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The Big Short Partners Reunite: Rates, AI, Gold and Two Stock Picks | The Real Eisman Playbook Ep 75 — Transcript

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0:05Hey, it's Steve Eisman and welcome to
0:06another episode of The Real Eisman
0:08Playbook. So, when this podcast got
0:11started April of last year, one of the
0:13first guests were my former partners,
0:16Vincent Daniel, Porter Collins, and
0:18Danny Moses. We had this really great
0:20conversation. And since last April, I
0:24mean, to say that the world has changed
0:27sounds stupid. It's it's just so
0:29incredible how much things have changed.
0:31And you know, sometimes it's a good idea
0:33not to interview someone, but to sit
0:35down with some old friends and kind of
0:37hash things out. So that's what we're
0:39going to do today. Porter Vincent,
0:41welcome back.
0:42>> Good to be here.
0:42>> Thanks for having us.
0:43>> So let's start. I mean, where could we
0:46start? We could start with anything
0:47this. Let's start with Scott Bessant.
0:50Okay. Um, we'll do a little bit we'll do
0:52like a lightning round like Porter, what
0:55do you think about what the hell's going
0:56on with Scott Besson and the Treasury
0:58Department buying [laughter] buying
1:00long-term treasuries?
1:01>> Well, this is our old sandbox, right?
1:03This is the Fed. This is monetary
1:04policy. This is the Treasury.
1:07I think they're screwed.
1:10you know, they're they're at a point
1:13where they have to try these
1:14extraordinary measures because they're
1:16at they're out of things to do and
1:20they're trying to keep a lid on yields,
1:22but inflation's a problem. It's still
1:24high and you know, Wars is doing his
1:28little dance, but they can't do
1:30anything. And and at this point, you
1:32know, I I see it as interest expense
1:35plus entitlements isund and call it 10%
1:38of tax receipts. There's nothing you can
1:41do. You can't cut interest unless you
1:43Well, you certainly can't cut interest.
1:45I mean,
1:46>> you can in theory cut entitlements, but
1:48no one is going to is even talking about
1:49>> We've been talking about this for how
1:51long, Steve? And they haven't done
1:52anything long time.
1:53>> Yeah.
1:53>> Long time.
1:54>> And so I I don't know what you do. You
1:56either got to raise taxes a lot, which
1:59>> that's not going to happen.
2:00>> Not going to do print,
2:02>> right?
2:03And so, you know, you can see why,
2:06>> you know, I think I've had as much
2:08conviction in this precious metals trade
2:10as I've had in anything in a long, long
2:13time. So, explain to viewers who are not
2:15familiar with precious metals.
2:18>> What is the relationship between on the
2:21one hand what you're talking about
2:23interest rates and on the other hand
2:25precious metals? Because
2:27>> it's not intuitively obvious,
2:29>> no
2:30>> to most people that they're connected.
2:32So explain it to people like why do you
2:34think owning precious metals is is the
2:37result of everything you just talked
2:38about with respect to interest rates?
2:39Well, it goes back, you know, you got to
2:40take a little history lesson, but in
2:42terms of um central banks used to own
2:46assets, right? When you own other
2:48person, when you own debt, it's a you're
2:49owning a liability, right? And they own
2:52US government bonds. I know it's an
2:54asset, but it's someone else's
2:55liability, right? And so gold is an
2:57asset. And that's why you've seen um
3:00central banks around the world,
3:01including China, buy more and more of
3:03it, right? Right. And so I think you've
3:05crossed or close to crossing depends on
3:07the gold price obviously um as between
3:11gold and treasuries as which which is
3:13bigger as a percent of central banks
3:16balance sheets.
3:17>> So you're talking mostly about gold.
3:18>> Gold. Yes. Gold. And um you know gold's
3:23nothing. It's just it's an asset but
3:25it's an asset that's been it's doesn't
3:27have any debt. Doesn't you know just
3:29sits there right? And so it's a rock.
3:31It's a rock. and it's formed in outer
3:34space, but it's it's a rock and it it
3:36basically everything else is crashing
3:39against it, right? And so that's the
3:41sort of thesis. It just stays there.
3:42Everything else goes down, right? So is
3:45it value in dollars goes up because the
3:47dollar goes down and that's been the
3:49history. And if you look at the chart of
3:50it, it the dollar, US dollar has gone
3:52down and down a lot in the last hundred
3:55years. And I think that trend continues
3:57and probably, you know, accelerates at
4:00this point because they're out of
4:01arrows. So you like gold as kind of a
4:03result of all this stuff?
4:04>> Yeah. I I can't tell you what it's going
4:06to do today, tomorrow, but like I think
4:08>> Who could?
4:08>> Yeah. But I think, you know, if I look
4:10back in in five years, I think it's
4:12going to be a lot higher
4:14>> then. If you put yourself in the shoes
4:17of Bessant, I like doing this. Like what
4:19would
4:19>> you love doing that?
4:20>> I do. And I would say, well, what would
4:22I do? Well, the first thing I would do
4:24is I would go up to
4:24>> Well, by the way, before you say what
4:26you would do, you're in Besson's shoes.
4:29>> Yeah.
4:30articulate the problem from his
4:33perspective. What's the problem?
4:34>> So the problem is is that right now I
4:37have as Porter said expenses that are
4:41higher than receipts.
4:42>> Right?
4:42>> That's one of the issues
4:45to the point where 40 trillion times an
4:48interest rate is a big number and it's
4:50really eating into all the other things
4:51the government can do
4:52>> and going higher.
4:53>> So you need rates lower,
4:55>> right? So that so my that's the problem
4:58my primary agenda my issue is to get
5:00rates lower because that's the problem
5:02>> and it helps the economy
5:03>> of course and of course it helps the
5:04economy. So the first thing I would do
5:07>> is go up to my boss which is President
5:10Trump and say respectfully Mr. President
5:14can you end this war because if you can
5:16end the war maybe we could get oil down
5:19from say 86 to 60. Inflation
5:23expectations will come crashing down.
5:25rates will come crashing down. And so
5:27that gives us time.
5:29>> And the president just said no.
5:31>> Well, the president just said, "For some
5:34reason, I can't." Right? I think he's
5:36trying to be fair, but it's not working.
5:39>> Okay?
5:39>> So then what do you do? Right? Then you
5:42say, "Well, then we need to cut
5:44entitlements." No. Then we need to raise
5:46taxes. No. Like these are all nos. So
5:49then you start with theatricality and
5:51deception by playing twist games that
5:55the three of us when we were in the
5:57office together and if we saw something
5:58like this we would start laughing at
6:00each other and like what's 4 billion
6:02going to do? Well he said at least 4
6:04billion which means it's infinite. He's
6:06trying to have his draggy moment. Um so
6:08I think he is going to keep trying to
6:12get rates down because that's what he
6:14needs to do over the next six months to
6:16nine months. It has to.
6:17>> Why do you say 6 to 9 months?
