1 00:00:00,160 --> 00:00:02,880 Ladies and gentlemen, welcome to the Business Brew. 2 00:00:03,320 --> 00:00:07,800 I am your host Bill Brewster. This episode features Charles 3 00:00:07,800 --> 00:00:12,680 Lemonadeus of Value Works. Charles and I have a 4 00:00:12,680 --> 00:00:16,160 conversation about his investment philosophy. 5 00:00:16,440 --> 00:00:20,440 He is obviously considers himself a value person 6 00:00:20,760 --> 00:00:23,520 considering the fact that he named his firm Value works. 7 00:00:23,720 --> 00:00:27,800 I enjoyed speaking with him because he's got a very diverse 8 00:00:28,520 --> 00:00:32,080 take on investments. And, you know, the comment that 9 00:00:32,360 --> 00:00:37,240 that sort of stood out to me is he said something along the 10 00:00:37,240 --> 00:00:42,520 lines of, you know, it's your job as a portfolio manager to 11 00:00:42,520 --> 00:00:45,840 put together a series of uncorrelated bets. 12 00:00:45,840 --> 00:00:49,400 And I don't think that that is something that is or different. 13 00:00:49,400 --> 00:00:50,920 That's right. And I don't think that's 14 00:00:50,920 --> 00:00:55,320 necessarily something that is groundbreaking, but I think it's 15 00:00:55,320 --> 00:00:59,200 good to hear. And I think that as you hear him 16 00:00:59,200 --> 00:01:04,519 talk about the different names in his portfolio, you will see 17 00:01:04,800 --> 00:01:08,200 that he tries to implement what he's saying in a way that he 18 00:01:08,200 --> 00:01:11,400 understands. So I hope that you take some 19 00:01:11,400 --> 00:01:13,280 learnings out of this conversation. 20 00:01:13,280 --> 00:01:16,520 And it is a conversation that I didn't exactly expect to have 21 00:01:16,520 --> 00:01:18,280 when I researched his portfolios. 22 00:01:18,280 --> 00:01:21,040 But as we got into it, I found it fascinating. 23 00:01:21,080 --> 00:01:25,640 Hope you enjoy. As always, nothing in the show 24 00:01:25,880 --> 00:01:29,040 is financial advice. Please consult an investment 25 00:01:29,040 --> 00:01:31,080 advisor before making investment decisions. 26 00:01:31,440 --> 00:01:33,880 Everything in the show is for entertainment purposes and 27 00:01:33,880 --> 00:01:36,920 educational purposes. And do your own due diligence. 28 00:01:57,000 --> 00:01:59,440 All right, ladies and gentlemen, thrilled to be joined by Charles 29 00:01:59,440 --> 00:02:03,960 Lemonidas today of VALUE Works. Charles, how you doing? 30 00:02:04,240 --> 00:02:06,160 Good, good, good. Nice to be here with you, Bill. 31 00:02:07,000 --> 00:02:10,240 Well I appreciate your time. I know that you said that your 32 00:02:10,240 --> 00:02:14,800 background is not too exciting or whatever, but I was curious 33 00:02:14,800 --> 00:02:17,320 if you could let people in a little bit of background always 34 00:02:17,320 --> 00:02:20,920 help start the conversation and level set on where we all are. 35 00:02:20,920 --> 00:02:24,360 Well, that's our that's a picture of these, the Empire 36 00:02:24,360 --> 00:02:27,000 State Building punking through the clouds in Midtown. 37 00:02:27,320 --> 00:02:30,640 We are right now coming to you from One World Trade Center on 38 00:02:30,640 --> 00:02:32,960 the 84th floor. Let's see if we give you a 39 00:02:32,960 --> 00:02:35,280 picture outside. I doubt it'll show much, but 40 00:02:35,640 --> 00:02:38,640 yeah, yeah, you can see there's a horizontal bridge in the 41 00:02:38,640 --> 00:02:42,640 distance and the whole team out there plug it away. 42 00:02:43,240 --> 00:02:46,000 You started value works. How did you get into all this? 43 00:02:46,000 --> 00:02:48,400 Why is the firm name value works? 44 00:02:48,640 --> 00:02:51,640 How'd you get into value investing and and how'd you cut 45 00:02:51,640 --> 00:02:55,960 your teeth in the industry? Well, you know, I started out 46 00:02:56,080 --> 00:02:59,080 thinking that that a career on Wall Street would be exciting 47 00:02:59,080 --> 00:03:00,720 and fun and good for my skill set. 48 00:03:00,720 --> 00:03:03,760 I did some work on trying to figure out what career paths 49 00:03:03,760 --> 00:03:06,360 were. I started in a research 50 00:03:06,360 --> 00:03:09,760 department doing the most mundane research humanly 51 00:03:09,760 --> 00:03:14,840 possible but learning a lot, and was lucky enough to to have a 52 00:03:15,280 --> 00:03:18,200 couple of mentors who were really really good at assessing 53 00:03:18,320 --> 00:03:22,800 businesses and investments and didn't end up starting Value 54 00:03:22,800 --> 00:03:27,400 Works for another. I started in 86 after graduating 55 00:03:27,400 --> 00:03:34,760 College in 84 and started Value Works sort of in 99 in 2001. 56 00:03:35,040 --> 00:03:38,200 That's a good time to start something value based, right? 57 00:03:38,600 --> 00:03:42,440 Well, you know, I never liked the term value investor 58 00:03:42,480 --> 00:03:48,920 historically because to me it connoted low quality businesses 59 00:03:48,920 --> 00:03:52,360 at at cheap prices. There's a an article I read some 60 00:03:52,360 --> 00:03:55,560 fabled value guy said well, value had a bad year last year 61 00:03:55,560 --> 00:03:58,080 because financials and tobacco stocks did badly. 62 00:03:59,000 --> 00:04:02,040 Tobacco stocks and financials aren't definitionally value. 63 00:04:02,040 --> 00:04:06,200 Value is in the real world. There's something worth more 64 00:04:06,200 --> 00:04:09,720 money than than than I'm paying when I buy this security. 65 00:04:10,280 --> 00:04:15,120 And to me it it occurred to me that value is not buying low 66 00:04:15,120 --> 00:04:19,320 priced businesses cheap, but rather caring about price when 67 00:04:19,320 --> 00:04:23,280 you start your investment process and saying look what are 68 00:04:23,280 --> 00:04:25,880 the assets underneath this investment worth in the real 69 00:04:25,880 --> 00:04:28,120 world? And am I paying more for the 70 00:04:28,240 --> 00:04:30,680 more when I buy this stock or less than that amount? 71 00:04:30,680 --> 00:04:34,040 And that to me is value. I would agree with that 72 00:04:34,040 --> 00:04:36,280 definition. I think a quant might take a 73 00:04:36,720 --> 00:04:40,520 might might argue, but I would say that they're probably, 74 00:04:40,520 --> 00:04:42,480 they're playing a slightly different game than what we're 75 00:04:42,480 --> 00:04:44,440 talking about, right? Yeah. 76 00:04:44,440 --> 00:04:46,920 Look, it's a philosophical approach of how you look at 77 00:04:46,920 --> 00:04:48,080 investments. It's not. 78 00:04:48,120 --> 00:04:51,960 It's not purely metric driven. Any metric could show it that an 79 00:04:51,960 --> 00:04:55,640 instrument is not a value that is not priced according to a 80 00:04:55,640 --> 00:04:58,640 value metric, but a different metric might say it is. 81 00:04:58,640 --> 00:05:01,080 And if you're just using a metric, you're not getting the 82 00:05:01,080 --> 00:05:04,360 whole picture. Yeah, I would agree with that. 83 00:05:04,760 --> 00:05:09,640 Do do you specialize in certain types of companies or 84 00:05:09,640 --> 00:05:12,440 industries? You know, how do, how do you 85 00:05:12,880 --> 00:05:16,160 think about where you'll go as an investor? 86 00:05:16,360 --> 00:05:20,320 What I find the best investment opportunities are where you can 87 00:05:20,320 --> 00:05:24,480 find something that is a real growth opportunity and it's 88 00:05:24,480 --> 00:05:30,880 trading at a value price. And the key to our success over 89 00:05:30,880 --> 00:05:35,760 the years is building portfolios with a lot of those in there. 90 00:05:36,080 --> 00:05:39,680 And so that and they're all different from each other so 91 00:05:39,680 --> 00:05:44,080 that in any given period, one or two of them can come into favor 92 00:05:44,560 --> 00:05:46,240 and that carries the whole portfolio. 93 00:05:46,640 --> 00:05:51,280 So our portfolios will have 2530 long names in them, but within 94 00:05:51,280 --> 00:05:55,840 those 2530 names, there are really 15 that are very, very 95 00:05:55,840 --> 00:05:57,200 different from each other. Yeah. 96 00:05:57,560 --> 00:06:01,880 And I and I had noticed just based on your 13 F, it seems to 97 00:06:01,880 --> 00:06:06,560 me that you currently have a, a bit of a concentration and 98 00:06:06,560 --> 00:06:09,960 energy though I was going through your, your historical 13 99 00:06:09,960 --> 00:06:13,480 FS and it looks like that is more of a growing into a 100 00:06:13,480 --> 00:06:16,680 concentration than than something that you necessarily 101 00:06:16,680 --> 00:06:20,800 put on at cost, if I can say. That you have that exactly 102 00:06:20,800 --> 00:06:23,960 right, Bill. We had an amount of energy 103 00:06:23,960 --> 00:06:27,360 exposure coming into the COVID meltdown. 104 00:06:28,360 --> 00:06:32,800 But in that COVID meltdown of a three years ago, I guess, you 105 00:06:32,800 --> 00:06:37,600 know, oil prices went negative and security prices on energies, 106 00:06:38,040 --> 00:06:43,800 everything in the energy complex became completely divorced from 107 00:06:44,400 --> 00:06:50,480 long term values. And so we ended up buying four 108 00:06:50,480 --> 00:06:56,280 or five really, really low priced instruments that we were 109 00:06:56,280 --> 00:06:59,280 confident were were the right place in the capital structure. 