Equities Are Stories, Bonds Are Contracts

Greetings and welcome to Inside Baseball with Old Chestnut. I'm Liam Allen with my friend Morrison. Good to be back with you, pal. Nice to see you. Although I'm a little confused. I'm I might be in the wrong studio. My Script says we're starting with golden age. Nope. But um no. No, I decided to use an example of being allowed to say whatever you want, okay, complete and utter nonsense. And the masses love it. Okay. We proceed. That's what the Beatles did. Okay. John Lennon wrote the song. Okay.

Great song. So that's the that is the Beatles. Like, as you know, Fish is the the world's greatest cover band. So that once again is Fish covering the Beatles. All right. And the song doesn't make any sense. If you listen to the lyrics, it's borderline gibberish. So Lennon wrote the song to confound listeners who had been affording serious, scholarly interpretations of the Beatles' lyrics.

Apparently at that point they hadn't discovered psilocybin because that'll make sense out of anything. Right. Did you have a good week? Um, yeah, dude. I love watching the market get caned. I get a kick out of that. Um I'm I'm God, that makes me sad. You were s you are in for a life of misery. Oh come on. It just doesn't happen that much. Because like in my lifetime stocks have only gone up. You know, so I th you know.

Dude, and you know, I love the stock market because there's so many good stories. Like there's just the story after story, and the stories change, you know, and then everyone has a new opinion on the story and there's Dude, that nobody operates in more hypotheticals than the stock market. You have you have um what's a welcome to the parlor, said the spider to the fly. Um

So just to address a couple of things. First of all, uh apparently you had mentioned in the previous episode that some people had kind of wondered if I took down the comment section because my puts had gone sideways. Um no. Uh we're having some staffing issues which are in the midst of being resolved. Um good news. Excuse me, great news. The Ibwak t-shirts have arrived.

So um yeah. So now we need to figure out how about how to go about distributing them. So give us a couple of days. The website uh Stop, stop, stop, stop. Cause I got an email this morning. It's like they fucking know. Okay, bro. I got an email this morning that was like, Hey, can you hand me the Anthony's Peter's newsletter? Of course. Last sentence of the email. And by the way, if those two-year t-shirts come in anytime soon, but wait, but wait, there's more.

So this is where it's gonna get sticky for you because he's in Australia. Okay. I I figure out how we're gonna do this. Okay. This is my plan. I haven't tested it out, but I think what we'll probably do is this. Um If somebody wants a t-shirt, they will need to uh email you a PDF. Yeah. uh prepaid label. And I will stick it in a box. Okay. Yep. And drop it off at the post office. That's what that's Before we go uh to press on that, you and I need to discuss it. But I have you know those

flat rate boxes that you so I'll figure out what size box we need. And then if they want a t-shirt, they can PDF the prepaid label with their own return address on it. Mm-hmm. And then I'll stick it in the box and I'll drop it a post office. And then Yeah. Because, you know, um there there's no charge. How can you charge for something that's priceless? Right? It's true. But uh, you know, supplies are limited. Uh-huh. And I think I've already given away 80% of them because people are just.

So so um ask me what we did last night. Uh I don't know. You were sending me emails at midnight asking to start the show with no music, so I assumed you were drunk. Um So what'd you do last night, pal? Well First of all, before I divulge what we did, I just felt a little bit creative. So given the turmoil in the world, no, I thought we had concluded we were gonna try and take a lighter touch this week. So I thought to be creative. We would start a cold open. We'd skip the music.

And just start talking like two guys no in the in the diner. But no network. No we're agreed to that and to sleep on it. We said to sleep on it. I think that was the instruction. Like if anyone that's listened to the show knows that the pushback on MB's bad ideas. Patented by E.G. Fisher is say, okay, doc, why don't you sleep on it? Okay, so it's really simple, it's not a hard no. Why why don't we sleep on that? Speaking of sleeping on it, I thought the podcast

Taping was scheduled for one thirty. I was sleeping literally on the floor in my dressing room because Cheryl has decided she's uh Jason Tullas incarnate and since the U.S. I don't walk as fast as her. I now every day have to run around the circle in my driveway. Or as Fiona calls it, Morris's racetrack. Right, the racetrack. Good. So we can come over. Yeah. So now I'm

having to run, which, you know, it how how old am I? I forget. Sixty three? Dude, I said to I said to my father the other day, I said to my mother, I said I don't care what the news says about uh additives'cause my mother and father have never drank a drop of liquor. Like they drink diapepsy. They don't drink coffee. My mother have tea at night, but the old man drank diapepsy, probably like, I don't know, two or three cans a day.