6:19>> Because I just I think they need time
6:23for
6:26inflation expectations to come down. Um
6:28and I you're trying to make a bet that
6:32somehow someway
6:34economic growth will slow a little bit,
6:37not a lot, to a point where inflation
6:39can come down to the point where rates.
6:42But but this is all a bet that they're
6:43trying to make. And in the interim, I
6:45think they're playing a lot of games to
6:47try and pull forward lower rates by
6:51signaling to the market, this is what
6:53we're going to do. I'm going to get what
6:55I want. You better follow my lead so
6:58rates can come down.
6:59>> Okay. All right.
7:00>> And and the and the war was just a a
7:03massive strategic error from, you know,
7:06a interest rate and debt perspective. We
7:09I think he thought they would be over
7:11in, you know, two weeks. He did
7:14>> and he That's a bad miss.
7:16>> Yeah. Okay. All right. I'm going to
7:18voice my opinion.
7:19>> Okay. Go for it.
7:20>> Here it comes. So, you know, I'm not
7:22nearly as hung up on the deficit as you
7:24guys. As as you know, I have this whole
7:26comedy routine where I go people like
7:28you are part of the oil the deficit. You
7:31know, we only talking about this for the
7:33last 25 years. Um,
7:36I don't think
7:38despite how bad it is that it's like
7:43eminent doom and destruction at this
7:45point. I don't think I don't think we're
7:46close, but we're moving in that
7:49direction.
7:49>> I mean, the question is defined doom and
7:51destruction. Like we're not going to
7:53>> think the rates are going to go 50 basis
7:55points higher in the end of the day is
7:56not the worst thing is not to me the
7:58worst thing in the world. I think the
8:00the mistake that
8:03Bessant made is basically putting a line
8:06in the sand. Now he has to defend it.
8:08>> Yes.
8:08>> That's this is what Dr. Miller said. By
8:10the way, did you read about the scandal
8:11about JCO Miller?
8:12>> No,
8:13>> he wrote it on AI. He wrote
8:15>> Oh, that that he admitted to it.
8:17>> He admitted to it. It's like that's why
8:19it's not a scandal.
8:20>> My my my response to him is you could
8:22have just written it yourself. It's not
8:24that complicated. You know, why would
8:25you do that? It's lazy. He said he's an
8:27econ major, not not an English major.
8:29>> You could still write a stupid editorial
8:32that's five paragraphs long. It's not
8:34that complicated. It
8:35>> was 100% written by
8:36>> 100% every word. Every word. So
8:41I think it's a bad sign. I think that
8:43that doing it is actually the sign of
8:45weakness. Not the problem is not the
8:47sign of weakness. Doing it.
8:50>> You're coming our way.
8:50>> I'm a little more nervous than I've
8:52been. And let's leave it at that. So I
8:55what we would contend always was that
8:58when you woke up in the morning and you
9:00turned on CNBC,
9:02>> right,
9:02>> and you saw rates benign, Nvidia up,
9:07>> Apple up,
9:08>> that made everyone come and said and
9:11said
9:12>> nothing's wrong here, right
9:15underneath the surface, the amount of
9:18work that they're doing to make sure
9:20that everyone wakes up in the morning
9:22and sees calm.
9:24I think is incredible. And this is the
9:26first time that people are starting to
9:28see what we see.
9:30>> It was just so out in the open that it
9:32couldn't be hidden anymore. Right.
9:33Right. And saying like to me it's like
9:36he's been doing this for about 5 years.
9:38>> 10 years.
9:39>> 15 years.
9:40>> Well, the Fed has the Fed has.
9:42>> The Fed has correct. The irony here is
9:43that is that Wars comes in and says, "I
9:46don't want to do this anymore cuz he's
9:47in a box."
9:48>> Right. And Besson says, "I'm going to
9:50replace you."
9:50>> I have a theory for that.
9:51>> Okay. Oh, please share.
9:53>> So the theory is that let let me provide
9:56let me just explain because viewers
9:58understand this.
9:59>> So the Fed over since basically 2010 has
10:02done quantitative easing multiple times
10:05where the Fed goes out and buys
10:07treasuries with the idea of of bringing
10:10interest rates down. That's supposed to
10:11jumpst start the economy. It never
10:13helped the economy but it did help the
10:15stock market go up. So Walsh as a new
10:17head of the Fed has basically said I
10:20don't want to play that game anymore. I
10:21don't want to do quantitative easing and
10:23I don't want and what's more I don't
10:25want to talk about it. So and so he's
10:28stepped aside and they're still doing QE
10:31every day. They just don't call it Q.
10:34They're printing money every day.
10:35>> Yes, they're printing money. They're not
10:37they're not actually going
10:39but he but in theory he has stepped
10:41aside. Now Besson comes in and says I'm
10:43going to do it.
10:44>> That's so you first off they're playing
10:46a great good cop bad cop right? I think
10:50the majority of the market has been
10:53conditioned to look at the Fed as dovish
10:56or hawkish and that's their signal right
10:59so when he's hawkish
11:01>> wash
11:02the market can cool off maybe slow down
11:06maybe market will go down maybe rates
11:08will go down that's the biggest thing
11:09right
11:09>> whereas Besson is wide open
11:12>> and no one really knows
11:13>> because no one has focused on him before
11:14>> kind of no one knows really what the
11:16Treasury is doing what's this twist
11:18thing. What's What's
11:19>> any It's not just It's not just the
11:22Treasury. It's wide open. The entire
11:25fiscal uh you know that we're running $2
11:29trillion deficits or whatever the root
11:31cause of all of this.
11:32>> 6% six or seven% budget deficits.
11:34>> Look, the only the only way that this
11:37that the government is ever going to do
11:39anything about this is if we get close
11:42to the edge.
11:43>> For sure.
11:44>> Yeah. They just said, you know, it's not
11:46just entitlement, it's it's defense. I
11:48mean, it's the whole budget. So, the how
11:50you going to how you going to get the
11:52federal government to you don't even
11:54necessarily have to cut the budget, but
11:55you could, let's say, slow the growth
11:56rate by half. Let's say that's what
11:59that's what you could do. But they're
12:00not going to do it
12:02>> unless things get really bad.
12:03>> Doge lasted a month.
12:06>> A month. Remember that? A month. And
12:09what they cut was nothing. Correct.
12:12>> So, it has to get bad. There was
12:13supposed to be all this fraud and you
12:14know and there probably was but it it's
12:16nothing.
12:16>> But that but that's nothing compared to
12:18what's actually being spent legitimately
12:20on on social security.
12:23You can't say that people what's being
12:25spent on Medicare is illegitimate. It's
12:26just a lot of money.
12:27>> Correct. It's probably a lot of fraud
12:29too. So
12:29>> I'm sure it is.
12:30>> But it's a lot of money.
12:32>> But it's a lot of money and there's
12:33parts of the government I mean the the
12:34defense department you know there's
12:35stuff that the government spends on.
