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credits and other factors. the

1:02

market is currently set up, it

1:05

is potentially in the process

1:07

of building a fairly

1:10

significant market low. And

1:12

again, it's very possible that we could

1:14

get a retest of the recent lows or

1:16

maybe set a higher low, which would

1:18

be very bullish. But

1:20

that would be a normal corrective

1:22

process. And

1:24

then what will happen is that

1:27

things that have done very well recently

1:29

will become a source of liquidity

1:31

to buy equities. Welcome

1:39

to Thoughtful Money. I'm Thoughtful Money founder

1:41

and your host, Adam Taggart, welcoming you

1:43

here at the end of another week

1:45

for another weekly market recap with my

1:47

good friend, the Nidirul. portfolio manager

1:49

Lance Roberts. Lance, how you

1:51

doing? I'm doing good today. How are you?

1:54

Good. Good. I hope I pronounced

1:56

that correctly. That's the adjective

1:58

form of Nader, which means

2:00

the low, right? So

2:04

the big question I have for you today,

2:06

Lance, is has the market found a bottom? I

2:09

should note too that as we're

2:11

talking, Lance, I'm releasing on the channel

2:13

because we're recording this on Friday. I'm

2:16

releasing on the channel a

2:18

special Friday release with the great

2:20

investor Felix Zuloff. He

2:22

only does media once a year.

2:24

His last media tour was back

2:26

in December, but he decided

2:28

because of so much that happened since

2:30

you last came on that actually he

2:32

had fairly accurately predicted, kind of eerily

2:34

accurately predicted, that it was time to

2:36

come and give folks an update, especially

2:38

given all the market volatility. And one

2:40

of his big messages is that he

2:43

thinks we're seeing a classic bottoming process

2:45

in the markets. Now, he thinks the

2:47

markets potentially could fall from here and

2:49

retest the lows. But he doesn't expect

2:51

us to really go below them. And then,

2:53

and we can get into this later if

2:55

you want, he actually thinks while this year

2:57

will probably be a bumpy ride, as you've

2:59

said, by fall. He's

3:02

basically saying, just keep your dry

3:04

pattern till fall. By fall, you really

3:06

want to start going pretty long because

3:08

he expects kind of a blockbuster 26

3:11

and 27, which surprised me in that

3:13

level of optimism. So anyway. question

3:15

for you, my friend, and we can

3:17

start, however you like, we can pull

3:19

up the technicals and the S &P or

3:21

whatever. Can we start there real quick

3:23

just before we get into that? Because

3:25

it's interesting because that is, so I

3:28

haven't released it yet, but so we're

3:30

recording this on Friday. I've already written

3:32

a newsletter for this weekend because the

3:34

markets are closed for Good Friday, by

3:36

the way, just to wish everybody a

3:38

very happy and blessed Easter. I

3:40

hope you enjoy your holiday with your family. And

3:43

pass over to you for those that are having a pass over. That's

3:45

correct. And so many

3:47

blessings to you. But

3:49

it's interesting because this whole weekend's

3:52

newsletter, and by the way, I have

3:54

not seen the interview with Felix

3:56

Zuloff yet because I was writing a

3:58

newsletter on Wednesday and Thursday, but

4:00

it's exactly the same message that,

4:02

you know, when you take a

4:05

look at how the market is

4:07

currently set up, It is

4:09

potentially in the process

4:11

of building a fairly significant

4:13

market low. And

4:15

again, to his point, and we even

4:17

state this newsletter, it's very possible that

4:19

we could get a retest of the recent

4:21

lows or maybe set a higher low,

4:23

which would be very bullish. But

4:26

that would be a normal corrective

4:28

process. And

4:30

then what will happen is that

4:32

investors will want to be very cautious.

4:35

about where they got assets allocated

4:37

because things that have done very

4:39

well recently will become a source

4:42

of liquidity to buy equities. So

4:44

you will expect to

4:47

see a fairly significant rotation

4:49

within asset classes on emerging markets

4:51

and international things that have done well

4:53

this year relative to the S &P

4:55

will become a source of liquidity

4:57

to fund S &P purchases. Okay.

5:00

All right. Well, you

5:03

know, one landside Let's

5:05

wait until you see the

5:07

interview with Felix and then we

5:09

can go through kind of where

5:11

he thinks money is going to go into in

5:14

this next big upcycle. But

5:16

it doesn't surprise me at all that you'd written

5:18

an article on this. I don't think I've come

5:20

up with a topic yet that you haven't. Well,

5:23

it's just interesting that you that you're

5:25

basically he came to the same

5:27

conclusions because our whole work in this

5:30

weekend's newsletter is just looking at

5:32

charts, right? Just looking at sentiment and

5:34

positioning and all these things which

5:36

are at levels that have historically always

5:38

marked near market lows. And so

5:40

just from a purely technical perspective,

5:42

that was where this whole article

5:45

came from this weekend. And it's

5:47

discussing the art of contrarianism, right,

5:49

which is. The hardest time to

5:51

buy things is when nobody wants

5:53

them. The hardest time to sell

5:55

thing is when everybody's buying something. And

5:58

so this is where it becomes very

6:00

difficult for investors to let go of a

6:02

particular thesis. This is going

6:04

up because of, you know, de -dolarization

6:06

or whatever it is, very

6:08

far to let go of that thesis

6:10

and just realize that when things

6:13

turn, then the new thesis will

6:15

be something else. And then, of

6:17

course, you've got to make that migration

6:19

or that rotation. within the markets.

6:21

And that's what we're seeing. We're

6:23

seeing certain asset classes and international markets

6:25

that are doing well based

6:27

on a thesis that will

6:29

revert. And then that

6:31

thesis will change to a new thesis. And then everybody

6:33

won't forget about the old thesis. And the new

6:35

thesis is, well, it's AI and

6:38

it's backed up whatever it's going to

6:40

be in the next leg higher. So

6:42

this is the challenge

6:44

of being a contrarian investor.

6:47

is that you've got to do the very

6:49

things that are the toughest to do because

6:51

nobody else is doing them. So

6:53

that does echo a fair amount of

6:55

what Felix said as well. Like

6:58

I said, he says it's still probably going

7:01

to be fairly choppy through fall. And

7:03

he says, look, what you

7:05

should do is you should, as things

7:07

drop and headlines are screaming, the world

7:09

is ending and everybody is freaking out, start.

7:13

kind of nibbling in, again, keep most of

7:15

your powder dry, but take advantage of those

7:17

drawdowns if indeed they happen. Until

7:20

the fall, I don't see him

7:22

being, the kind of message I

7:24

took was, hey, if we have some rallies, don't

7:27

go all in. Yeah, sell those. But

7:30

as things begin to firm up by

7:32

the fall, and for him, kind of firming

7:34

up is he thinks we could go

7:36

into a recession. this year, not 100%. I

7:38

don't get the sense from him. He

7:40

thinks it's going to be a crippling one.

7:43

And again, he sort of said by

7:45

the fall, that's when there should be really

7:47

good values. And that's when you really

7:49

want to start getting aggressive in deploying your

7:51

dry powder. Obviously,

7:53

folks, he could come back on

7:55

in the summer and make a totally

7:57

different audible call if something else changes

7:59

his mind. But that's what he's seeing right now. But

8:02

his point is just like, you're going to

8:04

have to go against your emotions, right? Again,

8:08

we lay out all the rules in

8:10

this weekend's newsletter, which will be on

8:12

Substack. At Lance Roberts, it'll be on

8:15

our website, billinvestment.com. I think

8:17

you post a copy of the newsletter as well

8:19

through your Substack channel, so it'll be out

8:21

there. But we actually list all the rules to

8:23

go through right now about looking at your

8:25

portfolio, what to look at,

8:27

what to start positioning for, and he's

8:29

right. And we said this earlier

8:31

here on January the 5th, we wrote

8:33

that article, you know, curb your enthusiasm because

8:35

we just come off to 20 % back

8:37

to back years. Everybody's all excited about

8:39

25. We're still going through

8:41

earnings revisions, earnings, negative earnings revisions are

8:43

picking up steam now. So we had

8:45

talked multiple times about earnings estimates need

8:48

to come down a lot. His

8:50

point about better valuations, you know,

8:52

this later this year and, you

8:54

know, later this summer, early fall

8:57

is right. That doesn't mean though,

8:59

don't, don't take. lower valuations to

9:01

meet substantially lower stock prices. Those

9:04

two are not technically

9:06

correlated to each other in this

9:08

type of environment. We can see a

9:10

retest of the recent lows, maybe even possibly

9:12

set some new lows, but it

9:14

most likely is not going to be

9:16

another 15 % downside. So

9:19

again, probably most likely a retest of

9:21

lows. Markets are fairly washed out here.

9:24

We've got a lot of off -sides

9:26

positioning. And

9:28

as earnings start to stabilize, and again,

9:30

we've got a lot of flux with earnings

9:32

right now. And this is part of

9:34

the problem that's dragging on the markets is

9:36

this uncertainty over tariffs. We

9:39

had these onerous tariffs. Now they're

9:41

paused for 90 days. And

9:43

over the next 90 days, we're going

9:45

to have all these negotiations with

9:47

countries, Japan, Vietnam, Taiwan, whoever. China's got

9:50

a lot of back channel negotiations

9:52

going on right now. So in

9:54

90 days, we may have no tariffs. We

9:56

may have some tariffs. We may have very low

9:58

tariffs. So all this concern

10:00

over tariffs is likely going

10:02

to evaporate. But the problem is, until there's

10:04

some certainty, we can't figure out what forward

10:06

earnings are going to look like. But once

10:08

the market can get, and this is the

10:10

thing that's going on, the most important thing

10:12

for investors to take away right now is,

10:15

when you look at all these

10:17

super negative headlines out there, just

10:19

realize the market is already pricing

10:21

all this stuff in. If

10:23

you're thinking it's, you know, it's, it's,

10:25

uh, I talked to a guy yesterday, he's

10:27

like, oh, it's, you know, um, it's,

10:29

it's decolonialization and it's, and, and, you know,

10:31

kind of all these, I said, yeah,

10:33

I get that. It's perfectly fine. But

10:36

the market's already pricing that in, right? So

10:38

what you've got to make sure and

10:40

do is understand that the market at some point

10:42

is going to, to come to the basis

10:45

where it says, okay, that risk is now priced

10:47

in the markets. I can start buying

10:49

equities again and monies will flow back into

10:51

risk assets. Yeah. And

10:53

one thing that, so if you

10:55

remember, for those

10:57

that remember Felix's appearance back

10:59

in December, he basically

11:01

said, look, there's

11:05

going to be

11:07

uncertainty that's going to create volatility

11:09

in the markets. OK, we got

11:11

that. So that volatility

11:13

could potentially lead to a market

11:16

correction of 15 % to 20

11:18

% early in 2025. OK,

11:20

check. We got that. He

11:22

then said, the new administrations, tariff

11:25

policies could lead

11:27

to some pretty

11:29

disruptive trade relations

11:31

between countries. Check,

11:33

we got that.

11:36

So everything that he predicted has sort of

11:38

happened. And then he said, at some point, the

11:41

central planners will step in and

11:43

they'll kind of put a bottom

11:45

on things. I

11:48

asked him, oh, well, so if you're expecting a recession, do

11:50

you expect them to step in then? And he basically

11:52

said, no, I think it's kind of going on now. I

11:55

think what he meant by that is if you look

11:57

at other countries, you look at Europe, you look

11:59

at China, they're already stimulating. They're

12:02

back to pretty aggressive

12:04

fiscal stimulus. The European Central

12:06

Bank has cut interest rates seven

12:08

times with unanimous consent. Right.

12:11

So everybody is playing the playbook that

12:13

we did here in the States

12:15

to juice our markets. And while in

12:17

the US, we aren't so much

12:19

right now. And

12:21

this is another thing I want to talk

12:24

to you about. And hence the beef between

12:26

President Trump and Jerome Powell this week. Exactly. And

12:28

really, what

12:31

do you think the odds are that

12:33

the Fed reverts to cutting this

12:35

year? 100%.

12:37

Okay, yeah, it seems pretty challenging

12:40

to think that the Fed won't at

12:42

some point, especially if inflation isn't

12:44

running away, which it doesn't seem to

12:46

be right now. And

12:48

if the economy continues to slow, you know, as you

12:50

and I have been talking about a lot. So,

12:54

you know, there seem to be more

12:56

and more reasons that suggest, hey, it's

12:58

okay for the Fed to start cutting.

