MARKETS IN TURMOIL EMERGENCY PODCAST

Greetings and welcome to Inside Baseball with Old Chestnut. I'm Liam Allen with my friend Morris Sacks on a Wednesday night. for the markets in turmoil edition of Inside Basement with all that. So good to see you, Bud. You look great. Yeah, and the uh and the downtrend stuck today. I I was afraid it wasn't gonna take Well, you know, I am uh we we should be full disclosure. We cut an entire episode yesterday and I fucked it up. And it's gonna go into one of those

Great historical lost tapes of a Springsteen concert. Uh I thought it was our best uh podcast, but we'll try and equal it. And as Liam pointed out, the market has moved. again today, which actually gives us a little bit of an advantage over the competition because we can comment live. So As a good producer, y yesterday's show started out with a uh reference to Havanigila because

We um we had a really good call on uh the previous podcast, which was beware a market that doesn't go up on good news. And I felt uh, you know, the trader's uh obligation to back up my view with a position. So we bought uh some puts and lo and behold, Everything that Liam and I have thought to learn you people over the last several years. It was culmination of a life's work. Uh So, you know, for my birthday the the uh the market gods gave me a little

Pat on the back, which came at a really good time. And uh So here we are. I I Obviously if we were Bill Ackman, I'd sit here and tell you the forty things we did right. Um, but as a good instructor, I would like to recap a couple of things that I think are important. Before you go any further, what was the good news? Because somebody wanted to know what was the good news? Somebody said, why did he buy the put?

And I said, y you know, there were there was good news and the market didn't go up. And they said, What was what was the good news? Uh I thought the good news was Powell's comment that he was determined to hold to that inflation goal, yet he was willing to lower the funds rate at the next meeting. I think that was my take of what he said. And so I thought that was stock

should be n we'll we all have come to determine by now. I don't know anything about the stock market. But you know, that to me would be the the um the soft landing, the golden uh ticket to you know long term non-inflationary growth.

And when I didn't get what I wanted, you know, I and I guess one of the teaching points is I've said many times, I have no problem being flat. Because when you're flat, you don't you're not wrong and you can go from being, you know, flat to do what I did today, which is got out my little shopping basket, although um Uh as I see where things are now, I I'm glad it didn't fill up the basket because you're supposed to get a bounce today.

And uh what I explained uh that's lost to history is You know, I I I've been reading more about war and war tactics. And the idea when you're a commander is you always have a strategic reserve. And and the reason is because what happens is the enemy will make a massive frontal assault. And if they break through the front. they're going to need to be resupplied with ammo and food and all sorts of things. So until they can get that supply line established.

your your you know strategic reserve can come and counterattack and take a lot of lost land with very little effort. And so what's happening here is we had the flush overnight triggered by the Nikkei. And so people like myself who have a strategic reserve are ready to put some money to work, which is why

The puts we bought, I had a very difficult time deciding what to do because that's usually where I fuck things up. So uh I did what Any good trader would do is uh I talked to my trading manager in my case. Life coach Leslie Harris. And he said something which I thought is up there with with the great. He said, you know. The easy money's now over.

And so any money you make between here and now is gonna be on a bigger position and it's gonna have a lot more tension. And I I feel like we got the brass ring, we got a lot of validation both financially and uh kind of educationally. And um I think you might have heard me say this yesterday, Liam. With my good fortune with the puts, we're not gonna be able to we're not gonna have to put that um

Yeah, the paywall up for the platinum subscriber. Another year, another year, another year, another season. Free free. Free of charge. Okay. So the because I'm really tired and I've already done this once before and I'm afraid the fucking internet will go down again. If it does, you're gonna hear a a noise of somebody jumping from a forty story building. Um

So all along we keep saying don't shortval and because you don't know when something's gonna happen. And uh I think The reason I'm so happy with how things worked out is You know, it it validates a lot of these concepts that we hit over and over again about, you know, do you love your trade? Right. So I'm not uh active today, but I would imagine there'll be some stories of guys who crushed it.

