10 Great Investors Share Their Most Important Lesson

[00:00:00] Investing is about preserving and growing wealth. It's not about getting rich.

[00:00:04] Look at your portfolio as little as possible. You're going to do it sometimes. I think that's okay.

[00:00:10] You have to avoid the cemetery. When everybody is so convinced that things are going to go wrong, ask yourself, you know, try to think about what might go right.

[00:00:24] Having humility to diversify is your ticket to long-term success.

[00:00:29] Welcome to Two Quants and a Financial Planner, where we bridge the worlds of investing and financial planning to help investors achieve their long-term goals.

[00:00:34] Join Matt Zeigler, Jack Forehand and me, Justin Carbonneau, as we cover a wide range of investing and planning topics that impact all of us and discuss how we can apply them in the real world to achieve the best outcomes in our financial life.

[00:00:44] Jack Forehand is a principal at Validia Capital Management. Matt Zeigler is managing director at Sunpoint Investments.

[00:00:49] The opinions expressed in this podcast do not necessarily reflect the opinions of Validia Capital or Sunpoint Investments.

[00:00:55] No information on this podcast should be construed as investment advice.

[00:00:58] Securities discussed in the podcast may be holdings of clients of Validia Capital or Sunpoint Investments.

[00:01:02] So Matt, it's time to get back to basics today.

[00:01:04] Let's get back to basics. Back to the old school style here. The original style.

[00:01:10] We've been doing some complicated stuff recently, and I think it's probably good that we do this.

[00:01:13] But what's also cool about like a lot of our interviews, I was thinking about this when we were setting it up, is we asked the standard question at the end of all the episodes, which is if you could teach one lesson to the average investor, what it would be.

[00:01:23] But like a lot of times before that, we've talked about a lot of complicated things throughout the episode.

[00:01:28] And what's cool about that question is it always brings it back to basics.

[00:01:31] Like nobody ever says, you know, well, my one lesson is you've got to know what Jerome Powell's about to do or something like that.

[00:01:37] It's always like a timeless lesson about investing, even if we've talked about like the most complicated stuff in the episode before that.

[00:01:43] And it's, well, it's like Stu, it's like, I know, we know what the stats are, or at least what the on average, how much people watch these things.

[00:01:50] And it's, there's just this beautiful nugget that happens at the end of all these conversations in these episodes where somebody goes, you know what, here is the philosophical underpinning behind everything I do.

[00:02:00] And it puts a nice little bow on it. And I love that we cut out these clips and share them the way we do.

[00:02:06] And I know how many days in a row are you doing this on social media? Are you doing the whole month of December?

[00:02:10] Yeah, I'm trying to do a clip a day every day for December. So we'll see, we'll see if I can stick to that or not.

[00:02:15] Well, statistically, if this is the part of the episode people miss, I consistently think this is my favorite thing in each episode.

[00:02:23] Because it really cuts to the core about how a lot of these really, really smart people, just the lens that they see everything through.

[00:02:30] So I'm always going to be excited to take a bunch of these clips and chop them up with you.

[00:02:35] And also the reality is the basics are the things you have to get right in investing.

[00:02:38] And like these guys all recognize that as much as like I'm spending a bunch of time digging into quant stuff.

[00:02:42] And, you know, we have Cliff Aspenes in this episode and he's done more detailed research than anyone I know.

[00:02:46] Like they all know that for your average person out there, like figuring out this long, short factor or whatever is not what's going to lead to your investing success.

[00:02:53] You know, although all of us do that, everybody realizes that you got to get the basics right.

[00:02:57] And for most people, the basics are enough and you don't even need that complicated stuff.

[00:03:00] Oh, 100%. And whether you're a professional building portfolios and doing this or you're a do-it-yourselfer at home is a little bit sophisticated.

[00:03:08] The way that they communicate this stuff is not just the composite education that went into the ability to have this simplified thought, but it's also the through line of how we talk about it.

[00:03:19] So incredibly useful just from a communicative philosophical angle of being how are you going to tell this to your boss or your client or your spouse on why you're doing this thing?

[00:03:31] You got to be able to boil it down and here's a bunch of brilliant people boiling it down for all of us.

[00:03:36] And that feeds really well into our first clip, which is from Jim Paulson.

[00:03:39] And I was really excited.

[00:03:40] I've been watching Jim on CNBC like my whole career, basically.

[00:03:42] So I was really excited.

[00:03:43] We emailed him and he agreed to come on.

[00:03:44] And he's like one of the nicest people we've ever had in the podcast.

[00:03:47] He's such an incredibly nice guy.

[00:03:48] But in this lesson, he's talking about himself as a professional.

[00:03:53] But what was interesting to me is like a lot of the stuff he said or basically all the stuff he said applies to an investor who's not a professional as well.

[00:03:59] So here's Jim talking about the one lesson you teach the average investor.

[00:04:02] I think the biggest thing, maybe it's not nothing new, but it's just true to me that, you know, as a professional asset manager for many years, the reality is I think we impact just a small poor part of acre-level mature.

[00:04:20] I mean, probably less than 10% of the total result is going to be due to our decision if we add value.

[00:04:29] We're talking 10% or less that we add, truthfully.

[00:04:32] Because the reality is you take in a pot of assets and the vast majority of it is already spoken for.

[00:04:40] It has to be this much diversified.

[00:04:42] It has to be here, here, and here.

[00:04:45] And then you're really only playing with the last little bit of it as your bet overlay on top of it.

[00:04:51] And I guess I really kind of leave that, that we're just adding a little bit on the end.

[00:04:58] The worst sin you can do as an asset manager is lose track of the fact you're trying so hard to put your footprint of outperformance on it that you blow the other 90%.

[00:05:09] And that is, you know, you get too bearish, whatever, or too bullish and, you know, get it too aggressive or too conservative.

[00:05:18] Probably more, you can get yourself too bearish and you miss out on the way most of us make most of our money.

[00:05:26] That is, we're just there.

[00:05:27] You're just in.

[00:05:29] You're just along for the rye.

[00:05:32] Because again, the markets go up 10% a year over time.

[00:05:36] We might add 1% to that, maybe, if we're good or whatever, lucky or whatever.

[00:05:42] But we don't want to lose track of the fact that it's the biggest part, just the market itself, not us, that makes that.

[00:05:49] The only other thing I'd say is that you realize that it's okay to be wrong with this business.

[00:05:58] It really is.

[00:05:59] If you're not wrong, ever, which I, the only way I can think you can't be wrong is that you're basically a closet indexed.

[00:06:08] That you sell yourself as an active manager, but you'll closet index you because the way you're never wrong is you never take a bet.

[00:06:16] You're always just indexed.

[00:06:19] And if that's the case, you won't ever run it before, but you really won't ever add any value for the client as well.

[00:06:27] And so the only way to add value is to take risk.

[00:06:31] And that means whenever you take risk on a regular basis, you're going to do wrong.

[00:06:35] And I think that's okay.

[00:06:37] That's okay to realize.

[00:06:38] It's okay to tell your clients.

[00:06:40] I guess those are the things I'd say.

[00:06:43] And most of those are word from humbling experiences myself on yours.

[00:06:48] So yeah, there were two aspects of this.

[00:06:50] One is he's talking about, you know, not worrying about like what you're doing as a strategist.

[00:06:55] He's usually working on about something that might impact 10% of what someone's doing.

[00:06:59] And he talked about not screwing up the other 90% should be his number one goal.

[00:07:03] And he also talked about this idea that it's okay to be wrong.

[00:07:06] And when I was thinking about that, we'll go through them one at a time, but both of those apply a ton to an average investor.

[00:07:12] Like a lot of people tend to try to do these things with their portfolio that are maybe minor things.

[00:07:17] And they screw up the basic blocking attack into the portfolio trying to do these minor things.

[00:07:21] So I think this lesson applies to anybody, whether you're a professional or not.

[00:07:26] Absolutely.

[00:07:27] I love the metaphor when I'm talking to people about this stuff as you can treat oftentimes you can treat the portfolio like it's a house.

[00:07:34] And you should think about it this way.

[00:07:35] And the 90% in this number, it's kind of funny.

[00:07:39] It's the Pareto principle stuff.

[00:07:41] It rhymes with a lot of life if you just start looking for it.

[00:07:44] That's the old 80-20 rule.

[00:07:46] 80% doesn't really matter.

[00:07:48] 20% does.

[00:07:49] But you have to understand which domain you're operating in.

[00:07:51] So in a case like this, I think about this with a portfolio.

[00:07:54] And it's a lot like owning a house.

[00:07:57] The time you spend getting a house ready to sell and put on the market and then close on the deal and everything versus the time you live in the house versus the time you buy the next house.

[00:08:08] This is what applies.

[00:08:09] Most of the time you're in the house, it's just like maintenance, letting the markets do its thing.

[00:08:13] You have no control really over what the real estate market is going to do.

[00:08:18] Aside from, you know, updating the electricity, putting a new appliance in, making sure the roof isn't leaky.

[00:08:23] It's this marginal tinkering that just is aligned with the long-term value of whatever the rest of the world is going to do when you're in between those two transactions.

[00:08:31] And here's a crazy stat for you, Jack.

[00:08:34] Do you know how long it takes the average person to basically get a house ready for sale and put it on the market and close?

[00:08:42] I have no idea.

[00:08:43] In 30 days?

[00:08:45] Yeah.

[00:08:46] Sometimes.

[00:08:46] My way on.

[00:08:47] No, it's a, so it's, it's usually like two to four months, but I think the, it skews.

[00:08:53] So it looks more like when you zoom out historically, it's like anywhere from like two to six months to do it, depending on how much you have to cram into that last thing.

[00:08:59] And then likewise, on the flip side, same thing.

[00:09:02] When people are looking for a house, it's going to take them anywhere between two to six months to find a house, make the offer, have it accepted and move in.

[00:09:10] Now, the average duration of home ownership in the U.S., do you know what this approximately is?

[00:09:15] I wouldn't even guess that.

[00:09:17] It's, I would assume it's pretty long, right?

[00:09:19] Five plus years?

[00:09:20] It's five plus years.

