are poor and at the lower end of the spectrum and already struggling with this.

[00:05:04] So this shows up as effectively a regressive tax that then reduces their access to cars

[00:05:08] in a way that actually creates all sorts of other ripples through the system,

[00:05:12] but largely involves a slowing down. Right? That is different than a cost of increase

[00:05:17] for cars. And it also ironically shows up in things like the demand versus supply components

[00:05:24] because those are now properly tuned to capture this dynamic. Right? If you think about the way

[00:05:29] those are supposed to work, they say, did price increase and did that price increase cause

[00:05:34] demand or quantity consumed rise or fall? That's how those types of things work. Right? Well,

[00:05:41] if I buy a car and my insurance cost goes up, am I buying more or less? I actually am not changing

[00:05:49] anything really. Right? And so there's a slight increase in the quantity and force that shows

[00:05:54] up as, oh my gosh, this is a demand driven increase in prices. Right? Unfortunately,

[00:05:59] it just doesn't work that way. And so there's limitations to all those sort of stuff that

[00:06:03] happens at every turning point in every cycle. Some people want to project forward on

[00:06:07] a linear path towards inflation. Some people want to project their political outputs. And that's

[00:06:12] really what we're ultimately seeing in the inflation data where it has become effectively

[00:06:17] a political argument. Biden causes the inflation or Trump caused the inflation or X, Y, Z. Right?

[00:06:25] And we see this. If you look at the Michigan report in terms of the outlook for the next

[00:06:31] five to 10 years, the really notable component is not the change in the median expectation,

[00:06:37] which has actually been fairly constant. What's really remarkable is the growth of the tails.

[00:06:42] And so something like 20% of respondents, all of a sudden you're saying we expect inflation over

[00:06:47] the next five to 10 years to be 10% plus. Right? Why do you think that? Well, because

[00:06:53] it's inevitable money printing. These are not fact-based statements. We've introduced an

[00:06:59] extraordinary degree of emotionality into it that just doesn't really match the underlying

[00:07:05] data that we're seeing. So I mentioned before the rise in the reported inflation metrics recently.

[00:07:11] I mean, do you think what we're seeing in those reported metrics is overstating the true level

[00:07:15] of inflation we're seeing right now? I don't think there's any question about it. And I

[00:07:18] find it ironic that people who two years ago or three years ago would criticize owner's

[00:07:24] equivalent rent and say it doesn't report true inflation are now suddenly defending it

[00:07:28] and saying, oh, look, owner's equivalent rent. And that's not coming down anytime soon.

[00:07:33] Even as metrics that are incorporated within the owner's equivalent rent, look at what's happening

[00:07:38] on the margin where all prices are ultimately set and things like the Cleveland new tenant

[00:07:43] rent index are falling very rapidly. Do you think there's a better way to do

[00:07:48] inflation? I mean, we have things like true inflation right now that are trying to do it

[00:07:50] in real time. Do you think there's a better way to measure inflation than the way we're doing

[00:07:53] it? Well, I think unfortunately, inflation is one of these things that's a little bit like

[00:07:57] pornography. Right? Everybody has their own taste and experience in it. You know,

[00:08:01] that was a joke. Obviously, you know when you see it, right? Nobody actually knows what my

[00:08:05] inflation experience is or what your inflation experience is. We all have independent ones that

[00:08:11] are tied to where we live in the country, what we desire and what we like. And if you

[00:08:16] happen to be somebody who is basically tied into the marginal behavior around that,

[00:08:22] right? So let's talk about population expansion like millennials. Well,

[00:08:26] if you're buying the same thing as an expanding population, you're going to by

[00:08:29] definition experience a rising inflation component to it. Right? On the flip side of that,

[00:08:35] if I look at a lot of the things that people really do buy in their lives on a continuous

[00:08:40] basis, things like automobiles, things like durable goods, things like televisions,

[00:08:45] things like speakers and entertainment centers, things like milk, eggs, et cetera,

[00:08:51] all of those have largely retreated. I mean, the simple fact is wheat prices are at the same

[00:08:56] level that they were 50 years ago. Right? Just stop and think about that. When we start talking

[00:09:02] about the deflationary forces in the 19th century, we're largely talking about a basket

[00:09:08] that involved things like wheat. We're talking about scraps of cloth, right? Jack, how much

[00:09:14] did you spend on your last scrap of cloth? Yeah. It's been a while, Tom. I guess you

[00:09:18] could call some of my shirts a scrap of cloth, but- That's exactly right. We throw

[00:09:21] this stuff away now because we have so much, right? So our consumption baskets have changed.

[00:09:26] They've become far more complex. They've become far more effectively protected by intellectual

[00:09:30] property. That's the only thing that keeps an iPhone cost up, right? It's the fact

[00:09:34] that I can't slap that label onto a Huawei phone and call it an iPhone and be able

[00:09:38] to sell it and effectively the same thing. They're all functionally identical except for

[00:09:42] walled gardens that are created by intellectual property restrictions. And the dynamics of

[00:09:47] the inflation component, the price of wheat has no material impact on American consumption

[00:09:52] events anymore. So when you look at the Fed right now, do you think they're too tight?

[00:09:56] I mean, there's different camps in that. One looks at the rate relative to what might

[00:09:59] be the neutral rate and say the Fed's really tight. Other people look at financial

[00:10:02] conditions type indexes that include the stock market and things like that and say

[00:10:05] the Fed's not that tight at all. How do you think conditions are right now?

[00:10:10] So I think conditions are again split by who you are, right? So if you are somebody who

[00:10:15] has borrowed and currently has debt outstanding, we typically call those young people,

[00:10:21] you are struggling, right? If you're somebody who has accumulated savings over your life in

[00:10:26] anticipation of spending down those savings in your retirement, you're suddenly sitting

[00:10:31] golden because the assets that you had accumulated are now offering you an income stream

[00:10:36] that is far above what you would have expected just a few years ago.