12:36It's not fraud. It's just they spend a
12:38lot of money. So would you con would you
12:40like sort of concede to us that you know
12:43any part you guys were kind of right
12:44about calling you the oil the deficit
12:46[laughter] crowd but I'm not but um but
12:49I'm not saying it as passionately as I
12:51use. All right. [laughter]
12:53>> Just want to put that on record. You
12:55want to put it on record. You got it on
12:57the record. Okay.
12:58>> All right. So let's talk AI. I'm gonna
13:00So I had on a guy named Ed Zitron. He
13:04he's like Mr. negative AI and he does
13:08like the kind of research that that you
13:10guys do but on AI. So he he put out he
13:14puts out something every week that's
13:15like 20 pages long
13:17>> every week,
13:18>> right?
13:18>> And he pointed out something I didn't
13:20know cuz cuz when he he came in, Nvidia
13:22had just had literally just reported the
13:24night before. And so I said to him,
13:27Nvidia's revenue numbers were up over
13:28100%.
13:30and he said, "Yeah, but and then he he
13:33pointed out and I I confirmed this later
13:35in the day that in the 10 Q there's in
13:38note 7 I actually looked this up
13:41>> stuff that we used to do to financial
13:42stock financial stocks. So note 7 says
13:46that the top five direct customers of
13:50Nvidia
13:52accounted for 70% of accounts receivable
13:56in the quarter. Okay. At the end of the
13:57quarter.
13:58>> Yeah. So on the one hand your revenue is
14:00up over 100%. On the other hand it's
14:04totally concentrated in a handful of
14:06names
14:06>> and a couple of those handful of names
14:08are not looking so good. Open AI
14:10certainly
14:11>> open AI is in trouble. So I'm just
14:12curious. I mean I we could talk about
14:14this for the next 10 hours. Give me your
14:16thoughts about the whole what's going on
14:18in AI from where from where you guys
14:20sit.
14:20>> Morning serving.
14:22>> I spoke to a friend. He's a friend of
14:24ours. Yeah.
14:25>> Yourself included.
14:26>> Okay. Uh, and he has one of those jobs
14:28where he would publicly traded company
14:31name not for attribution.
14:33>> Let's call him Mr. X.
14:34>> Mr. X told me that his company's queries
14:38are up, I'm forgetting the percentage,
14:4130, 40%. Tokens, the amount of tokens
14:43he's using for AI,
14:45>> right?
14:45>> But his costs are down something like
14:4760%.
14:49Because
14:49>> because what the company has done
14:52in my words, not his, is centralize all
14:56the queries that are make in AI
14:59and rather than sticking everything in
15:01leading edge trying to figure out what
15:03are Leaning Age frontier queries that
15:05require best-in-class
15:08versus the offtheshelf open source. So
15:12in other words, they're very careful now
15:14about what they send to anthropic and
15:16open AI and everything else they send a
15:19small percentage of the very very
15:20important queries to them and everything
15:22else they let's say they give to the
15:25Chinese openweight models. So therefore
15:27the costs have come down a lot. so
15:28careful that the costs are coming down.
15:30>> Now,
15:31>> let's take that. That's just one
15:33example. So, you can't make a whole
15:36>> uh mosaic on it, but assuming most
15:39enterprises are doing this, right?
15:41Right.
15:42>> How do we get to the returns on invested
15:44capital of all the money that we're
15:46spending uh on artificial intelligence?
15:49So our view is yeah the funding can
15:52continue as we've seen but at the end of
15:56the day are we dealing with a very
15:58similar and Porter is probably going to
15:59speak about this
16:01>> capex boom that history would suggest
16:03you have boom bust and then
16:07>> what we get are are good cycles
16:09afterwards right and that's where we
16:11stand this is like the topic
16:13>> yes
16:14>> I had um Torson Sllock on and he said
16:18you know GDP PE will grow let's say 2%
16:20this year at least half of it is AI
16:23capex.
16:24So if if all of a sudden open AI failed
16:29and the whole thing reversed the economy
16:31would go into recession almost
16:32immediately. No, you know I'm not making
16:34the call. Listen, we're not
16:36>> I'm not making that call yet.
16:37>> We're we're not AI experts. This is not
16:38our our expertise, right? But you know I
16:41look at the balance sheet of open AI or
16:44anthropic and I look at what you know
16:46the these hyperscalers have gone from
16:49huge
16:50>> uh cash flow machines not machines like
16:53like like spew out cash like no one's
16:56ever seen and they were buying back
16:59their own stocks to to go in the other
17:01to issuing debt to Google
17:03>> and in some cases equity. Google issues
17:05$85 billion in equity, right? Bought by
17:07Buffett, which is like geez, what that's
17:09that's not a sure not or I guess it
17:11wasn't Buffett, but uh sure not a
17:13distressed purchase, right? So
17:16>> I think you're in a different paradigm
17:17here. And um yes, it scares me, right?
17:21And you know, they're going to they're
17:25going to force this issue, right?
17:26They're they're going to let AI come
17:28public. They're going to they're going
17:29to let anthropic come public because
17:31they need to. My contention always is
17:34that just like SpaceX, it's bad for the
17:37market
17:38>> because
17:38>> it's supply, right? It's it's it's it's
17:40it's you know, you you
17:42>> new stock
17:43>> new stock of supply, right? And that's
17:45what usually has killed markets, right?
17:47That's that's in 2000 in 1929. That's
17:50what killed the market was new supply of
17:52stock. And so it's just supply demand.
17:55It's kind of that simple, right? And so
17:57we've had this machine where, you know,
17:59everyone's been investing in their 401k
18:01and you have new supply of buyers every
18:03day, right? They talk about the S&P.
18:05It's the dumbest investment uh
18:09philosophy ever, right? If I get more
18:10money in, I I buy. If I get money out, I
18:13sell. There's no other thought to
18:14anything, right? They they don't think.
18:16That's that's the two that's the two
18:17thought process. And so
18:19>> if you flood a market with capital,
18:22right, it it's it's problematic. And
18:24that that's the way I think about it.
18:25And that's that that's what makes me
18:26nervous.
18:28>> Um, you know, look at SpaceX. Where's
18:31the re, you know, when when everyone who
18:33made all this money finally sells
18:35>> asteroid mining? Don't don't poo poo
18:38asteroid mining.
18:40[laughter]
18:41>> Exactly.
18:43>> I was impressed by that. The Oh, you
18:46loved it. I loved it because I'm a
18:48sci-fi guy. I I don't even know what
18:50you're talking about, but I'm sure Musk
18:52saying
18:52>> no, in the in the S1 there's a whole
18:54section about things that SpaceX will do
18:58in the future and one of them asteroid
18:59mining. So I I in my weekly podcast I
19:02commented I said, you know, it's kind of
19:04interesting that there's a show on Apple
19:07right now called For All Mankind, which
19:09is a sci-fi show where asteroid mining
19:11is is a major theme.
19:12>> You know, full self-driving is about a
19:14decade behind and it's at level three.
19:16So, you know, he makes a lot of good
19:18comments that that don't quite come
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22:08So my thought about the whole AI thing,
22:11which which is what makes me nervous
22:13right now,
22:14>> is that there were some very good
22:16reports by some Wall Street firms that
22:18basically said that 70% of hyperscaler
22:23AI revenue is from just anthropic and
22:26open AI.