[00:09:22] This is something that I actually would have guessed shorter than the actual statistical averages.

[00:09:26] The actual average is 12 years.

[00:09:29] But I remember back in my banking and lending days, pre-financial crisis, they used to tell us it was like five to seven years.

[00:09:36] That was the longest people set of the house.

[00:09:38] That's why they set the arms the way that they set the arms.

[00:09:40] And that's why like the 30-year mortgage was just like a cute thing with the amortization table skewing all the interest out.

[00:09:45] Because most people are just going to be there.

[00:09:47] So whole point in saying if it takes a year on both sides of the trade in total to buy and sell the house, but you're in it for 10 to 12 years, guess what?

[00:09:56] It's 90-10.

[00:09:57] Again, it's the same thing he's saying here.

[00:09:59] It's where are you going to put most of your effort?

[00:10:01] And it's probably going to be in that maintenance.

[00:10:03] And you got to live in that mode with your portfolio just like you would with your house.

[00:10:07] Yeah, house is a place where I would think the median and the mean are probably very different in terms of the average time of ownership because you've got those 50-year people like making the mean be a lot greater than the median.

[00:10:15] That was my guess at least.

[00:10:16] They're definitely dragging that number out.

[00:10:18] And I'm sure that's where when you adjust the stuff, you find a lot more people probably in that five to seven-year range.

[00:10:23] The other thing he said that I think is really important for people to keep in mind is this idea that it's okay to be wrong in investing.

[00:10:29] And he's talking about making calls on the market, but it applies everywhere.

[00:10:33] So if I think about your world of financial planning, a lot of times if you have a truly diversified portfolio, you're going to look at it every year.

[00:10:39] And one of the things in there is going to be wrong, whether it's managed futures or whether it's bonds or it's stocked, something is going to be wrong in that it didn't work that year.

[00:10:47] And not overreacting to that, understanding that being wrong with some of the things you're doing as part of the process is really important.

[00:10:54] Or if you carry it to my world, like thinking about factor investing, like good factor strategies are probably right 55%, 60% of the time.

[00:11:01] And they work really well doing that, but that means you're going to be wrong a ton of the time.

[00:11:05] So understanding you're going to be wrong and not overreacting to it, I think is really important in all aspects of investing.

[00:11:10] Ah, so valuable.

[00:11:11] I still go back to, and I can't remember who the original source for this is, the ultimate am I diversified test.

[00:11:18] It's not to call Kramer and give him your five stocks.

[00:11:21] Not get the buzzer out and everything.

[00:11:22] You don't need to get the buzzer out for this one.

[00:11:24] But it is to basically look at your portfolio and say, do I absolutely hate or think I'm a moron for at least one thing I own?

[00:11:32] And it's usually pretty good indication, so long as that thing hasn't gone to zero or something.

[00:11:36] If you own at least one or a handful of things that you're like, oh God, that's so stupid.

[00:11:40] I'm so embarrassed that I have this.

[00:11:41] You're probably diversified.

[00:11:43] You're doing something right.

[00:11:44] Not everything is supposed to work at the same time, just like not everything is supposed to fail at the same time.

[00:11:49] Super healthy reminder.

[00:11:50] That's the upside of being wrong and getting comfortable with it.

[00:11:53] Yeah, one of the funny things about that Kramer, am I diversified thing, is I don't think there's anybody who ever appeared on that who was actually diversified.

[00:11:59] It was basically like, am I diversified?

[00:12:00] Here's five stocks I own in my portfolio.

[00:12:03] No one in your position would ever conclude something's diversified based on five stocks in their portfolio.

[00:12:08] But I guess that was his thing.

[00:12:09] For sake of entertainment value, it served its purpose.

[00:12:12] And I will say, credit to him on this.

[00:12:15] As flawed as that segment is, it's a great simplified way to just talk about where revenue and return streams come from.

[00:12:22] And if it does nothing else except tilt into somebody's brain, like you only own tech stocks or you only own bank stocks or you only own whatever else.

[00:12:32] It's just make them think about that.

[00:12:34] Just even a tiny bit.

[00:12:35] But yeah, I have entertainment value.

[00:12:38] Look, the guys.

[00:12:38] You should get the red buzzer for your client meetings when you're telling people they're diversified or not.

[00:12:42] You have that right in front of you.

[00:12:42] The only thing I have is the red stapler.

[00:12:45] But that's the office space reference gets me a lot further in life than Kramer's buzzer.

[00:12:51] So moving on to the next one.

[00:12:52] This one really gets at what we were talking about at the beginning, which is you can get people who run very, very complicated things but have really, really simple lessons.

[00:12:58] So here's Cliff Aspen that's talking about his one lesson.

[00:13:00] Look at your portfolio as little as possible.

[00:13:04] Probably 20 of your other people have said the same thing.

[00:13:07] But that just means it's true, particularly for what you call the average investor.

[00:13:15] I think there have actually been studies on this.

[00:13:18] But just intuitively, you know whoever looks at it more loses.

[00:13:24] I don't know what the right frequency.

[00:13:26] I can't imagine someone not checking once a year.

[00:13:29] How's it going?

[00:13:30] But perceive vol, perceive risk when you look frequently.

[00:13:35] Secondly, by the way, I think dance is a little different for professionals.

[00:13:39] I have to look at how we're doing each day.

[00:13:41] It's just a little weird if one of my clients calls and goes, oh, big event happened today.

[00:13:46] How are you guys doing?

[00:13:46] And I go, I don't know.

[00:13:48] That's just a little odd.

[00:13:51] But I'm a hypocrite.

[00:13:53] I look at it all day.

[00:13:55] When I'm in the office, I look at it all day.

[00:13:56] When I'm out of the office, I'm actually much better.

[00:13:59] I can check it on my phone.

[00:14:00] But I just do it a lot less.

[00:14:04] But I will tell you, myself, and if anyone should be aware of these biases, I'm up there with people who should be.

[00:14:14] I don't know if I'm going to tell you I'm not that good at it, which is embarrassing.

[00:14:17] But if we have a day where we've been up, we've been down, we've been up, we've been down, and we ended up flat, I feel like it's been a bad day.

[00:14:26] The downs hurt me more than the ups made me feel good.

[00:14:30] The formal term for that is prospect theory, and it applies intraday.

[00:14:34] My perception of how crazy the world is is probably larger than it really is.

[00:14:40] So to the extent people, you know, once a year make sure your money wasn't embezzled or something, that's probably a good idea.

[00:14:49] But much more than that, no one will probably get to that.

[00:14:54] But if you're looking daily, look weekly.

[00:14:56] If you're looking weekly, look monthly.

[00:14:57] If you're looking monthly, go further out the spectrum.

[00:15:01] Certainly the individual investor and most professionals, including me, don't have a lot of short-term predictive power.

[00:15:07] And their instincts are probably to do the wrong thing, to sell at the bottom and buy at the top.

[00:15:12] So look less would be my one-liner.

[00:15:16] This lesson almost seems too simple, but it's so, so important.

[00:15:19] Like, there's such a correlation between the amount of time you look at your portfolio and the wrong things you do.

[00:15:25] Just seeing the stuff moving around, and I'm totally guilty of this.

[00:15:28] I've got the app on my phone, I've got the positions moving around, and the green and the red, and like, all it does is lead to problems.

[00:15:33] We all do it, but we shouldn't be doing it.

[00:15:36] Are you familiar with the work of one Chuck Berry and his novelty hit, My Dingaling?

[00:15:44] Are you familiar with this song?

[00:15:45] I don't know if I'm familiar with that song.

[00:15:47] I am familiar with Chuck Berry.

[00:15:49] It's right up there with Johnny B. Goode.

[00:15:51] I think it's this time of year I flashback.

[00:15:53] I had this white Chuck Berry cassette that traveled in my Walkman to and from grandparents' houses as a child.

[00:15:59] Always was fascinated by him.

[00:16:00] So he's got this great novelty song, My Dingaling.

[00:16:02] And you already know what it's about, but it's just a double entendre for children to laugh and smile at.

[00:16:09] Radio is not the play in the era in which it was released.

[00:16:12] But the whole point is like, if you keep playing with the silver bells on the string, it's ridiculous.

[00:16:18] It's stupid.

[00:16:19] Everybody knows it's ridiculous.

[00:16:21] Everybody knows it's not the thing you're supposed to be doing.

[00:16:23] And we should step back and laugh at it.

[00:16:25] So if you're going to put the app on your phone, if you're going to constantly look and tinker with your portfolio, know that it's stupid.

[00:16:30] I don't know about you.

[00:16:31] I took all social media.

[00:16:33] I don't have any.

[00:16:33] I have like my bank finance app.

[00:16:35] That's the only thing that I have that's as an app on my phone.

[00:16:39] I want six steps to look at this stuff.

[00:16:41] And I've tried to remove as much of it from my life as possible.

[00:16:44] In work during the day, yes, I'm going to have the markets up in front of me and all that stuff all day long.

[00:16:48] But I got to turn that frigging dopamine machine off as soon as I can and unplug and get as far away from it as possible.

[00:16:57] Because it literally rots your brain.

[00:17:00] I've noticed that with you the other way because you come in like bursts on Twitter.

[00:17:03] Like you won't be like if you tag Matt on something on Twitter, like it won't be an immediate response.

[00:17:07] It'll be like, all right, Matt comes in, you know, two o'clock and there's a bunch of stuff.

[00:17:10] So you can tell obviously you're keeping yourself away from that a lot of the day.

[00:17:13] It's usually a couple of times a day and it's literally before stuff and after stuff.

[00:17:17] And sometimes there's a gap in between.

[00:17:18] But taking that stuff off your phone and just not looking at it.

[00:17:22] Portfolio too.

[00:17:23] As much if not more than social media.

[00:17:26] Just boil it down to the stuff where it's not.

[00:17:28] If you know it's adding value, put it in the spots where you know it's going to add value.

[00:17:32] But if you know it's not, just get as far away from it as possible.

[00:17:34] People, they've made an entire industry out of these little, you know, computers, supercomputers we keep in our pockets these days to steal our attention.