All right, I said to my mother the other night, I said, I've never seen pop run. I've never in my life seen the old man run. And he is seventy eight and fit as a fiddle. Okay. Fit is a fiddle. Went into the doctor and the doctor said you got the heart of a 50 year old, sir. What do you do? And the old man said, I chase it, I chase the grandkids. He goes, You don't exercise? He says, Never a day in my life. Okay.

So the secret to living the secret to living to 80, not do, is is drink a couple diapesies and never, ever, ever exercise. Okay. Your body is made to run from a lion. That's it. Okay? You're not made to run for two hours. It's bad for your knees. It's bad for your ankles. Your body was molded to escape the lion. And that's it. I got it. Okay. Okay. Well, you really got to share. There's no lions over there at in the in the golden triangle. Yeah.

So to answer the question on everyone's lips, what did old Chestnut do last night? Cheryl and I and Travis and his wife, we went to the monster truck show in Bridgeport. No, you did not. No, you did not. No, you did not. Seven o'clock in Bridgeport? Hard on my hand. Dude, you could have come and did you bring headphones? Airplugs, yeah.

What are you like mad now? Yeah, I am dude because Fiona wanted to go. Okay. And I was you do not want her going. I know, I know, I know how loud it is. I know how it's got nothing to do with the loud. The crowd? The crowd? No. First of all, as a Jew, I've never felt safer in my life than at the Monster Truck Show in Bridgeport, Connecticut.

If anyone's looking to kill Jews, that's the last place they're going. The reason I don't think you should take her, and of course, you raise your children however you think. Your daughter will decide to give up. Every other aspiration in life, other than to drive these monster trucks, because the women.

I know the chicken are way better than the men at this the woman that drives Gravedigger. I know a woman digger, how the fuck do you know this? Yeah, yeah. I can't believe you went to Monster Jam. My buddy Timmy O'Reilly brought the boys and Timmy says. I said, are you going to? Because I almost I was this close to bringing her to the one o'clock, but I know how loud it is and I know how the fumes are bad indoors.

So I said, sweetheart, I'll bring you to MetLife next summer when we can bring your brother. Your brother's one. I can't bring the baby to the monster trucks. All right. I brought him to Lime Rock Park for the car racing and that was too loud. But the monster truck show, dude, I looked at the tickets. Number one.

$90 per person? What did you pay 90 bucks to see the monster track? Is that what I did? Yes. Yes. That's Cheryl. That's that's that's Cheryl. I it was$88, and they want anything with a pull. So I would have had to pay for Fiona and E. G and myself. So I cringed at the ticket and I said eh. I said but I said look sweetheart I'll bring you to MetLife next summer. It's outdoors. We'll go on a nice sunny May day and you can wash the trucks. Dude, I'm already in trouble with the monster truck.

Because she watches like learning TV, and one of the things is Blaze and AJ, and it's a monster truck character, and she's four years old, so she's Already obsessed with monster trucks. It's monster trucks and trains. Okay. I was supposed to do it to the son, but I I'm a learning father and I did it to the daughter. The good news is

She won't go to college. She'll learn a trade. She'll become an electrician. She'll make se'll make a hundred and seventy five dollars an hour. No kidding. Versus these kids coming out of school. protesting and getting a job as a sociologist making forty eight grand a year. Dude, sociology majors, good job. Good job. Art majors, good job. What are you guys gonna do?

Please. I mean, I was an English major. At least I I gave myself some outs. Like English, at least English you can, you know, it's something with a straight face. But when you when you show up, oh, I'm an art history major. Oh, okay. Well, unless you work as like a graphic designer or what do you? Dude, the college the college racket is is seems to be unraveling. Um, because the kids have not painted themselves in a wonderful light in the last uh

In the last week. They said something about remember somebody said it like how there was always one kid in the class that was like a total liberal, you're like nut job. And they were like, Well, now that's every kid in the class.

You've cut into a real vein with me in that um, you know, being a free market guy, you get your money, you do what you want with it, right? But the government gets involved by charging you taxes, and they incentivize different behaviors by making law. So in my case I use those laws to invest money to pay as little in taxes as possible. One thing you can do is you can give money to charity, which at this point gives me an opportunity to say our auction is now closed.

We reached$475,000. All I'm at liberty to discuss now is the general nature of the gift. So about sixty-five percent went to healthcare research. And the balance went to a uh protector of outdoor wildlife organization, and then a political action committee, which is got a bias towards Israel. Now so The bidding is over. The one little element is it's gonna be difficult to find a mutually agreed upon date for us all to have lunch. But I will try and make that happen before we head west.