110 00:06:59,280 --> 00:07:04,920 So you'd come out the other side and I don't think we put 8% of 111 00:07:04,920 --> 00:07:08,240 the portfolio into those four or five names because they were so 112 00:07:08,240 --> 00:07:12,080 volatile and had so much upside. And those names have just, 113 00:07:12,840 --> 00:07:16,120 they've gone up, you know, 5X to TO25X. 114 00:07:17,520 --> 00:07:19,840 And so, yeah, our challenge now is scaling those back. 115 00:07:21,040 --> 00:07:23,120 Yeah, I was. So I, I was just going to ask 116 00:07:23,120 --> 00:07:26,600 that how do you think about sizing, you know, sizing a 117 00:07:26,600 --> 00:07:29,040 position like that in the beginning and then how do you 118 00:07:29,040 --> 00:07:31,520 think about scaling them back? Like how do you think about the 119 00:07:31,880 --> 00:07:35,280 portfolio management when a position grows that large just 120 00:07:35,280 --> 00:07:39,040 sort of conceptually? Well, you know, we talk about 121 00:07:39,040 --> 00:07:44,720 starting our position sizing at 3 to 6% and that's a central 122 00:07:44,720 --> 00:07:48,080 place for us. But essential investment for us 123 00:07:48,200 --> 00:07:51,720 is pretty stably valued. You know, some of our core 124 00:07:51,720 --> 00:07:55,600 investments include Comcast and Goldman Sachs. 125 00:07:55,720 --> 00:08:01,120 You know, these these names can earn us great rates of return, 126 00:08:01,120 --> 00:08:04,400 but they're stable and solid names. 127 00:08:05,040 --> 00:08:10,120 When things get really dislocated, we'll tend to buy 128 00:08:10,120 --> 00:08:15,080 more names in a space at smaller percentages, really thinking of 129 00:08:15,080 --> 00:08:19,240 them as almost one investment or two investments. 130 00:08:19,800 --> 00:08:24,960 So a year ago this month, I guess or last month when the 131 00:08:24,960 --> 00:08:28,640 retail, the regional banks, you know, and all their securities 132 00:08:28,640 --> 00:08:32,280 started collapsing. I think we bought four or five 133 00:08:32,840 --> 00:08:35,919 different instruments of three or four different companies 134 00:08:36,440 --> 00:08:41,679 preferred stocks and debt that we're at anywhere from 35 to to 135 00:08:41,720 --> 00:08:46,120 60% of the face amount. Each one of them. 136 00:08:46,120 --> 00:08:50,280 We, we did the analysis that the underlying these businesses were 137 00:08:50,280 --> 00:08:54,400 going to be solvent and, and well capitalized. 138 00:08:54,800 --> 00:08:57,800 And we thought there was a, a disconnect in the market, but we 139 00:08:57,800 --> 00:09:02,560 ended up buying, you know, four or five individual investments 140 00:09:02,560 --> 00:09:06,760 in this and we size them all the individual one small, but the 141 00:09:06,760 --> 00:09:10,400 aggregate was, was a very heavy weighting for an investment. 142 00:09:11,080 --> 00:09:14,040 And so when two or three investments are really, really 143 00:09:14,040 --> 00:09:17,840 similar, we think of them as not two or three investments, but 144 00:09:17,840 --> 00:09:20,800 maybe 1 1/2 or two investments and size them accordingly. 145 00:09:20,800 --> 00:09:23,880 And then when they get big, look, our, our you know, we sell 146 00:09:23,880 --> 00:09:25,800 things when we think they're fairly priced. 147 00:09:26,480 --> 00:09:29,600 And even though these and, and so some of our energy 148 00:09:29,600 --> 00:09:32,960 investments we've sold and no longer own, but some of them are 149 00:09:32,960 --> 00:09:38,840 only expensive relative to where they used to trade, not relative 150 00:09:38,840 --> 00:09:40,560 to what their underlying assets are worth. 151 00:09:40,560 --> 00:09:44,000 And so those, you know, we scaled them back and we have two 152 00:09:44,000 --> 00:09:47,000 different portfolios. We, we manage two composites, 153 00:09:47,440 --> 00:09:50,480 the capital appreciation one and a more aggressive portfolio. 154 00:09:51,120 --> 00:09:54,880 The more aggressive portfolio, we'll let names be 1520% of the 155 00:09:54,920 --> 00:09:58,920 equity of the portfolio in the capital appreciation, more 156 00:09:58,920 --> 00:10:03,120 conservative portfolio. If something gets up to be mid 157 00:10:03,120 --> 00:10:05,360 teen digit percentages, we're scaling it back. 158 00:10:05,680 --> 00:10:10,040 Said differently, the the capital appreciation might be a 159 00:10:10,040 --> 00:10:14,120 stay rich idea where the more aggressive one may enable you to 160 00:10:14,120 --> 00:10:16,320 compound a little bit quicker. That's right. 161 00:10:16,320 --> 00:10:18,760 And if you look at our website, yeah, you'll see the marketing 162 00:10:18,760 --> 00:10:21,360 material for both of them, They're both doing very well 163 00:10:21,360 --> 00:10:23,680 over extended periods. I think that capital 164 00:10:23,680 --> 00:10:27,640 appreciation has basically kept up with the S&P since 1996, 165 00:10:27,920 --> 00:10:32,680 which for a value guy is probably much, much, much better 166 00:10:32,680 --> 00:10:34,920 than average. The the more aggressive 167 00:10:34,920 --> 00:10:38,400 portfolio has done basically two times the S and P / 20 years. 168 00:10:38,400 --> 00:10:41,640 So why is that? I guess I obviously you're 169 00:10:41,640 --> 00:10:46,680 letting your winners run more, but do you think that as far as 170 00:10:47,000 --> 00:10:51,520 compounding at high rates goes, is there something about letting 171 00:10:51,520 --> 00:10:55,040 winners run that is inherently sort of superior from a 172 00:10:55,040 --> 00:10:56,800 compounding standpoint, do you think? 173 00:10:57,840 --> 00:11:01,000 No, not necessarily, Bill. And I'm not sure that's the 174 00:11:01,160 --> 00:11:04,920 biggest driver of the difference in performance. 175 00:11:05,680 --> 00:11:08,520 I think the biggest driver in the difference of performance is 176 00:11:08,800 --> 00:11:12,240 how aggressive we get during periods of dislocation when 177 00:11:12,240 --> 00:11:15,480 things become really cheap on the capital appreciation 178 00:11:15,480 --> 00:11:18,440 composite. You know, or if our rule is we 179 00:11:18,440 --> 00:11:22,680 build positions of three to 5% and if it goes down in price, we 180 00:11:22,680 --> 00:11:25,720 don't let the market tell us we were wrong and sell it. 181 00:11:25,720 --> 00:11:27,760 But we also don't add to the position. 182 00:11:27,760 --> 00:11:31,480 So we have, you know, plenty of times names have gone down by 183 00:11:31,480 --> 00:11:37,320 80% in price and a 4% stake has become a .8% stake in the 184 00:11:37,320 --> 00:11:40,200 capital appreciation deposit. You know, if, if it turns out 185 00:11:40,200 --> 00:11:43,920 our thesis was right in the 1st place and it goes up five fold 186 00:11:43,920 --> 00:11:47,680 to our cost and then exceeds that and double S again, we'll 187 00:11:47,680 --> 00:11:51,720 have it that a 10% gain in the portfolio from a 1% position. 188 00:11:52,520 --> 00:11:55,880 And that's good in the cap in, in the more aggressive 189 00:11:55,880 --> 00:12:00,200 portfolio, we will add to names when they go down and we will 190 00:12:00,200 --> 00:12:03,520 get more aggressive in periods of uncertainty and, and, and 191 00:12:03,520 --> 00:12:06,400 turmoil. That's the, the biggest driver I 192 00:12:06,400 --> 00:12:08,880 think of, of the relative performance and, and the, and 193 00:12:08,880 --> 00:12:11,520 the more aggressive portfolio also has a shorting component to 194 00:12:11,560 --> 00:12:14,360 it. So, so we have 2030% of the 195 00:12:14,360 --> 00:12:18,840 portfolio short and we end up with more than $1.00 for dollar 196 00:12:18,840 --> 00:12:21,400 long. So we, we, we look for a central 197 00:12:21,400 --> 00:12:25,840 place to be 125% long and 25% short in the more aggressive 198 00:12:25,840 --> 00:12:28,440 portfolio. And so those two things, the 199 00:12:28,440 --> 00:12:36,000 portfolio rules mostly on adding and the the leverage and the 200 00:12:36,000 --> 00:12:40,800 ability to get short, which takes gives you an ability to 201 00:12:40,800 --> 00:12:43,480 get more aggressive when things go down in price. 202 00:12:43,480 --> 00:12:47,160 Because in at the bottom of market declines, we have 203 00:12:47,280 --> 00:12:50,720 historically had very, very trivial short exposure. 204 00:12:51,120 --> 00:12:54,400 So we're functionally getting more long, but not having any 205 00:12:54,400 --> 00:12:58,440 short and then and then we've had more torque on the upside as 206 00:12:58,440 --> 00:13:01,080 a result. That makes sense. 207 00:13:01,120 --> 00:13:04,160 You know, a younger me would say, well, why don't you just 208 00:13:04,160 --> 00:13:07,240 add to the capital of like, why aren't you allowing yourself to 209 00:13:07,240 --> 00:13:10,200 add in the capital appreciation portfolio? 