[00:17:41] Take some of it back.

[00:17:42] It's really important.

[00:17:43] And as I've mentioned, it's tough for people in our business because you do have to look to some degree at what's going on.

[00:17:48] Like you can't, and I've learned this throughout my career.

[00:17:50] Like I'm a factor investor, so we don't even know what we hold half the time in the portfolios.

[00:17:54] But you can't have clients calling you up and there's something going on in the market or something going on in your portfolio.

[00:17:58] And I don't even know what we hold, you know, like people don't want to hear that, whether that has anything to do with your investment process or not.

[00:18:03] So, but it makes it more challenging because by looking, you want to do something.

[00:18:07] You want to change something.

[00:18:08] You want to see the underperformance in three months and you want to, you know, all of that becomes an issue.

[00:18:12] But for your average person, I think the less you look, the better.

[00:18:15] Yeah.

[00:18:15] The less you look, the better and have systems around how and why you look.

[00:18:20] When there's something crazy going on in our job, we have to know about it.

[00:18:23] We have to know about the UnitedHealthcare incident the other day and whatever else, just so not that it means we're going to do anything about it.

[00:18:29] But it's just, you got to be plugged in to have conversations with the people we talk to all day, every day.

[00:18:34] But as professionals, we also have to have that professional distance of, is this something that, what's the Howard Linsen, Howard Linsen always uses it.

[00:18:42] I know he took it from somebody else.

[00:18:44] There's no such thing as information overload, only filter failure.

[00:18:48] This is a case of that.

[00:18:50] So I'm going to group the next two together because I think they both fit into the things you need to keep in mind in the 2x micro strategy world.

[00:18:57] So these are two lessons.

[00:18:59] One's from Zathwath Demodaran and one is from Jared Dillian.

[00:19:01] I think it's a lesson that increasingly is getting lost.

[00:19:04] Investing is about preserving and growing wealth.

[00:19:07] It's not about getting rich.

[00:19:08] And I think it's some of these days of YouTube celebrities telling you can get rich again.

[00:19:14] I was just watching a PBS documentary on crypto and how people want to hit the jackpot.

[00:19:20] I think that going for 10 baggers, 100 baggers, again, think of how much we go after those.

[00:19:27] That's not the name of investing.

[00:19:29] It's about preserving and growing wealth.

[00:19:31] Would I like to grow wealth at 50% a year?

[00:19:34] Yes.

[00:19:35] Would I like to have a 100 bagger in my portfolio?

[00:19:38] Yes, but I shouldn't be actively looking for those things because if I look for those things, I'm going to miss the core tenets of investing.

[00:19:45] So I know it's tough to follow when people around you are getting rich effortlessly.

[00:19:50] The guy who bought Bitcoin at 100 and sold it at 5,000, you say, I'm working so hard to get a 15% return a year.

[00:19:58] And there he made 50 times.

[00:20:00] I think that's why looking at other people, letting envy drive what you should be doing as an investor can be extremely dangerous.

[00:20:09] So keep your focus on preserving and growing wealth, which means you need the income to create the wealth.

[00:20:16] So if you're a doctor, go back to being a doctor.

[00:20:19] Don't spend your lunchtime looking at what stocks are doing, what your portfolio is doing.

[00:20:24] Read up some medical stuff.

[00:20:25] If you're an engineer, be an engineer first.

[00:20:28] Live the rest of your lives.

[00:20:30] Don't let investing become the center of your universe because you need the income from whatever you do to create the wealth, which you can then preserve and grow.

[00:20:39] But in a world where markets and I think that watching CNBC all day is a recipe for a terrible investing philosophy.

[00:20:50] So spend less time kind of tracking markets on a minute-by-minute basis, reading everything that's happening.

[00:20:56] Go back to living the rest of your lives and let investing do what it's supposed to do, which is take the wealth you accumulate from the rest of your life and preserving and growing that.

[00:21:06] You have to avoid the cemetery.

[00:21:12] You have to avoid the...

[00:21:13] Really, like, you know, investing is...

[00:21:20] There's two parts of this.

[00:21:22] A lot of people focus on the one big win that will set them up for life, right?

[00:21:29] So let's say you go...

[00:21:31] This is a dumb example, but let's say you get a job in NVIDIA and you get stock options and now you're worth 20 million bucks, right?

[00:21:39] So that one decision sets you up for life.

[00:21:41] Most people are focused on the positive aspect of that.

[00:21:46] You also have to be focused on the negative aspect of that.

[00:21:49] You have to avoid the catastrophic losses, right?

[00:21:53] Because that can set you back years if you have a catastrophic loss.

[00:21:58] So that would really be my piece of advice.

[00:22:01] I think these both kind of fit in because Aswath is talking about this idea that all of us want to get rich quick.

[00:22:06] Like, you know, we want to shoot for the stars right now.

[00:22:08] And you're seeing a lot of that right now.

[00:22:10] And by the way, people are getting rich quick right now.

[00:22:12] So it's not like they're trying to get rich quick and failing.

[00:22:14] Like, it's easier to teach that lesson when that's happening.

[00:22:16] But right now, it's like, I wish I owned the two times micro strategy ETF.

[00:22:19] It's gone very well for everybody.

[00:22:21] And Jared's talking about this idea of avoiding the cemetery.

[00:22:24] And that's the flip side of the same thing, which is there will be people, not physically into the cemetery, but there will be people's portfolios that will end up in the cemetery because of those products.

[00:22:33] Now, I don't know if that's going to happen now or a year from now or two years from now.

[00:22:36] But the same stuff that is getting everybody rich right now will eventually be the downfall to a lot of people.

[00:22:42] So I think these lessons pair really well together.

[00:22:44] Extra shout out to Mr. Night Moves himself, Jerry Dillian, for this one.

[00:22:47] The two quotes that I always think about, the two very stoic old, you know, old language quotes are memento mori.

[00:22:55] Like, remember, you're mortal.

[00:22:56] Remember, you're going to die.

[00:22:57] That applies to your portfolio too.

[00:22:59] And amor fati, love your fate.

[00:23:01] And I think you got to put those two quotes together.

[00:23:04] And I think they apply to portfolios.

[00:23:05] I think they apply to what Aswath and what Jared are saying in these quotes.

[00:23:10] You have to stay out of the cemetery.

[00:23:11] You got to do not do stuff that is colossally stupid or will hurt you.

[00:23:15] And you got to love your fate, which sometimes means you didn't buy the crazy thing that's gone off the charts higher.

[00:23:21] Off the charts higher, like the, you know, the whatever times levered micro strategy fund.

[00:23:26] You also probably, though, if you didn't chase that, have you seen the memes going around with the guy complaining of his hawk to a girl, like meme coin is down 20,000.

[00:23:36] Is that real or was that fate?

[00:23:39] I don't know.

[00:23:40] Is there such a coin?

[00:23:42] I don't know.

[00:23:43] I guess there is such a coin because a bunch of the crypto type people I follow were all when that coin was coming out.

[00:23:49] We're like, this has to be the top, right?

[00:23:51] Like this has to be the thing that rings the bell.

[00:23:53] But, you know, don't tap the glass.

[00:23:58] If you don't know what the water is in the water in which you swim, like you got to be aware of this type of stuff.

[00:24:02] And I think this is extra, extra, extra amor fati.

[00:24:06] I know lots of people say the Lemento Mori thing.

[00:24:08] Don't forget I'm more fati.

[00:24:09] Like love your fate.

[00:24:11] If your fate is not to be involved in these things, you have to accept other people are getting rich doing something stupid, which is true a lot of the time.

[00:24:18] There's lots of stupid ways to potentially get rich, but those ways also tend to get you potentially disastrously poor.

[00:24:25] And those are tradeoffs you got to be comfortable taking.

[00:24:28] Just a public service announcement as well.

[00:24:30] Like every one of our episodes now has some sort of comment about some coin that starts with an X or something like that.

[00:24:35] Like I deleted 170 comments this morning because these people just keep, these bots just keep responding to each other about this coin.

[00:24:42] So finally, I have now learned that you actually can block certain terms from your comments on YouTube.

[00:24:47] So I will now be making improvements.

[00:24:49] So anybody who has seen those, we will, I mean, I'm sure they'll come up with something else that I, you know, I'm going to have to just constantly chase them with the blocking.

[00:24:54] But you should see less of the crypto related comments.

[00:24:57] And obviously nobody should be paying any attention to whatever that is that's going on or the three named investment advisors that have saved people's lives that are also in there a lot.

[00:25:04] Like I lost 20,000 and Bob Larry Johnson came in and say, like, those are all fake people that do not exist either.

[00:25:10] And, you know, Telegram is not a great place to be operating with financial advisors.

[00:25:14] So those are my, those are my caveats for today.

[00:25:17] Thank you for that PSA.

[00:25:18] And once again, a lesson of you've got this supercomputer in your pocket, pushing all this information at you.

[00:25:24] If you don't have a strong enough filter, filter failure, failure will get you.

[00:25:28] And you'll be the guy who's down $20,000 on the hook to a coin, whatever it's called.

[00:25:33] And before we move on to the next one, the other thing I want to bring up just from Aswath's comment is like most people who do get rich, get rich from their human capital.

[00:25:39] And he made that point, which is if you are going to focus on getting rich, you know, probably like this stuff you can buy that's going crazy in the stock market, it will work for some people.

[00:25:47] And you'll think you can do it because it worked for them.

[00:25:49] But for most people, like focusing on what you're good at in your career, you know, in my case, obviously this incredibly lucrative podcasting career, like focusing on that is probably better than focusing on buying whatever coin or stock or whatever is getting everybody rich right now.

[00:26:02] You need to have the surplus from your human capital.

[00:26:04] You trade your time for some effort that you do.

[00:26:06] You get compensated for your time and you need that to be a surplus first.

[00:26:10] If you're generating a deficit there, not saying that Jack's generating a deficit working on the excess return.

[00:26:16] Well, I'm not saying that either.

[00:26:19] But you're putting in time because you love something and that's different.

[00:26:23] And it can be a hobby until it's something else, but you're putting in time because you love something.