Um I wanna make uh I know we claim to be apolitical here, but at this point I think it's important to make a note. Um Uh you you're familiar with there there has been a number of uh posters taped up that sh talk about the hostages that have been kidnapped. So um a friend of the show, Ed She uh was contacted by a friend of his and the friend asked if Ed wouldn't mind using his influence in the outdoor billboard.

uh arena which Ed is a denizen of. And apparently Ed uh was able to get many of these uh posters up on electronic billboards, including if I have my facts correct. Remember, this is based upon a true story. Uh Times Square. Whoa. So if it's okay with you. As a a way of saying thank you from all of us at Inside Baseball with Old Chestnut, I'd like to offer add a complimentary invitation to the charity lunch at my house. The the good news is

It will certainly get through the two bottles of Harlem Estate. And that takes a lot of pressure off me. So I'm assuming you're okay with that. If we can I love hanging out with it. Absolutely. Yeah, Ed's more fun than you. Duh. Everybody's more fun than me. I mean you're going to bed you're going to bed at 10. Ed and I are going out.

Dude, that's amazing. He's got the big billboard in LA too. He's got that big one. Did he did he get the LA one? I don't care. You got Times Square. I'm not sure. Send him a note. He'll give him the hill. Very impressive. But it was it was so um It was so impressive even uh you know Sheryl. you know, show was uh close to tears kind of yeah yeah yeah yeah incredible. We had dinner with Ed and uh his uh

life partner Tina up in the restaurant in New Canaan called the Elm, which I I like very much. I would go there regularly with uh Ted Shaker and we would get the uh the cheeseburger.

They did something rather peculiar. I you have you have uh contacts in the restaurant business. Maybe you can explain this to me. But if you ordered an iced tea. They would come out with this contraption that had like uh iced tea in a funnel. And you would pour hot water through it, and the hot water would go through the funnel into a bottle with ice.

So it would make the tea cold, mm-hmm, but it it would dilute it because the ice Yeah. Yeah. But I always seemed a little confounded by that. And by the way, this restaurant at Elm. That that uh singer you're very fond of? What's it Miley Cyrus? What's her name? Yeah, wrecking ball, Miley Cyrus. No, uh the one with the red lips. Katy Perry. No, the one in uh

I've I'm a I've turned against I I've turned against her, Taylor Swift. She's got some big meathead boyfriend now. Oh, because she had she had launched Or dinner at that restaurant the other day. Did she, or was that a hoax? Because I heard it was a hoax. I heard she was not there. Listen, I have I have to be careful because I've been accused of providing disinformation and so I'm just gonna say

Do your own research. Okay. But you know, we had talked recently about New York restaurants, which obviously is on the cutting edge of what matters right now. The rest of the world has got things going on that, you know, they'll be Um but remember you had asked me the name of the Italian restaurant that I had gone to with and it it's Elio's on the upper east side. Okay. I think it's great. But I want to be clear that there's an element of it to me that it's greatness.

Is it reminds me of my father's favorite restaurant in Chicago called Gene and Giorgetti's, which I've heard you talk about. But um my father when he was a bachelor, he'd eat there like five nights a week, which explains why at 46 he died of a heart attack. But um in any event, I remember going there From the time you know, I was zero basically. And uh we had the same waiter, Vincenz, and you know, in perfect in perfect

Role, he would never really say anything. He would just walk up to the table, kind of put his knuckles on the table, lean over. He'd be looking at the room, but you could tell he was listening to you. Pro. Just and just you know, you'd say what you want and you'd kinda nod and Yeah, dude. Old school, yeah. Old school, right. And then um This was sort of an emotional moment for me. So, you know, my dad died in uh I think August thirty first, nineteen seventy nine.

And so uh I don't know, several months later I was home from college and I went there with my mother. I don't think Mark was there. I think he might have been at college. I'm not sure whether I I think Amy might have been there, but Vince comes over and he kind of does his thing and he leans over the table and he looks around and gives us the shrug and and my mom says, you know, Mori path.

And you could tell it just nodded and we went on and we ordered dinner. But for me, the rite of passage was when Dinner was over and the bill came. Okay. Vince handed me the paper check. With the backside up and on it he put a pen, which meant I now had a house. All I had to do was write my name and sign it and they would send me the bill. And that was sort of a rite of passage to me, which I f I was

I was quite taken. Yeah, understandably so. Yeah. Yeah. Uh not quite as dramatic, but maybe more impressive was when I was invited to get a Peter Luger credit card. I could probably I don't want to do it'cause it'll make all sorts of noise, but it's probably in one of the dust drawers here. Yeah. The problem with going to Peter Luger now is you go there

And you get home, you become a cappuccino machine for about an hour. Yeah, it's it's it hasn't been good in a long time. Uh so we'll take that off to but