[00:10:40] And so this is exactly what we ultimately see. We see boomers benefiting, the older

[00:10:44] generation benefiting, the wealthy benefiting from this dynamic and those who are at the

[00:10:49] lower end of the socioeconomic strata, they've actually seen or at the younger end in

[00:10:54] particular, they've seen their prospects deteriorate materially.

[00:10:58] So when you think about what the Fed should be doing here, I mean, they're meeting

[00:11:01] tomorrow. What is your view? I mean, do you think they should be cutting rates or no?

[00:11:04] I think they should be cutting rates. But again, it's something that is totally up for

[00:11:09] debate depending on what your objective outcome is, right? If you think as the Fed does that

[00:11:15] higher interest rates are contractionary and that they should ultimately be driving

[00:11:19] inflation lower, then it becomes a question of how do you interpret the inflationary data

[00:11:23] that we've received? And what we're seeing are things like insurance costs going much higher,

[00:11:28] the cost of banking services, what's called the imputed cost, going much higher.

[00:11:32] At the same time, we're not seeing the same material benefit from the retreat in things like

[00:11:38] oil prices or energy prices that we saw last year. And so that's showing up a bit more in

[00:11:42] the headline and even in the core data where again, that is effectively being pulled forward,

[00:11:48] right? We show insurance costs as core. We show banking services as core, even though nobody is

[00:11:54] actually writing a larger check to JP Morgan for their banking services. They're actually just

[00:11:59] receiving less relative to what they could get in a money market fund. And that's interpreted

[00:12:05] as a big increase in the cost of banking services. The fact that we now have to pay

[00:12:09] higher rates for securities lending because of an increase in the prime rate and the

[00:12:15] consolidation in the brokerage industry, that's interpreted as inflation, right?

[00:12:22] As far as I can tell, that's caused by the Fed and by our failure to enforce antitrust dynamics.

[00:12:26] RG How much control do you think the Fed has here over inflation? You could argue

[00:12:31] long rates are much more important for the economy. Do you think they have, you could also

[00:12:35] argue in a fiscal dominated world, they're less powerful than they once were.

[00:12:40] How much control do you think they have over the rate of inflation?

[00:12:42] CB So I don't think they ever really had that much control over the rate of inflation.

[00:12:46] If they actually did, we wouldn't have seen the structural dynamics of inflation behavior

[00:12:50] that's been largely tied to demographic features for the past 70 years, right?

[00:12:56] It feels insane to say this to people, but when you actually think about how powerful

[00:13:00] the Fed is, what the Fed does control is the front end of the curve.

[00:13:04] And if the Fed decides to keep the front end of the curve elevated, let's just say randomly,

[00:13:08] Jerome Powell is reinstituted for a 20-year term and says, at no point in my term

[00:13:15] will the front end curve fall below 10% interest rates.

[00:13:19] Right? Well, what has to happen to the 10-year bond?

[00:13:21] RG Yeah, it's going to go up.

[00:13:25] CB It has to go higher in yield. Does that mean it's the right yield?

[00:13:30] No.

[00:13:30] RG Not necessarily.

[00:13:31] CB Right. It's what Jerome Powell thinks. And so it's really what's actually happening right now

[00:13:36] is the uncertainty that's being created in the front end is actually transmitting itself to the

[00:13:41] back end. It's not that the economy is getting markedly stronger or that we're seeing an

[00:13:47] improvement, the first quarter GDP growth, which by the way, the now casting components

[00:13:52] on a nominal basis missed by over 250 basis points. That's an extraordinary miss when you

[00:13:57] really think about it. It's not so much that the headline being at 1.5% versus expectations of 2.5%

[00:14:05] was the big miss, it's that the nominal number was such a huge miss.

[00:14:09] Right? That's actually a really important development in my view.

[00:14:13] RG Cool. How do you think the election affects economic policy? I mean,

[00:14:16] people will argue the Fed is trying to juice the market in the election or government

[00:14:20] officials are trying to juice the market in the election. How much do you think that affects

[00:14:23] policy?

[00:14:24] Well, I don't think there's any question that the political leaders, which would include the

[00:14:29] Secretary of the Treasury, right? So remember, there is no independence for the Treasury. That

[00:14:34] is an appointed position that serves the pleasure of the President subject to confirmation,

[00:14:39] obviously, by the Senate. If you think about that entity being political, there's nothing new

[00:14:46] there. Right? And so do I think that it has an impact? Of course it does. Do they have degrees

[00:14:52] of freedom that allow them to do anything that they want? Of course not. Right? They

[00:14:57] don't have the capability to meaningfully cut taxes or to meaningfully raise taxes.

[00:15:02] They can propose it and it can be passed under Congress, right? But Congress ultimately

[00:15:07] controls that path. There is a legitimate concern that fiscal policy has increasingly

[00:15:13] moved to the executive branch because of the fears of the inability of Congress to act. Things

[00:15:18] like getting rid of student loan payments through executive orders or mandating that

[00:15:25] regulatory agencies don't report things like delinquencies on student loan payments. Those

[00:15:31] can absolutely be accomplished politically, but it's really fascinating to actually look at

[00:15:36] what's driving the increased level of deficit. At this point, it is all about the interest

[00:15:42] rate policy. All of the increase in deficit is being driven by the Fed itself at this stage.

[00:15:48] So ironically, all the concerns that people have around very high deficit levels would be

[00:15:52] largely solved if the Fed started cutting rates. And that in turn would then cause a secondary

[00:15:57] feature. If the Fed starts to cut the front end of the curve, then you can actually finance

[00:16:02] the back end of the curve. Right now it's very hard because of the inversion in the yield curve

[00:16:06] to take a levered position in something like 10s or 30s. You can do that as the front end,

[00:16:12] particularly in 2s by the way, but you can do that as the front end of the curve falls in

[00:16:17] price. Balls are kneeled to be more accurate. Just one more before I hand it over to Brent,

[00:16:21] I wanted to ask you about, you mentioned the deficit and that's something many people are

[00:16:25] worried about right now. But with the deficit and the large national debt,

[00:16:28] and some people will say that is a huge, huge issue for our country going forward.