13:00

And as Trump is saying, agree with them or

13:02

not, he's saying, look, you know, Fed, you're

13:04

going to be behind the curve again, like this

13:06

is exactly when you should be easing

13:08

here and I think

13:10

it's a great point because you

13:12

know the Fed has been

13:14

making mistakes ever since last year

13:17

and

13:19

again they've made crucial

13:21

mistakes really ever

13:23

since 2020 and when

13:25

2020 happened and we

13:27

shut down the economy and then

13:29

sent $5 ,000 checks to households, you

13:32

should have realized then that that

13:34

imbalance of supply and demand would create

13:36

inflation. They should not have come

13:38

in with zero interest rates at that

13:40

point and $120 billion a month

13:42

in QE to juice the markets

13:44

because you were just going to exacerbate

13:46

the inflationary pressures in the economy,

13:48

but they made that mistake. Then

13:51

they tried to reverse that process, but they

13:53

were way too late. You and I

13:55

were talking about this in 2021. The market's

13:57

running off to the moon. We're having

13:59

this massive up near the markets,

14:01

tons of speculation. We're doing IPOs

14:03

and SPACs and everybody's chasing

14:06

meme stocks and everything else. And

14:08

you and I discussed back then the Fed

14:10

should have been cutting rates, sorry, should have

14:12

been hiking rates into that environment and cutting QE

14:14

where you had all that. monetary

14:16

liquidity from the government circling, circling

14:18

around the environment that would have helped

14:20

stabilize inflation, would have helped cool

14:22

the financial markets a bit. But no,

14:24

they didn't do that. They kept

14:27

the, the, the, the, the foot on

14:29

the pedal that entire time. And then

14:31

when you finally get the Ukraine -Russia

14:33

war breakout, then they decided that, okay,

14:35

now's a good time while we have

14:37

international turmoil, let's hide rates into that.

14:39

So he caused a 20 % bear market

14:41

decline. So it's just

14:43

been one constant mistake after another

14:45

than last year. They cut

14:47

rates by 50 basis points

14:50

in September when it should

14:52

have been at best a 25

14:54

basis point cut if anything at that

14:56

point, because inflation was coming down,

14:58

but was still still fairly elevated. So

15:00

the need for a rate cut

15:02

then was nothing more than really, if

15:05

you look at it, couldn't have

15:07

been anything more than just a political

15:09

move to help potentially. support

15:11

markets going into the election. But

15:14

again, it's up for debate on why

15:16

they did it, but it was a mistake.

15:18

Now they've got themselves into this trap

15:20

of, well, inflation is still higher

15:22

than our target. So if I cut rate,

15:24

I might increase inflation, which isn't going to

15:26

be the case, because when we've cut rates previously,

15:29

it's always led to disinflation of the economy.

15:31

But that's a whole other argument. So

15:33

it's just been one constant mistake where

15:35

they're behind the curve and constantly playing catch

15:37

up. And President Trump is right,

15:39

is that he's going to be late this time.

15:41

The rest of the world is cutting rates.

15:43

ECB, like I said, is cut seven times already.

15:46

The world economic growth is

15:48

slowing down rapidly. This isn't a

15:50

minor slowdown. It's a rapid slowdown.

15:52

That's going to circle feed back into

15:54

the US economy. We're already seeing,

15:56

we wrote last week, about

15:59

the consumers tapping out, and we're already

16:01

seeing clear evidence of that. And now

16:03

you've got this disruption in the bond market

16:05

because of the leveraging. So you've got

16:07

all these catalysts that are piling up and

16:09

the Fed should be stepping in here

16:11

trying to ease that volatility risk to the

16:13

markets because if the recent decline in

16:16

the wealth effect shows up in the economy

16:18

in the next month or so, they're

16:20

going to be putting a real bad mind

16:22

about trying to cut rates and get

16:24

back ahead of the curve. Okay,

16:26

we're going to talk a little bit

16:28

about some additional signs of weakness

16:30

in the very important affluent

16:32

consumer segment that's been supporting retail

16:34

sales before we get there. So

16:37

last week, you and I talked about

16:39

how you and several other folks that I

16:41

interviewed recently on the channel have said,

16:43

you know, this year is going to probably

16:45

feel a lot like 2022, where for

16:47

the most part, it's going to be this

16:49

sort of slow, disappointing grind, probably

16:52

downwards grind. And

16:55

I think Felix

16:57

maybe even kind of

17:00

emphasize that on steroids. He didn't use

17:02

those words, but basically saying, look,

17:04

it's going to be choppy until the

17:06

fall and we could maybe even

17:08

retest the lows. So that

17:10

could be the unhappy,

17:13

frustrating, just grind down in

17:15

markets for the next six months or so. But

17:18

then just as we bounced in

17:20

October of 2022, that's when we hit

17:22

true bottom and then the markets

17:24

took off. And we had two great

17:26

years in the markets ahead of

17:28

us. That's kind of what I think

17:30

Felix is predicting here, right? Things

17:32

start taking off in the fall and

17:34

then, hey, get ready for really

17:36

good returns or strong returns in 26,

17:38

27. So yeah, I mean,

17:40

maybe that 2022 analogy is a

17:42

good default until we see something that

17:44

suggests differently. So we wrote an

17:46

article on Monday talking about yield spreads

17:48

and the fact that we're starting

17:50

to see credit spreads increase between high

17:52

yield and treasuries. you know,

17:54

it's exactly what you should expect when the

17:56

market's selling off, you know, a lot

17:58

of bond market volatility, like we've had as

18:00

of late, you know, that increase in

18:02

credit spreads is, you know, not unsurprising. It's

18:04

not at levels that are alarming by

18:07

these threats of imagination, but they are rising.

18:09

So we wanted to do an update

18:11

in that article, which we did. And

18:13

in the latter half of the last part

18:15

of that article, we go through the fact

18:18

that we've now triggered our weekly sell signal,

18:20

which you and I talked about last week,

18:22

and that was why We were

18:24

waiting for a rally in the markets. We had

18:26

laid out this premise, Monday before

18:28

last, that markets were deeply oversold,

18:30

sitting on the bullish trend support.

18:32

We would get a fairly significant

18:34

rally. And into that rally,

18:36

we want to reduce equity risk by

18:38

one quarter to one half percent, one

18:40

quarter to one half in each position,

18:42

want to raise cash levels, potentially add

18:44

a hedge. So we were

18:46

waiting for that kind of

18:48

that announcement Wednesday morning of that

18:50

week when before President Trump

18:52

announced the pause on tariffs, we

18:54

had bought some technology stocks

18:56

and video, Microsoft, Apple, Google, reduced

18:58

some weightings in the other

19:01

area of the portfolio, waited

19:03

for that bounce. And so when

19:05

we got that bounce Wednesday afternoon,

19:07

that 9 % rally, we

19:09

stepped in and sold reduced positions across

19:11

the board, raised about 15 % in

19:13

cash, added a short position of

19:15

the portfolio. And the reason for

19:17

doing all that is because the setup

19:19

is very similar right now to what we

19:21

saw in 2022. So this is a

19:24

chart of 2022. And then

19:26

where this crossover is, that's where the

19:28

weekly sell signal occurred. That's what just

19:30

happened in the markets. After

19:32

you got that weekly sell signal,

19:34

that was when the market rally, which

19:36

we just had, that's where we

19:38

reduced exposure into that rally. Now we're

19:40

kind of declining here. Now I

19:43

don't necessarily expect to have this big

19:45

secondary decline. but probably a

19:47

decline as Felix was talking

19:49

about, somewhere retest these lows, could

19:51

even set some minor new

19:53

lows, but the difference

19:56

and the reason it's

19:58

different here at this structure

20:00

of 2022 is that

20:02

when you take a look

20:04

at consumer investor sentiment,

20:06

investor positioning, investors

20:08

were still very optimistic at

20:10

this initial bottom. in October

20:12

of 2022 was where they were

20:14

super negative pessimistic. That was where back

20:16

then you and I were talking

20:19

about why we would get a bull

20:21

market, why we're increasing exposure because

20:23

of that super negative sentiment. Well,

20:25

we've got that same level. In fact,

20:27

if you take a look at the

20:29

kind of our technical indicators, take a

20:31

look at our sentiment indicators, they're

20:33

as negative now as they were during

20:35

the financial crisis. some

20:38

cases even more negative than they were at

20:40

the bottom of the market in 2022. So

20:43

Felix is right, is that we've already

20:45

gotten so much negative sentiment positioning out

20:47

of the way that there's not a

20:49

lot of downside left to this market,

20:51

but a retest of these lows, or

20:53

maybe even setting slightly new lows, Friday

20:56

things would happen, kind of chop around for

20:58

the next several months. We're

21:00

going to start to

21:02

see a development of. more

21:05

positive price action. We'll start to see

21:07

a positive divergence in relative strength, even though

21:09

the market's still under pressure. You'll start

21:11

to see relative strength improving. You'll start to

21:13

see momentum improving. And that's going

21:15

to be your signal to start adding into exposure.

21:17

Even though the market's still under a lot of pressure

21:19

and things look very negative, that'll be

21:21

your time to start buying in

21:23

more heavily into whatever positions you want

21:26

to own. And we'll start to

21:28

see rotations within markets as a whole

21:30

back into the US dollar, in

21:32

particular, to take advantage. of those

21:34

equity prices once they bottom begin to turn

21:36

up. And so he's right. By the end of

21:38

this year, I think very likely we get

21:40

around October, you're going to start to

21:42

see that bottoming process, start to see all those

21:44

things kind of aligned for a fairly strong

21:46

rally in the year in. Okay.

21:48

So, you know, kind of

21:51

the punchline here for the

21:53

regular investor is if Felix

21:55

is correct, and Lance,

21:57

I think you think he's more likely to be correct than not,

22:00

it's, you know, kind

22:03

of hunker down a little bit in

22:05

the near term. Again,

22:08

nibble in on the dips,

22:10

sell the rips. But

22:12

basically, as Felix would say, prioritize

22:14

keeping your capital

22:16

dry. And then

22:18

once that stuff gets washed

22:21

out, then

22:23

be positioned for

22:25

better days ahead, right?

22:28

Yeah okay well folks you know we

22:30

will obviously be tracking this every week

22:32

here with Lance so providing lots of

22:34

updates on this and again you know

22:36

that's Felix's best view of the future

22:38

right now. There's stuff that could

22:40

happen between now and then and if it does Felix

22:42

has told me he'll come back on and let

22:45

us know. All right so

22:47

let's see here where to go next.

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23:49

Let's see here. You mentioned

23:51

credit spreads, Lance, and

23:53

you told us why you're

23:56

watching them, but you're not unduly

23:58

concerned by them right now. What

24:01

is the latest on just the general

24:03

health of the bond market? We

24:05

had yields come down substantially, then

24:07

they went up really quickly. Everybody

24:10

was worried that there was

24:12

maybe a brewing crisis in the

24:14

credit markets. Should

24:16

we, you know, is there still reason to

24:18

have some concern? Is it getting resolved? What's the

24:20

latest? Well, so yeah,

24:22

you know, so yields are doing what

24:24

they should have been doing. You

24:27

know, we got down to, we

24:29

got down to below 4 % on,

24:31

you know, falling inflation, slowing

24:33

economic growth. So yields

24:35

were tracking economic growth and inflation, doing exactly

24:37

what they were supposed to do. And then

24:40

all of a sudden, just you wake up

24:42

one morning and it's like, bam, you know,

24:44

we're up to 4 .5%. That's not. economic

24:47

concerns, that's not inflation concerns. That's

24:49

a liquidity crisis occurring somewhere within

24:52

the bond markets that we've talked about

24:54

before. Credit related

24:56

events are very serious because they

24:58

impact the financial markets and we

25:00

did see a casualty from it.

25:02

There was a hedge fund that

25:04

blew up over that. But

25:06

it seems to be fairly contained. I'm

25:08

sure there's been a lot of action

25:10

behind the scenes that we know nothing

25:13

about between Fed, Treasury and the bond

25:15

markets and JP Morgan and everybody else.

25:18

But it seems to be that whatever

25:20

storm there was that was brewing

25:22

is getting resolved. We're starting to see

25:24

yields kind of calm down here

25:26

a little bit. Volatility starting to drop

25:28

back down as well in the

25:30

bond market. So probably it's

25:32

not resolved yet. It'll probably take

25:34

another month or so. I wouldn't be

25:37

surprised to see some kind of

25:39

news headline in a couple of months.

25:41

It's like, oh, yeah. There

25:43

was this little problem that we've got

25:46

resolved, but you didn't know anything about it.