And then there'll be stories of guys who get wiped out. Dude, did you hear the stories about guys getting locked out of their brokerages? So Monday morning, Charles Schwab, Fidelity? E-trade? Go down the list. The casino was closed for business to to Tom Tom Dick and Harry on Monday morning. Yeah. Dude, a friends of the show. I got I got tweets. I got emails tau people talking about how Who does Morris use as his broker?

And I said I said, I don't know. I said the lady with the velvet hammer down in Greenwich. I said it's you know, I I I don't think unless there I said unless the phone line goes down in Greenwich proper, I think he's okay. Dude, I got I got mass stories of that including friend of the show Kevin Muir who I cringed when I saw it Kev.

Kevin Muir had a post on Twitter that he got his trades got canceled or broken or something on some Oh no. I I saw him newsletter said he you know he took all his trades off. And I wanted to congratulate him but I he had a tweet, I'm pretty sure the other night saying that his service he he got fucked on something. But yeah, Charles Schwab, nine forty Monday morning.

Well while like that was the panic was nine forty Monday morning. It started on Sunday night. You saw the Nike get crushed, futures open, futures went, you know, as fast as they could down and then Monday morning it cash opened. You know, there was Nvidia was ten percent down. So everyone's trying to buy that on sale Nvidia and everything and and they couldn't get in. Charles Schwab. I had I had listened to

Tweeting at me, sorry doesn't fix the lamp to Charlie. Because Charles Schwab made their bullshit apology at like two o'clock. Yeah. So somebody somebody re replied to Charles Schwab, sorry doesn't fix the lamp. So it's good to see we've entered the lexicon, you know. Well, it was just a matter of time. You can't have two stars like you and I. Yeah. Anyway, um, you know, there's we go into these market areas where uh I like

to say this is where the markets find the auditors the mistakes the auditors couldn't. And again, I apologize for getting the Mark Twain quote wrong. It's you know it's it's hard. to talk for an hour and have things come out smoothly. You know, we had this entire show done and then I made a snarky comment about Serena Williams in Paris and legal fucking shot the whole thing down. Oh god, I'm glad that I was off air for that because I would have hit I would have hit end.

Dude, you mentioned you all right, hold on. Let me back up because if you're going to talk about yesterday's ghost show, I'm going to bring up what you said on it.

You said that this buying the puts and this validation and this trade meant more to you than taking Paul Tudor Jones's lunch money twenty five, thirty years ago. Oh yeah. That was this was a big thing for me and I and I I I I hope you share in this joy because You know, this is all you, all your idea.

Right. And you notice he said joy, folks. He didn't say uh you know profits. There's joy. I get joy, he gets the profit. Okay. So you could listen, listen intently to this little love story he tells me here. Okay. Yeah, the joy. The joy overflow. I'm waiting still waiting for a number. I don't know what else to I know bag. That's one of my rules.

Well go ahead, go ahead. So seriously like No, but we've been going here, you know, just because you had the idea that it'd be fun to kind of open up a little bit of the window of the financial markets and you know, to talk for an hour without sounding like a doofus. I mean, I'm that's an assumption on my part, but it it's fucking hard and it only works because you have that ability to have a discussion and I've had numerous people ask me where you work.

in the financial services business with how much you've learned and I I I Yeah. I mean who can put a price on that? You know, exactly. Handler's been asking me to intern, but I, you know, I said, Rich, I I I'm busy, you know. Rich. Get in line. Yeah, exactly. Rich, I can't move down to the city. I can't. I'm I'm happy in Westchester.

What are you doing? Fielding offers? But you know, it's tough. You know, it tell talk about doing the show is difficult. But you've been in cash and you've that's been a t and you've been flat. And there's been a lot of action that's gone on, you know, in the stock market. But like to go from zero percent to whatever the two year went to five percent and for you to maintain Your position that you didn't like, you know, you were content.

You are content to be in cash and munis and not be screwing around in the market for a long time. And that has to be difficult. You know, you didn't miss the Nvidia because it's lo and behold, Cheryl that was all over there, you know. So I'm not gonna give you credit for that. I've gotta live with that the rest of my life. You can have the money if I don't have a ear button.