[00:16:32] How big of an issue do you think the national debt is?

[00:16:35] So I don't think that the national, all right, first of all, let's separate them into two

[00:16:39] components. The national debt can most easily be thought of as failed economic policy that

[00:16:46] didn't contribute enough growth versus the initial expectations. If you actually had made

[00:16:52] investments that drove significant growth in the United States, then we wouldn't actually be looking

[00:16:58] at the debt levels that we have. So really what the debt is telling you is this higher policy

[00:17:04] was not particularly good. That should not be a surprise to anyone who has actually observed

[00:17:08] policy over the last 20 years. Going forward, now the question becomes do we spend that money

[00:17:15] well or do we spend it badly? And unfortunately, there's a ton of evidence that we're not

[00:17:19] spending it particularly well. Right? That's what occurs when you effectively, as Lacey Hunt says,

[00:17:27] increasingly have to devote the resources to paying off the mistakes that were made in the

[00:17:31] past. Had we spent that debt to build more roads, had we spent that debt to rebuild our

[00:17:37] nuclear industry so that we had unlimited supplies of low cost based load power,

[00:17:42] had we decided to spend that money on productive capability and effectively created a competitor

[00:17:48] to China that we're now being forced to suddenly reevaluate, right? Or to make investments in

[00:17:54] education that actually caused children to be better prepared for the workforce today.

[00:17:59] We wouldn't be struggling with these issues, but we didn't do that. And so now we have to

[00:18:03] deal with ramifications of it. So is the debt a problem? Yes. But what it's telling you is

[00:18:08] that policy is the problem, not the actual debt itself. The debt is really equity when

[00:18:14] it's happening at the sovereign level. Right? Saying what are the claims on the resources of

[00:18:18] our economy? We've got a ton of claims that are tied to prior mistakes.

[00:18:25] Do you think that policy can be adjusted to address that or is that unlikely to happen?

[00:18:32] So Adam Smith has a very famous line. There's a lot of ruin in the country,

[00:18:36] right? Particularly a country like the United States, which has extraordinary physical resources,

[00:18:42] which really does not have to spend that much of its national defense on defending itself because

[00:18:46] it has oceans on either side of it, relatively secure borders with relatively

[00:18:53] favorable neighbors. Right? We don't have to spend that much protecting what we have.

[00:18:59] We're spending an awful lot of money basically trying to protect everything around the world

[00:19:04] and create conditions under which the world order doesn't change all that much.

[00:19:10] I'm not sure we're spending that money particularly well, is the argument that

[00:19:14] I would make. And it just comes back to the same thing. I don't think people are thinking in

[00:19:18] these terms, right? They're thinking in the terms of this is impossible. We can't demand more.

[00:19:23] The system is ultimately totally corrupted. We need to get by with less, right? We've just lost

[00:19:29] the growth mindset. We'll eventually recover it. I think I'm highly confident that we will

[00:19:33] eventually recover it, but how long that takes, I can't tell you.

[00:19:39] I know that you know Chris Cole and I was listening to an interesting podcast interview

[00:19:44] with Grant Williams from November of 2020. And it was really interesting to listen back

[00:19:48] to that because it really forecast a lot of the things that I think were playing out today.

[00:19:53] If I frame this correctly, he thought that we basically come to this situation where we're

[00:19:59] going to have to choose sort of a left tail or right tail. And that had to do with monetization

[00:20:04] of debt or sort of taking the pain for some of our past mistakes so to speak.

[00:20:11] You seem to think from what I'm pulling from what you're saying is that we can kind of hit

[00:20:16] the ball down the fairway. It doesn't necessarily have to be this left or right tail

[00:20:20] outcome of everything that's happened really post-COVID.

[00:20:26] Are you familiar with that sort of idea? And am I reading you correctly there?

[00:20:31] Yeah, I know. I think we're saying the same thing, right? Which is the debt is effectively

[00:20:34] a measure of how much of the resources you have to put towards prior bad policy,

[00:20:39] right? And one way of getting rid of that debt is to effectively hyperinflate it away,

[00:20:44] right? Or to take advantage of the dynamics that we print our own currency and effectively

[00:20:50] cancel out the debt. The irony is the way that that would take place is through you can't

[00:20:56] actually just inflate the debt away, right? The great irony is if I look at the decrease

[00:21:02] that we've seen in the debt to GDP number, it's been a function of growth, right? Not just

[00:21:07] a function of inflating, right? We haven't done that much damage in terms of inflating

[00:21:12] at this point. And candidly, I would highlight for people like remember we expanded our money

[00:21:17] supply 35%. We shut the entire world down. We started a war in Europe. We started a war

[00:21:22] in the Middle East. We are currently engaged in conflict with China. We shut down the Suez

[00:21:27] Canal. We had to reroute everything around the Cape of Good Hope. The water levels in the

[00:21:35] Panama Canal are limiting transit through that mechanism, etc., right? Basically,

[00:21:40] everything's going crazy wrong. And we're arguing about two and a half versus three and a half

[00:21:44] percent inflation numbers, right? Now, have we had a cumulative inflation of 25%?

[00:21:49] Almost certainly has the price level shifted to reflect those prior mistakes and the fact

[00:21:54] that we did not contract demand adequately in the face of lower supply, 100%. People should

[00:22:00] really be thinking about all the things that we screwed up and how little impact it actually

[00:22:05] had. That gives you some idea of that degree of how much room there exists in a country. And

[00:22:12] again, I'm in this weird position where I am hyper critical of the choices that we're making

[00:22:18] from a policy standpoint but also highlighted for people to immediately project the end of

[00:22:23] the system, that the world is coming to an end, that inflation is going to run rampant,

[00:22:28] that they are in charge and are acting against our interests. This is just political paranoia.

[00:22:36] That's a very pragmatic view they have there.

[00:22:40] Well, it's pragmatic to the extent that it actually ends up being right. And so,

[00:22:44] I'll just say very quickly that it's been wrong. I mean, the simple fact is that the

[00:22:49] US's financial house is in much better order than China's, much better order than Europe's.