But moving on, because I know people aren't here to hear about our restaurant reviews. We need to talk about Danny Meyer. Yeah. Yeah. Um So in case you missed the last episode or two, we had a a horrific um uh experience at the Gramercy Tavern. The service was bad and uh you know the whole And for for me, uh, a spoiled brat who's been going out to restaurants since he was one year old. And by the way, had manners of

beaten into me. Right. It it wasn't, you know, it wasn't at the table, but when I got home, man, if I had used the wrong spoon or the the finger bowl debacle. Yeah, yeah. Like the lemons. Yeah, yeah. It left it left a mark, right? Um so bad service just it just ruins the i experience. for me. Um so the Gramacy Tavern thing uh was a bit of a setback and we uh

uh at that point denoted him um uh excommunicado. Mm-hmm. mm-hmm uh However, the story continues because my very good friend Michael Berry, who I dine with monthly, he is in the business. Of hotel restaurant construction. So he's out three nights a week trying different restaurants. Uh he knows many of the chefs and so I get drug along as'cause it you know we're fun. It's it's a nice evening. So um He knows that during the COVID, Danny Meyer did this thing where if you prepaid You got twice.

So for instance, I put up I don't know fifteen hundred bucks But I got three grand a credit at his restaurants. Yep, yep. I figured everyone wins, right? He gets the cash flow. I know. You know, Gramercy Tavern, Union Square Cafe, Shake Shack, blah blah blah. So Michael suggested we go Two Danny Myers restaurant in Lower Manhattan, right near the Fed. It's called Manhattan, perhaps. Yeah, yeah, yeah, yeah. Okay. So

Um super high end, right? Manah? Manah, yeah. Super high end. Yeah. Um excommunicado. F. No way. F in fact, I'm afraid we're gonna have to um deconsecrate the whole empire. The animal empire. Let me explain why. If if if you care. Oh, I totally care. So the bill comes After Michael had been treated rudely.

Stop. Did you let me let me hear what you tell me is back up. So you get you what was the food even good? So it's so you got a two, so it's the two you and and they had it they struggled with the two you at the to the point where he was rude. So The building In the very popular financial district across from the Federal Reserve, right? Mm-hmm. It's pitch black. There's there's those.

wood horse barriers everywhere. Yeah. So there's only one way to get to the building. And I know why they grabbed this building because it's an office building and they got cheap space. Okay. So you go up to the top where the restaurant is and it has a pretty nice view. Yep. So as is our habit. we may have a seven o'clock dinner reservation. But we like to get there a half hour early and and have a cocktail without being rushed. Okay. Well

They wouldn't let Michael go up to the top to the bar to wait for me because our reservation Yeah. Then he gets up to the top and there's no place to sit. So they won't let him order a drink. And then he says, Well, that table's dirty. If you clean it I can sit there and wait. And they're like, Well, your name's not on the list. Come on.

This is before we even sit down to dinner. Okay. So now you know I'm I'm in a bad mood. Right. I mean this is my favorite. This is my favorite. We haven't sat down and and you're already bent. Yeah. And rightfully so. It's not fucking hard. As a person intimately familiar with the restaurant business, what has the biggest profit? Oh the bar by far. Yeah. So you're not gonna sell a seventeen dollar drink? Fools. Fools. Okay.

So we sit down and uh the bill comes and food good. Get the food wasn't even worth talking about. I don't even remember. I love it. I love it. I I don't because first of all, getting to this place. was a fucking shit show. Okay. You you take an it it's it's got the ambience of getting to like um Is it per se the one that's in uh

The mall in Columbus Circle. Yeah. You're gonna go to a dinner, it's gonna be three hours, you walk through a shopping mall. Talk about talk about, you know. Yes, I know what you mean, dude. Blue ribbon, you walk in, boom, you're eating. Like the the ambiance is good. Because I've read I remember reading the review, like Danny Myers' new spot. It hyped the view. All like the the pro photos look great. But number one, you gotta be uh

You know, you you need to navigate your way there, you need to orienteer your way there, and then they're gonna be surly to you down in the financial district, you know? They got a lot of balls. So it's so uh Byzantine down there. Um, you know, since I hurt my back. Off camber.

cobblestone streets with holes in them are a little tough to navigate for me, especially when there's no lights. Yeah, yeah, yeah. So Dave had to help me walk around the block, not like help me, but just sort of guide me because I was Now keep in mind, I worked down there for a zillion years, right? Anyway, we get there and we go through all this broohaha and we have dinner and then I go to pay and um They don't take it.

They're like, oh, we're not part of that. Stop it. You excuse me? Oh no, no, that's d Danny Meyer's this or that. I'm like, hang on. You mean when Danny Meyer Was broke out of cash, and I fronted him fifteen hundred bucks on the promise. that I could use it as any of his restaurants now. Now you know, now, like, okay, fine. You know what? He needs the money more than me. So Dan, look.