210 00:13:10,440 --> 00:13:13,000 The older me thinks I know the answer, but I'm going to ask you 211 00:13:13,000 --> 00:13:17,080 the question and let you answer. But I respect risk management a 212 00:13:17,080 --> 00:13:20,320 lot more than I used to. So I I will toss it to you. 213 00:13:21,920 --> 00:13:24,040 You know, I don't know if you could tell by the look at things 214 00:13:24,040 --> 00:13:27,160 here, but yes, I've been at this long enough to know the single 215 00:13:27,160 --> 00:13:30,520 most important thing is to stay at the table and not to get 216 00:13:30,520 --> 00:13:32,640 wiped out. And look, our, our, our 217 00:13:32,640 --> 00:13:35,560 aggressive portfolio has been around for 25 years and hasn't 218 00:13:35,560 --> 00:13:38,120 gotten wiped out. But the, the capital 219 00:13:38,120 --> 00:13:41,000 appreciation portfolio is designed for someone's nest egg 220 00:13:41,000 --> 00:13:45,960 assets and a large part of someone's, you know, investable 221 00:13:46,000 --> 00:13:49,320 assets. And so it just has more 222 00:13:49,320 --> 00:13:52,960 conservative rules. And if we put 5% of someone's 223 00:13:52,960 --> 00:13:57,480 portfolio at risk in a name and it goes down 2% of the 224 00:13:57,480 --> 00:14:02,760 portfolio, it's designed to be defend the, the conservatively 225 00:14:02,800 --> 00:14:06,320 structured portfolio. So we don't just add to it and 226 00:14:06,320 --> 00:14:09,600 add to it. And look, ultimately investing 227 00:14:09,600 --> 00:14:12,560 is tricky and you're going to get some things wrong. 228 00:14:12,560 --> 00:14:16,560 And you know, you can't build a 2530 stock portfolio and have it 229 00:14:17,160 --> 00:14:20,800 invested over time and time and time and not have some things 230 00:14:20,800 --> 00:14:24,040 ultimately be wrong soup to nuts and, and get it wrong. 231 00:14:24,680 --> 00:14:27,440 And you know, we're not willing to burn down the portfolios 232 00:14:27,440 --> 00:14:32,880 because for any anyone name. I have a lot of respect for 233 00:14:32,880 --> 00:14:34,560 that. I think that there's, John 234 00:14:34,560 --> 00:14:38,240 Hampton Once Upon a time wrote a piece about not doubling down 235 00:14:38,240 --> 00:14:41,000 into losers and whatnot. And people can go read that. 236 00:14:41,000 --> 00:14:45,880 But that was, it's funny. I think that, you know, they're 237 00:14:46,080 --> 00:14:50,440 the younger me used to say, well, if it's down 50% and 238 00:14:50,440 --> 00:14:54,920 you're right, why in the world would you not buy more or, or 239 00:14:54,920 --> 00:14:57,240 said differently, if you're not wrong or you don't think you're 240 00:14:57,240 --> 00:14:58,840 wrong, why would you not buy more? 241 00:14:59,280 --> 00:15:01,640 Older me realizes that maybe you were wrong even though you 242 00:15:01,640 --> 00:15:03,200 didn't realize you were wrong, right? 243 00:15:03,280 --> 00:15:06,520 That's right. So, you know, you do want to, 244 00:15:06,560 --> 00:15:09,560 you want to exercise caution when you do it. 245 00:15:09,880 --> 00:15:12,720 We do it in an assertive portfolio and we don't do it in 246 00:15:12,720 --> 00:15:17,200 another portfolio because they're both good strategies for 247 00:15:17,200 --> 00:15:19,400 different investors and different and different risk 248 00:15:19,400 --> 00:15:22,680 tolerances. And and, you know, the the more 249 00:15:22,680 --> 00:15:26,080 aggressive strategy has had higher returns, but it's been 250 00:15:26,080 --> 00:15:29,680 more aggressive, yeah. Interesting, I really like how 251 00:15:29,680 --> 00:15:33,000 you said that that makes like perfect intuitive sense to me. 252 00:15:33,440 --> 00:15:39,880 So you know, it's it's funny, like I learn from reading 253 00:15:39,880 --> 00:15:42,680 Buffett, right. I have a lot more to learn 254 00:15:42,680 --> 00:15:46,280 probably by rereading Buffett and and and thinking more about 255 00:15:46,280 --> 00:15:49,480 it. But you know, I hear one of the 256 00:15:49,480 --> 00:15:54,560 quotes that he says, you know, as I'd have 50% my best idea. 257 00:15:55,160 --> 00:16:01,000 And I think about like how I used to interpret that and how I 258 00:16:01,000 --> 00:16:04,200 do now. And boy, is it changed with age 259 00:16:04,200 --> 00:16:07,960 and, and my definition of what my best idea would have to look 260 00:16:07,960 --> 00:16:10,080 like in order to have that kind of a position. 261 00:16:10,080 --> 00:16:12,480 It would. I haven't seen one in my life, I 262 00:16:12,480 --> 00:16:15,040 don't think. You know, the notion of having 263 00:16:15,040 --> 00:16:19,240 50% of an investment portfolio and, and a name I, you know, I, 264 00:16:19,280 --> 00:16:24,400 I, I, I don't think that that's the good portfolio structure. 265 00:16:25,120 --> 00:16:28,120 Yeah, I don't have the stomach for it, but I, I think sometimes 266 00:16:28,120 --> 00:16:32,600 value people because of, and I, and I don't mean to lay the 267 00:16:32,600 --> 00:16:36,040 blame at, at certainly not at the church's feet, but because 268 00:16:36,040 --> 00:16:39,160 of of Monger and Buffett. I think there's some sort of 269 00:16:39,160 --> 00:16:44,120 pride in concentration. And, and I don't necessarily 270 00:16:44,120 --> 00:16:46,800 when I was young, I felt it. And maybe I'm just 271 00:16:46,800 --> 00:16:50,800 internalizing, but I, I think like I said, as I've grown 272 00:16:50,800 --> 00:16:54,160 older, I've got children now. Like I'm not trying to take a 273 00:16:54,160 --> 00:16:55,800 hero shot at something and blow it up. 274 00:16:55,800 --> 00:16:58,800 So if you're if you had a vehicle that you're saying is 275 00:16:58,800 --> 00:17:03,080 for the people's nest egg, I fully respect rules around it. 276 00:17:03,880 --> 00:17:06,319 Right. And and look, our job is to 277 00:17:06,319 --> 00:17:10,160 build a diversified portfolio, not bet the portfolio on one or 278 00:17:10,160 --> 00:17:13,280 two ideas. Yeah, yeah. 279 00:17:14,280 --> 00:17:18,160 Were there, did you see something in your younger years 280 00:17:18,160 --> 00:17:23,440 that that made you sort of lean this way from building a firm 281 00:17:23,440 --> 00:17:26,640 perspective, or was this something that kind of 282 00:17:26,640 --> 00:17:30,320 inherently made sense to you? When I started out investing, I 283 00:17:30,320 --> 00:17:33,240 tried to make sense of, you know, what worked as an 284 00:17:33,240 --> 00:17:35,560 investment and what didn't work as an investment. 285 00:17:35,560 --> 00:17:40,920 And it was really challenging because there didn't seem to be 286 00:17:40,920 --> 00:17:47,800 a lot of correlation between any particular facts and the near 287 00:17:47,800 --> 00:17:51,320 term movement of any security. And you know, people were 288 00:17:51,320 --> 00:17:54,560 judging success based on three and six months. 289 00:17:54,560 --> 00:17:58,400 And you know, when when you're starting out, two years is an 290 00:17:58,400 --> 00:18:01,840 awfully long time. It's hard to know that things 291 00:18:01,840 --> 00:18:03,920 are going to work out well over two or three years. 292 00:18:04,760 --> 00:18:11,960 So what I was able to do is find a bunch of securities that I was 293 00:18:11,960 --> 00:18:14,360 pretty sure you'd get the rate of return that they were 294 00:18:14,360 --> 00:18:17,120 offering because they were able to pay their bills. 295 00:18:17,320 --> 00:18:20,920 So I started out as a high yield bond analyst and my my first 296 00:18:21,120 --> 00:18:24,400 investment was a Pan Am equipment trust certificate. 297 00:18:24,400 --> 00:18:27,320 There was a plan in the world that had a $30 million value, 298 00:18:27,960 --> 00:18:30,400 18,000,000 of the bonds outstanding trading at a 299 00:18:30,400 --> 00:18:34,520 discount. I was paying $15 million to get 300 00:18:34,520 --> 00:18:39,320 a $30 million airplane, OK, I'm paying $30 million, the $15 301 00:18:39,320 --> 00:18:42,880 million, the planes worth $30 million and I'm getting that's 302 00:18:42,880 --> 00:18:47,680 an 11 1/2% coupon training at whatever price, a discount to 303 00:18:47,680 --> 00:18:50,600 par. And then I like, OK, this, this 304 00:18:50,600 --> 00:18:52,480 company has these bonds outstanding. 305 00:18:52,480 --> 00:18:54,120 This is the cash flow they're generating. 306 00:18:54,120 --> 00:18:56,320 It's super stable. It's going to grow at these 307 00:18:56,320 --> 00:18:58,080 rates. This is the free cash flow. 308 00:18:58,080 --> 00:19:00,920 This is how they're going to deliver over time, OK? 309 00:19:00,920 --> 00:19:02,600 And this is the rate of return you're getting. 310 00:19:02,840 --> 00:19:05,400 The business can sustain that valuation. 311 00:19:06,360 --> 00:19:11,040 And then I was lucky enough to have the fellow running the risk 312 00:19:11,040 --> 00:19:14,920 arbitrage research effort leave the firm and ultimately help 313 00:19:14,920 --> 00:19:17,360 Leon Cooperman build Omega Advisors. 