[00:22:55] We actually know these things and yet weirdly we talk about the collapse of the dollar.

[00:23:01] Well, I would also say to your point, we talked about this several times with some of

[00:23:04] the earlier guests that volatility has really been pretty contained, even through 2022,

[00:23:10] I guess you could argue, even though we threw so many problems at it politically and fiscally

[00:23:17] and everything else. Well, I mean, you've heard my explanation for 2022. I think that 2022 was

[00:23:23] much more tied to systematic portfolio rebalancing. And candidly, I think the

[00:23:28] lack of demand for interest rates is tied to the same thing. So if you build portfolios

[00:23:32] that say I'm going to be 50-50 equities bonds, and nowhere in that statement do you include,

[00:23:38] but I'm going to actually look at the level of yields or I'm going to consider valuation

[00:23:43] and equities before I make that statement of 50-50, then you would actually expect exactly

[00:23:49] what we saw in 2022, which is Federal Reserve Hikes interest rates. Mechanically,

[00:23:53] that lowers the price of bonds. If I'm running a 50-50 bond equity portfolio and

[00:23:58] bond prices fall, what do I have to do? I have to sell equities, buy bonds.

[00:24:02] And so that's what we saw in 2022. Did we see a recession? Did we see a significant retreat

[00:24:07] in profitability? Did we see corporations stop buying back their own shares? In some cases,

[00:24:11] we did. But for the most part, it was largely a story about a match in behavior between

[00:24:16] bond prices and equity prices. It's consistent with this dynamic of systematic portfolio

[00:24:22] allocations. If I look at what's happened since the Fed has paused interest rate hikes,

[00:24:28] we've increased the supply of bonds and we've decreased the supply of equities because we

[00:24:33] ended the SPAC nonsense and we've started shrinking share counts again. Well, if I'm

[00:24:37] running a 50-50 allocation in which my demand is largely fixed and the supply changes in the

[00:24:43] way I described, I expect to see equity prices go higher and bond prices to go lower.

[00:24:48] And unfortunately, I think that's really what we've seen. I just don't think there's

[00:24:51] information content in the way that people think there is in the behavior of financial

[00:24:55] markets at this point. Is that due to a lot of the financialization of markets essentially?

[00:25:02] I think it's due to a combination of financialization and also the rigid

[00:25:06] application of rules that if you stop and think about them, don't make any sense.

[00:25:10] The idea that I'm going to allocate my portfolio on a fixed basis after we've seen

[00:25:15] the type of change in interest rates that we've seen is extraordinary.

[00:25:21] But if I look at a Vanguard website and I look at the expected return to bonds

[00:25:25] in their portfolio construction techniques, it's totally unchanged from where it was in 2021.

[00:25:32] So why would I change my portfolio construction if my expected returns remain the same?

[00:25:37] Even though we know that that's prima facie absurd, we've gone from negative 3% real rates

[00:25:43] to positive 2.5% to 3% real rates. And everybody's saying, well, bonds are certificates of

[00:25:48] confiscation still. Well, they have to be at least slightly less certificates of confiscation,

[00:25:53] right? Right.

[00:25:54] But nobody's thinking about them that way.

[00:25:58] Well, Mike, thank you for doing this, I guess. You have proven Mike Taylor's

[00:26:01] compliments correct. I am told, you're right.

[00:26:05] Well, you're not standing so we don't know that, but the brilliant part you have.

[00:26:08] Thank you again. We really appreciate you taking the time.

[00:26:12] My pleasure. Thank you.

[00:26:15] Mike. Hey, how you doing?

[00:26:18] Good. How are you? Thank you for joining us. We appreciate it.

[00:26:20] Ah, so my head gets smaller.

[00:26:25] Like it's big enough already.

[00:26:30] I'm trying to get the pink in there. Okay, we won't.

[00:26:32] There you go. You're perfect.

[00:26:35] Well, we really appreciate you taking the time to talk to us today.

[00:26:38] Oh, my pleasure. Thank you so much. Thank you for putting this together.

[00:26:43] Yeah, it's our pleasure. And as we'll talk about in a minute,

[00:26:46] we're doing a one-day thing here for Susan G. Coleman, but you're doing something every day

[00:26:50] for Susan G. Coleman, which we'll get into when we get into the interview.

[00:26:53] But first I just want to intro you. You're the manager of the Simplify Healthcare ETF.

[00:26:58] You've worked at a lot of hedge funds that would never hire me under any circumstances.

[00:27:03] You were a scientist. If we wanted to talk to somebody about healthcare,

[00:27:07] you are definitely the guy to talk to. So again, thank you for joining us.

[00:27:11] Thank you so much for having me. Healthcare is a humbling because we don't have it all figured

[00:27:19] out. I don't have all the answers. In fact, my wife would tell you I have none of the answers.

[00:27:25] And if I did, they're wrong anyway. So it's a pleasure to be here. And thank you so very

[00:27:33] much. I'm so glad to help out. But there are so many cool things going

[00:27:37] on in healthcare right now, and we're going to get into those with you.

[00:27:40] From someone on the outside, I probably don't understand them that well, but there's definitely

[00:27:44] some groundbreaking stuff going on. So as we go through the interview, we're going to get

[00:27:46] into that. But before we start, I just want to mention again why we're here. We're here to

[00:27:50] support Susan G. Coleman. If you're watching us on YouTube, there's a donate button next to

[00:27:55] the video or under if you're on mobile. If you're watching us on Twitter or on LinkedIn,

[00:27:58] you can go to YouTube and donate. If you get any value out of what we're doing today,

[00:28:02] we would really appreciate it if you would donate. It's a great cause.

[00:28:06] And we'll get into that in a second. But if you can donate, if you're watching,

[00:28:09] we would greatly appreciate it. And with you, we're actually going to start out with Susan G.

[00:28:13] Coleman because you actually started an ETF for the benefit of Susan G.