I met you once, maybe twice. You seem like a real nice guy, but you know what? You took your eye off the ball. And over here it inside baseball with old chestnut. We hold people to a higher standard. And I'm really pain it's really painful for me. Um Danny Meyer is a Trinity College. Graduate and also he is a member of my fraternity and my chapter. He is Alpha Delta Phi Trinity.

Phi cap Trinity. Okay. So one of the luminaries of my of my literary society, Danny Meyer, has now been dragged down into the gutter by fucking up. You fucked up. Grammarcy Tavern, okay, which was the crown jewel of Manhattan. It was fantastic. Dude, you fucked up uh Union Square Cafe, whatever the other one that you went full vegan, you botched that Danny. You hit a whole vegan.

Yeah. Yeah. There's no never go full retard. Exactly. Exactly. And now it pains me to do so. But now you're gonna you you're gonna you're gonna screw Morris at your new flagship down at the financial. Do you know who this man is? Do you know how I'm the t shirt guy. Do you know how critical of an error this is with the

With the trillions of dollars of assets under management that listens to this show. Okay. With literally, Danny, I will show you the statistics. We do a bigger number in lower Manhattan. than anywhere else. It's man, it's it's Manhattan by far. And then Washington, D.C. So the Danny, these are the people that are listening. This is your customer base.

These are hundreds of people that would go into that restaurant after work down from Wall Street that now have heard you got a bunch of fucking assholes working there. Hey, you know, you said he went to Trinity. Uncle Uncle Mark would ask the question, did you ever see the diploma?

I mean those with I mean like when when you point fingers there's four pointing back at you so I'm gonna I'm gonna I'm gonna keep my mouth shut on that. Okay. So you know I was doing a little uh self-analysis because offline for a while I've been complaining to you about I'm tired of paying for this research'cause it's They're just wrong, yet they don't understand that they're wrong. Yeah. Um

Uh we had talked about starting the show with Golden Age because of what the lead metal had done. And um I did want to talk about that. One of the newsletters that I'm gonna let lap. Um has been making uh prediction that gold prices were going to go up. I think it's going on three years now. And uh i i it is indeed higher. Um, roughly around the same time they Ask the question, do you own enough silver? Okay. I don't think silver's

back to where it was when they asked. But yet they won't they won't consolidate the two calls, which is sort of something you had mentioned to me, which is writing about it.

versus experience it. And that's that's kind of the thing that's starting to to hit me a little bit. Um I was reviewing Our show. Uh, we had a couple of critical comments and I wanted to understand. And so I went through and looked at kind of the broad brush of what we've talked about. So I think the most noticeable one would be the prediction that uh you can't have a clown. DJ running a major investment bank. And all of a sudden, oddly enough,

DJ Sell, um uh this I I like let me f let me run with this for a minute. So DJ Sell finally gets shamed into giving up the gig, not because it was causing him trouble at work, but because of all the media attention that he was getting. And and not long after that, I believe you sent me a stock chart. That showed Goldman Sachs at its fifty two week low.

Okay. Now you will recall I had at some point mentioned stocks are supposed to be the present value of all future cash flows. And the fact that it was making new highs. You know, you had to take that with a grain of salt because you know, the work you do today is what you reap the benefits tomorrow. And the reason Goldman Sachs is now, uh, did you say 52-week lows or something like that? It's pretty simple. It's because he gave up being a DJ.

He's gonna spend more time at work. And what did he lose? Three billion dollars or something like that? I I don't get it. I you know, d w Wall Street traditionally makes the mistake of taking the guys who make a lot of money and promoting them to management. Now I'm an example of that, which is look what happened there, right?

But I don't know that he ever made any money. And now you got a guy who's gonna devote full time to something he sucks at. What'd you like better? You like trading better or managing? Oh, trading. Man, man managing is just. I I the only reason you ever manage. Is so someone doesn't manage you. That is the only reason why. Trading and this goes back to the writing, the people who write, you know.

And and so one of these guys, I I'm not gonna mention any names'cause I I just don't they're they're they're nice enough people. I I don't think they have the skill set to understand that, you know, talk is talk. But um Uh the beauty of trading. There's no debate on the You ye the number is the number.