But you but so like that that aspect of it To like for you to have to listen to the peanut gallery and to stick to stick to I'm urging caution and I'm content with my five percent two year, you know, for three years now. Well I it's the confluence of events, right? I I've been through a lot of these cycles and I was fortunate not to be short during that run up, you know, and it there is FOMO.

But um when you got the two year note back around four percent, I I remember thinking you just generally don't get this many times in your life where you can take all your risk off at a good price and park your money at you know at that rate. And um you know I've one of the lessons I keep wanting to repeat is I uh always wanted to feel like I could sit and do nothing and that if you wait long enough Something comes along and you get a big opportunity. And uh um this is proof of concept, right?

I mean, I I I look at, you know, we made some money on the puts, which obviously Uh I that's always fun and you know it'll help society through the continuation of this free publication and then some money to charity. But uh the best part uh is I'm buying stuff back like 10% below where I sold it. And you know, like uh

Ben Franklin said a penny saved is a penny earned. I mean, you know, how many people would be, you know, cock of the walk if they were up ten percent year to date, right? Well that's Ten percent buy and back is the same. So yeah, yeah, yeah. Yeah. So I I think it's And then... You know, we got a couple of really nice notes. I don't know if I'll be able to find them technologically. But uh Bob's your uncle. kind of came and said basically Look, this is what he's back.

He came back. He he he said that he was no longer a listener because he was offended by the Bezos comments and then he circled back and he said he was he wanted to come back to the locker room. We got we got we got the wraparound. Yeah, exactly. He round tripped it. Well, well the anyway, the option trade, I wanted to just go through that because there was this comment from Leslie that I thought was profound. I made Oh yeah yeah yeah yeah. Um you know, you get older, you repeat yourself.

Um it's on record. It's on tape. The market the market broke and I've always had trouble. Staying with stuff and knowing where to get out when you have these windfalls. And I've, you know, talked about the the straight path trade that, you know. I did well, but yep. Okay. So I I kind of confused life coach Leslie Harrison.

He said, Well I think it's going lower, but you had A gift, the easy money's over, take half off at the close, and uh to follow his lead, which I never do, I put in market orders, um You know, last time I did this, Cheryl was in the room, so I had to be a little careful. But to me, when I Hear the term market or I think of a tube of anal lube. Now

I don't know why I say that. I've never seen one. It's not my it's not how I roll, but that's how I feel about it market orders. Yeah. Yeah. But the the thing is. In this context, you don't want to miss something. You don't wanna right. This is the the land of the resting bid and the resting offer. But I do feel like even though Um the market's getting crushed and that's not a good sign and all that. And I don't know whether all of the

There's a saying the the good or the bad trades force the good trades out of the market. I don't know whether that's taken place. I don't know whether the hedge funds have been blown out. So I don't know where things are gonna end up. But You know, if you were fortunate.

To be liquid. I think these are the times You find what you love. There this is not a time for half measures. You find what you love and you get out of your basket and you fill it up. And uh again, you know. Maintain liquidity, no leverage, no short volatility. But when you look at the Howard Mark. He'll always tell ya. You know, you gotta be greedy when other people are scared or I get that quote wrong, but basically you gotta be there to buy when people are getting forced out because

Two two things. One is That's the only time you get any real value. Secondly, that those prices don't stay there very long. So if you don't buy'em when they're you know somebody else is, dude. It happened so fast. It happened Monday, it happened. You saw it right before your eyes. You saw

I'll just use NVIDIA. But you saw Nvidia in 92 and by three o'clock in the afternoon it was up to like 104 or something, you know? And then I know they whacked it down, but but somebody else is you know somebody else is gonna come in. hammer that buy button when if you don't. So if you like if you loved Apple, you know, a week before at two hundred, you gotta really love Apple on Monday at one seventy five, you know? Keeping in mind we don't provide investment advice.

As I mentioned, we sold half the puts on the open and then uh I just Earlier this morning I punched out the other half just'cause Um, I've been able to buy a lot of longs back at better prices. And uh I had that problem looking at option premium and knowing that every day it goes away by divided by the square root of time somehow.