25:49

Citadel almost died, but hey, we've

25:51

kept him alive. But

25:53

yeah, we'll probably find out. be

25:55

like the JFK files. We'll find

25:57

out in 10 years who it

25:59

was. What

26:02

will happen here in the next

26:04

kind of few months, I suspect, is

26:07

that yields will start to focus

26:09

back on economic data. Yields will come

26:11

down and start to factor in

26:13

economic growth and where inflation is currently

26:15

running. So we'll head back towards

26:17

that kind of high threes to maybe

26:19

low fours and not too distant

26:21

future, but things will come down here

26:23

a bit. if

26:26

you start getting more recessionary concerns, which is

26:28

a lot of the headline news right now, of

26:30

course, you see a lot of headlines like

26:32

recession risk now 40, 50 % kind of bothers

26:34

me that so many people are talking about a

26:36

recession because generally that means you're not going

26:38

to get one. Right. But

26:40

if you start getting recessionary concerns, you're gonna see

26:42

yields come down quite a bit more. So, you

26:45

know, you know, we've got a few things are

26:47

going on. We've got a weaker dollar right now.

26:50

That's that will resolve itself. You're assuming

26:52

that the dollars trade relative to foreign

26:54

currencies is always about balancing currency risk.

26:56

We've got a lot of stuff going

26:58

on right now between countries over tariffs

27:00

and those other things. That's all going

27:02

to get resolved. And

27:04

the dollar is the reserve currency. It's going

27:06

to stay that way. So when assets

27:09

start to flow back into the US dollar,

27:11

it'll have three choices. It can buy

27:13

gold. It can buy stocks. It can buy

27:15

bonds. And when you start

27:17

looking at relative spreads between the

27:20

Eurozone bonds example and the U

27:22

.S. Treasury, that U .S. Treasury yield

27:24

is going to start looking very

27:26

attractive. And if you're

27:28

not having currency depreciation in the short term,

27:30

remember if I own, and this is really

27:32

kind of key to a lot of things, is

27:35

if I'm a foreign country, I

27:37

transact 70 % of all my business

27:39

in U .S. dollars. Therefore,

27:42

I have to keep reserve

27:44

currency in place. But

27:46

if the currency that I'm

27:48

storing in is declining, then I'm

27:50

taking a hit on my

27:52

reserve currency because just on a

27:54

relative basis between the US

27:56

dollar versus the euro as an

27:58

example. So if the dollar is

28:00

declining, then I've got to

28:02

make a decision because that

28:04

that decline, the dollar is impacting

28:06

me economically. So if I'm

28:08

also then which I don't mind just

28:10

to decline in the US dollar that's fine

28:13

as long as asset prices are going

28:15

up so if I've invested stocks or bonds

28:17

and bond prices are rising or stock

28:19

prices are rising I'm not as concerned about

28:21

the currency risk but it does impair

28:23

my returns but I'm not as concerned but

28:25

if I'm losing money on this if

28:27

my investments are in stocks or in bonds

28:29

and I'm losing money there at the

28:31

same time the dollar is depreciating I've got

28:34

to pull that money back out. So

28:36

that's why we're seeing a reversal of money

28:38

flows. I don't mind storing

28:40

it gold right now because it's appreciating

28:42

in price. So I'm not being impacted

28:44

as much by that dollar depreciation. So

28:46

that's why you're seeing a lot of

28:48

central banks storing gold at the moment

28:50

to balance those currency reserves. But

28:52

they have to store the reserve. They

28:54

just got to figure out where to

28:56

do it. So when there's a depreciation

28:58

in the dollar, at the same time,

29:00

asset prices are declining. you see this

29:02

extraction of capital because they're pulling the

29:05

reserves back to strengthen their currency relative

29:07

to the U .S. dollar to keep

29:09

that balance in somewhat in place, that'll

29:11

reverse when the dollar starts to strengthen.

29:13

Those money flows come right back in

29:15

for the same reason. So we've

29:17

got to get through this period. And once

29:19

we get through this period and things

29:21

start to stabilize and we have more clarity

29:23

over tariffs and political uncertainty comes down

29:25

a bit, then we'll start to see a

29:27

reversion and yields as things start to

29:29

stabilize, money comes back into treasuries, et cetera.

29:32

Okay. And just to give a

29:34

sneak peek into what Felix thought, he's

29:37

not a big fan of bonds in the long

29:39

term, but he says he thinks they'll do okay in

29:41

the short term, especially if there's a recession in

29:44

the second half of this year. But it's basically for

29:46

all the reasons you just mentioned. Absolutely.

29:48

He also has some thoughts about where gold

29:50

is going and I'll be a little cryptic

29:52

just so folks feel extra incentive to go

29:54

watch that interview with Felix because it's a

29:56

must watch folks. All

29:58

right. So

30:02

one of the factors here

30:04

that has been increasing uncertainty, which

30:06

has been weighing on both

30:08

stocks and bonds, has been the

30:10

whole tariff tempest. And

30:12

I'm going to ask you to put

30:14

on your geopolitical hat with me

30:16

for a minute here. And we are

30:18

not geopolitical experts. So we are

30:20

just two guys shooting the breeze on

30:23

this. But

30:25

Lance, what do you think here right now? What is your

30:27

gut telling you? you

30:31

know, aggressive stance. I went

30:33

on a fairly long, I

30:36

don't to call it a die drive, but

30:38

I think it was two weeks ago where I

30:40

sort of walked through what I believed to

30:42

be, you know, Trump's strategy here, like

30:44

it or hate it, why I

30:46

thought he was doing what he was

30:49

doing. And I made the

30:51

analogy, which I still feel

30:53

like is a pretty good one,

30:55

that he basically called everybody at

30:57

the poker table. And he

30:59

did it because he believed he's got the

31:01

best hand. And he's

31:03

essentially trying to push everybody with

31:05

a weaker hand to cut a

31:07

deal with us, to renegotiate a

31:10

deal. One, to make it more

31:12

favorable for America so that we're

31:14

not getting screwed by everybody the

31:16

way that Trump says. But

31:18

I think more to really

31:20

secure more valuable trade relations with

31:23

countries. And there's three things

31:25

about that. One is to try to balance things

31:27

out to make them a little, little more

31:29

fair, right? Don't tariff our stuff as much as

31:31

you do. And, you know, while we're not

31:33

tariffing you that much, right? So we'll get, we'll

31:35

get more balance there. Two is

31:38

to try to strike deals for strategic

31:40

resources, right? Like, okay,

31:43

you know, Vietnam, you know,

31:45

look, we'll get the whole tariff

31:47

stuff, like figured

31:49

out, and if you've got any major

31:51

non -tariff trade barriers, we want to

31:53

get those right sized or whatever. But

31:56

part of this deal is going to be

31:58

like, yeah, we'll remove this penalty on you, but

32:00

you're going to buy your gas from us. We've

32:03

got plentiful cheap natural gas. We

32:05

want you to commit to multi -decade

32:07

deal with us. So securing

32:09

these really strategic relationships. And

32:12

then the third is, hey, to get all these

32:14

carrots that were offered for us to remove the stick

32:17

and to give you these really tasty carrots, you

32:19

get to be on our side versus China. So

32:21

I think he's trying to get the

32:23

world to ring fence China in here. So

32:26

my question for you is, as

32:29

the dust is slowly starting to settle. I

32:31

mean, we're still very early on in this

32:33

process. You know, the

32:35

critics would say, hey, Adam,

32:37

I disagree with you. This is just

32:39

Trump being chaotic. But also, you know,

32:42

we're burning bridges with key allies and

32:44

we're, you know, driving people towards China

32:46

and stuff like that. Where's

32:48

your gut tell you? Is

32:50

Trump's strategy here? Is

32:53

it starting to pay off? You know, we're

32:55

hearing about all these you know, the phone lines

32:57

blowing up and we're seeing Japan and India

32:59

and all these other, you know, key countries come

33:01

here to strike deals. Or

33:03

is he risking everything? Has he really

33:05

damaged the system and is he putting

33:07

America, you know, back on its hind

33:09

foot here? Does your gut tell you

33:11

we're heading more towards one or the

33:13

other at this point? Yeah, well, no.

33:15

So first of all, you know, I

33:18

was never a big proponent of belief

33:20

that he was going to just impose

33:22

these massive tariffs. You know, that's

33:24

where it's to stay. I mean, you and I were

33:26

saying very early on when he started talking about this

33:28

is this is all sticking carrot. This is just part

33:30

of negotiation processes the way he operates. And,

33:32

you know, and this is also

33:34

why the Fed is making a mistake

33:36

because, you know, how his

33:38

statement said, you know, I think these

33:40

tariffs are to cause all this inflation

33:42

temporarily, but there's probably not going to

33:45

be any tariffs to any great degree.

33:47

Again, these tariffs were all to stick

33:49

in the carrot and to your point,

33:51

he's already cutting. trade deals where it'll

33:53

be, hey, Vietnam, you take off all

33:55

your tariffs on us so we can

33:57

sell our, you know, we

33:59

can sell Ford F -150s to you and

34:01

it's a fair trade deal and we'll buy,

34:04

you know, all the stuff that we

34:06

buy from you and there's just no tariffs

34:08

either way. And that's where we're going

34:10

to eventually wind up with a lot of

34:12

these countries. With China, it'll probably wind

34:14

up being either no tariffs or some small

34:16

tariff, whatever it is, relative

34:18

to what we do from them.

34:21

Because again, you can't discount

34:23

the fact that in 2000, right

34:25

at the turn of the

34:27

century, the US was the

34:29

major exporter to the vast majority

34:31

of the world. Now it's China. China

34:34

is the mass exporter to virtually

34:37

all of South America, all of

34:39

Canada, all of Africa, all of

34:41

Europe. They are the major

34:43

exporter. So you can't reinfenced them

34:45

off to any great degree because so

34:47

many economies now depend on China

34:49

for goods and services of a variety

34:51

of things. But we can negotiate

34:54

a much fairer trading relationship with them

34:56

than we've had in the past. And

34:58

that's ultimately going to be the end of this.

35:01

And so that's why A, these tariffs aren't going

35:03

to lead to inflation, as

35:05

everybody expects, because they're

35:07

not going to be there to any great

35:09

degree. Most of this is going to

35:11

get resolved over the months ahead. And

35:13

again, this was what I said

35:15

to you, I think last week or

35:17

week before when we had the

35:19

conversation is that all this positioning was

35:21

chaotic up front. But as soon

35:23

as he realized what the damage was

35:25

to the stock and the bond

35:27

market, he started looking for that exit.

35:29

And that exit was, OK, pause

35:31

for 90 days, and then we'll go

35:33

to 10%. But we'll just never

35:35

revisit the old tariffs again. It'll

35:38

just be, we'll move on. the

35:40

24 -hour news cycle will pass.

35:42

Nobody's going to remember the let -dick

35:44

mistake that occurred back in the

35:46

original announcements. The big poster board

35:48

that Trump had with all those

35:50

crazy numbers there. Exactly. That'll

35:52

all just fade in the past and

35:54

we'll all forget about it and, well,

35:57

in the meet, the narrative, they forget

35:59

about it and markets will move

36:02

on and we'll get back to focusing

36:04

on what matters in markets, bond

36:06

markets, stock markets, everything else. we'll get

36:08

back to focusing on the fundamentals. And

36:11

that's kind of where I was going with

36:13

this, which is, what do you think is

36:15

more likely at this point? And I think

36:17

I know from your answer already, but I

36:19

mean, is it, is it that things are

36:21

going to become more quieted down and the

36:23

bond market, you know, once we make it

36:25

through the basis trade folks repairing their balance

36:28

sheets and these deals start getting struck, then

36:30

we should start to see the 10 years

36:32

start marching back down again. Exactly.

36:34

Well, see, remember, that's, that was the

36:36

whole. blow up in the bond market, it

36:38

occurred right with those announcement of tariffs,

36:40

because again, if I'm a foreign holder

36:42

of US treasuries, and all of a sudden

36:45

you're going to put these massive, these

36:47

really onerous tariffs on me, I yank all

36:49

my, I go, great, I'm going to

36:51

take my money out of US bonds, I'm

36:53

going to pull my reserves back. And

36:56

then that causes interest rates to spike. All

36:58

of a sudden, it's like the yen carry

37:00

trade blow up that we had in, you

37:02

know, last year, we had that 10 %

37:04

decline when the end carry trade blew up.