22:2970%
22:31of AI revenue.
22:33>> Correct. That make sense?
22:34>> Yeah. And then so if you just take that
22:36math, that equates to about 25 to 35% of
22:39their total cloud revenue.
22:41>> Yeah.
22:43>> That's huge when you think about it.
22:44>> That's why they need to come public.
22:46>> Yes. Well, I know they need to come
22:47public. The problem is that the Open AI
22:50numbers that have just come out are
22:51actually quite poor.
22:52>> Yes.
22:52>> Compared to Anthropic,
22:53>> they had huge market share and they just
22:55they lose it every day.
22:56>> Well, and they keep losing it. And
22:57Steve, you're closer to it than we are.
22:59The sequential growth rates, are they
23:02slowing, accelerating?
23:03>> So, Anthropic put out like 11 and a half
23:07billion in revenue for the June quarter.
23:09They didn't say anything about costs and
23:12that was up over 100% in 3 months.
23:15>> Okay.
23:16>> Open AI was at 6.5 billion and it was up
23:19only 18% in 3 months.
23:22Its costs were 12 billion. But the crazy
23:26thing was was that if you look at forget
23:28about these the percentage in increases
23:31if you just look at the dollar changes
23:34in three months their revenue went up a
23:35billion and their cost went up three.
23:37>> Yeah.
23:38>> So I I think Open AI is in trouble and
23:42if Open AI and you know when you're not
23:45profitable as you know
23:48>> narrative is everything like our like
23:51our country
23:52>> right there narrative is everything like
23:54our country. Exactly. So like look, if
23:56you're a really really profitable
23:57company and somebody writes a bad
23:59newspaper article about you,
24:01>> big deal. You know, the stock goes down
24:03for a day. Who cares?
24:04>> You buy back stock.
24:05>> You buy back stock. Who cares? You got
24:06you're swimming in money. But when
24:07you're open AI and you're bleeding cash
24:09every single day and all of a sudden the
24:11narrative has really started to change
24:13and got they've lost tremendous number
24:14of people.
24:16>> It's bad. Your cost of capital is
24:18rising. Yes.
24:19>> And you can't afford that.
24:20>> And you can't afford that. I make this
24:21joke that whoever buys open AI at out of
24:24bankruptcy, it's going to be a fantastic
24:25deal
24:26>> probably.
24:27>> And that that's the history of what
24:28happens though,
24:29>> right?
24:30>> Just like they railroads if the
24:32railroads failed. Whoever bought WCO,
24:34you know, when when Wakovia was
24:35purchased for nothing, you know, it was
24:37a great deal for Wells Fargo, right?
24:38Same thing with Bear Sterns. Like that
24:40that's what happens.
24:42>> You guys do a newsletter.
24:43>> Yes.
24:44>> And you wrote an article about shorting.
24:46>> Yes. Mhm.
24:47>> So, why don't you share with people your
24:50your thoughts from that article because
24:52it was kind of interesting.
24:53>> Thanks for reading, by the way.
24:54>> Yeah. Well, I like to read.
24:56>> Are you a fan of the Untouchables?
24:58>> I Yes.
24:59>> Yes.
25:00>> So, I was thinking about
25:02>> team
25:04team. [laughter]
25:05>> But really, when you think about a
25:06movie, whatever movie Shan Connor is in,
25:09he outshines everybody else
25:10>> all the time.
25:11>> All the time. Yeah.
25:12>> There's got to be I love Finding
25:13Forester. You must like
25:15>> love finding he's unbelievable.
25:17>> He's unbelievable. And anyway, so
25:19>> it's not a soup question.
25:20>> I I [laughter]
25:23go with this.
25:24>> A great line. It's a great line.
25:25>> I thought about his arc, right? And his
25:28character and it's kind of like shorting
25:29stocks or the way we probably feel right
25:32now,
25:32>> right?
25:32>> Like we just want to go long, you know,
25:35we'll choose gold, you'll choose
25:37whatever, be the B cup, but then all of
25:39a sudden you get like interesting shorts
25:41that come your way. Right.
25:43>> Right. And then you got to make a
25:44decision, right? And then do I do it or
25:46not?
25:46>> Do I do it or not? And you know that if
25:48you decide to do it, and we could talk
25:49about like one where we decided to to go
25:53there,
25:54>> you know, you're aim for a war.
25:56>> A war, right?
25:57>> Fighting crazy is hard.
25:59>> And yes, very hard.
26:00>> Yes. Most of the people in the investing
26:03world like you're short, they're long.
26:05>> Not only that, let's think about the
26:07people who are short for a living,
26:09right? When you look at the citadels,
26:11millenniums, the 72s,
26:14what is probably not well known is that
26:16the people that work there, the the pods
26:18as they're called,
26:19>> explain what a a pod within a millennium
26:22or citadel is. What does that mean?
26:23>> When you work at a millennium or 72,
26:27their GPS, their the the grand PMs will
26:31give you an allocation of money, right?
26:33Call it $2 billion.
26:34>> So, I could be running a team.
26:36>> Yes.
26:36>> And I don't raise any money. The money
26:39is raised at the parent. Correct. Ken
26:41Griffin gives you the money.
26:42>> Or if I'm at Citadel, Ken Griffin says,
26:44"Oh, I I think this is he's a good guy.
26:46I'm going to give him
26:48>> 250 million in capital. Go do go do
26:52something with it."
26:52>> Correct.
26:53>> And so, and if I'm running the
26:54financials pod
26:57>> like you guys ran at Citadel for a
26:58while, then what you're doing is they
27:00gave you money and you're investing long
27:02short in financials.
27:03>> Correct. Now, let's keep it simple. For
27:07every long that you have in your
27:09portfolio, you have to have almost
27:12dollar for dollar a short
27:13>> at these firms.
27:14>> At these firms, right? And these firms
27:16have grown.
27:17>> They're huge
27:18>> in huge size and they're highly levered.
27:21>> Explain that. What do you mean by they
27:23are highly people don't understand this
27:25world?
27:25>> Well, and it's amazing. And I'm not
27:28saying even I think the financial media
27:31doesn't really understand this world all
27:32that well. So let's just say make up a
27:34number that Citadel has
27:3725 billion in capital that they're
27:40running
27:41>> for their investors that investors have
27:44given them $25 billion. When you say
27:46it's levered, what does that mean? So in
27:48order to lever, you have to make sure
27:50that your annualized volatility
27:53is statistically below a certain level.
27:56Call it 6 8 9%. In order to do that, you
28:00have to have a very low net on your on
28:03your
28:03>> your longs and your shorts are roughly
28:05equal.
28:06>> And then once you figure out that
28:08gorgeous science, you can leverage
28:10yourselves 5 to1, which means
28:12>> in other words, Citadel would be running
28:14they have 25 billion in capital, but
28:17they borrow and they're running 125
28:19billion in positions.