[00:26:27] When we go to work and we generate a surplus from our human capital, then we have to make the decision of what do I do with that surplus?

[00:26:35] And to go out and, you know, you can go do your degen gambling with the surplus if you want, you expect it then to be lost.

[00:26:42] But per Oswald's point, if you take that thing and you want to bank that, if you want to invest in effectively save that money for future consumption when the human capital is not there, when that to add a deficit, maybe later in life or in a rough period.

[00:26:55] That should really guide your decision making process on what you did with the temporary surplus to stretch it out into a long term benefit.

[00:27:03] That's my entire professional life is converting that into plain English for people.

[00:27:08] So I really like this next one.

[00:27:09] This is Ian Castle talking about doing your own work.

[00:27:11] I would say the most important thing would be just to do your own work.

[00:27:15] You know, it doesn't mean that you can't use other people's work, but I think you need to verify that other person's work.

[00:27:21] And kind of what we talked about before, I mean, the key to this, to stop picking is doing independent research to form that independent conviction.

[00:27:29] So you can just know what to do before other people, you know, and even when I was a private full-time investor, yeah, I had big wins.

[00:27:37] But just that independent research and conviction and just having a pulse on that business, you know, it was the large losses I never took that kept me in the game as much as the big wins.

[00:27:50] And so you're not able to do that unless you really dive in yourself.

[00:27:54] And I also think that's like the best resume for a younger stock picker or somebody who wants to get into it.

[00:28:00] Like, you know, go find, find a couple of businesses that you really like.

[00:28:03] Talk to the management teams, do the work, form conviction, be the ax in that name.

[00:28:07] You know, that business better than anybody else.

[00:28:09] You know, get loud about it on X.

[00:28:11] I don't care.

[00:28:12] I know I did back in the day.

[00:28:13] I don't anymore.

[00:28:15] But, you know, staple your name to it.

[00:28:17] You know, make people know that you were the one that found that thing early.

[00:28:21] And then it goes up a thousand percent.

[00:28:22] That's your resume.

[00:28:23] You know, you'll have employers, investors, whatever, knocking down your door if you have a history of finding winners in the stock market.

[00:28:33] I really like this because it's, I mean, he's talking about stock pickers.

[00:28:36] And a lot of people probably shouldn't be stock pickers.

[00:28:38] But the lesson applies across everything.

[00:28:40] Like, we have so much information being thrown at us these days.

[00:28:44] And it's so, you don't really have to do any work if you don't want to.

[00:28:47] But the problem is if you don't do any work, you end up believing a bunch of stuff that's just wrong.

[00:28:51] You end up having, like, all this incorrect information.

[00:28:53] Like, I think about all this stuff politically.

[00:28:54] And we don't talk about politics in the podcast.

[00:28:56] But if you think about, like, if I relied on Twitter for my political information right now, I'd have this just crazy extreme stuff on both sides.

[00:29:03] I'd have Elon Musk, like, retweeting things that a lot of which are not even true.

[00:29:06] Like, it's just, you know, if you don't do your own work, if you don't understand what you're doing, whether it's in life or in investing, it can cause a lot of problems, especially in the world we are now where we're getting all this information.

[00:29:17] The idea that the best resume of a young stock picker is basically the network around him and the community that he earns by sharing his work is Ian Castle.

[00:29:29] I'm applauding you.

[00:29:30] It's fantastic.

[00:29:32] I love the statement.

[00:29:33] Let your work show who you are to the people that you, that it'll matter to.

[00:29:38] And you don't have to get super famous doing it.

[00:29:40] You can go out there and put your stuff out there.

[00:29:42] But just let your work shine.

[00:29:43] Let your work show.

[00:29:44] I don't know if you saw this.

[00:29:46] This is the one piece of credence I'll give to the Elon Musk Twitter empire.

[00:29:50] He started or he shared the other day, he shared Dylan O'Sullivan stuff.

[00:29:54] And it's like, here's Dylan who's been tweeting literally Dostoyevsky quotes into the void for years.

[00:30:00] And as a Dostoyevsky super fan and Norm MacDonald and the other things he regularly shares, like I've loved that account for at least a couple of years now, if not longer.

[00:30:09] And now all of a sudden Elon Musk is retweeting him and it's just his followers have gone off the charts.

[00:30:15] It's what I'll say.

[00:30:16] You just, you show up, you do your work.

[00:30:18] One day it'll be there.

[00:30:19] One day it'll be gone.

[00:30:19] But if you love your work and you have a core group of people who appreciate what you do, that's all that matters.

[00:30:24] That's your resume.

[00:30:25] What a beautiful sentiment from Ian, totally apart from the investing reality of it.

[00:30:31] And I feel like it's almost like, I think it's a great example because I think it's almost more important to do your work now than it was before.

[00:30:36] Because although I'm talking about all the garbage that's out there, like you can stand out now.

[00:30:39] Like if you can become somebody who's doing the work, if you can become somebody people can rely on, like Ian was talking about, you can stand out more in the midst of all the other stuff that's out there that's not trustworthy.

[00:30:49] I feel like trustworthy sources are more important in a world where almost nothing is trustworthy.

[00:30:53] When we were in Nashville and the just press record I did with Kyla Scanlon and Scott Bradley, that was, I think it was Scott who said it, where he was like, we just don't want to be lied to.

[00:31:04] Like, that's what it is.

[00:31:06] There's so much inauthentic, see the crypto comments here on this video, they're inherently popping up on its release.

[00:31:13] There's so much inauthenticity and BS in the world right now that if you just find some people who are clear signal, it makes all the difference and it compounds.

[00:31:23] And, you know, people like you and I, we're going to gravitate towards those people, we're going to follow along.

[00:31:27] And it's actually never, there's so much crap out there that it's never been easier to be authentic and be yourself and earn that reputation.

[00:31:35] I don't want to rain the parade of your future coming macro newsletter, Matt, but here's Bob Elliott maybe giving some reasons why that might not be the best idea.

[00:31:42] I think the main thing is just have the humility to recognize that you don't know what's going to happen in the future, whether it's what's going to happen to asset prices or whether it's going to be knowing when you need the money that you put away from savings.

[00:31:56] And so while it can feel conservative and that you're missing out by not, you know, going extremely one direction or another, if you're trying to ease the mind and build wealth, having humility to diversify is your ticket to long-term success.

[00:32:14] So I really like this because this is, all of us have this tendency, I have the tendency to think we can predict the future.

[00:32:20] And it's not just, it's not just macro people who are predicting what's going to happen with inflation or whatever.

[00:32:24] It's anything in the future.

[00:32:26] Like I have the, sometimes when value investing is struggling, I feel like, oh, it's definitely going to turn around tomorrow.

[00:32:31] Like I feel like it's got to happen soon.

[00:32:32] Like all of us have this, when you have humility and you take a step back in investing, I think you end up building a better portfolio because you realize there's way more things that can happen than actually will happen.

[00:32:44] And you end up building a portfolio for all kinds of different scenarios that are possible in the future.

[00:32:49] The quote I beat to death in my professional work is more things can happen than will happen.

[00:32:55] Full stop.

[00:32:56] More things can happen than will happen.

[00:32:58] So we do the exercise in financial planning of going through the calendar, then going through the cash flows, the dollars in and the dollars out, how they map back over the calendar and the balance sheet.

[00:33:07] If the cash flow is at a surplus, you're saving something, where does it go?

[00:33:10] And if you're spending something, where are you taking it from or where are you borrowing it?

[00:33:13] Those three things, give me the context of those three things.

[00:33:15] We can approach everything and we can approach it from the lens of more things can happen than will happen.

[00:33:20] So give me your range of outcomes.

[00:33:22] Give me all your weird stuff on the table, no matter how bizarre it may feel on the good and the bad side.

[00:33:27] And then we're going to go, okay, if any of these paths happen, how do we want to pre-plan us dealing with it?

[00:33:33] And if you just accept that the other quote I beat to death because I've been saying it since I was like 12 years old at this point, all I know is that I don't know nothing and that's fine.

[00:33:42] Operation Ivy.

[00:33:43] Shout out Daniel Crosby who will appreciate this.

[00:33:45] When you make that statement and you just go more things happen than will happen.

[00:33:49] All I know is that I don't know nothing.

[00:33:50] All you can say is that I just got a plan to survive tomorrow.

[00:33:52] I just got to keep my stuff on the table, know what I care about and make sure I'm steering the way through.

[00:33:57] Bob Elliott makes his point just pure poetry.

[00:34:00] Love it.

[00:34:03] I don't know what's going to happen in the future is not the greatest thing for the YouTube channel.

[00:34:05] Like a lot of people who are saying they do know what's going to happen probably do a little bit better, but it is the reality of the situation.

[00:34:10] It's nobody who's out there forecasting this stuff.

[00:34:13] I mean, at the best they know, maybe it's a 60-40 probability or whatever it is.

[00:34:17] Like nobody knows what's actually going to happen in the future.

[00:34:19] You can have confidences.

[00:34:21] You can take tilts.

[00:34:22] You can have slight biases that you put on and you choose if you want to have strong biases or not.

[00:34:27] But see Paulson back at the beginning and lest us forget how incredibly right he was during the financial crisis.

[00:34:33] And then what the struggles have been after just to make a giant call like that again.

[00:34:37] It's not easy.

[00:34:39] Life is hard.

[00:34:40] Life is messy.

[00:34:40] More things can't happen than will happen.

[00:34:42] It's okay to say you don't know.

[00:34:43] And it's okay to say we'll figure this out as we go.

[00:34:46] So the next one plays into the same thing.

[00:34:48] You know, we're parading out macro forecasters here who are talking about being humble because I think it's really important.

[00:34:53] But here's Ed Yardenny talking about the challenge of picking tops and bottoms and some other things that he thought were his lesson for the average investor.

[00:34:59] Oh, I mean, that's a layup.

[00:35:01] You know, for stock investors, buy dividend yielding stocks, put them away.

[00:35:07] You know, obviously good companies are better than that.

[00:35:10] Dividend growers are better than that.

[00:35:11] And you're going to get a lot of sleep.