37:06

It's basically the same thing. You yank that

37:08

reserve, you pop interest rates, and all a

37:10

sudden that leverage gets called in and you

37:12

have this massive kind of wipeout in the

37:14

bond market. That was all just a function

37:16

of those tariffs that now will resolve itself.

37:18

And it's to take a little time for

37:20

the bond market to heal up, but it's

37:22

in that process now. OK. And

37:25

look, folks, again, we're not privy

37:27

to any inside information. We're just two

37:29

guys. doing

37:32

our best to make sense of

37:34

what's going on here. But the

37:36

reason why I asked you this,

37:38

Lance, is a lot of what

37:40

has, to use a danger,

37:43

a loaded word here, you know,

37:45

a lot of the uncertainty in the

37:47

system very well may prove to

37:49

be transitory, right? And there's

37:51

a number of people who are, I

37:53

think, still worried that, oh, this

37:55

has done permanent damage to the system

37:57

and to our geopolitical alliances. And

38:00

we're entering this whole new world where America is

38:02

going to increasingly kind of become a pariah and all

38:04

that stuff. And I would

38:06

just be really cautious of that.

38:08

Because in many ways, international relations

38:10

are They're

38:13

like a marriage between all these different countries, right?

38:15

And they're gonna be sometimes where I gotta do

38:17

things one way, but look, we still love each

38:19

other, right? And even though we shouted and we

38:21

had a fight, we're gonna make up.

38:23

So yeah, even though I pulled out this poster

38:25

board and said I was gonna hit you with all

38:27

this crazy stuff, behind the scenes,

38:29

we're gonna work out a trade deal where we

38:31

buy more of the X thing you really

38:33

want us to and you bring down your tariff

38:35

from us or you reduce your bad or

38:38

you stop state subsidizing whatever X. And

38:40

then we'll make up, right? And

38:42

so, look, could this thing still

38:44

blow up? Absolutely. I'm not

38:47

trying to be total... Trump's

38:49

handled this super masterfully, but

38:51

it does seem that we

38:53

will get more and more

38:55

clarity and that this tariff

38:57

issue will become more and

38:59

more as the year goes

39:01

on, a matter of the

39:03

past versus a future concern.

39:05

And that should have a

39:07

relatively seriously... a significant quelling

39:10

effect on the markets. Well,

39:12

and look, all of

39:14

this conversation set it all aside for

39:16

just a second. But this goes back

39:18

to what we started this conversation with,

39:20

which was be careful of narratives. And

39:23

this is one thing that you and

39:25

I talk about almost every week, it seems

39:27

like on the show, is that everybody's

39:29

got a narrative. And you've got

39:31

to be careful with the narratives because

39:34

generally, the other guy on the end

39:36

of the narrative has something to sell

39:38

you. Right. So, oh, you know, you

39:40

know, I'm selling, you know, Bitcoin or

39:42

gold or stocks or bonds or whatever

39:44

it is. I have a narrative, right?

39:46

And my narrative is, is I'm managing

39:48

money for my, for, you know, my

39:50

clients and my narrative gets shaped by

39:52

my view on what I'm doing for

39:54

my clients and how I'm positioning for

39:56

clients. And so everything that, you know,

39:58

we do in our terms of our

40:00

research, it shapes our narrative. So we

40:02

have a narrative and whether or not

40:04

you like our narrative or not is

40:06

irrelevant. It's just our narrative. But you've

40:08

got to be careful with that because

40:10

my narrative can shift. And

40:13

I will shift my narrative if

40:15

the facts on the ground change. The

40:17

problem for most investors are they

40:19

get into an asset. Let's just pick

40:21

on gold for a second because

40:23

gold had a wonderful week this week.

40:25

Our all weather portfolio is just

40:27

killing it this year. It's

40:30

fantastic. There's

40:32

a narrative being generated around what's

40:34

driving the price of gold versus what's

40:36

really driving the price of gold.

40:38

And you've got to be able to

40:41

separate those two out between the

40:43

guy that's trying to sell you gold

40:45

versus why I own gold in

40:47

a portfolio and when it is going

40:49

to come time to take profits

40:51

and shift those assets into other assets.

40:53

Because, again, that asset will become

40:55

a source of liquidity when stocks bottom.

40:58

And there's a long -term historical. trend

41:00

of that in the markets. But when

41:02

stocks start to rally, it will pull liquidity

41:04

from gold and back into stocks because

41:07

that's where money's been flowing. It's been coming

41:09

out of stocks as a risk hedge

41:11

into gold. So that's working

41:13

great. But when that narrative reverses,

41:15

just be aware that narrative will

41:17

reverse. And so we've got to

41:19

change our allocations. And this is

41:21

why we always talk about risk

41:23

management, taking profits, rebalancing portfolios. You

41:26

know, that's an ongoing risk management process that

41:28

you should be doing all the time. But

41:30

the biggest mistake that investors repeatedly make is

41:32

they go, oh, this is great. It's going

41:34

up. It's going to, it's now going to

41:36

go up forever. And you always have to

41:38

ask yourself this question, right? I

41:40

remember just a couple of months ago is like,

41:43

gold's going to go to 3 ,000 this year. And

41:45

so gold gets 3 ,000. Now it's 4500. If it

41:47

gets to 4500, it'll be 6 ,000. If it gets

41:49

to 6 ,000, it'll be 10 ,000, right? Everybody

41:52

always raises their estimates.

41:54

They never say, well, where, where is

41:56

it, you know, that this is

41:58

fairly valued well gold has no has

42:01

no fundamentals so you can't value

42:03

it so it's all just price speculation

42:05

so that's where you've got to

42:07

be uber careful with narratives and make

42:09

sure that when that narratives begins

42:11

to shift and it will that you're

42:13

aware of that shift and so

42:15

you know don't get don't get completely

42:18

indoctrinated into one belief and be

42:20

unwilling or unable to change that to

42:22

change your narrative when the market

42:24

changes So I have said many

42:26

times, I totally agree with you on

42:28

that point. So I won't rehash it here.

42:31

The thing I'll add to it is, look,

42:34

I own gold. I've owned gold for

42:36

a long time. I own gold. I'm guessing

42:38

for the same reasons that most people

42:40

watching this video who are gold owners own

42:42

it. And

42:44

I will be the first one to

42:46

tell you that I have been loving

42:48

this price action in gold. But

42:51

I am fully aware that

42:54

gold could have a pretty substantial

42:56

pullback here. I mean, it

42:58

has just moved so far so

43:00

fast. Just technically,

43:03

a fairly substantial pullback

43:05

would probably be merited. And

43:08

so to your point

43:10

about narratives, whatever your

43:13

narrative is for an asset, if

43:15

that asset has moved big, then

43:17

you should find some way to

43:19

place a hedge. on that correction

43:21

risk, right? Either, to your point,

43:23

sell something. Exactly. That's one way to hedge, which is

43:25

just, hey, I'm going to take some of these games. Don't

43:27

have to take all the games, but

43:29

let me take some while they're on the

43:31

table, right? Or you put in some sort

43:33

of protective hedge that if that correction happens,

43:35

you've got some downside protection to it. But

43:38

to your point, don't just blindingly believe

43:40

in the narrative and then get caught. totally

43:43

unaware is by surprise when that pullback

43:45

comes, right? Yeah, I mean, you know, look,

43:47

a great way to manage the position

43:49

is just sell some out of the money

43:51

calls, you get paid a premium today,

43:53

you may get and you'll eventually get called

43:55

away at the stock price. If gold

43:57

prices keep going up, you'll get called away

43:59

from some of your goal position. That's

44:01

okay. You may you made even more money,

44:03

right? It doesn't mean

44:06

you have to sell it, you know, and the

44:08

big mistake people make is with any everybody falls in

44:10

love with an asset, whatever it is. you

44:12

know, I've got a client that worked for

44:14

NVIDIA. So he's got a huge position in

44:16

NVIDIA. And when he first came

44:18

over to us late last year, we said, we

44:20

got to start selling some of this, right? It's

44:22

just NVIDIA is very overbought. It's very extended.

44:24

It's going to have a big price correction. We've

44:27

been taking profits in NVIDIA. It was very

44:29

difficult to get him to let go of

44:31

that stock because he had built a multi

44:33

-million dollar net worth off of working for

44:35

NVIDIA and collecting that stock while he was

44:37

working for the company, right? So very hard

44:39

that that narrative was that it was just

44:41

going to go up forever because it was

44:43

a video, right? So it's with any asset

44:45

class. And that doesn't mean you have to

44:47

sell everything. And generally, when you try to

44:50

tell people to sell something, you go, well,

44:52

I'm not selling it because it's going to

44:54

go up forever or whatever the reason is. It's

44:56

never about selling everything. It's just

44:58

about reducing the risk somewhat. So, you

45:00

know, if it's, you know, if

45:02

it's 5 % of your portfolio, fantastic.

45:05

It's probably six or seven by now

45:07

after the run up, just trim it back

45:09

to five. go back to your original

45:11

weighting, whatever that was. It doesn't

45:13

mean that you've lost anything. You just

45:15

realize some of the gains. And then

45:17

you will, and to Adam's point, a

45:20

normal price correction for gold

45:22

should take it back to

45:24

its mean average right now,

45:26

which is around $2 ,300

45:28

a share. So when

45:30

you think about $3 ,300 to

45:32

$2 ,300, the $1 ,000 cliff on

45:34

gold, you can buy a lot

45:36

more shit. Take your profits, wait for that pullback

45:39

and then buy more gold at a cheaper price,

45:41

right? That's just good management in

45:43

your portfolio of whatever position, whether it's

45:45

Nvidia or whether it's, you know, Apple

45:47

or Google or Gold or Bitcoin or

45:50

whatever else. You know, Bitcoin went from

45:52

100 ,000 to 80, right? So now

45:54

you can buy Bitcoin a whole lot

45:56

cheaper if you took some profits at

45:58

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on our way. Okay,

46:59

and again, this is just some of

47:01

the, know, you're just talking about one

47:03

of the best gardening practices to use

47:05

your analogy, Lance, that you use time

47:07

and time again to protect and grow

47:09

client wealth at RIA. So,

47:11

okay, so that's the cautionary note on gold. I'm glad you

47:13

went there just because I had this on my list

47:15

here. But Lance, you also

47:17

tell us to, you

47:20

know, we got to trade the markets

47:22

we have versus the markets that we

47:24

want to have. And right now, gold

47:26

has than on a massive tear, right?

47:28

Absolutely. So what's interesting

47:30

is that the mining companies have,

47:32

for a good long while, they

47:35

have lagged the price action

47:38

in gold. That's

47:40

changed recently, and the mining complex has

47:42

really started to wake up. But

47:45

gold is far above. uh, its

47:47

previous price highs and actually it

47:49

just passed a really important milestone

47:51

where on an inflation adjusted basis

47:53

using official inflation. So everybody can

47:55

debate, you know, true inflation rate,

47:57

but, but from the government CPI,

47:59

it is now above its all

48:02

time high of, uh, 1980 from

48:04

1980. So it's the first time

48:06

on inflation adjusted. Yeah. Go ahead.

48:08

Yeah. Yeah. That's, and that's such

48:10

a great point. I pointed that

48:12

out this week on, uh, on,

48:15

on Twitter, which is. It only took

48:17

you 45 years to get your money

48:19

back from 1980. So

48:21

it's one of the things, one of the narratives

48:23

around gold is it's a great hedge for inflation.

48:26

It took 45 years for gold to finally give

48:28

you inflation just to return. So

48:30

this is always the problem

48:33

about long -term analysis. It's

48:37

where you pick your entry points, right?

48:39

And so this is

48:41

my point is that no

48:45

matter who it is that's promoting a

48:47

narrative, is

48:49

that people are really bad

48:51

about cherry picking data entry points.

48:53

And they'll pick, well, do

48:55

you realize that gold has outperformed

48:57

the S &P 500 since 2000?

49:00

So if you bought it

49:02

in 2000, you've had a bigger

49:04

return on gold on a total return

49:06

basis than you have just by hunting

49:08

the S &P 500. Well, that was

49:10

because the S &P 500 went nowhere for

49:12

13 years. Gold

49:14

had a big leg up there

49:16

over the S &P. However, if

49:18

I cherry pick a data point like

49:20

2011, the S &P

49:23

500 is absolutely crushed Gold

49:25

over that timeframe, despite this recent

49:27

run -up. So what's

49:29

important is that you've got

49:31

to really forget all these narratives

49:33

and people haven't owned Gold

49:35

since 1950 or whatever it was,

49:38

right? you've got to look

49:40

at things in the term of the time

49:42

frames that you own it and how

49:44

you manage that risk over time. And so

49:46

forget about a lot of that stuff.