28:20>> Correct.
28:21>> Okay.
28:21>> Correct.
28:22>> Got it. And so and if you
28:24>> and it's all long short and it's roughly
28:27equal half half of the 125 billion is
28:30long and roughly half the 25 it depends
28:33>> at least on the equity side on the
28:34equity side
28:35>> then there's they do you know uh energy
28:38and fixed income and stuff like that but
28:39on the equities you know they but they
28:41match it so perfectly on a beta dollar
28:44you couldn't for every I think they'd
28:46sweep it every five minutes so you were
28:47perfectly hedged
28:49>> right
28:49>> and this is on a beta adjusted basis
28:51>> beta a factor neutral basis.
28:54>> What does that mean? Beta factoring
28:56ourselves. I apologize. So beta is it
28:58has to be beta adjusted. So the beta of
28:59your longs have to equal the beta of
29:01your shorts. Correct. They also want you
29:03to be factor neutral. So every stock has
29:06a personality.
29:07>> Right.
29:07>> That's the word I would use.
29:08>> I can't be long value like or like this
29:11is the Leupold guy. The whatever his
29:13name was
29:14>> Leopold Ashen Brener.
29:16>> Yeah. So he he was long AI short
29:18software.
29:19>> Right.
29:20>> And he blew up.
29:20>> Right. Right. Ken would not any of these
29:23firms would not allow you to have such
29:24mis mismatches, right? They they want
29:26you to be long some software and short
29:29the bad software. And so you're more
29:31perfectly balanced with
29:32>> you could be 100% long one sector and
29:35100 or sub sector and 100% short another
29:38subsector.
29:39>> Long growth short value. Can't do that.
29:41>> Can't do that. You're not supposed to
29:43long
29:45neutral factor neutral at least at least
29:48where we work. But I know the other
29:50shops are very
29:51>> probably roughly similar.
29:52>> So their return thresholds for their
29:55shorts are very different than ours,
29:57right? Meaning
29:58>> meaning if they're long let's let's go
30:00into our neck of the woods. Okay,
30:02>> right 100 million of JP Morgan, right?
30:05>> And they're short a 100 million of Bank
30:07America
30:08>> and they would do that something like
30:09that.
30:10>> If they made a spread between the two of
30:13three to 5%,
30:15>> they're happy
30:15>> and they're done and they're done,
30:17>> right? and they have to move on to the
30:18next
30:19>> and they have to move on to the next
30:20trade.
30:20>> When we're shorting stocks,
30:22>> we want to make like 150% or whatever.
30:24They want a big hit.
30:25>> So, but because they're the predominant
30:28short in the market and their their size
30:31market share of the overall market and
30:33trading is so ubiquitous, it almost
30:36makes it impossible. They know like
30:39every short that we would come up with,
30:41right? They're probably short as well in
30:43size. And if it doesn't work for them in
30:463 weeks, they're covering. So, you have
30:49to contend with all these squeezes, let
30:51alone that the market just generally
30:53goes up.
30:54>> What we used to do for a living is
30:57brutal,
30:57>> extremely more difficult.
31:00>> There are much more shorts in the market
31:01than there were than there used to be.
31:03>> Explain that. Why are there more?
31:04because because this the the these these
31:07uh firms they lever up and just the
31:10dollar amount of shorts is so big like
31:13there just wasn't amount the the the
31:15amount of shorting that occurred 20 30
31:17years ago wasn't as big. It was a small
31:19little
31:20>> cuz they're bigger.
31:20>> Cuz they're bigger
31:21>> and they're levered.
31:22>> Yes.
31:23>> I see. And they're not allowed to lose a
31:26lot of money because when you're levered
31:28five to one,
31:29>> you can't.
31:30>> You can't. Your business model doesn't
31:32work if you're losing four to 5% per
31:34month,
31:34>> right? Cuz multiply that by five.
31:36>> Correct.
31:36>> Yeah. And Leopold obviously wasn't as
31:39sophisticated as these big guys. And
31:40they they knew it and they blew him up.
31:42>> They blew him up and and and Kenny G
31:45cleaned his clock. [laughter] He did
31:46cleaned his clock.
31:47>> Cleaned his clock. Unbelievable.
31:49>> Smart guy, but
31:51you know what I analogized it to? I
31:53said, ' imagine if it's like the year is
31:551905
31:57and you have a thesis that the
31:59automobile is going to take over the
32:01world. So you're long
32:04every auto and auto parts company and
32:07you're short every horse carriage
32:09company and it's working great and
32:12you're making money on your longs and
32:14you're making money on your shorts and
32:15you're levered four, five to one. So you
32:18look like a genius and then all of a
32:20sudden on Fifth Avenue a terrible car
32:22accident takes place and it's on the
32:24front page of the paper and all of a
32:25sudden everybody says wait a minute
32:26maybe this auto thing is is too is
32:29dangerous and so for two months it all
32:32reverses when you leverage four five to
32:34one they matter you're out you're they
32:36take you out
32:37>> you know and so shorting [clears throat]
32:39is and we pointed out shorting is a very
32:41tough game right especially you know
32:42when you're you know we've been on and
32:44off only short or nothing uh Tesla for
32:47part better part of five or six years
32:50and fundamentally many could argue that
32:52we've been right right the earnings have
32:53been
32:54>> oh there's no question fundamentally
32:55you've been right the have gone in one
32:56direction
32:57>> down
32:57>> and the stock has gone up
32:58>> yes so that's a that's a tough short
33:02[laughter]
33:02[gasps]
33:02>> and so I think the lesson is don't short
33:04a cult unfortunately it
33:06>> it is sadly sometimes we don't learn our
33:09lesson on certain you can't help
33:10yourself
33:10>> because we can't and that was the part
33:12of Connory couldn't help himself right
33:14he knew better not to do that but He
33:17went in anyway. We're just doing it with
33:19significantly less capital than we used
33:20to.
33:21>> So, is there anything short-wise you
33:23really like these days
33:25>> that you're willing to share?
33:26>> Yeah, but it doesn't work. So, so let's
33:28let's start [laughter]
33:30let's start with a few caveats. I
33:32listening to your podcast, I think, you
33:35know, circle doesn't make any sense to
33:37me.
33:39>> Zero.
33:39>> Okay.
33:40>> And yet the stock has rallied
33:41enormously. Every I don't even know why.
33:44crypto's going on.
33:45>> The crypto the crypto legislation
33:47nonsense.
33:48>> Let's let's bring something near and
33:49dear to our hearts. So, we're back in
33:51our neck of the woods cuz circles Finn
33:53or Fintech.
33:54>> We short a lot of stuff in our neck of
33:55the woods. We don't we don't stray too
33:57far a field in our shorts
33:59>> other than other than
34:00>> you short FICO.
34:01>> Yes,
34:01>> we are short FICO.
34:02>> Me too.
34:03>> So, you know the reason.
34:03>> I had two shows on FICO when I've
34:06listened. We we shorted it the day that
34:09Bill Py came out and said something
34:11which was like I was around then which
34:12was like $2,500.