And when you don't trade, and keep in mind, trading is not for everybody, and you you can have your your own opinions and uh You know, uh that doesn't mean you can't add value, but you can't pretend to be a writer of financial markets. And not do the mere culpa. when week after week you shoot the best. So for instance, we go back to the lead metal, and I wanted to talk about this the other week, and uh you waved me off, which was probably good, but in the interim, one of these newsletters

came up with some strategy about if you're in a bull market for stocks, you own stocks. If you're in a bear market for stocks, you own gold. And of course you know, they never met a back test they didn't like, right? Uh aka curve fitting. So I wrote the the author a question. I said, so you've run the analysis of owning gold versus this or owning gold versus that. I said, what What cost of storage have you assigned to owning gold?

Surprisingly, I didn't get a return. Uh, I didn't get a reply. And the reason I ask is, you know, to the Simpleton who writes report and says, Well, if you'd own gold here, blah blah blah. one of my early mentors, John Ecstein, when I asked him about trading treasury bills, I said, John, how can you make any money trading treasury bills? And he said, Morris, if you trade five million of them, They're treasury bills. If you trade a billion of them, they're like anything else.

If you're gonna have a meaningful amount of goal Okay. And I went so far down this rabbit hole of gold at one point. I've had guys who write these newsletters tell me Things like there's a conspiracy to depress the price of gold. There isn't the ETFs don't hold the gold they pretend to hold. Okay. So I like that one. I like that. I like that one. That's a good

So here we are, they say in a time of crisis, hold gold. Okay. So I don't remember the numbers exactly, but To have a million dollars worth of gold. I I do the math, but I wanna my my memory is it's like three hundred pounds. Okay, yeah, yeah. Okay. Well. I know. Well Bob Menendez, the great the the the the esteemed senator from the great state of New Jersey, Bob Menendez kept his gold bars in his freezer. Okay. And he had a bunch of like Hershey, Hershey

chocolate sized gold bars in the freezer. Okay. But it was like you can get'em But dude it was like four hundred gram worth of gold, like two Hershey bars. It's like but if you're a real asset manager. Yeah. Yeah, I know. Okay. But y so when they talk about and this is why, you know, some of these old books that I talk about

You know, I can get it if you don't want to put the time in. But the one that comes to mind right now is the one about Satan's bushel. Yeah, of course. And it it It's an okay book, but the the salient point is They compare and contrast guys standing in the bean pit. trading five thousand bushels at the wink of an eye. and they take you to the farmer with his wagon to the grain elevator, and the hours it takes to negotiate

You know, whether it's number one or number two or number three. And all of a sudden you have to realize that if you're like in the real world. You have to deal with these things. So let's say you decide you you need a ton of gold. And by the way, I I It probably means gold's just going up. I you know, for whatever, fine. But if you're only owning gold for safety reasons, you know

Let's assume the gold ETF is good. I don't know. But let's say you decide it's not and you want to take personal possession of gold. Okay. Well If you go pick it up. Where are you gonna put it? Oh well let's say I got plenty of room here. Okay. Put it in the basement. Well, what happens if a bunch of guys decide one day when we're in Arizona, they come and take all the gold. Um well but in their analysis

like the Bitcoin analysis, where they don't adjust for loss due to theft, um, you get a very different result. And In s speaking extemporaneously, I I remember the I think it was the biography of JP Morgan, and he you know ruled Wall Street. I think probably to even a a much greater degree than Jamie Diamond did. But um that was back in a time where they would have um Many banking crises.

So what would happen? People would run to the bank, they get their cash out, they take their cash, they're go they go home, and guess what would happen? The crime rate in New York exploded. Why?'Cause everyone's walking around with a lot of cash. So, you know, when you get into the writing of the newsletter and pontificating about how You know, we've got assets that are fragile, we've got assets that are anti-fragile. Yeah.

Good for you. I don't need to spend 10 grand a year. I like this newsletter, Daily Shop. I think it's a hundred bucks or two hundred bucks, something like that. And I've discovered is it sort of that that uh Phrase Occam's razor, like the simplest explanation is usually the best. So um I've kind of gotten to where Um I've decided After reading that Howard Marks memo that's got a lot of press. You know Equities are stories, like you said, right? Bonds are contracts.

And part of the deal with the bond being a contract is if if the equity that's ahead uh or behind, depending how you want to phrase it, in the credit stack of the bond. If the company goes out of business, the bondholders get all the equity. You can't say for free because they they paid for their bonds, but you know, and and Howard Marx's point, if you expect the returns of High yield to be eight, nine, ten percent. And you expect the returns on equities to be eight, nine, ten percent.

you know, absent dividend reinvestment and all sorts of other little idio uh Sync. Yeah. Idiosync idiosyncrasies. Yeah that happen. Um, you know, like stock buybacks and coupon reinvestment and and all of that. you know, i i from a macro perspective you can understand why bonds are all of a sudden getting to be a little bit more of the of the topic du jour.