[00:28:18] Coleman, which is really, really cool. So I'm wondering if you could just talk about

[00:28:21] Simplify, the Simplify Healthcare ETF and what you're doing there.

[00:28:24] Sure. Absolutely. So Simplify approached me several years ago to put this together.

[00:28:31] And it is the first ETF actively traded by myself. And the fees associated, the profits that would go

[00:28:40] to Simplify go to the Susan G. Coleman Foundation for breast cancer. And so I get the honor of

[00:28:47] giving to the Susan G. Coleman Breast Cancer Foundation every single day. And this is what

[00:28:53] I do for a living. Essentially trade this fund and give it away. And so our investors get to

[00:29:00] keep the returns. But the very modest fees that are associated with this will go to that charity.

[00:29:06] And I should add that it changes every day, but I'm among the very top shareholders in

[00:29:12] the Pink Fund. So I trade it as if it is my own money because very much it is my own money.

[00:29:19] It's such a cool idea. Where did you come up with the idea? It's really interesting.

[00:29:24] Mike Green and I have been kicking it around. For those of you that don't know the much esteemed

[00:29:30] Mike Green, he's as brilliant as he is tall and good looking. And he's a wonderful guy.

[00:29:38] And he works at Simplify. And you can see him on almost one or two financial programs every

[00:29:47] single day. Incredibly active in the community and a very, very good friend. He and I have

[00:29:51] been close friends for gotta be 15 years or so. And we talk about every day. But he

[00:29:58] approached me about this many years ago, what to do, how can we get something together?

[00:30:04] And this was the result of those efforts.

[00:30:08] Can you talk about your background in healthcare? Because you were actually a scientist

[00:30:11] right before you were a money manager. Sure. Yeah, I did drug development, old school,

[00:30:16] belly to the bench as we call it. And so I developed drugs in the 90s and then discovered

[00:30:24] that this job existed. I didn't know, I lived in a laboratory. So please don't blame me for not

[00:30:30] knowing every job that's out there. As soon as I discovered this job existed,

[00:30:35] that was the moment. Aha. And I went to business school to learn what finance was.

[00:30:40] And then I went to Wall Street and I was very fortunate to right away get a spot at Oppenheimer

[00:30:46] funds as their head of healthcare in a very short period of time. And then just ran with

[00:30:52] it from there. Ended up at hedge funds in the 2000s. And then spent most of my career

[00:30:58] at Citadel and Millennium. And that's where my fund Critical Mass came together at Millennium.

[00:31:04] I ran that for most of my career. Really for the past 20 years. So doing the PING fund is

[00:31:12] certainly not a big leap from what I normally do. Do you think your background as a scientist

[00:31:19] helps you a lot in investing? You see a lot of really successful money managers come from an

[00:31:23] area completely outside of investing and then be really successful. Do you think that helps you?

[00:31:27] For the most part, it helps. I always have to be conscious that over time being an expert

[00:31:33] in something you garner biases. And those biases can be, I don't want to say they can be good and

[00:31:41] bad. Good because I can weed out things that very quickly probably can't work. But bad in

[00:31:47] the sense that the rest of Wall Street can't do that. So you can have tremendous trading

[00:31:53] opportunities that I might overlook because of my biases. And that's something I try to stay

[00:32:00] very, very conscious of is that it's not what I know versus what they know. It's when are they

[00:32:07] going to figure out what I know? And that is the trade. Early is being wrong. So I have to

[00:32:14] be very keen to the perceptions as to any new technology out there. And just if I think it's

[00:32:22] not going to work, that doesn't mean it can't be a great trade to the long side. Or if I

[00:32:26] think the market is much smaller than the street believes, that's a different trade. There's a run-up

[00:32:31] trade into the great anticipation. And those are the things that I have to really monitor

[00:32:35] and think about in order to make money for pink because at the end of the day, my job is

[00:32:40] not to be right. My job is to make money. Being right is for people who write books.

[00:32:48] For the most part. That was a really cool quote from our original interview with you

[00:32:54] I shared on Twitter, which is this idea of you go big when they figure out what you already know.

[00:32:59] Which is in terms of position sizing, which is a really interesting way to look at it. It's not

[00:33:03] what way I'd thought about it before. Yes. I'll give you an example today. There's a

[00:33:09] chemicals and materials company called 3M. And they just reported today and it is coming out

[00:33:16] to they are figuring out what I know. And this is a big position in pink that's way

[00:33:22] outside of the benchmark. Meaning that it's not represented in the benchmark. So it's a

[00:33:27] meaningful bet. And it's up, I don't know, six, seven, eight percent today. And I think

[00:33:31] that this probably has 50 to 70% upside over the next year as new management takes over.

[00:33:39] And we have a management turnaround for what has been a troubled and forgotten company

[00:33:43] for a very, very long time. It's extremely cheap. And I think they're going to be beating

[00:33:48] on revs and margins and maybe meaningfully on margins as management

[00:33:53] improves the throughput at the company. These are the sort of things that I will

[00:33:59] spend a lot of time on, figure it out, have a position on and then wait and watch for that

[00:34:03] moment that they start to figure out what we've done the work on. And that's a great

[00:34:09] example. And it's represented in very large size in the pink fund. Can you talk just at

[00:34:14] a high level about what you're seeing like in healthcare right now? What you think the

[00:34:17] biggest opportunities are at a high level? At a high level. So there's always going to be

[00:34:25] new product stories. And that's one of the great things about healthcare is that there

[00:34:28] is always new innovations that are coming and going because they expire on their patent life.

[00:34:35] And so that's one thing that's ongoing all the time. And that's part of my job is to

[00:34:42] dice through that, figure out what's going to work and what's not going to work.

[00:34:45] The other piece that's very meaningful is what the macro economy is going to do.

[00:34:52] Healthcare is sort of stuck in between defenses and offensives, meaning growth stocks when the

[00:35:00] economy is good. And we are very likely moving into a transition where the economy

[00:35:05] is going to decline very, very quickly. And so I have to think very hard about how to position

[00:35:11] for 2025. And that's where I'm spending an awful lot of time right now. Just about every

[00:35:16] single really, really great trade that I've ever had is a year to a year and a half in the making.