34:14I was I agree. It was it's bad.
34:17>> It's by the way it goes back to the same
34:19stuff that we used to be pissed off
34:20about is basically companies gouging
34:23customers.
34:23>> Yes.
34:24>> Yes.
34:25>> If if he if if FICO had raised prices
34:28over the last 5 years like call it
34:31inflation plus 2% Mastercard, right?
34:34like Visa, Mastercard, like nobody would
34:36even have paid attention and said they
34:38they raised prices 1,600%.
34:41>> It was pigish. And not only that,
34:43they're pulling credit files and
34:45mortgages and charging I think it's 3 to
34:475x what you're doing on credit card and
34:50auto loans. So imagine if you're Fanny
34:52May or some big rocket, right?
34:54>> Just because they can.
34:54>> Just because they can because of the law
34:57and like if I was Rocket or Fanny and
34:59Freddy, I'd be like, you're going to
35:00lower your price now, right? But
35:03everyone's like, "Oh, it's such a small
35:04piece of the the loan." It's like,
35:06"Well, that's small anymore."
35:07>> No.
35:08>> So, the other name which is near and
35:10dear to all of our hearts is Carvana and
35:13the mystery and the mystery buyer of
35:15paper north of 110.
35:17>> Okay. Go explain that.
35:18>> This will be this will be that's a
35:20cryptic comment.
35:20>> I will explain. So, what does Carvana do
35:23for a living? Okay. They sell used cars,
35:24right? Right. In addition to
35:26>> online online in addition to used cars
35:29selling the used car they provide the
35:31financing for it.
35:32>> Okay.
35:33>> Okay.
35:33>> Which at this point
35:34>> by the way I just wanted to say that the
35:37father who had a company called Ugly
35:39Duckling I know
35:40>> I actually went and visited the company
35:42in the 90s when you and I were working
35:44together and as as part of the trip I
35:46got an Ugly Duckling towel
35:49>> which I loved and used all the time. Do
35:52you still have it? I it it I used it so
35:54much it it became like like like like a
35:57rag but but it was one of the best
35:58towels I ever had. So So all due respect
36:01to Ugly Duckling, they had a great
36:02towel.
36:03>> By the way, when I when I [laughter]
36:04when I first came to work for you and
36:06call it 2001, I looked on the sheets and
36:08I was like, "What the hell is this Ugly
36:10Duckling that you're short?" [laughter]
36:13>> And that was Ernie Garcia Senior.
36:14>> Ernie Garcia Senior. So So they they
36:18sell used cars. They finance the sale of
36:20those cars. a good portion of those
36:23loans are subprime in nature.
36:25>> Okay.
36:26>> Um and and the the majority of their
36:28profits, almost all of their profits,
36:30>> a good portion of their pre-tax income
36:33between 75 and 100% from gain on sale.
36:37>> Explain
36:39how gain on sale works here. What does
36:41it mean?
36:42>> So, when you originate a loan or you
36:44create a loan, you could either hold it
36:46on your books and earn the spread,
36:47>> right?
36:48>> Or you're going to sell it to a third
36:49party. Are they selling it or are they
36:51securitizing it?
36:52>> Well, selling it and securitizing it are
36:54similar things. They're doing both,
36:56right? So, they're securitizing it, but
36:58blowing out even the residuals, meaning
37:00the last piece of the securization. So,
37:03they're not really
37:03>> They're actually selling the loans.
37:05>> Correct. They also sell loans on a whole
37:07loan basis that meaning the whole loan,
37:09not securitizing it
37:11>> to third parties like Ally. Ally is one
37:14of their biggest finance years. An ally
37:15probably pays I'm going to give a wide
37:17range because I don't know exactly what
37:19it is between 102 and 104. That means if
37:22I originated a loan for $100, I get to
37:25sell it for $102 or $104.
37:27>> Okay. So far everything you've said
37:29sounds legit.
37:30>> Correct. Their average gain on sale over
37:33the last two years has been 109 110.
37:36>> Okay. So if we do some simple math and
37:38say if Alli's 20% at 102 103 that means
37:42somebody in the world is paying north of
37:45110 meaning I originate a loan for 100
37:47selling it at 112 113.
37:49>> Okay.
37:50>> So there's a mystery buyer out there and
37:52no one knows who the mystery buyer is.
37:53They won't disclose it, but I think like
37:57eight years ago, they said it wasn't
38:00Mark Walter. And Mark Walter was is the
38:02guy who just is attempting to sell the
38:04the Lakers and the Dodgers and all this
38:07other stuff
38:08>> cuz his insurance company is in trouble.
38:10>> Yes. And allegedly,
38:11>> that's the only thing they said. Did it
38:13>> was not Mark Wal.
38:15>> Who is the number five holder of
38:16Carvana?
38:17>> Oh, that's right. He is the number five
38:18holder of the stock. It's a it's a it's
38:20a it's a it's a it's a one-sto multi
38:25special purpose vehicle called called C
38:27van that's owned by him owned by him.
38:30>> And allegedly Delaware Life owns a heck
38:32of a lot of Carvana paper.
38:36>> And Delaware Wife is who?
38:38>> Mark Walter.
38:39>> Insurance company.
38:40>> Yes. So
38:42did we find the mystery buyer?
38:44>> We've kn people have known the shorts
38:46have known this for a long time. This is
38:47nothing new.
38:48>> Okay. Because that's why they came out
38:50the Mark Walter connection.
38:51>> Yes. Because they came out, you know, I
38:53think eight years ago and they said it
38:55wasn't Mark Walter who's buying it, but
38:58everyone still thinks it's Mark Walter.
39:00And now
39:00>> it could be Delaware Life, who's not
39:02technically Mark Walter.
39:03>> And apparently in the court filings,
39:07Delaware Life had to increase the
39:10disclosure of how much counterparties
39:12they've had uh related party
39:13transactions they had something
39:15substantially. uh like I I think they
39:18said that that the related party
39:20transactions of the Delaware life and
39:23its related party like Mark Walter and
39:26such went from like three to something
39:28like 30 or 40%. So oops that's a big uh
39:32Yeah. Okay.
39:33>> And also listen Mark Walter came out and
39:36said publicly there is no fraud here.
39:37>> Yeah.
39:38>> There is no fraud here
39:39>> and the market believes it. So I got
39:40squeezed.
39:41>> You got squeezed?
39:41>> Yes. Yes.
39:42>> So which hence why it's so difficult to
39:45short sell. What has the stock Carvana
39:47done of late?
39:48>> It was
39:49>> a lot of nothing for the past year.
39:51>> Yeah, a lot of nothing. Yeah,
39:53>> it's expensive. It's like 30 or 40 times
39:55earnings and you know it's a lot for a
39:57used car. I mean like I guess they are
39:58changing the way that used cars are
40:00bought and sold but it's expensive for a
40:02used car company that's and they have a
40:04great service apparently but a lot of
40:07their profits are
40:09probably artificial or or enhanced
40:11steroid enhance
40:12>> but but proving that is going to be
40:14impossible. that has proven to be
40:16impossible for eight years.