[00:35:16] You know, I think to make money in the markets by picking tops is tricky because then you've got to pick the bottom.

[00:35:27] Fortunately for me, that's one of the things I'm supposed to do.

[00:35:31] And so it gives me something to do if I just told people all the time, you know, just don't.

[00:35:36] I got nothing to tell you but buy stocks.

[00:35:39] That's, you know, people want to hear, well, yeah, but are we about to see like a 50% implosion and nobody wants to kind of live through that.

[00:35:50] But I think I'm in the Warren Buffett camp viewing stocks as long run investors.

[00:35:57] Having said that, I see Warren Buffett's got more cash in his portfolio than he's had in a very long time.

[00:36:03] So that kind of has me a little bit concerned.

[00:36:06] So I do kind of pay attention to that.

[00:36:09] On a short-term basis, I think, you know, being somewhat skeptical about the consensus when everybody is so convinced that things are going to go wrong,

[00:36:21] ask yourself, you know, try to think about what might go right.

[00:36:26] And again, look around you, you know, what do you see?

[00:36:30] Do you see doom and gloom or do you see some optimistic things going on out there?

[00:36:35] Yeah, there were a few things I picked out of this.

[00:36:37] You know, he talked a little bit about stocks at the beginning, but the two things I took out is one is all these guys that try to pick the tops and the bottoms are going to tell,

[00:36:43] like if they're doing a good job, they're going to tell you that it's really, really hard to do and also that it's not going to be the thing that's going to make you successful in markets.

[00:36:50] Like you need, again, going back to the beginning with the blocking and tackling, that's what's important.

[00:36:55] Trying to pick tops and bottoms and getting everything right.

[00:36:58] And, you know, we all try to do it, but it's not what's going to make you successful long-term.

[00:37:02] I love that comfy leather chair behind him in this one.

[00:37:06] I know we were talking about YouTube backgrounds.

[00:37:08] Yeah, you look comfortable in the episode, I have to say.

[00:37:10] He looked comfortable.

[00:37:11] Just him saying, I think I just want the clip of him saying, you're going to get a lot of sleep.

[00:37:15] I don't know if we license that to like a mattress manufacturer or something, but it's fantastic.

[00:37:19] I love the comfy leather chair.

[00:37:21] It's such, clearly, like that's a nap chair.

[00:37:23] It can be nothing else except a nap chair.

[00:37:26] Short-term skeptical though.

[00:37:28] That's my favorite part of this clip.

[00:37:29] I love the idea of that you should be short-term skeptical.

[00:37:32] You should have some mapping exercise that you do where you go,

[00:37:36] the more people who are the more confident in something that's going on,

[00:37:39] that's what you should be skeptical of.

[00:37:41] Doesn't mean you have to do anything about it.

[00:37:43] Doesn't mean you have to be crazy with your calls on it.

[00:37:45] But the more optimistic you see a bunch of people,

[00:37:48] back to, you know, hawk to a coin or whatever it is,

[00:37:51] like the more you see something in a fever pitch,

[00:37:53] the more you probably want to lean against it.

[00:37:55] And the more you see people who are like,

[00:37:56] oh my God, the world is going to end,

[00:37:58] the more you want to fade that too.

[00:38:00] Love the short-term skeptical thing as much as I love,

[00:38:03] you know, quality nap time on a comfy chair.

[00:38:05] Yeah, I picked up on that skeptical thing too,

[00:38:07] because one of the great things about Ed is,

[00:38:08] like we're in a world where a lot of macro guys are always bearish,

[00:38:12] are always trying to tell us the world's going to end.

[00:38:14] And Ed has been right in this cycle in that he stayed positive,

[00:38:16] but also that's the right thing to do long-term.

[00:38:19] I mean, if you think about it,

[00:38:20] if I want to be a perma bull or a perma bear,

[00:38:22] I should probably be a perma bull for something that goes up

[00:38:24] more than it goes down.

[00:38:25] And Ed has been very good about like looking at the facts

[00:38:29] and fading these people who have,

[00:38:31] even when the consensus has been,

[00:38:32] the world's going to end, everything's going to fall apart.

[00:38:34] And you saw some of that,

[00:38:35] like in the bout we had with inflation,

[00:38:38] Ed was able to take a step back

[00:38:39] and maybe fade that consensus.

[00:38:41] And so I think that was a great way

[00:38:42] he was able to be skeptical of something

[00:38:44] that wasn't in the, you know,

[00:38:46] in the interest of most people's portfolios.

[00:38:47] I know maybe they're dated,

[00:38:50] maybe a lot of people don't.

[00:38:51] I don't see them shared on social media all the time anymore.

[00:38:53] This is definitely like a financial crisis era thing for me,

[00:38:56] but just his, like his earnings and PE charts,

[00:38:59] do you remember those?

[00:39:00] Like the expected earnings and the analyst expectation charts

[00:39:02] that he's got so many good.

[00:39:03] He's got like a free chart website to just outstanding.

[00:39:05] He has so much of his stuff on there.

[00:39:07] It is so good.

[00:39:08] And it's so great because it's so basic.

[00:39:10] And one of the things that he instilled in my brain

[00:39:13] and I owe him way too much money probably for it

[00:39:16] from 15 years ago at this point,

[00:39:18] where he's just like, just watch corporate earnings.

[00:39:20] Like watch earnings, watch the expectations,

[00:39:22] watch when they swing wildly above

[00:39:24] where the expectations are crazy.

[00:39:26] Watch when they start to go off a cliff.

[00:39:27] And I remember in whatever that like three year period was

[00:39:30] where we had an earnings recession,

[00:39:32] I remember him just pointing that out

[00:39:33] and being like, the only thing that's going to change

[00:39:35] is this is the expectations push earning expansion

[00:39:37] or earnings contraction or multiple expansion

[00:39:39] or multiple contraction on this market

[00:39:41] because we're flatlining for a period of time.

[00:39:43] Doesn't mean we have to have a bear market.

[00:39:45] Doesn't mean we have to have an outright economic recession,

[00:39:47] but earnings are flatlining.

[00:39:49] So why are you expecting stocks to go up?

[00:39:51] Little simple stuff like that, the way he reduces it.

[00:39:55] Brilliant.

[00:39:55] Many, many comfy naps to that, man.

[00:39:58] It's funny.

[00:39:59] Like I'm always thinking, as you know, behind the scenes,

[00:40:00] I'm always thinking about crazy things

[00:40:01] we should do with the podcast.

[00:40:02] And I was just thinking when I was putting this together,

[00:40:04] I'm like, we need to do an episode

[00:40:05] with Jim Paulson and Eddie Ardenny together.

[00:40:07] That'd be awesome.

[00:40:08] They're two of the people I respect the most

[00:40:09] and they both have been able to avoid

[00:40:11] the perma bear thing that a lot of people

[00:40:13] in the macro space fall into.

[00:40:15] So like at some point,

[00:40:15] we got to bring the two of them together

[00:40:16] and do like a joint episode.

[00:40:17] We got to get them together,

[00:40:19] do a joint episode

[00:40:19] and like bait Jim Rickards in the comments somewhere.

[00:40:22] Get him riled up.

[00:40:24] Have him make a surprise appearance

[00:40:26] in the middle of the episode.

[00:40:27] Finally, yeah, we'll get up.

[00:40:28] Rickford, Darren.

[00:40:28] We're calling questions.

[00:40:30] Rick Rubini has joined us.

[00:40:31] Awesome.

[00:40:34] We try not to do that kind of stuff

[00:40:35] to get the clicks,

[00:40:35] but we try to stay positive with the whole thing.

[00:40:37] I'm not above that.

[00:40:38] I'll do that.

[00:40:40] You could be the host of that thing.

[00:40:42] So anyway, moving on to our,

[00:40:43] we got three more to go here.

[00:40:45] And Eric Critton is one of my favorite people

[00:40:46] to have in the podcast

[00:40:47] because he's so grounded in reality.

[00:40:50] So here's Eric talking about something

[00:40:51] we've talked about a little bit before,

[00:40:52] which is this idea of getting the blocking

[00:40:53] and tackling right in your portfolio.

[00:40:55] Don't get ahead of yourself.

[00:40:56] If you do a good job of blocking and tackling

[00:40:59] in the initial housekeeping,

[00:41:00] if you do a good job of those things,

[00:41:02] you'll be better than 90% of all investors

[00:41:04] because they don't do a good job of that stuff.

[00:41:06] They jump it and go straight to the complexity,

[00:41:08] the most exciting stuff,

[00:41:10] the stuff everyone else is talking about.

[00:41:12] If you just do a good job of the basics,

[00:41:15] you'll be better than most.

[00:41:17] And then also to get to the actual base rate statistics first.

[00:41:21] One of the questions you guys brought up

[00:41:23] was that most people put their money in equities

[00:41:26] because they compound at 10, 11% a year

[00:41:28] for hundreds of years or whatever.

[00:41:30] That's a base rate statistic.

[00:41:32] And then you can adjust that the way I do for true wealth.

[00:41:35] You can say after fees that I'm going to pay,

[00:41:37] the taxes I'm going to pay,

[00:41:38] the transaction costs I'm going to pay

[00:41:39] and get to a net, net, net number.

[00:41:41] If you do that for all asset classes,

[00:41:43] it'll look quite a bit different

[00:41:45] than some of the convenient portfolios

[00:41:48] that are out there available for people.

[00:41:50] So find out what the actual base rate statistics are for things.

[00:41:53] I consider that good housekeeping

[00:41:56] and getting the blocking and tackling correct.

[00:41:58] And you'll already be ahead of the game

[00:41:59] because I'll tell you,

[00:42:00] there's a lot of valuable information

[00:42:02] in getting the basics right

[00:42:04] that most people just overlook.

[00:42:05] So there were two things that I picked up from this.

[00:42:07] One is this idea of the blocking and tackling,

[00:42:08] which we've talked about before,

[00:42:09] is you've got to get the big things right

[00:42:11] before you worry about the other things.

[00:42:13] And Eric does a really good job of thinking about that.

[00:42:15] And Eric runs a very unconventional approach.