49:48

It is an important milestone, but it completely

49:50

just deflates the entire premise that gold

49:52

was ever a hedge for inflation. OK, so

49:54

look, I don't to get wrapped in

49:56

that discussion. But

49:58

my point is that there's a

50:00

lot of momentum in gold right now.

50:02

There's a lot of heat and

50:04

gold. which, again, we

50:06

have the same conversation when there's a lot

50:09

of momentum in stocks. What's everybody

50:11

saying? Right.

50:13

Well, the genesis are up. Stocks

50:16

are going to crash because they're so

50:18

overvaluing. But here, what I'm trying to

50:20

do is take the narrative out. I'm

50:22

just saying gold's raging right now. Is

50:25

today the top? Maybe. Who knows? But

50:28

the point is that these

50:30

plays that tend to act

50:32

as levered proxies on the

50:35

gold price haven't performed as

50:37

such so far. We

50:39

are now starting to see the mining complex move, but

50:41

ratio suggests it still has

50:44

a lot of distance to move

50:46

before it kind of catches

50:48

up to gold. And

50:50

then silver... even

50:52

more so. So we're really, it's

50:54

moved a little bit, but very little

50:56

compared to its historic relationship to

50:58

gold. And the gold price ratio is

51:00

now near an all -time extreme, or

51:02

at least near historic extremes. So

51:05

my point is, is again, trading

51:07

the markets we have, until we see

51:09

a breakdown in the price of

51:11

gold, like how long can Wall

51:13

Street ignore these other plays that in

51:16

theory should really catch up to gold.

51:18

Like, you know, are you guys at

51:20

RA looking at the miners, looking at

51:22

silver any more closely now, just because

51:24

like, well, look, if they're tied to

51:26

this price and the price is really

51:28

moved, should those things eventually slingshot back

51:30

up? Well, they're

51:32

going to get drug up with the

51:35

price of gold, but gold miners

51:37

are absolutely some of the worst allocators

51:39

of capital. They're

51:41

fundamentally terrible. Their fundamentals are

51:43

terrible. Their management is terrible

51:45

in a lot of cases. You also

51:47

have to remember, that as

51:50

gold prices rise, all of the

51:52

cost inputs into the miners

51:54

increase. Wages go up, demand,

51:56

the stuff they have to buy to

51:58

mine and extract with, those prices go

52:00

up because now they're trying to extract

52:02

more gold because of higher prices, which

52:04

means more demand on all the inputs,

52:06

which increases the prices supply and demand,

52:09

so the costs go up. you

52:11

know, when you take a look at a lot

52:13

of the gold miners, they're very overvalued. They're very

52:15

expensive on a lot of different fronts. And again,

52:18

that just their performance, long -term performance has been

52:20

terrible. But their catch -up now

52:22

is simply just psychology. Everybody's now very excited

52:24

about gold. So to your point, exactly what

52:26

everybody's doing is like, well, I missed the

52:28

price of gold. So I'm going to go

52:30

buy the gold miners now because hopefully they'll

52:32

play catch -up. And that catch -up will probably

52:34

last for a bit. You

52:38

know, again, when you just go back

52:40

to returning to the base fundamentals of managing

52:42

money and looking at this. So one

52:44

the things that we do in and symbolizers

52:46

that we look at relative rotations. And

52:48

if you take the gold miners,

52:50

gold miners are as overbought now

52:52

as they have ever been. And

52:55

typically they can't sustain this level

52:57

of overbought conditions for very long. So

52:59

you're going to see a rotation

53:01

within the markets out of gold miners

53:03

back into other asset classes. And

53:05

then. Most importantly, if you take the,

53:07

this is the risk range analysis

53:09

that we run on all markets and

53:11

sectors. But if you take a

53:13

look at gold miners down here, whoops,

53:15

didn't mean to click on that. If

53:17

you take a look at gold miners,

53:19

they're currently trading at 30 % above

53:22

their long -term moving averages. That's a very

53:24

unsustainable deviation from the long -term moving

53:26

average. And your risk in that sector

53:28

is extremely high. So. Again, you may

53:30

get some more upside here temporarily because

53:32

there's a lot of excitement right now.

53:34

You've got a lot of people kind

53:36

of speculating. It's kind of like a

53:38

GameStop trade. But eventually,

53:41

that move is going to reverse. And

53:43

unfortunately, when gold miners tend to reverse,

53:45

it tends to be a fairly big

53:47

reversion back to the mean. And that

53:49

distance now between gold miners and their

53:51

means is very large. So if you're

53:53

trying to buy, you really kind of

53:55

miss the opportunity to buy gold miners. your

53:58

risk is more to the downside than

54:00

there is to the upside momentarily. All

54:02

right. So very helpful charts here. And

54:04

I get your overall points about risk

54:06

and the fact that it can't sustain

54:08

where it is. I get to challenge

54:11

one thing that you said, because I

54:13

know the audience in the gold stocks,

54:15

probably will too, which is, yes,

54:17

there might be some upward price

54:19

pressure on the inputs for gold

54:21

mining, but those things aren't increasing.

54:23

at the rate that gold has

54:25

increased here. And so the big

54:27

excitement about gold miners right now,

54:29

it's not just speculative, it's their

54:31

profit margins are increasing, right? Right.

54:34

Yeah, absolutely. That's what you

54:36

would expect on anything. But again,

54:38

I'm just saying, don't forget that it's

54:40

not just a zero sum game. My

54:44

profit margin is 10 % at $1

54:46

,000 an ounce. And it's now 300

54:48

% at $3 ,000 now. It's not

54:50

that, right? Because those inputs go up

54:52

as the price of gold increases.

54:55

Yes, you're maintaining a larger profit margin

54:57

because especially the rate that gold

54:59

is rising. I'm just saying, don't forget

55:01

that there are a fundamental impact

55:03

to the extraction cost of getting gold

55:05

out of the ground. OK.

55:07

And look, I know that

55:10

your firm isn't, you

55:12

do own gold, you own gold

55:14

in at least a couple of portfolios.

55:17

But you're not really a gold

55:19

mining focused portfolio, unlike some of

55:22

the other firms that I talked

55:24

to. So it's fine. But

55:26

I'm just curious. I was curious if

55:28

you guys were looking at either the mining

55:30

complex or silver a little differently these

55:32

days, given how far gold has risen, doesn't

55:34

sound like it in terms of things

55:36

that you're considering for your portfolio. Yeah, no,

55:38

me because we've owned gold for a

55:40

long time in our models. And so I

55:43

don't really have a need. I mean,

55:45

the price of gold is outperforming other stuff

55:48

at the moment, so I don't really

55:50

have a need to chase more speculative assets

55:52

and more speculative risk in the portfolio. It's

55:55

just not what our

55:57

models kind of do. If

55:59

I was running a gold miner portfolio,

56:02

which had terrible performance for the last 20

56:04

years, shoot. Yeah, I'd be touting right now

56:06

that gold miners to go to the roof

56:08

because this is my this is my chance

56:10

to play catch up in performance if I

56:13

was running a gold mining portfolio. So again,

56:15

going back to narratives, you know, be

56:17

careful of the guy promoting a narrative and

56:19

really focus on the fundamentals because again, get

56:21

back to these companies. They're really

56:23

bad allocators of capital and

56:25

they have moments of bright

56:27

spots that tend to leave

56:29

investors very disappointed over time.

56:31

Yeah, and I will say

56:33

is as a long

56:35

-suffering gold miner investor. There's a lot

56:38

of truth to what Lance has

56:40

said there. But the

56:42

complex is having its moment in

56:44

the sun and to a certain

56:46

extent. Enjoy it. And take advantage

56:48

of it and enjoy it. But

56:50

don't forget fake profits along the way.

56:52

Well, very much exactly. And again,

56:54

just to reiterate, gold is very

56:56

volatile. Gold miners

56:59

are volatility cubed.

57:02

And they have been a widowmaker trade for

57:04

much of the past decade. But they

57:06

also have generated some lottery tickets, too. They

57:08

absolutely have. All right. Last question about

57:10

gold, I think I already know your answer,

57:12

but I asked this on X and

57:14

it generated a fair amount of discussion. Be

57:16

curious to get your thoughts. So

57:20

on the day, this is just

57:22

the other day, gold was up

57:24

over $100 an ounce. I

57:27

think it was two days ago.

57:29

And I remember people in the

57:31

industry, back when I

57:33

started buying gold in

57:35

the early to mid 2000s,

57:38

Predicting hey at one point one day

57:40

gold's gonna go up start going up

57:43

a hundred bucks an ounce per day

57:45

right and we hit that milestone which

57:47

was you know it was again like

57:49

this is you're excited to see it

57:51

but you're kind of like worried there's

57:53

so what what that what is what

57:55

is driving this right and and gold

57:57

is actually up when I did that

57:59

that same tweet I think it was

58:01

over the previous eight calendar days gold

58:03

was up 400 bucks an ounce right

58:05

So the day gold was up over

58:07

100 bucks an ounce, the S &P was

58:09

down, I don't know, two, two and

58:11

a half or whatever. And I put

58:14

both up in my post and was

58:16

just like, is anybody

58:18

else out there who's a longtime

58:20

gold owner both thrilled by these results,

58:22

but also concerned that gold might

58:24

be sending a systemic warning that there's

58:26

something systemically vulnerable, where financial markets

58:29

are really struggling and gold is racing

58:31

off to the moon. This

58:33

gets back into the realm of narrative,

58:35

which I know you don't like, Lance.

58:37

But I mean, is there any potential

58:39

to that? Or we just talked earlier

58:41

about how we think things are probably

58:44

more likely going to quiet down. But

58:46

is there any potential that there's something

58:48

broken or breaking or danger breaking? Sure.

58:51

No. I mean, look, like I said, yield spreads are

58:53

rising a bit. They're not out of control. I'm

58:55

sure it's an imagination. But that could change, right? We

58:57

had this whole bond market scare. That's

58:59

not resolved. So if yields

59:01

kind of crack 4 .5 % on

59:04

the upside, I mean, there's potential

59:06

risk there in the credit markets.

59:09

So again, remember, the price of gold

59:11

is driven by speculators. So that

59:13

all happens on the price of the NIMAC.

59:15

So it's just trading. It's futures trading against the

59:17

price of gold. So

59:20

again, this goes back to if I've

59:22

got to choose where I'm storing reserve currency

59:24

right now, I've got three choices, stocks,

59:26

bonds, or gold, because those all trade in

59:28

dollars. So it would make

59:30

sense that if I'm having a breakdown in

59:32

the markets and the bond market, the

59:34

stock market, because of what's going on, then

59:36

my third choice is gold, which is

59:38

collecting those reserves right now. So

59:41

kind of what's happening is what

59:43

you would expect in a risk -off

59:45

environment and kind of in the stock

59:47

market itself. And then there's certainly

59:49

concerns over tariffs, economic growth, those type

59:51

of things, certainly some credit stress

59:53

in the bond market. you know,

59:55

yeah, that's why gold's performing well, and

59:57

it's going to continue to perform well

59:59

until those other issues are resolved. And

1:00:01

this goes back to, to Felix Zuloff

1:00:03

and kind of what we're writing this

1:00:06

weekend is that that this, you know,

1:00:08

you're this, this trading gold is likely

1:00:10

going to last potentially for another couple

1:00:12

of months until all this other stuff

1:00:14

resolves. And then we'll see a rotation

1:00:16

back in the other direction. Yeah.

1:00:19

And look, folks, just being

1:00:21

really transparent personally, I'm quite a

1:00:23

bullish on the long -term prospects

1:00:25

for gold. I plan

1:00:27

to hold my gold for

1:00:29

years, if not decades. Although

1:00:31

I do like Stephanie Pomboy,

1:00:34

I do look forward to the day

1:00:36

where I sell a good chunk

1:00:38

of it to buy other assets at

1:00:40

great trade -off valuations, right? How

1:00:45

are you going to know when that's going to

1:00:47

be? Well, I

1:00:49

think it's going to be when you and I are talking

1:00:51

about how I

1:00:53

don't know whether it's necessarily a blood on

1:00:55

the streets moment or just a time

1:00:57

where the economic prospects we think are far

1:00:59

outweigh the current valuation multiples. I

1:01:02

can tell you, it's not going to October. Pardon

1:01:04

me? So you're talking about October? I'm

1:01:06

talking potentially October. I mean, it could be

1:01:08

October, right? You just said

1:01:10

you're going to hold this for decades. If

1:01:12

gold's at ,000. And eventually you'll sell it.