40:17>> Well, I guess if Delaware Life goes
40:19under, then then it's not going to be so
40:21hard to prove because then the the buyer
40:22of the paper is gone.
40:23>> If they are the buyer,
40:24>> if they are the buyer of the paper.
40:25>> Yeah. So, the the only way, you know,
40:27the again the only way that you get paid
40:30on a on a short is usually if you bring
40:32light,
40:34>> you know, or truth to to what happens,
40:36right? Oh, I knew it all along, right?
40:39just, you know, like just that they they
40:41finally couldn't
40:42>> u bury the the subprime losses, right?
40:45Or in in the in the in the big short
40:47like, oh, this is where, you know, we
40:49were faking the prices all along, right?
40:51So that that's what finally happened.
40:53>> So you need a moment like that to to
40:55really get paid on the on the short.
40:56Whether that happens or not, I don't
40:58know.
40:58>> So besides gold,
41:00>> yes, you guys like anything
41:03>> very idiosyncratic
41:05odd things.
41:06>> Okay.
41:07>> Which kind of makes fits us. Well,
41:08that's that that's that you're you guys
41:09are weirdos. So, you know,
41:11>> we have about that's what you
41:13>> we probably have about 10 weird names
41:16and a lot of gold.
41:18>> Okay. Would you be willing to share two?
41:21>> Sure.
41:22>> Where you going first?
41:23>> Two weird names. One you put, you speak
41:25one, Vinnie, you speak one.
41:26>> Well, we we own a lot of um a company
41:29[clears throat] called Golar.
41:31>> Golar.
41:31>> Golar. G L A R.
41:33>> Yep. G L N G is a ticker. And what and
41:36what Golar does is they have they first
41:40were in shipping a long time ago and
41:41they kind of got out of shipping, but
41:42they have these boats. They right now
41:44they have four boats. And what these
41:45boats do is they pull up to a country
41:49like Argentina
41:51and convert the uh natural gas into
41:55liquid natural gas. So then that the gas
41:57can then go to the buyers around the
41:59world. And so, you know, you can either
42:02build a huge project like Shener does in
42:06Louisiana, which cost them probably
42:08between
42:09>> gab billions of dollars.
42:10>> Yes. I I think it's
42:11>> LNG is a symbol.
42:12>> Yes. Uh I think that they said that YPF
42:15in Argentina is going to spend 30 to50
42:18billion dollars building that. But in
42:20the meantime, they're buying these boats
42:22and, you know, they're going to take a
42:24toll. But the the capex is minimal. It's
42:26like three and a half or two and a half
42:28billion. How do they convert it though
42:30into liquid natural?
42:31>> Well, they they have a a it's a
42:33converter. It's the ship on the ship.
42:35>> I see.
42:35>> And so it's basically a 20-year
42:38contract, a toll road. And one of the
42:39things that we've been bullish on is
42:40Argentina. And
42:43>> Argentina finally, you know, figured out
42:45under Malay kind of figured out their
42:47their uh fiscal situation and balance
42:50the budget. But what they have is a lot
42:53of uh natural resources in terms of uh
42:57uh oil and gas and it's been trapped
42:59gas. They couldn't get it. It's there.
43:01They can find it, but how do you
43:03transport it out?
43:04>> Right.
43:04>> And the big thing for them is they're
43:06going to move these Golar ships in, two
43:07of them, and pull the gas out starting
43:10next year. And then eventually more gas
43:12and more oil comes out. And we think
43:14because of that um budget surplus go
43:18wild and interest rates which have gone
43:20from down from 100 plus% to uh 30 come
43:26down a lot more. So there's a lot margin
43:28is a big theme for us as um he probably
43:30don't know but Peter Teal moved there
43:33and has a big uh
43:34>> he plays chess with the president.
43:36>> Yes. And has a couple investments that
43:37we we have similar investments in but
43:39Golar is part of that that uh thought
43:42process.
43:44We own a farm. Uh, do you work on the
43:47farm, Vincent?
43:47>> No, but I've seen the farm. Do
43:48>> you wear a hat? I've seen the farm.
43:51>> He has a cool stylish trucker hat that
43:53you like you can wear and a shirt. Yes.
43:56Shirt.
43:57>> So, the farms in California.
43:58>> This a public company.
43:59>> Yeah. um farms in California in in
44:04vegetable, tomato, blueberry uh country
44:06where almost all of the product a lot of
44:09the products of America that are made
44:11your fruits and produce is made there.
44:13This just happens to be cannabis that
44:15they that they produce rather than
44:17fruits and vegetable.
44:18>> Full disclosure, the last time that I
44:20smoked weed, May 1984.
44:23>> Wow. Wow. [laughter]
44:27which is I think it's safe to say a long
44:30time ago. A long time ago. So this
44:32company Glass House, you own it. I own
44:34it too. So go ahead.
44:35>> So the ticker
44:36>> and none of us use the product. Correct.
44:37We do not use product. We do not use
44:39[laughter] the funniest thing
44:41>> couple sleep gummies every once in a
44:42while but that's about it
44:43>> is that I none of us use the product but
44:45what they what I do like about it is
44:47that they are the lowcost provider but
44:50that's not enough right? whatever that
44:52means in California that in proforma
44:55they could produce it for call it 90 to
44:58100 bucks a pound. These guys basically
44:59bought a huge vegetable glass house and
45:02and gut
45:03>> and gut it in May and they they they
45:06grow weed.
45:06>> Yep. The the opportunity here is
45:09recently last December and then
45:12eventually finalized they rescheduled
45:14>> the government federal government
45:16>> federal government rescheduled the
45:18classification of medical cannabis from
45:20schedule one to schedule three.
45:22>> Right.
45:22>> Which really reduces the restrictions.
45:25So a schedule one drug is heroin or
45:27fentinyl. Right.
45:28>> Right. Schedule
45:29>> which is a no no.
45:30>> Which is a no no. But cannabis was under
45:33the same rules as as something such as
45:35heroin.
45:36>> And you can't you can't die from you
45:38can't OD on on marijuana.
45:40>> No. Right.
45:40>> I assume you can. I can. But so in
45:44>> but because it's for medicinal purposes.
45:47The whole story is can they and right
45:49now the answer is not yet but we believe
45:52it will be the case produce cannabis and
45:55hemp in California
45:57>> and sell it elsewhere
45:58>> and sell it elsewhere. And the margins
46:00of selling it elsewhere are ginormous.
46:02>> So everybody should know in California
46:04they they say they sell it for $200 a
46:06pound
46:06>> and if they were able to sell it in
46:08Germany
46:09>> it's 600 700 bucks a pound.
46:10>> It could be a thousand but but what else
46:13will come down it's a lot more.
46:14>> You know I run conservative so I'm so
46:17but the that is 50 to 65% IBIDA margins
46:23if they can do that on higher revenues.
46:25>> How close do you think we are to this?