314 00:19:18,120 --> 00:19:25,640 And when Charlie left, I took over his mandate to do research 315 00:19:25,640 --> 00:19:31,400 on risk arbitrage names. And he had a list of about 15 316 00:19:32,320 --> 00:19:37,720 securities that were in some state of either being bought out 317 00:19:37,960 --> 00:19:42,520 or going through reorgs. And in each of them, the the 318 00:19:42,520 --> 00:19:45,920 modus operandi was that something was going to happen 319 00:19:45,920 --> 00:19:49,160 where an economic participant was going to take control over 320 00:19:49,160 --> 00:19:51,080 these entities and you were going to get some rate of 321 00:19:51,080 --> 00:19:54,120 return. And so you had to decide whether 322 00:19:54,120 --> 00:19:57,640 that buy was a good buy for the buyer and if so, how big a 323 00:19:57,640 --> 00:19:59,600 spread you were going to get and what your rate of return was 324 00:19:59,600 --> 00:20:01,880 going to be. So it was all about saying 325 00:20:01,960 --> 00:20:05,280 asking yourself what price will a rational buyer pay for this 326 00:20:05,280 --> 00:20:07,960 asset? And, and it was a really 327 00:20:07,960 --> 00:20:12,760 diversified group of assets. So it gave me a quick learning 328 00:20:12,760 --> 00:20:15,360 curve on valuing a bunch of different things, from 329 00:20:15,360 --> 00:20:21,520 bankruptcies to financial companies to supermarkets to all 330 00:20:21,520 --> 00:20:24,200 sorts of stuff. Yeah, that's neat. 331 00:20:24,640 --> 00:20:27,520 Now that you've been doing what you've been doing for a while, 332 00:20:27,560 --> 00:20:32,320 have you figured out a little bit better what, what makes an 333 00:20:32,320 --> 00:20:35,920 investment work, quote UN quote, from those that don't? 334 00:20:35,960 --> 00:20:39,000 I mean, are there any commonalities that you've seen 335 00:20:39,000 --> 00:20:41,440 that you, you know, somebody pitches you something and you're 336 00:20:41,440 --> 00:20:43,560 like, I don't know about that. I've seen enough of those not 337 00:20:43,560 --> 00:20:46,040 work. It's good to always keep an open 338 00:20:46,040 --> 00:20:48,240 mind. The thing that I do super 339 00:20:48,240 --> 00:20:49,920 consistently is, all right, like, what? 340 00:20:49,920 --> 00:20:53,600 What do these pairs have and why do I think that's worth more 341 00:20:53,600 --> 00:20:56,240 than I'm paying? We bought Rivian this week. 342 00:20:57,200 --> 00:21:00,080 Oh yeah, yeah, yeah. You know what they have? 343 00:21:01,800 --> 00:21:03,360 Well, they got a hell of a brand. 344 00:21:03,360 --> 00:21:08,040 They have a hell of a brand and they've got a truck that is put 345 00:21:08,040 --> 00:21:10,880 together. My understanding is that the 346 00:21:10,880 --> 00:21:13,920 components in that truck are like I think they have McLaren 347 00:21:13,920 --> 00:21:16,560 brakes in that. That's that's the rumor that I 348 00:21:16,560 --> 00:21:20,120 heard. So I think that the the 349 00:21:20,200 --> 00:21:23,320 probability that it's a solid, solid product is quite high. 350 00:21:23,320 --> 00:21:25,480 Outside of that, I don't know where where you're going with 351 00:21:25,520 --> 00:21:25,880 it. Well. 352 00:21:26,480 --> 00:21:28,080 Right. They have a great brand. 353 00:21:28,520 --> 00:21:32,120 They've spent a lot of money building the infrastructure to 354 00:21:32,120 --> 00:21:35,920 get a product to market. They have a very solid anchor 355 00:21:35,920 --> 00:21:40,280 client in Amazon. And they have $9 billion worth 356 00:21:40,280 --> 00:21:44,120 of cash and it's an $8 billion equity valuation with a couple 357 00:21:44,120 --> 00:21:45,480 of billion dollars worth of debt. 358 00:21:45,920 --> 00:21:50,240 So you're getting the $10 billion that they've invested in 359 00:21:50,240 --> 00:21:54,520 building their business and the share price and cash money. 360 00:21:55,920 --> 00:21:58,680 And yeah, the product I think is great. 361 00:21:58,680 --> 00:22:01,680 And I think it's, frankly, I think it's as as good a vehicle 362 00:22:01,680 --> 00:22:03,200 as you could buy. And I hope I'm right 'cause I 363 00:22:03,200 --> 00:22:07,200 just bought 1. I know a couple people that have 364 00:22:07,200 --> 00:22:11,280 them that rave. And and look, I think electric E 365 00:22:11,280 --> 00:22:16,200 VS are the future and I think that there will only be a couple 366 00:22:16,200 --> 00:22:19,600 of stand alone EV companies. I think you know, having a 367 00:22:19,600 --> 00:22:22,400 startup EV company is really, really hard. 368 00:22:23,080 --> 00:22:28,320 I think that Tesla will probably be around, but I think the other 369 00:22:28,400 --> 00:22:32,040 EV companies, you know, one of them went bankrupt in the 370 00:22:32,040 --> 00:22:36,000 process of spinning out of control Right now, Fisker and 371 00:22:36,000 --> 00:22:38,240 they're not it. It's highly unlikely that they 372 00:22:38,240 --> 00:22:42,480 have a going business that there's a Fisker out there a 373 00:22:42,480 --> 00:22:46,200 year from now. And that means that anyone who 374 00:22:46,200 --> 00:22:50,000 bought that car is going to have a doozy of a time finding 375 00:22:50,000 --> 00:22:56,200 service, which the knock on is going to be to any other stand 376 00:22:56,200 --> 00:23:00,000 alone EV maker. You know it's going to scare 377 00:23:00,000 --> 00:23:01,840 buyers. Yeah, you would think. 378 00:23:01,960 --> 00:23:05,600 The notion they may not be around, I think Rivian will be 379 00:23:05,600 --> 00:23:09,080 around because they have that big pile of cash and because 380 00:23:09,080 --> 00:23:12,840 they have Amazon as one of their bigger shareholders and a core 381 00:23:13,080 --> 00:23:16,640 client of theirs who is committed to buying a certain 382 00:23:16,640 --> 00:23:18,760 number of trucks over an extended period. 383 00:23:19,160 --> 00:23:24,280 So I think they'll be around and I think their product is great 384 00:23:24,520 --> 00:23:28,120 and I'm getting it at cash on the balance sheet basically. 385 00:23:29,320 --> 00:23:33,480 Yeah, with so, so the market's telling you they're gonna burn 386 00:23:33,480 --> 00:23:37,080 it and burn the cash and the entity is not economic, right. 387 00:23:37,080 --> 00:23:39,680 And that becomes what where you focus on. 388 00:23:39,680 --> 00:23:43,840 Is this a true implied assumption that the market's 389 00:23:43,960 --> 00:23:46,000 telling me that? That that's right, that's right. 390 00:23:46,000 --> 00:23:48,960 And they look, that's, that's a very legitimate perspective. 391 00:23:49,760 --> 00:23:53,000 And there are other EV companies that I don't think will make it. 392 00:23:53,000 --> 00:23:56,320 And so, yeah, cash or not cash and not enough cash and not 393 00:23:56,320 --> 00:23:58,480 happening. And so the devil is in the 394 00:23:58,480 --> 00:24:02,160 details for sure. And, and it's their judgments 395 00:24:02,160 --> 00:24:07,080 and, and questions involved. But the soft details around 396 00:24:07,600 --> 00:24:11,240 Rivian are pretty good. The Amazon backing them is an 397 00:24:11,240 --> 00:24:15,400 idea. They, to my mind, have as good a 398 00:24:15,400 --> 00:24:19,480 product as is out there. And yeah, I mean, I say that as 399 00:24:19,480 --> 00:24:23,760 a consumer now, you know, I, I felt confident buying their 400 00:24:23,760 --> 00:24:29,800 truck because they seem to spend 150 grand on building it and I 401 00:24:29,920 --> 00:24:32,840 don't get 100 grand. That's what I was gonna go. 402 00:24:32,840 --> 00:24:35,800 But now this is where the business concern comes from, 403 00:24:35,800 --> 00:24:39,120 right though is that if you were to disassemble the truck, my 404 00:24:39,120 --> 00:24:41,840 understanding is that the cost that they have in the truck 405 00:24:41,880 --> 00:24:44,160 exceeds the retail price. Well, that's right. 406 00:24:44,160 --> 00:24:47,720 And that makes it a good buy for me, yeah. 407 00:24:48,760 --> 00:24:51,240 You're correct. But I don't think that math 408 00:24:51,360 --> 00:24:55,360 stays true over time. You know, this company started 409 00:24:55,360 --> 00:24:59,640 producing cars, trucks two years ago, three years ago. 410 00:25:00,280 --> 00:25:02,440 You know, they're ramping up production. 411 00:25:02,520 --> 00:25:05,040 They're doing. Yeah, the run rate is 50,000 412 00:25:05,040 --> 00:25:07,760 trucks a year, 5760 thousand trucks a year. 413 00:25:08,320 --> 00:25:11,400 You know, that's not scale. And the prices of the inputs 414 00:25:11,400 --> 00:25:15,840 that they contracted for early days were high numbers. 415 00:25:16,240 --> 00:25:22,800 But I'm pretty sure that electric vehicles are 416 00:25:22,800 --> 00:25:26,320 fundamentally cheaper to build than internal combustion 417 00:25:26,800 --> 00:25:30,600 vehicles. That over time, the simplicity 418 00:25:30,600 --> 00:25:33,480 of the electric motor compared to an internal combustion motor 419 00:25:33,480 --> 00:25:35,440 is just really, really different. 420 00:25:36,560 --> 00:25:41,520 And the battery technology, you know, at today's level is a 421 00:25:41,520 --> 00:25:45,600 viable technology. And so the only input, the only 422 00:25:46,280 --> 00:25:51,400 pricing driver on the battery is the commodities that go into it. 423 00:25:52,480 --> 00:25:57,080 And those commodities have been volatile in price, but they're 424 00:25:57,080 --> 00:26:01,840 not inherently rare commodities. So and and some lithium 425 00:26:01,840 --> 00:26:04,200 companies obviously have had huge margins and the negative 426 00:26:04,200 --> 00:26:08,880 margins are blah, blah. But the battery prices, because 427 00:26:08,880 --> 00:26:12,840 they're driven by commodities that are becoming that are 428 00:26:12,840 --> 00:26:16,400 highly likely to become cheaper, those prices go down. 429 00:26:16,920 --> 00:26:24,600 So the EV vehicle will be the the cheaper vehicle to build for 430 00:26:24,600 --> 00:26:31,280 this, for apples to apples and, and, and people who build them 431 00:26:31,480 --> 00:26:34,240 will probably earn a positive rate of return on them if you 432 00:26:34,240 --> 00:26:39,280 have a brand value and efficient manufacturing operations. 