[00:35:24] And that's what I really try to time things out is understanding what's going to happen

[00:35:28] in a year and then when to put it on. And so I'm thinking an awful lot about how to put

[00:35:33] this book together for the fall. Thinking about not the fall, but thinking about one queue,

[00:35:38] two queue next year. So those are the things that I'm working on and thinking about from a

[00:35:43] top-down level. Yeah, I can assume that's a pretty challenging thing because you've got these great

[00:35:47] companies doing really innovative things. But then on the other side, you've got the economy

[00:35:51] and they're influenced by the economy like everybody else. So balancing those two things,

[00:35:54] I would assume is a huge challenge. I have to be very, very selective,

[00:35:58] very selective and nimble. And I treat it like it's my money. So I'm just going to pull

[00:36:06] up while we're talking here my portfolio in pink so I can speak to it if you need me to speak to it.

[00:36:16] Can you talk about just some of the innovation you're seeing in healthcare? People like us who

[00:36:19] are outside of it, we know there's world-changing things coming, but we don't know exactly what

[00:36:23] they are. What are the areas where you think healthcare is going to change the world the most

[00:36:28] in the coming years? Healthcare is incremental like many scientific projects. It's all baby steps

[00:36:39] and there's rarely giant leaps. Now, a giant leap though could be a big product like the GLP-1

[00:36:46] class for weight loss and heart disease, but that's not a new class. For instance,

[00:36:51] it'll be an innovation maybe to the public because they're now finding out about it,

[00:36:55] but it's been available for seven years in different forms, more than seven, in fact 10.

[00:37:01] So it's all incremental and it's baby steps, but I will submit that those baby steps over

[00:37:07] the past 20 years have added up to profound results for patients and payers and doctors

[00:37:13] and productivity for the world. When I started the antibody, that was new 25 years ago.

[00:37:22] There was only a handful available and they can, for the most part, turn off certain protein or

[00:37:29] signaling pathways that delivers tremendous results to a disease, specifically cancer,

[00:37:37] autoimmune, things like that. And now, over the past 20 years, now we have viral gene

[00:37:44] therapies, RNA gene therapies. We even have kind of gene therapies that will insert new

[00:37:50] genetic information into certain types of cells to have a profound impact. This is all new.

[00:37:56] When I came onto Wall Street, I was a molecular biologist and a virologist,

[00:38:01] and if you went to the textbooks that I just walked out of and the classes I just walked

[00:38:05] out of, we thought we had it all figured out. We knew how a cell went from a signal to the

[00:38:13] nucleus to change the DNA read profile, to make the RNA, to make the proteins,

[00:38:19] to have an impact in development or a morphological change in the cell.

[00:38:25] And we learned that, yeah, that's totally not how it works. There's many, many,

[00:38:29] many more layers of editing that occurs in between here and there. And so even the dogma

[00:38:35] of how things work in the cell has changed profoundly in the past 25 years.

[00:38:41] I submit that it will change even more so in the future, and we'll learn new things about

[00:38:45] how our bodies work. What's significantly different, though, is the velocity.

[00:38:51] The velocity has changed. The toil that I used to do at 2 a.m. in the laboratory in 1998

[00:38:58] is epic. And it was one guy with pipetters and going from heat bath to cool bath to a fire

[00:39:06] to whatever, to a machine that could code out my DNA and read it. And I have to go with a ruler

[00:39:13] going through and say, A, G, G, G. You know, I'm literally reading it by hand.

[00:39:19] They don't do that anymore. Machinery has taken over much of this. And so you don't have

[00:39:25] the guys in the lab at 2 a.m. toiling as much. Now you have 100 machines doing two million

[00:39:32] times the output of what I could have done by hand 25 years ago. That's what's changed.

[00:39:37] And that has changed the velocity and the, let's say, the fidelity of what can be done.

[00:39:43] We can go now from the whiteboard over here, from an idea to the whiteboard,

[00:39:49] to a drug concept screened pretty darn quick now, to animals to human in sub three years.

[00:39:57] That's incredible. And I don't mean approved in three years, but I'm saying you're in humans

[00:40:03] from an idea on a whiteboard within three years or sooner. And that is breathtaking

[00:40:10] how fast the velocity is. So the amount of content that has come out scientifically

[00:40:15] is stunning and overwhelming for an analyst trying to keep up with all this information

[00:40:22] that's constantly getting poured out. And that's really part of the battle is how fast can I

[00:40:27] learn? How fast can I process and then trade for the pink foot?

[00:40:33] You mentioned GLP-1s. To an outsider like me, it seems like that is a game changing thing.

[00:40:38] Is that the case? Well, in my view, there's probably about

[00:40:47] 75 million Americans that should be on the GLP-1. So about 25% of the entire population or so.

[00:40:56] And so that's profound. Look, humans are designed to pack on the weight because

[00:41:08] through evolution genetically, our biggest fear of our bodies and our primal mind is don't starve.

[00:41:17] And so we are programmed to overeat and put on weight. And while that will keep us alive in

[00:41:23] the short term, while there's no food in the winter and we're in a cave, in the longer term,

[00:41:29] it has terrible impacts on the body around the cardiovascular and so forth, and a lot of

[00:41:35] inflammation. And this is the first class of drugs that can, let's say, fool the body into

[00:41:43] thinking we're sated. Not all the time, not completely. But for most people, you simply eat

[00:41:51] half your lunch instead of all your lunch. And that reduction in caloric intake has a profound

[00:41:57] impact on the body and the mind. And it's a good one. So I think that it's going to be a

[00:42:05] gigantic drug class, the biggest ever. And I can't wait to see what comes out next.