46:28That's the $64,000 question. We believe
46:32it's probably evolving slowly
46:36and probably in my opinion might get
46:38yelled at right now by Porter a 2027
46:41event that we start seeing progress uh
46:44whether it's interstate or overseas.
46:47>> They sold hemp overseas this this
46:49quarter.
46:50>> Yes. and small amount small but then but
46:52then they're trying to get sell
46:53obviously the cannabis and then the
46:55question is is can they get into selling
46:57you know they have bombs that that um
47:00you know that that fix like icy hot but
47:02it actually works
47:03>> right
47:04>> and so c can you get into and can they
47:07you know find a distribution partner and
47:09get into the wellness business there's a
47:10lot of
47:11>> there's a lot they could do a lot they
47:12can do and so is it's a small cap
47:14company
47:15>> it's like a 500 million what is it a
47:17billion billion it's a billion in
47:205 800 million something.
47:21>> So we play we play we have a lot of
47:23companies that were long and these small
47:25cap stuff that we can find that no one
47:27else really traffics in and we we like
47:29it. You know we don't we've owned Google
47:31for years but that's basically the only
47:33household name that you
47:34>> the only time we we go into what I would
47:37call the mainstream media neck of the
47:39woods is when there's something's for
47:42sale, right? So for example when SAS
47:46apocalypse or whatever we call it was
47:48there and they were destroying some of
47:50these names you know we bought into it
47:53and service now uh on the cheap
47:56>> uh when Google was allegedly being
47:59disrupted
48:00>> we bought Google.
48:01>> Okay.
48:01>> But but we typically don't play the you
48:04don't play the standard game.
48:05>> We don't play the stand
48:05>> we don't own Amazon or this other stuff.
48:09>> All right. We only have a few minutes.
48:10Let's I'll give you guys the last word.
48:12reporter say something. Again, I'll go
48:14back to what I started with in that I
48:18think that they're going to have to
48:19print a lot of money. I I I just think
48:22that and it's not going to it's not a
48:24big disaster, but I think that just it's
48:27not like the the world's going to blow
48:29up because they can't do it, right?
48:31>> So, but but what they when there is a
48:32problem, what do they do? Come in they
48:34come in and and helicopter print lots of
48:37money,
48:37>> right? And so I think that if something
48:40really goes bad, I know they're going to
48:41helicopter print money. And if status
48:43quo happens, I know they're going to
48:45keep continue printing money. And so
48:47therefore, I think that the, you know,
48:50gold continues to do well. And I think
48:52that that's where the majority of our
48:54capital sits. And I'm pretty bullish on
48:56it.
48:57>> And Steve, I want to say just thank you.
49:00You're doing a great job. You look
49:02great. Thank you. People love your
49:04podcasts. It's uh you know it's
49:07interesting. Thank you. Thank you for
49:08saying that. Um
49:11it's like
49:13being part of a of like a dialogue
49:16debate, you know, the AI, private
49:19credit, all I mean you guys are
49:20involved, too. It's it's like being
49:24front and center on like the most
49:25important questions of our of the age.
49:28and and the the new media that we're
49:30involved with deals with this much
49:33better than old media.
49:35>> What you do a great job of is is doing
49:37the whole what do you mean? Right. You
49:39you you know it's like cuz people like
49:41to talk fancy and and
49:43>> Oh, it was like when Vinnie was talking
49:44the leverage. I know that most most
49:46viewers it's not a criticism to viewers.
49:48Why would they know how a hedge fund
49:50lever the book?
49:51>> So I I I've sort of learned that from
49:52you over the years and you know I asked
49:53a question on a call recently and
49:55someone's like god that was a good
49:56question. I was like, "Yeah, it was a
49:57Steve question." [laughter]
49:59>> Thank you.
49:59>> Go, hold on. Go back and say that again.
50:01What do you mean? What do you mean? What
50:02do you mean? Explain that.
50:04>> Yeah.
50:04>> So,
50:04>> and it's a lot of fun to like for us,
50:06you're right. I mean, our jobs are never
50:08boring now. Like, you're waking up.
50:10>> You wake up every day something is
50:12interesting has happened and you learn
50:13about it. And I mean, I've learned more
50:15about tech in the last year than I ever
50:17learned.
50:18>> Yeah. I mean, if if you said to us, you
50:21know, five years ago, hey, you know,
50:23Porter and Vinnie, you're gonna you're
50:24going to start this Substack, like,
50:27what? No way would I ever do that.
50:28>> Yeah. Yeah.
50:29>> And so, it's been it's been fun. We we
50:32enjoy educating, you know, our
50:34subscribers and, you know, our own
50:36little pocket of crazy. And it's it's
50:37fun, you know, we enjoy it and we get a
50:40lot of feedback from them and we have
50:41this little Discord that we use and and
50:44so people ask us questions all day, all
50:46the time. Funniest comment I got was I
50:49always and not today but I usually wear
50:51this jacket with a hoodie.
50:52>> Yep.
50:53>> Yeah.
50:53>> So few months ago I wore it and there
50:57was a comment from someone that says is
51:00he wearing a jacket with a hoodie and
51:02somebody one of the other viewers
51:04replied saying you must be new here.
51:06[laughter]
51:08>> I make fun of uh Vinnie's wife and I
51:11like to make fun of V usually Vinnie's
51:13clothing attire.
51:14>> Oh yeah. all the time like he likes his
51:16cargo shorts and you look good today
51:17though.
51:18>> You look good.
51:19>> I I was I was in the middle of Penn
51:20Station and they were soliciting me but
51:23uh people were soliciting me and one
51:25called me GQ and CEO so I had to give
51:27them money, right? [laughter] Like like
51:29whether it's true or not, it just felt
51:30good. I was like I got to give you
51:32money. Don't sign me up for anything.
51:33Here's here's here's 20. So
51:35>> that's great.
51:36>> Remember we we would uh Stew the H had
51:39this uh exchange company that we owned.
51:41Remember back in the day?
51:42>> Sure. And uh it was a big meeting and uh
51:45they're like, "Well, okay. Just come
51:46down to our offices right now." And
51:47Vinnie's like, "I'm not dressed for
51:48this." So you went out into uh Paul
51:50Stewart.
51:51>> Paul Stewart and he had like this he got
51:55a nice bright pink uh button-down and
51:58like a like a socks.
52:01>> Oh my god. And blue sweater. I was like,
52:04"Oh my god, [laughter] what the hell is
52:05going on?"
52:07>> Like when in Rome, you
52:08>> look great. You look great.
52:09>> When in Rome, you got to dress the part.
52:10>> Got to dress the part. All right, guys.
52:12Thank you. That was great. Thank you for
52:13coming in.
52:16[music]
52:19>> This podcast is forformational purposes
52:21only and does not constitute investment
52:23advice. A host and guests may [music]
52:25hold positions in stocks discussed.
52:27Opinions expressed are their own and not
52:29recommendations. Please do your own due
52:31diligence and consult a licensed
52:32financial adviser before [music] making
52:34any investment decisions.

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