433 00:26:39,720 --> 00:26:43,320 And I think these guys have those things. 434 00:26:43,880 --> 00:26:48,880 So you know, when, when the the equity was valued at $30 435 00:26:48,880 --> 00:26:52,960 billion, we're like, yeah, well, maybe that'll work, but seems 436 00:26:52,960 --> 00:26:58,360 like a lot of risk in it when it's at $9 a share and $9 437 00:26:58,360 --> 00:27:01,320 billion, right? And a half billion dollars and 438 00:27:01,320 --> 00:27:03,520 there's 9 1/2 billion dollars of cash. 439 00:27:04,480 --> 00:27:08,480 The risk reward is just really different and and all the soft 440 00:27:08,480 --> 00:27:10,880 facts around it are really positive. 441 00:27:11,080 --> 00:27:12,680 I think they're the best management going. 442 00:27:12,680 --> 00:27:14,720 I think it's a really, really well billed car. 443 00:27:14,960 --> 00:27:18,760 I think the brand management has been spot on. 444 00:27:19,360 --> 00:27:23,440 You know, Mr. Bezos has sort of done a good job building 445 00:27:23,440 --> 00:27:26,440 businesses over time. I'm happy to have him in yeah, 446 00:27:26,440 --> 00:27:30,480 be on his side of the table. When I look at Amazon, it's a 447 00:27:30,560 --> 00:27:33,920 it's not a cheap stock. When I look at Rivian, it's a 448 00:27:33,920 --> 00:27:36,480 very cheap stock. You said like it's important to 449 00:27:36,480 --> 00:27:39,160 keep an open mind here. You know, I'm looking at your 450 00:27:39,160 --> 00:27:41,160 portfolio. I was like, I got to figure out 451 00:27:41,160 --> 00:27:43,800 energy questions. Now we're discussing Rivian. 452 00:27:44,040 --> 00:27:47,880 Blows my mind. You know, one of the things we 453 00:27:47,880 --> 00:27:52,160 do really well is build a very diversified portfolio and it's 454 00:27:52,160 --> 00:27:57,200 not diversified with 200 names that are all the same, but it's 455 00:27:57,200 --> 00:28:00,240 diversified with 25 investments that are all really different. 456 00:28:00,560 --> 00:28:03,920 What's the same always is the underlying assessment like, So 457 00:28:03,920 --> 00:28:05,280 what do they have and what's it worth? 458 00:28:05,760 --> 00:28:08,840 And yeah, who do they owe and how much? 459 00:28:08,880 --> 00:28:11,800 And what am I paying to get at when I buy this instrument? 460 00:28:12,840 --> 00:28:15,000 Yeah, I love it. I love it. 461 00:28:16,000 --> 00:28:18,720 What do you think about Comcast? I'm somebody who does follow 462 00:28:18,720 --> 00:28:22,360 cable reasonably well. It has been punch after punch, 463 00:28:22,360 --> 00:28:25,120 although Comcast has weathered the storm quite a bit better, in 464 00:28:25,120 --> 00:28:27,600 part, I think because of the parks business and their 465 00:28:27,600 --> 00:28:30,000 leverage is quite a bit less aggressive than some of the 466 00:28:30,000 --> 00:28:33,600 peers. So I think they've and and 467 00:28:34,680 --> 00:28:36,480 arguably their operations are better. 468 00:28:36,480 --> 00:28:41,840 But curious when, when you see maybe underlying signs that 469 00:28:41,840 --> 00:28:48,120 things are going well, but the stocks, whether it's because the 470 00:28:48,120 --> 00:28:52,120 sector or whatever remain weak. How do you think through that? 471 00:28:52,680 --> 00:28:57,240 I, I believe it patience, you know, time goes by and you don't 472 00:28:57,240 --> 00:29:02,440 know when like the truth will out, whether it's this month or 473 00:29:02,760 --> 00:29:05,760 three years from now. I think what's good about 474 00:29:05,760 --> 00:29:08,560 Comcast is they generate huge amounts of cash flow. 475 00:29:09,120 --> 00:29:13,720 Their businesses are for the most like, you know, they're in 476 00:29:13,720 --> 00:29:16,120 transition, but they're not in decline. 477 00:29:16,720 --> 00:29:19,280 The management's been better than any other management. 478 00:29:19,280 --> 00:29:23,680 I think that's comparable and that's evidenced by, you know, 479 00:29:23,680 --> 00:29:27,320 where they are as, as in terms of scale and scope in that 480 00:29:27,320 --> 00:29:30,000 space. They're they're big and 481 00:29:30,000 --> 00:29:33,800 competitive and strong. The underlying assets you could 482 00:29:33,800 --> 00:29:37,000 easily make a case of worth 50% more than today's share price, 483 00:29:37,000 --> 00:29:40,560 if not more if you start doing your sum of the parts, etcetera. 484 00:29:42,040 --> 00:29:45,040 The stock's been dead money for two lifetimes. 485 00:29:47,040 --> 00:29:49,440 It has felt like that. It's been dead money for two 486 00:29:49,440 --> 00:29:54,000 lifetimes. But you know, look, it's one 487 00:29:54,000 --> 00:29:56,720 stock out of 25 that's been dead money. 488 00:29:57,200 --> 00:30:01,440 You know, when will it double? Maybe in the next 12 months, 489 00:30:02,600 --> 00:30:06,880 maybe in, in, in two years, the values are creating day in and 490 00:30:06,880 --> 00:30:08,360 day outlook. They're they're, they're 491 00:30:08,360 --> 00:30:11,320 generating value from owning high quality assets. 492 00:30:11,920 --> 00:30:15,720 And so you know, if, if that value is growing by 10% a year 493 00:30:15,720 --> 00:30:20,280 or 7% a year or 14% a year, something like that. 494 00:30:21,160 --> 00:30:24,880 And so the longer it stays at this price, the cheaper it gets. 495 00:30:25,400 --> 00:30:29,040 And you know, we've seen that happen before and that and then 496 00:30:29,040 --> 00:30:32,520 you get a catch up and the catch up is profound and you just 497 00:30:33,480 --> 00:30:34,880 never know when it's going to happen. 498 00:30:35,440 --> 00:30:38,880 But you want to be in a bunch of different things so that any one 499 00:30:38,880 --> 00:30:42,160 of them could be doing that on a given day or month. 500 00:30:43,000 --> 00:30:49,000 And, and OK, so you know, we've talked about a, a few different 501 00:30:49,000 --> 00:30:51,720 concepts. I would I would characterize 502 00:30:51,960 --> 00:30:55,000 Comcast as a fairly stable earnings stream today. 503 00:30:55,440 --> 00:30:59,760 I would say energy generally certainly looks a lot better 504 00:30:59,760 --> 00:31:03,840 post 2020 than it did pre 2020. And maybe that sticks, maybe it 505 00:31:03,840 --> 00:31:05,720 doesn't. You know, the history of 506 00:31:05,720 --> 00:31:08,080 commodity companies makes me a little bit skittish. 507 00:31:08,440 --> 00:31:12,520 And then you've got Rivian where the earnings stream is, is on 508 00:31:12,520 --> 00:31:14,800 the com. Do you manage those types of 509 00:31:14,800 --> 00:31:17,960 investments differently? Do you compare, you know, do you 510 00:31:17,960 --> 00:31:20,800 have a model that's sort of the flight path and you're comparing 511 00:31:20,800 --> 00:31:24,600 results to the model? Like how do you manage thinking 512 00:31:24,600 --> 00:31:27,600 in so many different ways? You know, part of it is that 513 00:31:27,600 --> 00:31:32,160 after we have a thesis and an understanding, we stop thinking 514 00:31:32,160 --> 00:31:34,560 about it too much. I mean, we'll revisit the 515 00:31:34,560 --> 00:31:37,280 numbers and we'll look at it again and ask ourselves if we're 516 00:31:37,280 --> 00:31:39,680 wrong. But yeah, I haven't spent that 517 00:31:39,680 --> 00:31:42,240 much time thinking about Comcast over the past couple of years. 518 00:31:42,240 --> 00:31:46,080 A little bit here and there. But I'll, you know, I think I 519 00:31:46,080 --> 00:31:49,440 know what the driver, the drivers are and I, I think out 520 00:31:49,440 --> 00:31:52,080 monitoring them and I think I'm waiting for, for that to play 521 00:31:52,080 --> 00:31:55,280 out. And then we own air Lease, 522 00:31:55,400 --> 00:31:59,680 which, you know, owns a fleet of aircraft and leases them out. 523 00:31:59,760 --> 00:32:06,080 And the planes are worth probably 50 to 70% more than the 524 00:32:06,080 --> 00:32:10,320 share price of then the enterprise value, which means a 525 00:32:10,320 --> 00:32:13,040 lot more to the equity because there's torque there. 526 00:32:13,040 --> 00:32:18,200 And so, you know, the work of this job is looking for new 527 00:32:18,200 --> 00:32:22,680 ideas and understanding where the opportunities are being 528 00:32:22,680 --> 00:32:26,440 created today. And because we tend to hold 529 00:32:26,440 --> 00:32:30,200 things for in a year, two years, three years, four years, you 530 00:32:30,200 --> 00:32:33,440 could spend a lot of time looking at different things and 531 00:32:33,520 --> 00:32:36,680 and have really diversified exposure because the the 532 00:32:36,680 --> 00:32:38,280 investments tend to be long lived. 533 00:32:38,480 --> 00:32:42,040 I'm more asking this is I'd love to just pick your brain and 534 00:32:42,040 --> 00:32:45,880 learn when, when do you think about revisiting a thesis, 535 00:32:45,880 --> 00:32:48,800 right? Do you have sort of key metrics 536 00:32:48,800 --> 00:32:51,160 that you're tracking? And if this is off base, then 537 00:32:51,160 --> 00:32:54,640 maybe I need to revisit like, because there's a fine line 538 00:32:54,640 --> 00:32:58,720 between over tinkering and then being like overly lazy, right? 