1:01:14

Well, some of it I planned to

1:01:16

own for like it's just Armageddon insurance, family

1:01:18

legacy. But the

1:01:20

goal is not to die in a coffin made

1:01:22

of gold bricks, not that I have a bunch of

1:01:24

gold bricks. But

1:01:27

it's an asset, right? It's an asset

1:01:29

to be traded at the right time

1:01:31

for another asset you want at a

1:01:33

much better value. Right. And

1:01:35

that's perfect. I absolutely agree

1:01:37

with that. Great. And

1:01:40

so I am. Like I said, that

1:01:42

optimistic about gold long -term and going

1:01:44

to hold on to those tight hands

1:01:46

for the most part. But

1:01:48

I do think right now there's a

1:01:51

bit of a Purell factor, you know,

1:01:53

that we got to be careful in

1:01:55

here, which is, you know,

1:01:57

we all remember everybody rushing to

1:01:59

Costco in the fist fights over

1:02:01

the toilet paper and the Purell

1:02:03

and the N95 masks, right? You

1:02:05

know, they were scarce, everybody was

1:02:07

worried. That gave a tremendous premium

1:02:09

to these items. And then

1:02:11

once the pandemic ended, you

1:02:14

can hardly give away the Purell, right?

1:02:16

And that's not a great analogy because I

1:02:18

think gold's always going to have a

1:02:20

fair amount of demand out there in the

1:02:22

market. But there is undoubtedly, I think,

1:02:24

some uncertainty premium that gold has right now

1:02:26

because of the tariffs, because of the

1:02:28

basis trade, because of some of these things

1:02:30

that we're talking about. And as those

1:02:32

get resolved, presumably

1:02:34

that premium is going to then bleed off

1:02:36

the price of gold. How much is

1:02:38

that premium? I don't know. Is it 5

1:02:40

%? Is it 20 %? I don't know.

1:02:42

But I'm mentally prepared for that. And I'm

1:02:44

just saying, if you're a gold holder

1:02:46

who's cheering this, great. Enjoy the time. Enjoy

1:02:49

the ride. But be mentally prepared for

1:02:51

that potential cooling off. Right. And

1:02:53

just remember that mean reversion

1:02:55

events when they occur are always

1:02:57

larger than the actual premium. Say

1:03:00

your premium, you're overpaying your premium

1:03:02

right now by 30%. I mean

1:03:04

reversions events can be 40 to

1:03:06

50 when they occur. So it's

1:03:09

always past the premium. So

1:03:11

again, this is why it's

1:03:13

really important to just pay attention

1:03:15

to long -term deviations for means.

1:03:17

Look at a monthly chart

1:03:19

of goal versus its long -term

1:03:22

moving average, and that'll give you

1:03:24

a really good example of

1:03:26

historical precedence for reversions and consolidations.

1:03:28

And again, you kind of go back and

1:03:31

look at history going back to 1950,

1:03:33

gold has reversions of 50 to 70 %

1:03:35

and long periods where it just goes nowhere.

1:03:38

And again, there's nothing wrong with that. It's

1:03:40

just that the money's moving into other

1:03:42

assets. And then eventually, gold goes through its

1:03:44

spike again, like in 2008, when you

1:03:46

have a risk -off event. Or like now,

1:03:48

you have this risk -off event in the

1:03:50

markets and gold's doing exceptionally well. So it's

1:03:52

a great risk -off hedge. Then it's actually

1:03:54

doing its job very well this year. You

1:03:57

know of doing that doing that

1:03:59

work in the market Yeah, and look

1:04:01

one thing I want to note

1:04:03

too because Like I said, it wouldn't

1:04:06

surprise me to see a material

1:04:08

pullback in the price of gold And

1:04:10

I'm mentally prepared for that But

1:04:12

I don't think it necessarily has to

1:04:14

I mean gold to your point

1:04:16

It just could go sideways for a

1:04:18

long time at some point and

1:04:20

one of the big differences between now

1:04:22

and the previous inflation adjusted spike

1:04:24

back in the 80s was that In

1:04:27

1980, the

1:04:29

Western retail buyer was

1:04:31

panic buying gold. And

1:04:34

I've got stories from coin

1:04:36

dealers who were operating shops

1:04:38

back then where they had

1:04:40

lines around the block. They'd

1:04:43

have to literally... to be able to transact,

1:04:45

they'd have to let the buyers in first

1:04:47

to have product to then sell to the,

1:04:49

sorry, vote the sellers in first to then

1:04:51

have product to buy to the buyers in

1:04:53

line, because inventory was so tight. So

1:04:55

right now, we do not

1:04:57

really have much demand amongst

1:04:59

Western retail. It's still primarily

1:05:02

central banks and Asian investors.

1:05:05

So this isn't quite like

1:05:07

a... a mania like

1:05:09

we had before. So

1:05:11

I wouldn't expect as much of a correction.

1:05:13

Again, that's just one guy's opinion. But

1:05:15

anyways, all right, we'll look moving on from

1:05:17

gold. Actually, last thing, folks, just on

1:05:19

gold, if you haven't yet read Thoughtful Money's

1:05:21

free guide to how to buy and

1:05:23

store gold and silver, but are

1:05:25

thinking of potentially either getting

1:05:27

into precious metals now or increasing

1:05:29

your exposure to it, just

1:05:32

go to thoughtfulmoney.com slash gold and

1:05:34

you can read that guide

1:05:36

for free. All right, Lance. Question

1:05:40

I meant to ask you

1:05:42

earlier when we were talking about

1:05:44

stocks. You

1:05:46

talked about how the sell signal is still on. You

1:05:49

talked about how now that we've risen a

1:05:51

little bit since then, you wouldn't expect to

1:05:53

see the market. You wouldn't be surprised to

1:05:55

see the market come down a bit. When

1:05:59

that sell signal happened, you

1:06:03

decreased your portfolio's equity exposure

1:06:05

by 25%, right? You've

1:06:07

got those 25 % milestones,

1:06:09

right? What will you be looking forward

1:06:11

to add that back in? Well,

1:06:13

so again, we actually

1:06:15

added exposure before we decreased

1:06:17

exposure. So again, let's

1:06:19

talk about on the Wednesday, we didn't know

1:06:22

that President Trump was going to announce this

1:06:24

pause on tariffs, but Wednesday morning, the market

1:06:26

was selling off. I mean, we had multiple

1:06:28

days where the market was just down. you

1:06:30

know, 2 ,000 points in the Dow, 1 ,500

1:06:32

points in the Dow, very reminiscent of what

1:06:34

we saw during the 2020 pandemic. Well, that

1:06:36

Wednesday morning, the markets were opening

1:06:38

down, but tech stocks were holding up. They

1:06:41

were actually turning positive. And so we

1:06:43

were seeing money flows come in. So

1:06:45

we went in and we bought positions in

1:06:47

Nvidia, Apple, sorry, Nvidia, Microsoft, Google, Palantir

1:06:49

and Palo Alto Networks. And then

1:06:51

that afternoon, President

1:06:53

Trump announces it. those stocks go

1:06:55

surging apples up 20 % for the

1:06:57

day, and Microsoft's up 20 % today,

1:06:59

and Vidya's up almost 30. The

1:07:02

next morning, we took those positions

1:07:04

back off again and reduced. That was

1:07:06

when we reduced equity by 25 %

1:07:08

and added a short position to

1:07:10

the portfolio. So where it's pretty much

1:07:13

where we're going to hang out

1:07:15

here now, we

1:07:17

are okay adding positions.

1:07:19

Like for instance, on

1:07:22

Tuesday, we bought ExxonMobil

1:07:24

and Diamondback Energy. The

1:07:27

reason was is oil prices were

1:07:29

so extremely beaten up, you're going

1:07:31

to get a reflex rally in

1:07:33

energy stocks and those stocks have

1:07:35

performed very well this week. Despite

1:07:37

the market being off yesterday, energy

1:07:40

stocks were up 3 .5 % to

1:07:42

7 % depending on the stock

1:07:44

to show. Energy stocks are also

1:07:46

now, I can add positions in the

1:07:49

portfolio to things that are really beaten up.

1:07:51

Eli Lilly is a good example. I

1:07:53

was up 15 % yesterday on their announcement. I

1:07:56

can add stuff to the portfolio that can also

1:07:58

last as a hedge by going up when other

1:08:00

stuff is going down. We're

1:08:03

working through the portfolio. That's why it's

1:08:05

so important where we go back and

1:08:07

again, it's very easy. And look, I

1:08:09

can already hear the screams of people

1:08:11

in your comments over our goal conversation.

1:08:13

Again, I'm not a gold bug. I'm

1:08:15

the first one to admit that because

1:08:17

I don't care about gold. I own

1:08:19

gold. Personally, I've got some gold coins

1:08:21

that I keep in the safe. But

1:08:24

as far as investor goes, I

1:08:26

just care about the price. I'm

1:08:28

not tied up into a narrative.

1:08:30

I don't care about the end

1:08:32

of the world or any of

1:08:34

that nonsense because it very rarely

1:08:36

matters. What I'm more concerned with

1:08:38

is, can I make money with

1:08:40

an asset? So that's why we

1:08:42

look so hard at things like

1:08:44

relative rotation within the markets. And

1:08:46

so when we start going back

1:08:48

and looking at relative rotation models

1:08:50

and particularly looking at things like

1:08:52

the individual sectors of the market,

1:08:54

technology is some of the most

1:08:56

over, you know, most oversold sectors

1:08:58

of the market, transportation. I

1:09:00

wouldn't touch transportation even though it's really oversold.

1:09:03

It's oversold for a reason. because

1:09:05

most of the companies in this

1:09:07

is regional airlines and they're actually

1:09:09

absolutely getting fundamentally pumped. So

1:09:11

sometimes things are oversold for a reason.

1:09:13

So you got to sort through that.

1:09:15

Consumer discretionary energy. Energy was way more

1:09:17

oversold before the rally this week.

1:09:19

It was actually two weeks ago, it

1:09:22

was like one of the most

1:09:24

oversold sectors, which was why we started

1:09:26

buying into it. So now where

1:09:28

I'm looking to take profits out of

1:09:30

are things like utilities, staples, industrials,

1:09:32

which we did reduce those. because we'll

1:09:34

get a rotation back in the

1:09:36

other direction. So these will eventually get

1:09:38

sold off, and then we'll start

1:09:40

to see these other sectors like technology

1:09:42

starting to perform a lot better. And

1:09:45

again, this kind of goes back into the

1:09:47

other analysis as well. Again, gold

1:09:49

miners are more historically overbought

1:09:51

and deviated than just about any

1:09:53

other point in history. This

1:09:56

is going to be a

1:09:58

losing trade probably sooner than later.

1:10:00

If you're trying to buy it here, if you own

1:10:03

it, great, I would take profits. Nothing wrong with that.

1:10:05

But if you're trying to buy it here, you're probably

1:10:07

buying at the wrong end of the stick. I'd be

1:10:09

looking at things like high beta, high quality

1:10:11

factors, mid cap, small cap, which has

1:10:13

been really beaten up. If we get relaxation

1:10:15

on tariffs, if we get to see,

1:10:17

and particularly as we move through earnings season,

1:10:20

we're about to start getting corporate share

1:10:22

buybacks coming back next week. So when

1:10:24

that window opens back up, high beta

1:10:26

names should start performing a lot better. I

1:10:29

would look for a rotation back

1:10:31

into those sectors and those stocks as

1:10:33

well. But again, this is why

1:10:35

rotation is so important because the market

1:10:37

just rolls through this. Markets don't

1:10:39

care about narrative ultimately. What

1:10:41

it looks for is where do I reduce

1:10:43

risk? Where do I buy risk? Where's

1:10:45

my best opportunity? If things are really

1:10:47

overbought as a trader, I'm going to take money

1:10:49

out of those sectors. I'm to buy stuff that's

1:10:51

really beaten up because that's where I can make

1:10:53

the most money. I can't make money and stuff

1:10:56

that's already overbought. There's nothing left there to get.

1:10:58

There's a lot of opportunities and companies that are

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really big. Now, let me give you an example. Adam,

1:11:04

you're a recently smart guy. You went to

1:11:06

Stanford. If I told you that

1:11:08

I have a company right now that

1:11:10

trades at a one -time peg ratio with

1:11:12

a 91 % growth rate and earnings over

1:11:14

the last five years, would you be a

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be interested in becoming one. Yeah. Yeah,

1:12:20

that's a video, by the way. Okay.