Made the cover of Barons. They made the cover of Barons uh this weekend. As you Yeah, I was not excited about that. That's the cover Sports Illustrated. Unless it's the cover of Sports Illustrated with Martha Stewart on it, which I don't know how that one. I mean I you know Older women are beautiful. I find her more attractive every time I see her. How about that? I find her more attractive. I follow her on Instagram. She looks better by the day.

It's the technology. She's just riding her horse up in Bedford. She's working in the garden, throwing lavish dinners, making it look easy. Yeah, she hanging out with Snoop. You guys should hang out and eat some gummies together. You and Martha would get on famous. I get on with everyone. I know. That's what I mean. Like you and Martha might you know, she's she's actually a c she's a convicted inside trader though. So you gotta keep keep your distance.

Yeah. Well I I I uh going back to the puts, um after I had read the um a Howard Marks letter, the puts uh were at a level that I exited and just because it's full disclosure. I made a small amount of money enough to provide me and my family a very um pleasant vacation. There there was no home run grand slam. And by the way, had I waited. Yeah.

But uh we proceed. What what if you had waited? What if you had kept them on? How like are you kicking yourself about that a little bit? No, I you know, I'm too old. I I try kicking myself, I just fall. Um now the the reason is this. Um

I'm one of these guys. I don't ever remember the winners. All I remember is fucking this up and fucking that up. And and uh I think part of that Is important when you trade because the second you get lost in your own genius, it's like you're you're you're setting yourself up for disaster. It is an example. What market do I tell everyone to avoid? Oh the munis. Good. The munis market. Well Number one, I'm law munis out the ass. Number two, I've gotten fucking eviscerated.

If I have lost a fucking king's ransom being on these fucking munis. And I tell you what, it's awesome. I love it. It's just like look in the mirror, I'm like You're a loser. Just say it. But you know what? I didn't um I didn't prepare it. Uh I might be able to find it. I'm gonna try something and see. Have a good weekend, folks. Oh okay, no, that one didn't work. I have my Muni portfolio somewhere on this computer. And what I wanted here it is. What I wanted to bring up was um

The yields. Okay, here we go. So I'm not going to mention any particular names or even that they're munis. I'm just going to talk about some yields. So if I can find one thing, okay. These are the yields on the list of the bonds I own. And when I say yield, as you know, I like to use yield to worst, meaning if they're called early. But the first one is uh rated triple A, uh 5.876. So that's tax-free. Then uh five point nine eight, five point five four, five point three. All

triple tax free or double tax free, triple A rated. We get into the some of the non-rated bonds, but we've done the credit research on. Six and three quarters, zero coupon. legitimately backed by you know defeasance and tracks receipts. Yep, yep. How how bad are you gonna get hurt owning A zero coupon muni at, you know. that rate and and so being unlevered um

I I I feel pretty comfortable. I'd prefer they were to profit just because my ego would feel less diminished. But the fact is as Anthony Peters likes to point out, and uh um Who was that other guy? Oh uh there was this fellow named John Biggs I used to play golf with who was president of T IAA Creft. Yeah. You may have you may have heard of them.

He used to tell me he loved rising interest rate environments because he was constantly getting thrown along cash and a rising rate environment made it easier for him to invest. So anyway. Interesting. I knew The S P puts, the logic being that if the economy did well the the the stocks would uh Rally. According to that GDP number.

According to the GDP number, uh you know the economy's doing great. Yeah, it and it it could well be. Yeah, go ahead. Well, I I had this conversation with life coach and executive producer Leslie Harris, you know I know crude oil bounced a little bit, but it ain't 100 bucks a barrel. It's in the 70s, right? Okay. Crude oil, I've been told is a demand-driven product.

So uh you know, I wonder about that. I haven't checked the price of copper, although I've heard it discussed. I think the price of copper has not been behaving well. And copper is one of these industrial metals that is used in everything. And um We've called it the metal with the PhD. Mm-hmm. Start lining these things up and uh You add in the fact that we still have by many of these analysts.

Uh Torsen Slock. I know that's a household name, especially your house. Um he's I think said that the effective actual federal funds rate's closer to seven percent. Uh I believe the more in one of their newsletters recently said that's JP more It's an old it's a joke when you were in short pants. Um said there's a lot of financial headwinds. Financial conditions are very restrictive. Again, uh I continue uh so far unsuccessfully to buy into the Lacey Hudd.

you know, we're gonna have deflation. But you have financial conditions are still restrictive. Um the Fed's balance sheet, and I wrote it down and now I'm never gonna find it, but the Fed's balance sheet continues to decline, which is an unwinding of the quantitative Easing. Right. And along with that, you saw um the yield curve uh continue to disinvert. Getting there.