[00:42:11] And again, it's all incremental. We're going to see these injectables go into more of a

[00:42:17] pill format over the next three to four years. And that will extend the IP life for many of these

[00:42:24] companies. And then that too will go generic. And so 15 years from now, we're going to have

[00:42:32] a whole suite of drugs that are going to be for pennies every day and can have a profound

[00:42:38] impact on the weight and cardiovascular health of patients. So that's incredibly powerful

[00:42:45] for humans to live better and live longer. So GLP-1 is going to be big, it already is,

[00:42:51] it'll be much bigger. Mike, can I ask on that point? I mean, I think LOI,

[00:42:56] it's up five, six, seven percent this morning. Is that trade likely done because that information

[00:43:03] is fairly well known at this point? Or do you think that there's more kind of life left

[00:43:07] in that trade? Oh, there's tons of life in that trade, in my view. And the reason is

[00:43:14] it's not covered. The drug, it's not covered largely for Medicare patients. And that's

[00:43:19] really where the big, big market is, is everybody 62 and over. Of the folks that are 62 and over,

[00:43:26] probably half should be on a GLP-1. It will greatly improve their lives. They're sleeping.

[00:43:31] It'll improve sleep apnea. It'll improve their hearts. It'll improve their liver.

[00:43:36] It'll improve their kidney. It'll improve their mobility. It'll improve their hips,

[00:43:40] taking the weight off of those old hips. And that will be covered incrementally throughout the

[00:43:49] year and years in the future. The government doesn't tend to do it all at once. They like

[00:43:55] to take their time with these sort of things, especially when it's really good for humans.

[00:44:00] They like to say, well, maybe not, in my experience. They're more concerned about the

[00:44:06] financial impact than the health improvement in their patients.

[00:44:15] Another area that people mention a lot in terms of something we're going to see a lot

[00:44:18] of innovation is this idea of aging. I don't know if it's going to be too late for me,

[00:44:22] but it seems like we're going to be doing a lot of stuff in that area.

[00:44:25] What are you seeing in the area of aging? I see a lot of early science for the most part.

[00:44:39] But I do think that that is very likely in our lifetimes going to be the next really big

[00:44:47] drug class, just because I think we're getting closer and closer to having a plan on how to

[00:44:54] attack aging. And part of it is figuring out what is aging. What is it? For a while,

[00:45:04] I thought it was because the caps of your chromosomes start to decay, and that's a sign

[00:45:10] of aging. And so they tried a number of drugs to extend the caps of your chromosomes,

[00:45:15] things like that. Didn't work. But I don't want to go into all the details of it,

[00:45:22] because I don't want everyone to fall asleep. But that is something that I'm watching.

[00:45:26] The thing is about science, which is so great, is that I won't miss it,

[00:45:30] because I will be watching this like I have been for the next 20 years sitting here reading,

[00:45:36] just like I did for the previous 20 years sitting here reading. And it's all small increments

[00:45:42] as we move forward. So it won't surprise anybody. I don't think there's going to be any big

[00:45:47] shocking drugs that come out. One that's extremely interesting to me that I should bring up is

[00:45:55] Regeneron is going to have a go into patients for a drug that may be able to cure allergy.

[00:46:07] That is really, really, really big. There are millions and millions and millions of patients

[00:46:11] that suffer from severe allergy. And that'll be the first time we can see an outcome from here.

[00:46:18] But I'm looking forward to those first patients. And I think on paper, when I write it down,

[00:46:25] I go through it and I'm like, that's probably going to work. So we'll see.

[00:46:31] But those are the sort of things that I'm very interested in and everything else, honestly.

[00:46:35] But I just want to give you a couple examples that are big.

[00:46:39] How about cancer? I mean, we're here today to support Susan G. Coleman to help fight cancer.

[00:46:43] What is your outlook for cancer? I mean, is this something we're going to be able to cure

[00:46:46] or at least reduce to something you can live with over the next 10 years or so?

[00:46:50] I think that's the key. It's developing a relationship with cancer where it's there,

[00:46:57] but it doesn't own you. And I don't know if we'll ever be able to get rid of it

[00:47:03] for many patients. I think it'll just be, let's say, an armistice where we simply have

[00:47:12] agreed to the lines and we will not cross them. So the cancer is there, but it's in check.

[00:47:18] And so we have this ongoing battle in your body of we're fighting the cancer back and it

[00:47:23] stays pretty small. The drugs are there to help. And you can get on with your life

[00:47:28] and live a pretty darn normal life. And we've seen that in many classes,

[00:47:32] especially leukemias, where patients will still endure a leukemia for a very,

[00:47:38] very long period of time and they will live to a ripe old age and die of something else.

[00:47:44] So we're getting there and it will be incremental from one cancer to the next. But

[00:47:49] when you look 20 years down the line, we're probably going to see that for most cancers,

[00:47:54] where these things will just simply be in check and you can get on with your life.

[00:47:59] And diagnosis will play a very big role in that finding it early. Right now,

[00:48:03] we're at the spot where there's been a lot of efforts to try to find cancers,

[00:48:08] detect cancers early with a blood test and so forth. Unfortunately, they're not very good.

[00:48:16] And honestly, the results that you get are not terribly useful

[00:48:22] because your cancer level may be so low that they can't find it. So what do you do with

[00:48:30] that information? Do we treat? Do you just live under a scary cloud for the rest of your life,

[00:48:37] knowing that maybe kind of somewhere you have cancer and maybe you don't?

[00:48:42] So we're not at the point, I think, where that can be prime time.

[00:48:46] But again, it's incremental and we'll get there into the future.

[00:48:52] You pulled up your holdings, so I want to give you an opportunity to use them.

[00:48:56] How do you think about taking all this innovation we're seeing in the healthcare

[00:48:59] space and turning it into a portfolio?

[00:49:08] Look, our job for making a portfolio is to deliver asymmetric returns.

[00:49:15] And sometimes it requires having a lot of innovation in that book that is not well

[00:49:21] understood. And there are other times when you want to not have that innovation in the book,

[00:49:27] because that's not the right time to do that in a macro sense. So I do move it around an awful

[00:49:35] lot, like I would and do my own money figuring out what is correct in the risk reward paradigm.