[00:42:18] I mean, Eric is using managed futures.

[00:42:20] He's using things that make sense

[00:42:22] for people to use,

[00:42:23] but most people are not using.

[00:42:24] But when you think about the idea

[00:42:26] of blocking and tackling

[00:42:27] and getting those big decisions right,

[00:42:28] it sort of leads to the type of portfolio Eric builds.

[00:42:32] Got to say this.

[00:42:33] Thing number three I took away from this

[00:42:34] as we watch these in sequence here.

[00:42:36] Not a good nap couch behind Eric there.

[00:42:39] I mean, that love suit.

[00:42:40] It'd be like furniture analyzer.

[00:42:42] We'll do a whole episode of people's furniture

[00:42:44] and their setup and let Mattie analyze.

[00:42:46] Yeah, yeah.

[00:42:47] Two people will watch that, but we'll do it.

[00:42:49] Ian, I have questions for you too

[00:42:51] about the couch and the sink.

[00:42:52] I can't tell if that's an extra room.

[00:42:54] He's got a very good modern look in the house, Ian.

[00:42:56] Very clean and modern.

[00:42:57] I like the cabinets.

[00:42:58] I like the whole thing.

[00:42:59] Yeah, I really like it.

[00:43:00] I just, the couch and the positioning.

[00:43:02] I need a blueprint of that room.

[00:43:04] Eric, the love seat is,

[00:43:05] I mean, it's just not good for naps.

[00:43:07] It might be great for you to sit back on

[00:43:08] and pontificate off into the distance or something,

[00:43:11] which he's such a thoughtful guy.

[00:43:13] I imagine it's probably more for that than napping.

[00:43:16] The blocking and tackling.

[00:43:17] We didn't have to care, Matt,

[00:43:18] about whether people wanted to watch us.

[00:43:19] The types of episodes we would produce

[00:43:21] would be just,

[00:43:22] we'd produce the whole episode

[00:43:23] just talking about people's setups

[00:43:24] and their furniture

[00:43:25] and analyzing their cabinetry or something.

[00:43:27] I think I could tell more

[00:43:29] about an investment manager

[00:43:31] by the furniture surrounding him

[00:43:32] than probably the things he's going to say.

[00:43:34] based on their setup behind them.

[00:43:37] I'm up for that challenge.

[00:43:39] But the blocking and tackling,

[00:43:40] like seriously,

[00:43:42] and take it all the way

[00:43:43] to the football analogy

[00:43:44] of the blocking and tackling

[00:43:45] on the execution of a play.

[00:43:48] That's what this boils down to.

[00:43:49] And whether it's in an investment strategy

[00:43:51] or a financial plan

[00:43:52] or something else,

[00:43:53] understanding the blocking and tackling

[00:43:55] that has to happen around the play

[00:43:57] to make the thing go right

[00:43:58] or know that it's going disastrously wrong,

[00:44:02] that's really, really important stuff.

[00:44:04] And it's boring to talk about

[00:44:06] because it's all basics.

[00:44:07] But you can't lose sight

[00:44:09] of how critical those basics are.

[00:44:11] I think a lot about

[00:44:12] like the blocking and tackling

[00:44:13] and the COVID crash.

[00:44:15] And so COVID happens.

[00:44:16] We see it take over.

[00:44:17] We see it hit markets.

[00:44:18] Another great one would be

[00:44:19] the Trump tariffs eight years ago.

[00:44:21] You see these market events

[00:44:22] that move really, really fast.

[00:44:24] If you don't understand

[00:44:25] your blocking and tackling,

[00:44:26] you don't understand

[00:44:27] what's important for you

[00:44:28] to respond to, how and when.

[00:44:30] Eric's point in just putting this together,

[00:44:33] the reminder to respond back

[00:44:34] to these basics.

[00:44:35] I'll take it back to Paulson's

[00:44:37] 90% of the time

[00:44:38] versus 10% of the time.

[00:44:40] Great, great, great point.

[00:44:43] The other thing I took from this

[00:44:44] is that he talked about base rates

[00:44:46] and we've talked about this

[00:44:46] on our episode about Michael Mobison,

[00:44:47] but base rates are such an important tool

[00:44:49] for investors to look at

[00:44:51] because everybody wants to try

[00:44:52] to pray at the future.

[00:44:53] But a lot of times

[00:44:54] it's much easier to say

[00:44:55] when these types of circumstances

[00:44:56] happened in the past,

[00:44:57] what happened?

[00:44:58] And just look to the past

[00:44:59] versus trying to analyze

[00:45:00] what's going on right now

[00:45:01] and make predictions based on it.

[00:45:03] Yeah, and how you should respond.

[00:45:05] The base rates lesson

[00:45:06] from Mobison,

[00:45:07] the way Eric explains it here,

[00:45:08] are super critical

[00:45:09] because in a COVID crash,

[00:45:12] in the flash crash,

[00:45:13] in the Trump tariff decline

[00:45:15] that we experienced,

[00:45:16] like all these things,

[00:45:17] you should be mapping back

[00:45:18] to the base rates,

[00:45:19] how you're running

[00:45:20] the models,

[00:45:21] the portfolios,

[00:45:22] or the plan that you're running,

[00:45:23] and then what do you have to do

[00:45:25] in response to this event

[00:45:27] relative to your presumptions,

[00:45:28] your assumptions,

[00:45:29] your base rates.

[00:45:30] Infinitely, infinitely useful.

[00:45:32] And it's another thing,

[00:45:34] just takes you back to basics.

[00:45:35] It's a very grounding activity.

[00:45:37] So this next one's Andrew Beer.

[00:45:38] We actually just put him out.

[00:45:40] His episode just came out today

[00:45:41] on the podcast,

[00:45:41] but this is not from that episode.

[00:45:43] This is from the original episode

[00:45:44] we had where we asked him

[00:45:45] this question.

[00:45:46] But here's Andrew talking

[00:45:47] about thinking long-term.

[00:45:48] Think long-term.

[00:45:50] You know, it goes back

[00:45:51] to the compounding question.

[00:45:54] It's, you know, I mean,

[00:45:57] just do the basic math.

[00:46:00] Like, I was reading

[00:46:01] about a hedge fund the other day,

[00:46:04] and it was guys who were thinking

[00:46:07] in college,

[00:46:08] I save $1,000 this semester

[00:46:11] and I invest it.

[00:46:13] How much could it be worth

[00:46:14] in 40 years?

[00:46:16] And so if you're working

[00:46:20] and you're 25 years old

[00:46:21] or 30 years old and have a job

[00:46:23] and just think of those terms,

[00:46:26] putting a little bit away,

[00:46:28] saving a little bit.

[00:46:29] It's interesting.

[00:46:30] It's something they said

[00:46:31] at Harvard Business School.

[00:46:32] They said you have to,

[00:46:33] from day one,

[00:46:35] find a way to save a little bit

[00:46:37] and start accumulating wealth

[00:46:38] because it will be working

[00:46:39] for you on the side.

[00:46:41] And I've done that

[00:46:43] in a very, very weird way.

[00:46:44] Right?

[00:46:45] I've got, because I started

[00:46:46] in a different place,

[00:46:47] my jobs have been very different,

[00:46:49] the businesses

[00:46:49] that I've ended up pursuing.

[00:46:51] But I think that's,

[00:46:56] at some point,

[00:46:57] you're going to be 55 or 65

[00:46:58] or retire in.

[00:47:00] And at that point,

[00:47:02] you know,

[00:47:03] you're not going to have

[00:47:03] the flexibility to move

[00:47:04] the next job that you want to move.

[00:47:05] Even if you're 55,

[00:47:07] today,

[00:47:08] it's a lot harder to move

[00:47:09] than if you're 35.

[00:47:11] So,

[00:47:11] so think long-term,

[00:47:14] be patient,

[00:47:16] you know,

[00:47:16] trust that

[00:47:19] people who are running companies

[00:47:20] are trying to build value

[00:47:21] over time.

[00:47:22] Policymakers,

[00:47:23] in general,

[00:47:25] you know,

[00:47:25] big,

[00:47:26] maybe quotation marks

[00:47:27] or something,

[00:47:28] are trying to find ways

[00:47:29] for the economy

[00:47:30] to grow more over time

[00:47:32] or for there to be

[00:47:33] more wealth accumulation.

[00:47:35] So,

[00:47:36] long-term,

[00:47:37] you know,

[00:47:37] try to be very optimistic

[00:47:39] and,

[00:47:40] and,

[00:47:41] and have a long-term plan

[00:47:42] that you can execute.

[00:47:43] Yeah,

[00:47:43] I think we all lose sight

[00:47:44] of this at times.

[00:47:45] I mean,

[00:47:45] I think we all tend to,

[00:47:47] and again,

[00:47:47] the definition of what

[00:47:48] long-term is,

[00:47:49] is so much longer

[00:47:50] than what all of us

[00:47:51] think it actually is.

[00:47:52] Like,

[00:47:52] most people are like,

[00:47:53] you're having a bad year here,

[00:47:54] so you're doing bad

[00:47:55] in the long-term.

[00:47:56] Or,

[00:47:56] you know,

[00:47:56] these three years

[00:47:57] haven't gone well,

[00:47:57] so you're not doing well

[00:47:58] in the long-term.

[00:47:59] And in the world I live

[00:47:59] in a factor investing,

[00:48:01] like,

[00:48:01] the long-term is a decade plus.

[00:48:03] You know,

[00:48:03] you could argue

[00:48:03] it's probably 20 years.

[00:48:05] So,

[00:48:05] what most people think

[00:48:07] the long-term is

[00:48:07] or the way,

[00:48:08] the period they'll react to

[00:48:09] as the long-term

[00:48:10] is very different

[00:48:11] than what the actual

[00:48:12] long-term is.

[00:48:14] This whole thinking

[00:48:15] on multiple time frame stuff

[00:48:17] and extra,

[00:48:18] extra shout out

[00:48:18] to the Luca Dallanas

[00:48:20] of the world

[00:48:20] and people who talk

[00:48:21] and write very eloquently

[00:48:22] about this.