539 00:32:58,720 --> 00:33:01,800 So I haven't quite figured that out. 540 00:33:01,800 --> 00:33:03,800 I I tend to tinker more than I should. 541 00:33:04,920 --> 00:33:08,760 Yeah, I hear what you're saying. There are times when I feel the 542 00:33:08,760 --> 00:33:12,320 most important thing we could do is sit on our hands and make 543 00:33:12,320 --> 00:33:18,480 sure we don't touch anything. But when it comes to revisiting 544 00:33:18,480 --> 00:33:25,400 theses, it has to be really organic because, you know, any 545 00:33:25,400 --> 00:33:31,840 given measure has its flaws. You know, you revisit it when it 546 00:33:31,840 --> 00:33:36,000 goes down price by 20 percent, 30%. 547 00:33:36,080 --> 00:33:38,800 You know, if it's not going down in price but things are going 548 00:33:38,800 --> 00:33:41,440 wrong, you know, it's a really good time to get out of it. 549 00:33:41,920 --> 00:33:47,360 Probably just as important to be aware of exactly how the 550 00:33:47,360 --> 00:33:51,520 investment is playing out. When it's stable in prices, when 551 00:33:51,520 --> 00:33:55,800 it's gone up or down, 'cause you know to get out without any 552 00:33:55,800 --> 00:33:57,960 damage. When you got it wrong, it's a 553 00:33:57,960 --> 00:34:02,680 beautiful. Place that's called luck and we 554 00:34:02,680 --> 00:34:04,680 can all pay more. Or paying attention. 555 00:34:05,360 --> 00:34:09,280 Or tinkering too much. Yeah, well, sometimes it works, 556 00:34:09,280 --> 00:34:11,080 sometimes it doesn't, right. Right. 557 00:34:11,320 --> 00:34:14,400 But look, that's where, that's where, you know, some people 558 00:34:15,239 --> 00:34:17,920 execute well and others, you know, they have all the data, 559 00:34:17,920 --> 00:34:22,360 they just aren't, you know, don't pull the trigger at the 560 00:34:22,360 --> 00:34:24,080 right moment. Well, I know I've been a pretty 561 00:34:24,080 --> 00:34:26,719 good seller. The holding part I could work 562 00:34:26,719 --> 00:34:29,159 on, but I don't know, maybe I'm not sure that that says I'm a 563 00:34:29,159 --> 00:34:31,600 good investor at all, but I'm always working on it, trying to 564 00:34:31,600 --> 00:34:33,600 get better. So over time, hopefully. 565 00:34:34,120 --> 00:34:36,080 Well, that's right. And it's, you know, the nice 566 00:34:36,080 --> 00:34:38,239 thing is it's a thinking man's business. 567 00:34:38,960 --> 00:34:41,440 Yeah, just can't overthink it, you know? 568 00:34:41,520 --> 00:34:45,000 But but in our background, you had mentioned that you had a 569 00:34:45,000 --> 00:34:50,239 view that we were sort of approaching sort of AI guess 570 00:34:50,239 --> 00:34:52,920 you, you'd said an overextended bull market peak. 571 00:34:52,920 --> 00:34:55,520 You said we're likely to get there, but we're not there yet. 572 00:34:55,520 --> 00:34:59,680 And I'm curious to hear you riff on that and and talk about why 573 00:34:59,680 --> 00:35:01,040 you think that. Sure. 574 00:35:01,040 --> 00:35:04,240 Well, you know, the, the, the simple reason why I think we'll 575 00:35:04,240 --> 00:35:07,960 get to a bull market cyclical peak that's overextended is 576 00:35:07,960 --> 00:35:13,840 because I, I think we, that market cycles exist and that 577 00:35:14,880 --> 00:35:20,200 we're in a market cycle and exuberant tops happened and I 578 00:35:20,240 --> 00:35:22,440 have happened in the past and I think it'll happen again. 579 00:35:23,320 --> 00:35:28,200 Why do I think it's, it's three to five years in front of us, 580 00:35:29,840 --> 00:35:33,120 which is a yeah through two years, six years, eight years. 581 00:35:33,760 --> 00:35:39,720 Well, because these cycles tend to be long lived and you know 582 00:35:39,760 --> 00:35:45,360 the the market through was let me look at the calendar 2024, 583 00:35:45,360 --> 00:35:48,440 2008 we're a number of years into an advance. 584 00:35:49,960 --> 00:35:53,840 So you would not, you would not reset on the COVID pull back. 585 00:35:54,040 --> 00:35:57,480 No, no, absolutely not. You know, if if you look at the 586 00:35:57,480 --> 00:36:03,960 market advance from 1978 to 2000, which was 22 years, you 587 00:36:03,960 --> 00:36:07,840 know, you had the market break of 87 and then the recession of 588 00:36:07,840 --> 00:36:11,360 91. Those two things, you know, gave 589 00:36:11,360 --> 00:36:15,720 you corrections over a 20 year period and and big ones, you 590 00:36:15,720 --> 00:36:20,320 know, 30 ish percent whatever. I see COVID as more of that sort 591 00:36:20,320 --> 00:36:23,040 of phenomenon within a longer term advance. 592 00:36:23,040 --> 00:36:25,520 And obviously we're at higher levels than we were before 593 00:36:25,520 --> 00:36:28,400 COVID. So the advance is intact. 594 00:36:28,680 --> 00:36:34,520 Now then the question is OK, like so why do I think that this 595 00:36:34,520 --> 00:36:37,320 is not the top right And the answer there is because the 596 00:36:37,720 --> 00:36:40,840 there's froth in this market in certain places and areas. 597 00:36:42,480 --> 00:36:48,240 But the amount of froth relative to global GDP in 1999, two 598 00:36:48,240 --> 00:36:51,680 thousand is just orders of magnitude different than the 599 00:36:51,680 --> 00:36:57,280 amount of froth today. And I'm not a quant, I'm not 600 00:36:57,280 --> 00:37:01,120 going to prove that to you mathematically, but I was there 601 00:37:01,560 --> 00:37:07,520 and I saw the numbers in terms of total market caps of very, 602 00:37:07,520 --> 00:37:11,360 very small businesses and they were really big relative to US 603 00:37:11,360 --> 00:37:15,680 and global GDP, not relative to a $2 billion revenue based 604 00:37:15,680 --> 00:37:20,000 business. And and so I don't think the 605 00:37:20,520 --> 00:37:25,160 level of extension today is anything like it was in 2000. 606 00:37:25,600 --> 00:37:28,440 And I and because I think there were cycles, I think we'll get 607 00:37:28,440 --> 00:37:30,240 there. And I think there are a lot of, 608 00:37:30,640 --> 00:37:35,040 you know, sort of anecdotal pieces of data that suggest 609 00:37:35,040 --> 00:37:38,240 we're we're sort of on the way. What? 610 00:37:38,240 --> 00:37:44,200 What would those be? Well, you know, there's, there 611 00:37:44,200 --> 00:37:48,360 are exciting new technologies that are driving innovation in 612 00:37:48,360 --> 00:37:52,480 the year 2024. You know, I don't know where the 613 00:37:52,480 --> 00:37:57,440 blockchain goes, but in 1992 I didn't know where networking 614 00:37:57,440 --> 00:38:01,240 technology was going to go. It gave us the Internet five 615 00:38:01,240 --> 00:38:03,960 years later, whatever and it was happening. 616 00:38:04,240 --> 00:38:09,680 AI obviously it is going to have a big impact on the world. 617 00:38:10,360 --> 00:38:14,120 The electrification of transportation is a major 618 00:38:14,120 --> 00:38:17,640 transformative phenomenon that's going to play out over 20-30 619 00:38:17,640 --> 00:38:19,600 years. Those kinds of things. 620 00:38:19,600 --> 00:38:23,800 And and what's happening in medical technology is just 621 00:38:23,800 --> 00:38:27,680 amazing right now. I mean, the, the pace of new 622 00:38:27,680 --> 00:38:32,040 things that are coming out of labs that are curing cancers and 623 00:38:32,160 --> 00:38:36,160 fixing obesity are just, it's just there's a lot of 624 00:38:36,160 --> 00:38:40,400 technological innovation happening and that tends to 625 00:38:40,400 --> 00:38:44,560 create, you know, a bit of a gold rush and we're investing. 626 00:38:44,560 --> 00:38:47,360 Plus a lot of stimulus. Plus a lot of stimulus. 627 00:38:47,600 --> 00:38:50,000 No, no lack of stimulus. In the next several years. 628 00:38:50,800 --> 00:38:53,320 We've adjusted to to higher interest rates. 629 00:38:53,360 --> 00:38:56,960 So yeah, we might have a bump in the next six months, but I don't 630 00:38:56,960 --> 00:38:59,080 see why we wouldn't go to an exuberant peak. 631 00:39:00,800 --> 00:39:02,720 What's, what's the argument against that? 632 00:39:02,720 --> 00:39:07,600 That this is the top it it's not extended like other tops have 633 00:39:07,600 --> 00:39:11,480 been extended. That's just probably easy to 634 00:39:11,480 --> 00:39:14,200 demonstrate mathematically. Yeah. 635 00:39:14,200 --> 00:39:17,200 Well, so the other thought that you had that I I thought was 636 00:39:17,200 --> 00:39:21,840 very interesting was that the go. 637 00:39:22,000 --> 00:39:23,720 So the sentence that you wrote was go, go. 638 00:39:23,720 --> 00:39:26,120 Growth names bring you to the ultimate top. 639 00:39:26,400 --> 00:39:28,520 Less exciting companies don't participate. 640 00:39:28,880 --> 00:39:33,720 The key is to buy true growth stocks trading at value prices, 641 00:39:33,720 --> 00:39:36,560 which you had said earlier. If you simply buy cheap stocks, 642 00:39:36,560 --> 00:39:38,480 they will underperform into a major top. 643 00:39:38,480 --> 00:39:40,480 I was curious as to why you said that. 644 00:39:40,760 --> 00:39:44,560 Well, the cheap stock part, well, they get left behind for 645 00:39:44,560 --> 00:39:47,200 sure. You know, being an exuberant 646 00:39:47,200 --> 00:39:50,160 top, what's what people buy is what's fun. 647 00:39:50,600 --> 00:39:53,200 You know, people talk about stocks at cocktail parties. 