So um I know you wanted to at some point briefly touch on the basis trade. But before we do that, um What's happening, at least the last few days, the long end meaning the bonds, they've gone down and the curve has disinverted or steepened. For futures contracts, that's not the worst. Like that makes that futures contract a very difficult thing to manage. Um Of course, uh, we'll leave that to you to uh figure out why. That might be a good think piece for.

Uh Kevin Muir, um, but you had asked me what the big deal about the basis trade is. And uh, you know, I thought a bit about it. Um A little disappointed, no one's reached out for my advice, but I guess you know, it's hard to get through to me these days with the level of staffing that we have and but um The basis trade is a highly, highly, highly leveraged.

But there's a reason for that. It's because In the government bond market, which is where the bulk of the basis trading takes place, the movements between the relative issues. are very, very small. So you had a huge day on Friday. And the two-year note moved two and a quarter 30 seconds of a percent. So uh uh that's something like. I hate doing math in my head, but that's like two, six. It might be six cents. Uh per million. What?

Yeah, it's yeah, yeah, yeah. Yeah, yeah, something like that. And uh so you gotta move a lot of six cents on a million. Now I understand. If you're levered fifty to one, it's not six cents, it's it's thirty cents or something like that. But it's still outright you you you have a long and a short so if one moves by Six cents and the other moves by four and a half cents, that's one and a half cent on a million, even levered at 50 to 1, right? Okay. So um

you can get into Byzantine situations where the the um basis trade can can create some problems. But what people fail To mention is What a basis trader does is he will be long or short the futures and then long or short some form of equivalent security. They don't talk about the fact that the basis traders are doing nothing more than reacting to the relative cheapness or richness of the futures company. So let me explain a little bit more specifically. Basis Trader walks in.

His first inclination isn't just to put the basis strain on. It's like, well, what's cheap and what's rich? Well, if the future is are cheap because everyone's hedging their interest rates. Well There's a reason they're cheap. Someone's selling. a synthetic US Treasury. Okay. So the basis trader goes and he buys the future and then he hedges it up using some sort of similar security. And now That's the real reason futures contracts exist to shift risk.

One of uh uh Peter's laws is risk cannot be destroyed, it can only be transferred. Okay. Um So the the person worried about rising rates has transferred the risk to the the futures contract, right? Yep, yep. If the futures contract didn't exist. That person either couldn't had their risk or they'd use an interest rate swap, which they would say pay on a swap. That's the vernacular. Or they would find a treasury security to short

The it's not like the you get rid of the basis trade, you make the problem go away. There these things exist for a reason. Now As a traditionally trained market denizen, you know. You can't have a market of just hedgers. You can't have a market of just speculators. You have to have a market of many different participants because It's they all come together to create a fair price.

And I I'm not doing a great job of explaining this, but to say the treasury basis trade is a problem, it's just simple-minded. Yeah. And it's a little bit like listening to that. Um Looney Tunes Kathy Wood trying to explain to investors, this is great. This is better than the quote, blowjobs aren't sex. Okay. If you buy our stock, we have plenty of capital loss carry forwards to offset your future gains. Who the fuck says that?

Oh my God, do I look that dumb? Am I really that fucking dumb? And the one that got swept under the rug. But we here at Ibwak like to get out the magnifying glass. She went on to talk about how many of her stock. are doing poorly because the bond market got hurt. And once the bond market turns around, which she expects, the stocks should do better. Which to me begs the question, if you're expecting 35% compound annual growth. What difference does it make if the tenure note yield

Four percent or six percent. You can't answer because there is there is no answer. It's it's like the the the person with the big L painted on their forehead. So

Have we been your curve is getting close though? You're you're you're inverted, you're close. It they're working on creeping along, creeping, steepin'. How about that little two-year note chugging along at 5.004? I'm waiting for all the thank you notes. Nope, not coming. Not coming. Fiona, come here. Rosine. She's gonna she's gonna be pissed. Guess where more come here. Guess where Morris went last night? Hey sweetie. He went and saw the monster trucks. Yeah. We're gonna go this summer.

Yeah. That's crazy. Yeah. Morris went and saw the monster trucks and they were really loud and really fast and really noisy. I'll send you some pictures, okay? All right. Thank you. Goodbye. Get the other one out of here. All right, buddy. Um I guess time you're on duty, huh? Yeah, it's time. I'm gonna get yeah, I got an hour worth of monster truck discussions to have now. Don't forget to don't forget to punch in. Okay.

All right, buddy, thank you very much. And uh, I'll see you next week. T-shirts are here, folks. You heard the instructions. There you go. Inside baseball cast at Gmail. Inside baseball cast. At Gmail by the two year, folks. Take care, pal. All right, buddy. I'll talk to you soon. See you well.