[00:48:24] Understanding that

[00:48:24] you want to try

[00:48:25] to make decisions

[00:48:26] that are optimal

[00:48:27] both

[00:48:27] or not perfectly optimal

[00:48:29] but logical

[00:48:30] in the short-term

[00:48:31] and the long-term

[00:48:31] at the same time.

[00:48:32] It's just a great

[00:48:33] mapping exercise to do

[00:48:34] and I think

[00:48:36] Andrew really embodies

[00:48:37] this type of thinking.

[00:48:38] What can I do now

[00:48:39] that doesn't hurt me later?

[00:48:41] So,

[00:48:41] I have the high-paying job,

[00:48:42] I can save $1,000 a month,

[00:48:44] I can put compounding

[00:48:45] behind me.

[00:48:46] How is that

[00:48:46] an okay trade-off now

[00:48:48] that also benefits me later?

[00:48:50] Maybe I don't

[00:48:51] have the nicest,

[00:48:52] the most nice apartment

[00:48:53] or the most sexy car

[00:48:55] or the most whatever thing,

[00:48:56] but how do I take

[00:48:58] some of that consumption,

[00:48:59] put it aside,

[00:48:59] save it to help me out later?

[00:49:01] And then conversely

[00:49:02] what that reminds you of,

[00:49:03] even if you do get screwed up,

[00:49:05] even if stuff does go

[00:49:06] off, you know,

[00:49:08] off the rails for a while,

[00:49:10] you're not over.

[00:49:11] I mean,

[00:49:11] how many people

[00:49:12] have we also met

[00:49:13] who have had

[00:49:14] consecutive blow-ups

[00:49:15] in a career

[00:49:15] and are still doing just fine?

[00:49:18] Or anybody who,

[00:49:19] like, runs in,

[00:49:19] like, the restaurant

[00:49:20] or the real estate

[00:49:21] or whatever cycles

[00:49:21] in the last few years

[00:49:22] or last couple decades here

[00:49:24] where it's like,

[00:49:25] you could do great,

[00:49:26] blow up,

[00:49:27] and then do great again after.

[00:49:29] Your long-term

[00:49:30] can get reset.

[00:49:31] It'd be great

[00:49:32] if you could have

[00:49:32] a high-paying job,

[00:49:33] save money,

[00:49:34] and do everything right

[00:49:34] on the way up,

[00:49:35] but sooner or later

[00:49:36] you'd pay some tuition

[00:49:37] in these markets too.

[00:49:38] Yeah,

[00:49:39] and that compounding point

[00:49:39] is such an important point,

[00:49:40] and this is one of the things

[00:49:41] people miss about

[00:49:42] Warren Buffett

[00:49:42] is Warren Buffett

[00:49:43] clearly has exceptional returns

[00:49:44] over a long period of time,

[00:49:46] but how much,

[00:49:47] how important

[00:49:47] that long period of time is

[00:49:49] is something people miss.

[00:49:50] One of the big advantages

[00:49:51] Warren Buffett has had

[00:49:52] is he has a longer

[00:49:53] career of investing

[00:49:55] than almost anybody.

[00:49:56] He's been doing it

[00:49:57] for way longer,

[00:49:58] and so that gives him

[00:49:58] a huge opportunity

[00:49:59] for compounding to occur,

[00:50:01] and certainly he's had

[00:50:02] better returns

[00:50:03] than the market,

[00:50:04] but even somebody

[00:50:05] who's been in the market

[00:50:05] for that long

[00:50:06] of a period of time

[00:50:07] is going to have

[00:50:07] exceptional returns,

[00:50:08] and most people don't do it

[00:50:10] because they start too late,

[00:50:11] so this idea of just,

[00:50:12] you know,

[00:50:13] get some money in the market,

[00:50:14] compound,

[00:50:14] like,

[00:50:15] that's such an important idea.

[00:50:17] Get it in,

[00:50:18] let it work,

[00:50:19] and if you can at all,

[00:50:20] avoid taking it out,

[00:50:21] just let it,

[00:50:22] let it do its thing.

[00:50:23] Again,

[00:50:24] you're trading

[00:50:24] that human capital

[00:50:25] for something.

[00:50:27] That's surplus.

[00:50:27] You're basically saying,

[00:50:28] I'm taking this surplus

[00:50:29] that's short-term now,

[00:50:30] and I'm just going to

[00:50:31] set it aside for later,

[00:50:33] and that simple,

[00:50:33] simple act of being like,

[00:50:35] I can afford to do this now,

[00:50:36] and it's going to help me later,

[00:50:37] rhyming those two time frames,

[00:50:39] it might not be

[00:50:39] perfectly optimal.

[00:50:40] You might not pick

[00:50:41] the exact right investment

[00:50:42] to go off and put it in,

[00:50:44] but it's completely rational

[00:50:45] on where I can do it now

[00:50:47] for benefit later.

[00:50:48] Rhyme those horizons.

[00:50:49] It's the only magic

[00:50:51] we have to let

[00:50:51] compounding work.

[00:50:52] You probably won't be

[00:50:53] Warren Buffett,

[00:50:53] but that's okay.

[00:50:55] You don't have all

[00:50:55] the detriments that came

[00:50:56] with Warren Buffett's

[00:50:57] life either.

[00:50:58] Yeah,

[00:50:59] that is true.

[00:51:00] People always say,

[00:51:00] if you want to be

[00:51:01] Warren Buffett,

[00:51:02] you've got to take

[00:51:02] all aspects of his life,

[00:51:04] and that's true of everybody

[00:51:05] you look up to a lot

[00:51:06] of the times,

[00:51:07] or a lot of the celebrity

[00:51:08] type people you look up to

[00:51:09] is you focus on the one

[00:51:10] thing you want in their life,

[00:51:11] but you don't realize,

[00:51:12] well,

[00:51:12] I don't want that.

[00:51:12] I don't want to be

[00:51:13] the father Warren Buffett was,

[00:51:14] and I don't want to be

[00:51:15] all these other things,

[00:51:15] so maybe I don't want

[00:51:16] to take Warren Buffett

[00:51:17] as a whole.

[00:51:18] Yeah,

[00:51:18] yeah.

[00:51:19] We're all humans

[00:51:20] at the end of the day.

[00:51:21] We're all a little bit

[00:51:21] gross and weird

[00:51:22] from time to time,

[00:51:23] and pick the people

[00:51:25] you look up to wisely.

[00:51:26] That's all.

[00:51:27] Read Snowball.

[00:51:29] Open your eyes

[00:51:29] a little bit,

[00:51:30] and then be cursed

[00:51:31] like I am,

[00:51:32] where every time

[00:51:32] you see Snowball

[00:51:33] with Warren Buffett,

[00:51:34] you think of Snowball

[00:51:35] from Clerks,

[00:51:36] the character,

[00:51:36] and you're like,

[00:51:37] ah,

[00:51:37] that's weird.

[00:51:38] Never been able

[00:51:38] to shake that image.

[00:51:40] So this last one,

[00:51:42] as you know,

[00:51:43] I've gotten way more

[00:51:44] into the options

[00:51:45] and the tail risk

[00:51:46] type stuff,

[00:51:46] than I probably should

[00:51:47] because I don't do

[00:51:47] anything with it,

[00:51:48] but I find it

[00:51:49] infinitely interesting.

[00:51:51] So we did an interview

[00:51:52] with Chris Sidial,

[00:51:52] who runs tail risk funds,

[00:51:54] and he's a really,

[00:51:55] really interesting guy,

[00:51:55] but I also think

[00:51:57] his take here

[00:51:57] is a really balanced take

[00:51:58] that would benefit

[00:51:59] a lot of investors.

[00:52:00] So here's Chris

[00:52:01] with the one lesson

[00:52:01] he would teach

[00:52:02] the average investor.

[00:52:02] Yeah,

[00:52:03] I would say

[00:52:03] be understanding

[00:52:04] that anything is possible

[00:52:07] and be prepared

[00:52:09] for those type

[00:52:10] of worst possible outcomes.

[00:52:13] I think when people invest,

[00:52:15] you should naturally

[00:52:16] come into investing

[00:52:18] opportunistically

[00:52:18] because if you come in

[00:52:20] pessimistically,

[00:52:21] you'll just never make money.

[00:52:22] Right,

[00:52:22] you'll be the guy

[00:52:23] who's just always trying

[00:52:24] to short every dip

[00:52:25] in the S&P.

[00:52:28] But when you sort of

[00:52:31] become too optimistic,

[00:52:32] that's when it could

[00:52:33] be hazardous.

[00:52:33] So you have to be

[00:52:34] understanding that,

[00:52:35] like, yeah,

[00:52:36] every position

[00:52:36] that you put on

[00:52:37] should be with the intent

[00:52:39] that it could go

[00:52:40] completely wrong.

[00:52:42] And that's not just

[00:52:43] from like a long vol

[00:52:44] or a tail risk perspective,

[00:52:45] but it's just trading

[00:52:46] in general.

[00:52:47] It could be boiled down

[00:52:48] to as simple as...

[00:52:49] What I think is really cool

[00:52:50] about Chris is

[00:52:51] Chris is not a negative person

[00:52:53] or he doesn't have

[00:52:54] a negative outlook

[00:52:54] on markets.

[00:52:55] And there would be

[00:52:55] a tendency,

[00:52:56] there'd be such a tendency

[00:52:57] for me if I was running

[00:52:58] those types of strategies,

[00:52:59] like tail risk strategies,

[00:53:01] strategies that produce

[00:53:01] massive returns

[00:53:02] when you have market meltdowns

[00:53:04] to just be negative

[00:53:05] all the time

[00:53:05] and tweeting all this

[00:53:06] negative stuff on Twitter.

[00:53:07] And like,

[00:53:07] most of the time,

[00:53:08] Chris is pretty constructive

[00:53:09] about what's going on

[00:53:10] in the markets.

[00:53:11] He's pretty positive.

[00:53:11] And that's what he got

[00:53:12] at in the quote.

[00:53:13] He got at the idea

[00:53:14] of being optimistic,

[00:53:15] but understanding

[00:53:17] that anything is possible.