1:12:24

So again, this is, and so again, this

1:12:26

is, this is the point we've got

1:12:28

to get past narratives and start looking at

1:12:30

fundamental factors and rotations. That's why this

1:12:32

is so important in terms of money management

1:12:34

is that it's about managing risk. It's

1:12:37

never a sell, sell everything. It's never a

1:12:39

buy everything. It's never being one asset,

1:12:41

everything. it's about managing risk and portfolio. But

1:12:43

that's where we are in this market

1:12:45

cycle right now is that things have gotten

1:12:47

really out of kilter on both sides

1:12:49

of the scale. So, and again, back to

1:12:51

Felix Zuloff, he's absolutely right. We've got

1:12:53

such negative sentiment and such negative pessimism that

1:12:56

when that turns, there's going to be

1:12:58

a massive rush back into particular areas of

1:13:00

markets and be a lot of money

1:13:02

to be made later this year. All

1:13:04

right. And for you as an active

1:13:07

investor, does that, you

1:13:09

know, Is that a welcome smell of opportunity

1:13:11

to you? Oh, yeah. The hay there in

1:13:13

efficiencies, and I can take advantage of those.

1:13:16

Yeah, absolutely. That's why we're building

1:13:18

a shopping list right now. But

1:13:21

we still own the stocks that we like. And

1:13:24

again, like we reduced Eli Lilly from 3 %

1:13:26

of the portfolio to one and a half. But

1:13:28

we're still holding it because fundamentally it's

1:13:30

a great company, and they're going to continue

1:13:32

to grow. And with this development of the

1:13:34

pill version of the GLP -1, this

1:13:36

is going to have a massive boost in their sales. So

1:13:39

again, there's, you know, you've got to, you know,

1:13:41

again, headlines are one thing and looking at the

1:13:43

global market and say, oh, the markets are doing

1:13:45

terrible. The markets may not be

1:13:48

doing great, but there's some individual companies that are

1:13:50

doing exceptionally well. If you pay attention to what's

1:13:52

going on underneath the surface. Okay,

1:13:54

Lance, well, let me, let me

1:13:56

just connect one thing here. So

1:13:58

you've got a shopping list, you're

1:14:00

seeing some companies that are doing

1:14:02

great. But how

1:14:04

do you balance

1:14:06

that versus we might

1:14:09

be heading into recession. You wrote a

1:14:11

piece recently that inflation looks like it's

1:14:13

not going to be a big problem

1:14:15

as we go further into the year.

1:14:17

You mentioned that you're seeing increasing signs

1:14:19

of global economic slowdown. We're seeing weakness

1:14:21

in the luxury buyer. I

1:14:23

shared some results about LVMH last

1:14:25

week. Hermes just came out with

1:14:28

bad guidance again this week as

1:14:30

well. Goldman Sachs has said

1:14:32

luxury is in the late cycle. Right. So

1:14:34

sort of a warning that, hey, this

1:14:36

is sort of what we see before there's

1:14:38

a downturn in spending. And of course,

1:14:40

the affluent consumer has been propping up retail

1:14:42

sales. So how do you balance this

1:14:44

like, hey, we're seeing some good signs of

1:14:46

life here and prices are getting a

1:14:48

bit cheaper. But we might

1:14:50

be heading into recession and maybe that

1:14:52

could continue to pull prices down as companies

1:14:54

have to tighten their belt and the

1:14:56

fire workers and stuff like that. How are

1:14:58

you balancing the two? Two

1:15:01

things. One is that there's a, first of

1:15:04

all, let's just be clear. There's no guarantee

1:15:06

of recession. You know, I'm more in the

1:15:08

corner of a pretty significant economic slowdown. So,

1:15:10

you know, again, you kind of go back

1:15:12

and look at last year's growth rates. We

1:15:14

were at, you know, two and a half

1:15:16

to, you know, 2 .8%. You know, around

1:15:19

pretty weak growth in the first quarter, probably

1:15:21

by the time they announce it, by the

1:15:23

1, 1 .5%. You know, so we get down

1:15:25

towards that, you know, again, we still have

1:15:27

to go to get to a recession. We've

1:15:29

got to reverse. whatever economic growth

1:15:31

there is to get below zero, right?

1:15:33

So there's still a good bit of

1:15:36

economic slowdown before we even get to

1:15:38

a recession. And

1:15:40

so markets are, and this is why

1:15:42

over the next several months, that

1:15:44

markets can be somewhat challenged. And we'll

1:15:46

see kind of this consolidation in

1:15:48

the market as markets begin to reprice

1:15:50

for slower than expected earnings. We

1:15:52

start to drop forward estimates down. Valuations

1:15:55

have come down fairly sharply

1:15:57

here in recent weeks. So as

1:15:59

we start to realign valuations

1:16:01

with forward earnings as the economy

1:16:03

is slowing, then markets can

1:16:05

say, okay, I'm kind of where we

1:16:08

are. And I kind of see what

1:16:10

this is coming out of this, we're

1:16:12

going to have some pent up demand.

1:16:14

And then that's where stocks are going

1:16:16

to start pricing for forward expectations of

1:16:18

a reversal back to growth. And that's

1:16:20

kind of Felix's point. Now, if the

1:16:22

slowdown takes longer to drag through, let's

1:16:24

say it's a really slow grind towards

1:16:26

low economic growth, potentially even a minor

1:16:28

inflation. sorry, a minor recession, that,

1:16:31

you know, maybe this bottom in

1:16:33

the market doesn't occur in October, maybe

1:16:35

it's January of next year, right? Timing

1:16:38

is always difficult, but it's going

1:16:40

to be this process that markets are

1:16:42

kind of, markets always kind of

1:16:44

front run the recession. So if you're

1:16:46

expecting a recession, markets already pricing that

1:16:48

in right now, the recession may show

1:16:50

up and or be announced by

1:16:52

the National Bureau of Economic Research, you

1:16:54

know, a year from now. But by

1:16:56

the time they announce it, we'll already

1:16:58

be through the recession and markets

1:17:00

are recovering. So again, that's why

1:17:03

the real risk for investors is sitting going,

1:17:05

oh, I think there's a lot more downside

1:17:07

to stocks. You've got to be real careful

1:17:09

with that because markets are already pricing all

1:17:11

that in. That's what's happening right now. The

1:17:13

sharp drop off in the markets

1:17:15

is pricing in, the impact of

1:17:17

tariffs, slow economic growth, potential recession,

1:17:20

higher interest rates, all that.

1:17:23

That's what's happening in the markets right now.

1:17:25

And the markets are going to get through

1:17:27

this period. And then they're going to start

1:17:29

looking for opportunity while you're in the backseat

1:17:31

going, I still think there's a recession coming,

1:17:33

prices are going lower. Markets are way ahead

1:17:35

of you. There are three cars ahead of

1:17:37

you down the freeway, right? Yeah.

1:17:40

So is it fair to say that you,

1:17:44

I mean, you're in the game. It's

1:17:46

not like you've liquidated your portfolio

1:17:48

by any stretch. It

1:17:50

sounds like you're saying, hey,

1:17:54

as we get further into the year, I'd

1:17:56

rather be a little early in these assets

1:17:58

than late, right? Yeah. Well, there's nothing wrong

1:18:00

with being a little late, right? No,

1:18:05

but there is being too late, which you always say,

1:18:07

which is if they move and you're chasing. Yeah.

1:18:09

Yeah. If you're five years too

1:18:11

late, that's a different story. there's

1:18:14

nothing wrong with being a little bit early.

1:18:16

There's nothing wrong with being a little bit late.

1:18:18

And, you know, the problem is, is people

1:18:20

are trying to always time the perfect bottom, right?

1:18:23

And so when the bottom hits and the

1:18:25

market starts to recover, then what? I'm

1:18:28

all out. Just get me out of

1:18:30

stocks. And then the market bottoms

1:18:32

begins to recover. And then they go, well, okay,

1:18:34

it's recovering. So as soon

1:18:36

as it pulls back, I'll get back in, then the market

1:18:38

keeps going, right? Well, as soon as it pulls back to

1:18:40

where it was, I'll get back in. And then they never

1:18:42

get back in, right? It's a constant. you know, chase of

1:18:45

the market. And now it's going to crash again. So I

1:18:47

can't get in until it crashes again. And so they just

1:18:49

don't get back in the markets. So,

1:18:51

you know, from an investment standpoint, and this

1:18:53

is again, kind of going back, you know, to

1:18:55

just managing money, you know, forget all

1:18:58

these narratives, forget all the conversations, just

1:19:00

focus on the price. And,

1:19:02

you know, look at what you're

1:19:04

trying to achieve. And if I

1:19:06

have a good company in my

1:19:08

portfolio, I want to own it. And

1:19:10

because You know, and here's the

1:19:12

big narrow. I'm writing article on this

1:19:14

for Monday about the death cross,

1:19:16

right? It's like the 50 cross blows

1:19:18

200. It's a death cross. Sounds

1:19:21

that sounds very, very bad.

1:19:23

It sounds like a horrible thing.

1:19:27

The vast majority of the time death crosses

1:19:29

last three to four months unless you're inside

1:19:31

of a recession and a pretty big recession. And

1:19:33

then they tend to be longer. But

1:19:35

on average, go back to 1950. If

1:19:38

you just just tell folks where

1:19:40

the death cross is. Oh, okay. It's

1:19:42

when the 50 -day moving average, I'm

1:19:44

sorry, I apologize for that. It's

1:19:47

when the 50 -day moving average crosses

1:19:49

below the 200 -day moving average. So

1:19:51

that's considered the death cross. Now, what doesn't

1:19:53

get a lot of publicity in the media

1:19:55

is the golden cross, which is when the

1:19:57

50 crosses back above the 200, that's your

1:19:59

bison, right? But

1:20:02

these crosses tend to be

1:20:04

fairly short -lived, and by

1:20:06

the time they occur, markets

1:20:08

are often very near their

1:20:10

loans. So, if you go back in

1:20:12

history, if you buy

1:20:15

the death cross in your portfolio, you

1:20:17

may suffer some short -term downturn in the

1:20:19

markets. With this exception,

1:20:22

that the markets go into an event -driven

1:20:24

recession, a structural recession, like

1:20:26

the dot -com prices where you had

1:20:28

major companies failing and run WorldCom. You

1:20:31

know, the financial crisis, 2008,

1:20:34

you know, you blew up the whole

1:20:36

financial sector. outside of structural bear markets,

1:20:38

those crossovers tend to be fairly short

1:20:40

lived. If you bought them, and within

1:20:42

a year, you've been on average up

1:20:44

15 % in your portfolio. So

1:20:46

again, you know, this is why you got to

1:20:49

be careful with narratives, be careful with the headlines.

1:20:51

You're gonna see a lot of negative headlines about

1:20:53

the death cross in the markets. Be

1:20:55

real careful with that, because again,

1:20:57

unless we're gonna enter into a

1:20:59

structural bear market in terms of

1:21:01

we're gonna have another financial crisis

1:21:03

related event in the economy. this

1:21:06

correctional process that we're working through right now

1:21:08

will likely be over by the end of

1:21:10

the year. And then markets

1:21:12

are going to start pricing for better outlooks

1:21:14

going forward. Okay. All

1:21:17

right. Well, folks, you

1:21:19

know, you may be detecting a little bit

1:21:21

more of an optimistic view than you've

1:21:23

heard in recent months on this channel. We'll

1:21:26

see what happens from here. We'll

1:21:28

keep updating you on this weekly going

1:21:30

forward. Maybe this is a little

1:21:32

ember that we nurture and grow as

1:21:34

the year goes on. And look, for

1:21:37

a guy who oftentimes gets

1:21:40

painted, as you do too

1:21:42

sometimes Lance, as an Uber

1:21:44

bear, really what we're

1:21:46

just looking for is great opportunities to make money

1:21:48

for the folks that watch this channel. I

1:21:51

would love nothing more for that to present

1:21:53

itself as the case as we get further

1:21:55

into this year. So folks, we'll keep tracking

1:21:57

this on a weekly basis going forward from here.

1:21:59

We'll get to your trades in just a

1:22:01

second. One little bit of clarification I want

1:22:03

to add too is you were pushing me

1:22:05

lads to say, well, hey, you're going to

1:22:07

sell your gold as soon as this fall, right?