648 00:39:53,200 --> 00:39:57,560 They talk about getting rich on this crazy new company. 649 00:39:58,560 --> 00:40:00,560 Yeah, the shoeshine boy gives you tips. 650 00:40:00,880 --> 00:40:04,480 He doesn't give you a tip that, you know, Bank of America is at 651 00:40:04,960 --> 00:40:08,480 that at points the one and one and 1/4 times book and and and 652 00:40:08,480 --> 00:40:14,480 JP Morgan's at 1.7 times book. So he's like these guys are are 653 00:40:14,480 --> 00:40:17,040 going to have helicopters that are going to travel around the 654 00:40:17,040 --> 00:40:19,520 world. And so, yeah, it's and look, 655 00:40:19,520 --> 00:40:23,600 it's it's the gold rush stuff that gets everyone's attention. 656 00:40:23,600 --> 00:40:26,520 And yeah, other investments that are stayed and boring get. 657 00:40:26,920 --> 00:40:32,040 Get left on the sidelines and you know, in 1999, two thousand 658 00:40:32,200 --> 00:40:34,880 value managers were just quitting that they had 659 00:40:35,200 --> 00:40:41,520 underperformed dismally. 2000 came and 2001 came. 2002 came 660 00:40:41,520 --> 00:40:46,040 and value managers didn't see the same declines as the growth 661 00:40:46,040 --> 00:40:48,160 guys. But you had to still have a 662 00:40:48,160 --> 00:40:52,800 portfolio to have had it mattered and an awful lot of 663 00:40:52,800 --> 00:40:54,760 people. And and what happens in those 664 00:40:55,360 --> 00:41:02,760 excited moments, I think is that people stop doing the boring 665 00:41:02,760 --> 00:41:05,440 stuff and switch into the exciting stuff. 666 00:41:05,440 --> 00:41:07,720 And that's what makes it a bubble and that's what makes it 667 00:41:07,720 --> 00:41:09,960 a top. And and you know, you ask me 668 00:41:09,960 --> 00:41:11,880 like, why do I think we're not there yet? 669 00:41:13,800 --> 00:41:19,000 There are moments where there's a lot of invest where the public 670 00:41:19,000 --> 00:41:25,000 is interested in investing. But yeah, the, the degree to, of 671 00:41:25,960 --> 00:41:29,720 interest in investing today is not consistent with the shoe 672 00:41:29,720 --> 00:41:35,160 shine guy giving you stock tips. And and I think you'll get there 673 00:41:35,680 --> 00:41:37,160 because I believe in cycles. Yeah. 674 00:41:37,560 --> 00:41:44,920 Well, if you'd asked me in 20/22 was 2021 the top, I would have 675 00:41:44,920 --> 00:41:49,160 said yeah, maybe. I would have said probably like 676 00:41:49,400 --> 00:41:54,240 70% sure, but now I don't think that's necessarily true. 677 00:41:54,240 --> 00:41:56,480 You've seen a lot all these well, you've seen a lot of 678 00:41:56,480 --> 00:42:01,040 companies sort of pop whether Zoom or whatever, but the bull 679 00:42:01,040 --> 00:42:05,760 market runs on and you know, at least for at least for good 680 00:42:05,760 --> 00:42:09,760 quality companies and and the value factor is outperformed 681 00:42:09,760 --> 00:42:12,360 since 2020. So you know, there's a lot of 682 00:42:12,360 --> 00:42:14,480 there and there's still a lot of cheap stocks out there. 683 00:42:14,480 --> 00:42:17,120 I think I may be wrong when I say that, but I believe that to 684 00:42:17,120 --> 00:42:19,240 be true. No, I think you're right. 685 00:42:19,240 --> 00:42:24,880 And and the the stocks that are richly priced or richly priced 686 00:42:24,880 --> 00:42:29,000 for very good reasons like Nvidia's a very, very expensive 687 00:42:29,000 --> 00:42:33,680 stock and probably it and it'll take 20 years for that company's 688 00:42:33,680 --> 00:42:36,880 business to grow into that market cap. 689 00:42:37,520 --> 00:42:42,200 But they're a really well positioned company that is doing 690 00:42:42,280 --> 00:42:51,200 a fantastic job and arguing that it's frothy a little, but not a 691 00:42:51,200 --> 00:42:53,560 lot. And you look at the places where 692 00:42:53,560 --> 00:42:57,960 there are companies, you know, that are consequential market 693 00:42:57,960 --> 00:43:00,480 caps that are really, really frothy. 694 00:43:01,480 --> 00:43:08,080 Yeah, yeah, that's, that's part of the the, I guess the Mag 7 695 00:43:08,080 --> 00:43:10,640 debate, for lack of a better term, that I find a little bit 696 00:43:10,640 --> 00:43:13,720 like makes me want to yawn is exactly what you're saying. 697 00:43:13,720 --> 00:43:18,000 I mean, if you look at a lot of the, a lot of the Bag 7 at least 698 00:43:18,800 --> 00:43:22,040 you know, specifically Microsoft, Google, Facebook, 699 00:43:22,040 --> 00:43:26,000 Amazon, I mean just the sheer amount of compounding of wealth 700 00:43:26,000 --> 00:43:30,520 like true economic value that they have done is incredible. 701 00:43:30,520 --> 00:43:38,000 Global scale dominate important businesses disrupted the world. 702 00:43:38,720 --> 00:43:41,920 These are real. Like, you know, you could argue 703 00:43:41,920 --> 00:43:45,720 whether the PE is right or wrong, but you can't argue that 704 00:43:45,960 --> 00:43:49,240 that that they are not exceedingly valuable businesses. 705 00:43:50,120 --> 00:43:53,200 Yeah, Well, I I think about it sometimes, like baseball, 706 00:43:53,400 --> 00:43:56,160 eventually you're the team that overpays Albert Pujols. 707 00:43:56,160 --> 00:44:00,120 But you know, the teams that that rode that wave up it, it 708 00:44:00,120 --> 00:44:02,840 carried them for a very long, well, one team we carried the 709 00:44:02,840 --> 00:44:05,520 Cardinals for a very long time, right, so. 710 00:44:06,360 --> 00:44:08,640 I'm going to agree with you, I have no idea what you're talking 711 00:44:08,640 --> 00:44:11,120 about. Well, he's he was very, very 712 00:44:11,120 --> 00:44:13,560 good, very good. But but eventually somebody. 713 00:44:13,560 --> 00:44:14,760 Signs players. Paying. 714 00:44:16,040 --> 00:44:18,480 Oh, I'm sorry, off of professional sports. 715 00:44:19,520 --> 00:44:23,160 I'm sorry, I, I, I saw a little video the other day. 716 00:44:23,160 --> 00:44:26,120 It was like game six and it was and no one was in the stands and 717 00:44:26,120 --> 00:44:28,080 somebody just said like this about right. 718 00:44:28,480 --> 00:44:31,560 But hopefully, hopefully their their fortunes turn at some 719 00:44:31,560 --> 00:44:33,160 point. Interesting. 720 00:44:33,480 --> 00:44:36,240 So what do you get excited to come to work to do? 721 00:44:36,240 --> 00:44:39,720 I mean, are you somebody that just like loves learning and 722 00:44:40,240 --> 00:44:44,000 then the investment ideas flow from that or do you, I mean, do 723 00:44:44,000 --> 00:44:46,360 you enjoy being the entrepreneurial side of of 724 00:44:46,360 --> 00:44:49,920 building the business like what gets you going at this stage? 725 00:44:50,160 --> 00:44:53,080 I I love finding great ideas that I find really, really 726 00:44:53,080 --> 00:44:55,480 compelling. I mean, that's to me the best 727 00:44:55,480 --> 00:44:59,760 when you trip across something and you first see it, you're 728 00:44:59,760 --> 00:45:04,320 like, yeah, whatever. And then when you turn it over 729 00:45:04,320 --> 00:45:07,920 and turn it over and turn it over and be like, wow, this is 730 00:45:07,920 --> 00:45:09,720 great. Like I don't know if I'll make 731 00:45:09,720 --> 00:45:12,520 money for sure, but it's highly, highly likely. 732 00:45:13,080 --> 00:45:18,680 Yeah, that's totally motivates me, finding those, those, those 733 00:45:18,720 --> 00:45:24,360 good opportunities and getting confidence that they are good 734 00:45:24,360 --> 00:45:27,720 opportunities, long or short. Yeah. 735 00:45:29,400 --> 00:45:32,560 And I like it when they work out, it's much more pleasant. 736 00:45:34,760 --> 00:45:37,200 Indeed it is for everyone involved. 737 00:45:37,200 --> 00:45:40,480 That's right. I, I, I mean, I guess the short 738 00:45:40,480 --> 00:45:43,800 side less for everyone involved, but I would argue it's good for 739 00:45:43,800 --> 00:45:45,360 the market to have shorts be right. 740 00:45:46,160 --> 00:45:50,080 You know, look, sometimes companies get too frothy and 741 00:45:50,080 --> 00:45:55,880 they're they're scams and shams and it's better that they get 742 00:45:56,480 --> 00:45:58,760 identified sooner rather than later. 743 00:45:59,360 --> 00:46:02,640 And you know you're only making money on a short if something's 744 00:46:02,640 --> 00:46:05,400 wrong. And so you know, identifying 745 00:46:05,400 --> 00:46:07,640 something wrong sooner is better than later. 746 00:46:09,200 --> 00:46:14,840 In your experience, does shorting a company that has 747 00:46:14,840 --> 00:46:20,000 things going in the correct direction but is frothy, is that 748 00:46:20,160 --> 00:46:24,080 that that strikes me as a much more scary proposition than 749 00:46:24,080 --> 00:46:27,040 looking for the ones that are truly have like deterioration 750 00:46:27,040 --> 00:46:29,800 under the hood and sort of pressing those? 751 00:46:30,320 --> 00:46:33,760 Yeah, To, you know, I, I think of it as the, the inverse of a 752 00:46:33,760 --> 00:46:37,160 value trap. You know, when you have a 753 00:46:37,320 --> 00:46:41,000 business that is declining in value and declining in value and 754 00:46:41,000 --> 00:46:45,480 declining in value, you know, you might buy it cheap, but 755 00:46:45,480 --> 00:46:49,880 you're going to sell it cheaper. You know, shorting a great 756 00:46:49,880 --> 00:46:52,960 company whose business is growing, the underlying value is 757 00:46:52,960 --> 00:46:57,320 growing just because it's too expensive is, is a very foolish 758 00:46:57,320 --> 00:47:03,680 idea for two reasons. One, because ultimately the tide 759 00:47:03,680 --> 00:47:06,880 is against you, right, because they're growing in value. 