[00:49:45] So for instance, right now, our largest position is a gene therapy company called

[00:49:53] Sarepta. And I believe that they are going to get a very large label at the FDA for

[00:50:01] Duchenne's muscular dystrophy. And the over under is that most folks don't think so,

[00:50:10] because the data that they came out with in their phase three was imperfect.

[00:50:16] And that's sort of the argument. I looked at this and said, no, the FDA is going to

[00:50:21] sincerely like this. And that's the debate. And so I can think about what the risk reward is there.

[00:50:27] And so we have a meaningful position that that information, what's called the PEDUFA date,

[00:50:32] the approval date will come in June and might come a little sooner. But I think that the MPV,

[00:50:40] when you take a look at this company, for instance, I think that they're going to do

[00:50:44] over $5 billion in revenue next year. And it's around a $12 billion market cap company.

[00:50:51] So and what the investors are getting wrong is that there's a meaningful residual.

[00:50:59] There's a meaning that there's a large population, well, it's small, the population

[00:51:05] for Duchenne's muscular dystrophy. But the incidence of DMD, Duchenne's muscular dystrophy,

[00:51:14] the incidence of DMD will still garner for them about $1.5 to $2 billion a year in residual

[00:51:22] revenue once they go through the DMD population. So when you add up the sort of MPV of this

[00:51:31] company and their market, I think that this is worth closer to $30 billion rather than 12.

[00:51:37] So I would anticipate it doing extremely well this year on the numbers that are going to come out

[00:51:45] and the label that will come out. So those are ways how I think about our investments.

[00:51:50] Normally, I wouldn't be as large in a company like this in this book or even my book or any

[00:51:56] book. But when you do find you have asymmetric understanding, and you believe that you have

[00:52:04] the nuts, you have to bet like you have the nuts because my job is to make money for you

[00:52:10] and make big donations to the Susan G. Komen Foundation. So that's what we're going to do.

[00:52:18] Hopefully both with the ETF and today we're going to do that.

[00:52:21] In the couple minutes we have left, just a couple quick questions. You had mentioned

[00:52:24] earlier you're not very optimistic on the economy, so I just wanted to give you an

[00:52:27] opportunity to talk quickly about why that is. Well, let me phrase it like this. I am optimistic

[00:52:35] that the innovation that comes out of the U.S. economy and the United States in general is

[00:52:44] unparalleled. And so this is really the place to be investing for the most part.

[00:52:50] Smart people and accommodating government, meaning that they allow business to flourish

[00:52:59] for the most part. And you put those things together and it generates great things. And

[00:53:07] we've seen this now for 200 years out of the U.S. But for the past over a decade,

[00:53:15] we have had a command economy, which we've never really had before, especially during non-war time

[00:53:21] and non-crisis moment. And the government has determined what the GDP is by overspending

[00:53:30] and overspending in a grotesque way. And it's fine until the bill comes due.

[00:53:36] And we are witnessing right now that bill coming due. Think about the government,

[00:53:42] how it's financed. It's financed essentially for the vast majority on five-year paper,

[00:53:49] like a ninja loan. It's a teaser rate and it begins to roll over every year.

[00:53:56] And we had tremendous spending. And as this debt rolls over, they're having to pay higher

[00:54:02] and higher and higher interest rates so that next year, the interest, the coupons that they'll

[00:54:10] have to pay is about $1.7 trillion, and in total, that's as much as Medicare and Medicaid put

[00:54:22] together. So that number used to be a much, much, much smaller number of the budget.

[00:54:28] Now it's huge. And we don't get anything out of it, meaning that there's no fiscal

[00:54:32] spend that gets drilled into the economy with them paying those coupons. This is

[00:54:37] sort of the downfall of government largesse. And so next year, in order for us to have similar

[00:54:43] GDP growth as we did this year, which was modest, the government is probably going to

[00:54:48] have to spend $3 trillion of excess fiscal spend, meaning that they'll be bringing in

[00:54:57] about $5 trillion of taxes, which they spend and then $3 trillion on top of that, and maybe

[00:55:05] more. I don't think that that can happen. I don't think they're going to get a budget

[00:55:09] that even remotely looks like that. I think it'll be a more sanguine and a touch more

[00:55:15] balanced outcome. Well, people might applaud that and say, that's great. Well, it's not

[00:55:21] great when you're in a command economy. That spending reduction or let's say less of a comp,

[00:55:27] the reduction in growth will have a profound impact on the overall economy. So I think we're

[00:55:33] setting up for a very, very difficult 25. Well, thank you so much for joining us. We

[00:55:39] really appreciate it. This was awesome. Thank you for helping us raise money for Susan G.

[00:55:43] Komen. Yeah, we really appreciate your time today. It was absolutely my pleasure. And

[00:55:49] we went to Susan G. Komen because they can deliver big results from big checks. And many

[00:55:57] of the funds charities out there can't do it. They don't know what to do with a $5 million

[00:56:02] check. And that's where we want to be. So I applaud them for doing such an amazing job

[00:56:09] and putting that money to work in a great way. And we'll just keep forging ahead and

[00:56:15] putting up the numbers. All right? That's great. It's a great cause. Thank you again

[00:56:19] for doing this. All right. Thank you guys. Have a great day. This is Justin again. Thanks

[00:56:23] so much for tuning into this episode of excess returns. You can follow Jack on Twitter at

[00:56:29] practical quant and follow me on Twitter at JJ Carboneau. If you found this discussion

[00:56:34] interesting and valuable, please subscribe in either iTunes or on YouTube or leave a

[00:56:39] review or a comment. We appreciate it. Justin Carboneau and Jack Forehand are

[00:56:42] principals at the Lydia Capital Management. The opinions expressed in this podcast do

[00:56:46] not necessarily reflect the opinions of the Lydia Capital. No information on this

[00:56:49] podcast should be construed as investment advice. Securities discussed in the podcast

[00:56:53] may be holdings of clients of Lydia Capital.