1:22:10

And maybe I will sell some,

1:22:12

but I just want to provide

1:22:14

a caveat while I probably likely

1:22:17

won't because I have a long -term

1:22:19

vision for the gold. I

1:22:22

have a lot of cash and cash

1:22:24

equivalents right now. So what is your long

1:22:26

-term vision for gold? I'd love to hear

1:22:28

this. We'll

1:22:30

get into that

1:22:32

more later.

1:22:34

We don't have

1:22:36

any asset

1:22:38

like that. I

1:22:40

don't have narrative for any asset. So

1:22:43

it's just not my this is not my

1:22:45

business. So my point is, is that I

1:22:47

know people are in your chat or get all

1:22:49

upset because maybe I offended them and they're

1:22:51

a narrative. I don't have a narrative. I

1:22:53

don't care about gold. I don't care about

1:22:55

Bitcoin. I don't care about stocks. Just to be

1:22:57

clear, that's why I have you on this

1:22:59

channel, Lance. I just care about making money.

1:23:02

I just want to make money. That's all

1:23:04

I want to do. Yep, you are the Vulcan

1:23:06

voice of reason and data on, I just

1:23:08

want to make the next best investment for

1:23:10

me. So don't be, if I offended you

1:23:12

and your narrative and you're watching this channel, I

1:23:15

humbly apologize. It

1:23:17

is not my intention. I just don't

1:23:19

have a narrative and I don't care. I'm not trying

1:23:21

to sell you anything. And folks, go easy on Lance.

1:23:24

But the shorthand for why I have

1:23:26

this long -term view is I feel

1:23:29

of all the All the

1:23:31

predictions that I can make based

1:23:33

upon having been in this business for,

1:23:35

you know, decade and a

1:23:37

half is that the purchasing power of fiat

1:23:39

currency is going to continue to diminish

1:23:41

going forward. And gold is, I see as

1:23:43

part of just sort of a foundational

1:23:45

defense against that. It is not by any

1:23:48

stretch my entire portfolio. The point

1:23:50

I wanted to make is I have

1:23:52

a lot of defensively positioned capital in

1:23:54

cash and cash equivalents and that is

1:23:56

the first thing I'll deploy Lance when

1:23:58

we start seeing those good valuations. All

1:24:01

right, so let's get your trades and have a quick

1:24:03

rant. I want to slip in before we end. Yeah,

1:24:06

so I kind of mentioned

1:24:08

this earlier that this week we

1:24:10

bought energy stocks. We bought ExxonMobil

1:24:12

and Diamondback Energy. Two

1:24:15

reasons. One, the dividend yields were

1:24:17

very attractive, but two, They

1:24:19

were so extremely big. Now, and

1:24:21

again, this is where you start looking

1:24:23

at assets. And again, just going

1:24:25

back to gold for a second or

1:24:27

Bitcoin or stocks, when

1:24:30

things are trading at three

1:24:32

times their deviations or three

1:24:34

standard deviations above their long -term

1:24:36

means, that's a great opportunity

1:24:38

to sell assets. If

1:24:41

they're trading at three standard deviations below

1:24:43

their long -term means, like energy stocks,

1:24:45

that's a great time to buy assets. Right.

1:24:48

And so we bought energy stocks because

1:24:50

the recent sell -off in that sector

1:24:52

has been absolutely brutal. And

1:24:54

those companies print money, particularly

1:24:56

even in this environment. Funding

1:24:59

yields are strong, dividend yields are strong. And

1:25:02

if you get any type of, you

1:25:04

know, and again, this is just a trade.

1:25:06

We'll sell it. We're not buying energy stocks and

1:25:08

holding them for the next 20 years. This

1:25:10

is a trade and we'll likely trade

1:25:12

this position. We're up nicely in the position

1:25:14

in the last three days. We may

1:25:16

hold it until next week, maybe the week

1:25:18

after that, but we'll take those profits

1:25:20

back in and raise cash for the portfolio

1:25:22

again. Okay, so those trades were

1:25:25

basically the two main trades you made this week?

1:25:27

Yep, that's all we did this week. Okay,

1:25:29

all right. Well, okay,

1:25:32

get into the rant real quick.

1:25:34

So, Lance, you and I talk a lot about

1:25:36

health, one of the true forms of

1:25:38

wealth, and the

1:25:40

main pillars

1:25:42

of physical health.

1:25:46

that I think the research

1:25:48

is relatively clear on. It's

1:25:50

functional fitness, it's

1:25:52

nutrition, it's

1:25:54

stress management, I

1:25:57

would add mobility in there,

1:26:00

and then sleep hygiene. And

1:26:02

if you're just looking to feel better

1:26:04

in your body, those are kind

1:26:07

of like the five key things to focus on. And

1:26:09

we've talked a lot about The functional

1:26:11

fitness part, we've talked a lot about nutrition. Nutrition

1:26:13

probably is the most important. They're all

1:26:15

important, but it's probably the most important one

1:26:17

of the five. But

1:26:20

one I think that gets really

1:26:22

short shrift, especially in Western culture,

1:26:24

is sleep hygiene. Most

1:26:27

people have terrible sleep

1:26:29

hygiene. And the reason

1:26:31

why I'm bringing it up this week is I

1:26:33

actively try to work on all those five things.

1:26:36

I probably should work on mobility more than I

1:26:38

do, but I do try to work on that

1:26:40

too. But the one

1:26:42

where I've really struggled has been sleep. And

1:26:45

I've really tried to get it

1:26:47

right. But I will

1:26:49

say for the past couple of years,

1:26:51

I have just not been able

1:26:53

to remember the last night where I

1:26:55

woke up in the morning and

1:26:57

felt anywhere refreshed. And most most times

1:26:59

I've woken up and felt like

1:27:01

I could go right back to bed

1:27:03

for another eight hours. And I

1:27:05

kind of had had this superpower, which

1:27:07

I developed, I think from initially

1:27:09

working on Wall Street, where I worked

1:27:11

just, I mean, literally 100

1:27:13

plus hour weeks. but

1:27:16

especially the past couple of years, like if I've got

1:27:18

a free five minutes, man, I could go out like a

1:27:20

light on command if I wanted to, right? So

1:27:23

there's just always been this chronic

1:27:25

exhaustion and it hasn't kept me

1:27:27

from living my life, certainly been

1:27:30

working a really aggressive schedule running

1:27:32

this business. But it's been

1:27:34

this persistent thing I just couldn't shake. And

1:27:36

there's lots of things you can do. You

1:27:39

can create a good sleeping environment where

1:27:41

it's dark and it's cool and you've got

1:27:43

good... and good pillows and you don't

1:27:45

look at your devices, you know, an hour

1:27:47

or two before you go to bed.

1:27:49

I violate that a lot, but still when

1:27:51

I try and try that, don't eat

1:27:53

before bed, you know, lose weight. There's all

1:27:55

sorts of things that you can do.

1:27:57

And I just got to you know, a

1:27:59

lot of them weren't working and I

1:28:02

was really trying to work on increasing my

1:28:04

hours in bed and that really wasn't

1:28:06

making a big difference. The reason why I'm

1:28:08

giving all this is I finally went

1:28:10

and got tested. I had a sleep test,

1:28:12

which is really easy to do now.

1:28:14

They just give you a little thing that

1:28:16

goes on your finger at night and

1:28:18

you sleep on it for a night or

1:28:20

two and you bring it back. And

1:28:22

anyways, I was diagnosed with mild sleep apnea,

1:28:24

which I think lots of people have. And

1:28:29

I was happy to get the results that,

1:28:31

okay, there's something here I can work on.

1:28:33

Now, I got to tell you, the main

1:28:37

way to address sleep apnea. You

1:28:39

can't cure it apparently, but the

1:28:41

main way to treat it are

1:28:43

these CPAP machines, right? It's

1:28:46

like sleeping with a snorkel on. And

1:28:48

I really resisted the thought of ever having

1:28:50

to be dependent on a machine for sleep.

1:28:52

But I said, you know, eventually I was

1:28:54

like, you know what, let me, let me

1:28:56

just try it. So I'm currently in a

1:28:58

one week sleep trial where they give you

1:29:01

one of these machines to take home. And

1:29:03

I gotta tell you, it's super awkward. It

1:29:06

really feels totally demeaning. It's like the dog

1:29:09

when you put the collar on the dog,

1:29:11

like the cone on the dog, right? He

1:29:13

just sits there in shame, right? Just feels

1:29:15

awkward. That's what I feel like with this

1:29:17

thing getting into bed. And

1:29:19

it's early days, but I gotta tell

1:29:21

you Lance, after the first night, I

1:29:23

really felt different in the morning. I've

1:29:26

now done it for three nights and

1:29:28

it actually really does feel like it

1:29:30

is making a difference. And apparently the...

1:29:32

difference builds at least initially in the

1:29:34

first couple of weeks, months that you

1:29:36

do it. So I don't know if

1:29:38

it's something I'm going to embrace fully

1:29:40

going forward, but it feels very much

1:29:43

like a plant that it was bone

1:29:45

dry and just on death's door because

1:29:47

it hadn't been watered in months, getting

1:29:49

a little bit of water and feeling

1:29:51

that life start to go back into

1:29:53

it. So I don't know what your

1:29:55

sleep situations life, but I bring it

1:29:57

up because sleep is, like I said,

1:30:00

it's one of the great things that's

1:30:02

ignored by our culture. The

1:30:04

research is super clear that most

1:30:06

people have terrible habits that are impacting

1:30:08

their performance in the world. And

1:30:10

just personally, I feel like I'm beginning

1:30:12

to get that energy back that

1:30:15

I just felt I'd been missing for

1:30:17

a long time and mental acuity.

1:30:19

I just feel like my brain has

1:30:21

more RAM. in it. As

1:30:23

a result, maybe it's psychosomatic. Again,

1:30:25

it's early days. But it's

1:30:27

just reminding me how super important quality sleep

1:30:29

is. And I want to put in

1:30:31

a big vote for that. And if you're

1:30:33

somebody who's struggling and maybe have some

1:30:35

of the symptoms that I mentioned of just

1:30:37

sort of fatigue and tired to be

1:30:39

able to fall asleep on command and just

1:30:41

not having that energy, maybe go

1:30:43

get one of those sleep tests. It's covered by

1:30:46

your health plan, very cheap. And at least

1:30:48

see if you've got an issue going on because

1:30:50

it is treatable. Yeah,

1:30:52

no, I sleep like a rock. So

1:30:54

I can lay down, go right to

1:30:56

sleep anytime. I'm sleep standing up.

1:30:59

Well, I'm curious. Is it quality sleep? Do you wake

1:31:01

up refreshed? Yeah, no,

1:31:03

I have a

1:31:05

super set schedule. You

1:31:08

know, again, my, you know, my whole day

1:31:10

is very structured. And the thing

1:31:12

I don't want is people to mess with my

1:31:14

structure. Because I have a

1:31:16

specific time where I write, specific time where

1:31:18

I work, and I eat at a specific

1:31:20

time. I have a certain diet that I

1:31:22

follow. I go to bed at

1:31:24

a certain time. I wake up at 3 .30

1:31:26

in the morning, go to work, this type of

1:31:28

thing. So as long as I keep my schedule,

1:31:30

I'm good. If something gets me

1:31:32

off that schedule, then I'm cranky. So

1:31:36

I'm totally like you. And again, I

1:31:38

was really leaning into the routine to try

1:31:40

to just see if I could get

1:31:42

that sleep thing fixed. And I couldn't switch

1:31:44

is why I bring up this whole

1:31:46

story, which is just I found this as

1:31:48

a piece to the puzzle that, you

1:31:51

know, clearly is helping with what was missing.

1:31:53

And so again, if somebody's listening and

1:31:55

just saying, hey, you know, I've been looking

1:31:57

at my life and I can't figure

1:31:59

out what's causing this issue, maybe this is

1:32:01

something to look into. All right. Well,

1:32:03

with that said, Lance, as

1:32:05

always, you're doing Yeoman's

1:32:07

work here, keeping our eyes on

1:32:10

the prize and trying to keep

1:32:12

us safe from all these narratives

1:32:14

that can be influencing our thinking,

1:32:16

folks. If you think one of

1:32:18

the best ways to protect yourself and your

1:32:20

money from being unduly influenced by dangerous

1:32:23

outside narratives is to continue watching Lance Roberts

1:32:25

on this channel week after week, please

1:32:27

let him know that by hitting the like

1:32:29

button and clicking on the subscribe button

1:32:31

below as well as that little bell icon

1:32:33

right next to it. Folks,

1:32:36

if you haven't yet watched the interview with

1:32:38

Felix Zuloff, make sure you make that part of

1:32:40

your required viewing this weekend. It's actually a