760 00:47:07,560 --> 00:47:12,440 And two, the fact that you figured out that's overpriced, 761 00:47:13,000 --> 00:47:16,640 so has everybody else. Like everyone knows it's 762 00:47:16,640 --> 00:47:21,640 expensive, but expensive stocks can get much more expensive. 763 00:47:21,640 --> 00:47:25,920 And they're expensive in part because they get culty and gets, 764 00:47:26,200 --> 00:47:29,480 they generate an investor base that that have passion around 765 00:47:29,480 --> 00:47:32,440 them and those go to high prices. 766 00:47:32,680 --> 00:47:42,920 So, you know, you the upsides risk is not that it, you know, 767 00:47:42,920 --> 00:47:47,120 goes to to 50% over value, but that goes to 4X or 5X over 768 00:47:47,120 --> 00:47:50,160 value. And you know, if you're starting 769 00:47:50,160 --> 00:47:53,040 at 3X overvalued and you're growing a 5X overvalued, it's 770 00:47:53,240 --> 00:47:56,520 not a good place to be, especially when the value is 771 00:47:56,520 --> 00:47:59,200 growing over time. And look, we don't always get it 772 00:47:59,200 --> 00:48:00,680 right when we look for those things. 773 00:48:00,680 --> 00:48:03,440 And sometimes we think business conditions are deteriorating and 774 00:48:03,440 --> 00:48:07,280 they're not really, but, but our effort is to find things that 775 00:48:07,600 --> 00:48:11,640 can't last and, and investors are sure they will last. 776 00:48:13,240 --> 00:48:16,920 Yeah. Who do you look for an analyst? 777 00:48:16,920 --> 00:48:19,760 Do you like to hire somebody young and train them up, or do 778 00:48:19,760 --> 00:48:22,520 you prefer to hire somebody that's got some experience? 779 00:48:23,160 --> 00:48:27,520 My my move has always been to hire novices and let them grow 780 00:48:27,520 --> 00:48:31,280 into learning the process. I have a mindset and and a 781 00:48:31,280 --> 00:48:35,960 strategy of how we look at investments and I'm not really 782 00:48:35,960 --> 00:48:39,000 looking for someone to come in with a different strategy that 783 00:48:39,040 --> 00:48:44,360 that I learned from. I I strongly prefer to to have 784 00:48:44,480 --> 00:48:49,200 people fresh to the business to grow into responsible rules. 785 00:48:50,120 --> 00:48:52,400 Yeah, that makes sense, especially given I think your 786 00:48:52,400 --> 00:48:53,960 path in. Yeah. 787 00:48:54,920 --> 00:48:57,520 Yeah, cool. Well, I got to tell you, man, 788 00:48:57,520 --> 00:49:00,840 I've enjoyed this. This has been I, I can't, I 789 00:49:00,840 --> 00:49:02,520 racked my brain. I said, all right, how am I 790 00:49:02,520 --> 00:49:03,680 going to talk to him about energy? 791 00:49:03,680 --> 00:49:05,960 Because it's not something that I really know about. 792 00:49:05,960 --> 00:49:08,720 And it's, it's stuff that other people really know about. 793 00:49:08,720 --> 00:49:11,320 And here we are. We talked about everything but 794 00:49:11,360 --> 00:49:16,320 energy except for that you, you accumulated it when it was very 795 00:49:16,320 --> 00:49:19,600 asymmetric to the upside. And and that makes a lot of 796 00:49:19,600 --> 00:49:20,920 sense to me. That's right. 797 00:49:20,920 --> 00:49:23,240 And and look, we have some energy names. 798 00:49:23,240 --> 00:49:27,280 We're short today because the valuations don't make sense 799 00:49:27,280 --> 00:49:31,040 relative to the underlying assets and and you know, we have 800 00:49:31,040 --> 00:49:33,920 a lot of long exposure which is going to go down if energy 801 00:49:33,920 --> 00:49:38,440 prices go down South. We're happy to have some short 802 00:49:38,440 --> 00:49:41,200 exposure so that if energy prices do go down, we make money 803 00:49:41,200 --> 00:49:42,840 on those. Yeah. 804 00:49:43,960 --> 00:49:49,720 The, the thing that that I get hung up on is just the and, and 805 00:49:49,720 --> 00:49:52,640 it's probably a mental block and maybe it's changed, but it's an 806 00:49:52,640 --> 00:49:55,840 industry that tends to not have the best capital allocation 807 00:49:55,840 --> 00:49:59,480 histories. But maybe, maybe that's maybe 808 00:49:59,480 --> 00:50:01,640 that's an assumption. No, you're right and you're 809 00:50:01,640 --> 00:50:03,520 wrong. You're very right. 810 00:50:04,240 --> 00:50:13,080 For the period from 2000 until 2000, whatever 2016, you know, 811 00:50:13,240 --> 00:50:17,160 not so much for the path or whatever it was 2000. 812 00:50:18,080 --> 00:50:22,480 It's been a while since energy companies have been profligate. 813 00:50:22,760 --> 00:50:25,880 There was a long time that energy companies were profligate 814 00:50:26,120 --> 00:50:31,120 and it part of that was around the Shell innovation, you know, 815 00:50:31,120 --> 00:50:36,280 that they figured out how to get energy out of formations that we 816 00:50:36,280 --> 00:50:38,240 knew was there, just couldn't come out. 817 00:50:38,240 --> 00:50:41,200 Then they figured it out and it drove a lot of investment and 818 00:50:41,600 --> 00:50:46,240 they got exuberant and too much capital went in and returns went 819 00:50:46,240 --> 00:50:50,760 negative for a really long time. You know, by the time we really 820 00:50:50,760 --> 00:50:56,680 built our exposure in 2021, I guess we've got a long time of 821 00:50:56,680 --> 00:51:00,120 under investing in energy and everything was idle. 822 00:51:00,320 --> 00:51:03,640 You know, all the offshore rigs were idle, all the land rigs 823 00:51:03,640 --> 00:51:07,120 were idle and it had been a long slog down. 824 00:51:07,640 --> 00:51:11,320 And you know you talked about, you made a comment about 825 00:51:11,320 --> 00:51:13,600 commodities going down in price over time. 826 00:51:14,520 --> 00:51:22,280 And I was on ATV program in 2000 or so and I was on with Jimmy 827 00:51:22,280 --> 00:51:28,000 Rodgers, who started with with George Soros in the 1960s, one 828 00:51:28,000 --> 00:51:33,640 of the best investors going for a long, long time and investing 829 00:51:34,360 --> 00:51:39,320 powerhouse. And it's like, yeah, it's, you 830 00:51:39,360 --> 00:51:42,160 know, buying commodities. They've underperformed for a 831 00:51:42,160 --> 00:51:45,120 long time. Like, come on, they haven't gone 832 00:51:45,120 --> 00:51:49,040 anywhere in 20 years. Look at the commodity index and 833 00:51:49,040 --> 00:51:52,640 like, it has a base value from 19, whatever. 834 00:51:52,880 --> 00:51:55,560 And it was 100. And by the way, The thing is 105 835 00:51:55,560 --> 00:51:57,800 now. So, you know, I don't have to be 836 00:51:57,800 --> 00:52:02,000 that good of the math to see they've gone nowhere. 837 00:52:02,880 --> 00:52:05,080 And he's like, yeah, but these are long cycles. 838 00:52:06,600 --> 00:52:09,560 And, you know, the next eight years, man, was he right and was 839 00:52:09,560 --> 00:52:14,920 I wrong. So yeah, sometimes they're just 840 00:52:14,920 --> 00:52:16,920 long cycles. And sometimes. 841 00:52:17,240 --> 00:52:20,680 And look, energy has been a good investment, you know, over many, 842 00:52:20,680 --> 00:52:24,800 many long periods of time. And it went for an extended 843 00:52:24,800 --> 00:52:27,000 period where you're right, it was terrible. 844 00:52:27,720 --> 00:52:30,640 But that's one of the important things to think about in terms 845 00:52:30,720 --> 00:52:34,280 of what you are willing to look at and what you're none. 846 00:52:34,440 --> 00:52:37,080 Because in 2000 I was like, yeah, commodities. 847 00:52:38,880 --> 00:52:40,320 And I was like, well, wait a minute. 848 00:52:40,880 --> 00:52:45,440 Turns out that that that was wrong for an extended period, 849 00:52:46,440 --> 00:52:51,120 so. Yeah, no, I, I, I'm, I'm trying, 850 00:52:51,120 --> 00:52:53,600 right? I, I'm, I'm open, I've done work 851 00:52:53,600 --> 00:52:56,680 on, on energy, I've been surprised at some of the 852 00:52:56,680 --> 00:52:59,840 results. And the one I'm kind of kicking 853 00:52:59,840 --> 00:53:02,120 myself for is I should have bought Valero a couple months 854 00:53:02,120 --> 00:53:04,600 ago, but alas, I did not. And we'll see. 855 00:53:04,600 --> 00:53:07,760 I've I've done it long enough to know that there's a good chance 856 00:53:07,760 --> 00:53:09,720 the shares come down to where I didn't buy them and. 857 00:53:09,720 --> 00:53:11,600 Maybe you'll see if and you won't buy them again. 858 00:53:13,080 --> 00:53:14,880 That's probably true. You're not wrong. 859 00:53:15,720 --> 00:53:18,640 So, all right, cool. Well, thank you so much for your 860 00:53:18,640 --> 00:53:19,760 time. I appreciate it. 861 00:53:20,240 --> 00:53:22,720 I hope it was enjoyable for you. Yeah, you've made it really, 862 00:53:22,760 --> 00:53:24,440 really pleasant. Thank you very much for spending 863 00:53:24,480 --> 00:53:25,920 the hour with. Me. 864 00:53:25,920 --> 00:53:27,040 All right. Well, take care of yourself. 865 00:53:27,320 --> 00:53:28,760 You too. Thanks.