[00:53:18] And I think that's

[00:53:19] a great blend

[00:53:19] of like a way

[00:53:20] to look at the world.

[00:53:22] I go back

[00:53:24] and I don't know why

[00:53:25] I feel like with all these,

[00:53:26] all the tail risk people,

[00:53:27] I go back to

[00:53:29] Peter Atwater's work

[00:53:30] and the confidence map stuff.

[00:53:31] And I think about

[00:53:32] this idea that he has

[00:53:33] where anytime we think

[00:53:35] about the future,

[00:53:36] we are by definition

[00:53:37] imagining it.

[00:53:38] There is no such thing

[00:53:39] as a future

[00:53:40] in talking about it

[00:53:42] that you are not imagining.

[00:53:44] And I take a lot

[00:53:45] of strange comfort

[00:53:46] inside that

[00:53:47] because as soon as you realize

[00:53:48] you're imagining it,

[00:53:49] you realize your mood

[00:53:50] is affecting

[00:53:51] how you're thinking

[00:53:52] about this future.

[00:53:53] Chris has this unique ability

[00:53:55] to step back

[00:53:56] and go,

[00:53:57] I am imagining

[00:53:58] all these future realities

[00:53:59] and I know on average

[00:54:00] probably most of them

[00:54:01] are going to just be okay.

[00:54:03] Whereas you're going to

[00:54:03] come off the table

[00:54:04] and whatever else.

[00:54:05] However,

[00:54:05] I'm also building

[00:54:06] this strategy

[00:54:07] where in the worst

[00:54:07] nightmare scenarios,

[00:54:08] I think these things

[00:54:10] can play out.

[00:54:10] But as a function of mood,

[00:54:12] unless people are getting

[00:54:13] way too optimistic

[00:54:15] or way,

[00:54:15] way too dour,

[00:54:16] most of the stuff

[00:54:17] I'm going to do

[00:54:17] isn't really going to matter

[00:54:18] until it changes

[00:54:21] the way that we

[00:54:21] collectively

[00:54:22] participating in markets

[00:54:25] influence

[00:54:25] the future

[00:54:26] that we're imagining.

[00:54:28] He walks a really

[00:54:29] interesting tightrope

[00:54:30] and his philosophical

[00:54:31] optimism behind everything.

[00:54:33] I really admire it.

[00:54:34] Yeah,

[00:54:35] and I'm sure it helps him

[00:54:35] as an investor

[00:54:36] to maintain,

[00:54:37] to not be thinking

[00:54:37] like the next crash

[00:54:38] is always coming

[00:54:39] because that would

[00:54:40] probably put you

[00:54:41] in a bunch of traps.

[00:54:42] But the other point

[00:54:43] I'd make on tail risk

[00:54:44] strategies is

[00:54:45] I've come around

[00:54:46] to learn a lot

[00:54:46] about those types

[00:54:47] of strategies.

[00:54:48] They're really,

[00:54:48] really interesting strategies.

[00:54:49] I mean,

[00:54:49] obviously there's

[00:54:50] a bunch of them

[00:54:50] maybe that are not

[00:54:51] run properly,

[00:54:52] but the idea,

[00:54:53] there's such a lesson

[00:54:54] in rebalancing

[00:54:56] in tail risk strategies

[00:54:57] in terms of how

[00:54:58] rebalancing actually works

[00:54:59] because these types

[00:55:00] of strategies that

[00:55:01] if you use small

[00:55:03] allocations to them

[00:55:04] that can pay you

[00:55:04] when things are

[00:55:05] really,

[00:55:05] really bad

[00:55:06] in the market

[00:55:07] and then you can

[00:55:08] rebalance into your

[00:55:09] assets that are

[00:55:10] now cheap at that time,

[00:55:11] like when used properly,

[00:55:12] these can be really,

[00:55:13] really interesting strategies.

[00:55:14] So that was another

[00:55:15] thing I took from

[00:55:16] that whole conversation

[00:55:17] with him.

[00:55:18] He's great for this.

[00:55:19] The Jason Bucks

[00:55:20] of the world

[00:55:20] and other people

[00:55:21] who operate in this space

[00:55:22] are great for this.

[00:55:23] That rebalance risk

[00:55:24] is everything.

[00:55:25] And it all comes down

[00:55:26] to from an allocation

[00:55:28] perspective.

[00:55:28] It's all about

[00:55:30] position sizing

[00:55:31] relative to these things

[00:55:32] because like on one hand

[00:55:33] you could have a cash

[00:55:33] allocation

[00:55:34] and you could say

[00:55:35] if I have a drawdown

[00:55:36] of this magnitude

[00:55:36] or greater,

[00:55:37] I'm going to take

[00:55:38] from cash

[00:55:38] and I'm going to

[00:55:38] buy those risk assets.

[00:55:40] But you might be able

[00:55:40] to have or carry

[00:55:41] a smaller cash allocation

[00:55:43] or what you think

[00:55:44] is a non-diversified

[00:55:45] asset in your portfolio,

[00:55:47] maybe even negatively

[00:55:48] correlated in a case

[00:55:49] like something like this

[00:55:49] and go,

[00:55:50] here's what it is

[00:55:51] but now here's

[00:55:52] the very specific

[00:55:53] rebalancing strategy

[00:55:54] I want to apply

[00:55:55] across assets

[00:55:56] when I get those

[00:55:59] infrequent

[00:55:59] and extremely lumpy

[00:56:01] returns

[00:56:01] because

[00:56:03] if you have to put

[00:56:04] less assets aside

[00:56:05] for it

[00:56:05] and you know

[00:56:05] how to rebalance,

[00:56:06] I mean,

[00:56:07] you do the math,

[00:56:08] you can see how

[00:56:08] this can be really,

[00:56:09] really smart.

[00:56:09] I like you,

[00:56:10] it took me a while

[00:56:11] to come around to this

[00:56:12] but the more

[00:56:13] I've come around to it,

[00:56:14] the more I see it

[00:56:14] as for the right person,

[00:56:16] for the right entity.

[00:56:18] It's really powerful stuff.

[00:56:20] Changes the whole

[00:56:20] approach to position sizing

[00:56:21] when you have these things

[00:56:22] in a portfolio together.

[00:56:24] Well,

[00:56:25] that's a great note

[00:56:25] to wrap up on.

[00:56:26] I'm hoping we'll be able

[00:56:26] to keep doing these

[00:56:27] every year.

[00:56:27] Like one of the things

[00:56:28] I notice every year

[00:56:29] is,

[00:56:29] you know,

[00:56:29] the longer you've had

[00:56:30] a podcast,

[00:56:30] the more you end up

[00:56:31] having repeat guests

[00:56:32] and so like in the first year

[00:56:33] it's like,

[00:56:34] oh,

[00:56:34] I've got,

[00:56:34] you know,

[00:56:35] we have 52 interviews,

[00:56:35] I got 52 answers

[00:56:36] to this question

[00:56:37] like this year.

[00:56:38] It's like I got 20 or so

[00:56:39] because we have a lot

[00:56:40] of people we've had

[00:56:40] as repeat guests

[00:56:41] so hopefully we don't

[00:56:42] run out of guests

[00:56:42] and we can keep doing

[00:56:43] this every year

[00:56:43] but because I always

[00:56:44] learn from this episode

[00:56:45] and I always learn

[00:56:46] from these lessons.

[00:56:47] I love hearing the way

[00:56:48] smart people think

[00:56:49] and I love this

[00:56:50] extra liberal arts approach

[00:56:52] when we get to the end

[00:56:53] of the interviews

[00:56:54] and we ask them

[00:56:54] a question like this

[00:56:55] and they step back

[00:56:56] and now it's not just

[00:56:57] the pure tactics

[00:56:58] that we've talked about

[00:56:59] and pure strategy

[00:57:00] through the rest of the episode

[00:57:01] it's just like

[00:57:01] here's the overarching

[00:57:03] way to do it

[00:57:03] and whether you're

[00:57:04] an individual investor

[00:57:05] or an institutional investor

[00:57:06] or whatever it is

[00:57:07] this is the kind of stuff

[00:57:08] that just,

[00:57:08] it helps us communicate

[00:57:10] what we do

[00:57:11] to the people we care about

[00:57:12] the people we run

[00:57:13] the money for

[00:57:13] and everything else.

[00:57:15] So cool.

[00:57:15] Many more years of this.

[00:57:17] It only helps Jack.

[00:57:18] And we've got a new

[00:57:20] closing question

[00:57:20] we're using as well

[00:57:21] so we'll be able

[00:57:21] to do an episode

[00:57:22] based on that

[00:57:22] as we accumulate

[00:57:23] more answers.

[00:57:24] Diversification.

[00:57:26] Diversification

[00:57:26] of closing questions.

[00:57:28] Diversify in all ways

[00:57:29] so thank you everybody

[00:57:30] for joining us

[00:57:30] and we'll see you next time.

[00:57:31] Hi guys.

[00:57:32] This is Justin again.

[00:57:33] Thanks so much

[00:57:34] for tuning into this episode.

[00:57:36] You can follow Jack

[00:57:37] on Twitter

[00:57:37] at Practical Quant.

[00:57:39] You can follow me

[00:57:40] on Twitter

[00:57:40] at JJ Carbono

[00:57:42] and follow Matt

[00:57:43] on Twitter

[00:57:43] at Cultish Creative.

[00:57:45] If you found this discussion

[00:57:46] interesting and valuable

[00:57:47] please subscribe

[00:57:48] in either iTunes

[00:57:49] or on YouTube

[00:57:50] or leave a review

[00:57:51] or a comment.

[00:57:52] Also if you have

[00:57:53] any ideas

[00:57:54] for topics

[00:57:54] you'd like us to cover

[00:57:55] in the future

[00:57:56] please email us

[00:57:57] at

[00:57:58] excessreturnspod

[00:57:58] at gmail.com

[00:57:59] We would like this

[00:58:00] to be a listener

[00:58:01] driven podcast

[00:58:02] and would appreciate

[00:58:03] any suggestions.

[00:58:04] Thank you.

[00:58:05] Thank you.

[00:58:05] Thank you.