But uh, you know, uh I wanted to mention a couple of comments the listeners had had sent me. One was uh forget who I apologize, but they asked if We had any analyst who were very uh helpful in earning money even though they didn't manage trading positions themselves. I got it. Bob Cobb. Okay. Do you want to read it? Read it. Question on the trading group you ran. What was your thought on non-trading analysts?

Etc. Did you ever find value in anyone from an idea generation standpoint who just didn't seem able to take risk effectively? What was your thought on non-trading analysts? Did you ever find value in anyone from an idea generation standpoint? That's a that's a great question. And I worked with two men, uh Dr. Amir Sader. and uh Philly John for uh twenty years and uh Uh how I feel these guys is

They were part of the team. They were every bit as valuable uh as uh anyone pulling the trigger. And I'm I know that. you know, guys like Igie would just echo what I'm saying about these people. Um, you know, everyone wants to be the trader because it's, you know, the captain and gets the glory. But, you know, I can tell you working with these guys was worth a great deal of money.

And I tried hard to make sure they felt like they rewarded uh well for their participation. Mm-hmm. And I also tried to share with them the respect in the intellectual uh brain power that these guys had. And uh so when I made that wrong term and went to that hedge fund uh I had to have Amir come because I knew that he could do the whole thing. And if I were, God forbid, forced to go back to work, it whatever number it took.

Okay. He's coming. Yeah, that's how unlikely it is I'm gonna be coming back to work. Right. Got it. Yeah, he he has in in in Philly especially. They like what they do. I mean, I'm not uh we never really discuss trading and this and that, but they're content in their in their in their own skin, which allows them to be unselfish and not worry about you know getting proper recognition and and uh you know I think so much of uh John.

I took a couple of my daughters and I think he trained them on XL. Oh wow. Yeah. I mean it's yeah. Yeah, yeah, yeah. Wow. Yeah, you've spoken highly I remember you I've I remember Amir's name from you speaking highly of him ages ago. Um as as being an integral part of the team. Yeah.

Anyway. And didn't you didn't you run something by him recently? Didn't you have a question for him and you and you I thought that you would run something by him recently and you were like, ah, I just want to check with the mirror and it checked out and now it's good to go.

I feel like that happened recently or something. It might have. I uh I've been having a little trouble keeping track of everything. But um, you know, I just wanna go through this thought process of uh you know how you make money and you know process has been talking to you weekly and talking to Leslie, you know, virtually daily. And then, you know, reading guys like Anthony Peterson. And then, you know,

Stuff like that really has helped me focus. And uh it's been like I said, the joy has been just this proof of concept that all these silly little things we've talked about. you know, when markets go crazy. This is where you th you separate the wheat from the chaff, you know, it's like I remember there were some comments about our our discussion of P and L and how we always survived

the crises and now it was you know QED right? Yeah. And So at this point in my life and age and what you and I've set out to achieve, I I think the the victory lap show is is good and And I hope we thanked all the people that we should have thanked. I know there's a whole team behind the the scenes working night and day, but uh You know, how about all our all our two ten all our yield curve disciples who have sat

for four years and talked about the inverted yield curve. Here we are today, whatever it is, August seventh, through sixth or seventh, twenty twenty four. And the two year is checking in at 3.97, and the 10 year is at 3.95. Separate two points. Okay. Remember when it was well, we remember we said the Fred's gonna tighten until they broke something? So I guess the decision's still out because we don't know where the economy is, but

Uh you know, if you listen to Bill Ackman and I I just I've had enough. I was gonna say who? Dude, you're you dude, you're You're lucky you get to listen to him. Some of the listeners have to read him, okay? And he uses. 10,000 words per tweet. Okay. Like you need you need a long screen phone to read all of Bill's take, okay?

He's got it. He's really off the reservation. I don't want to do it on the celebration show, but he's off the reservation. I told him to stop using Twitter. He tweeted his IPO to death. Okay. That's Hall of Fame level Kathy Wood type shit. You wrecked your IPO on Twitter. Bill, put the phone down. Go take a vacation. Okay. We've done everything in our power to give you advice here. We've supported you.

Loyally, but you got to get the fuck off Twitter, dude. You get you you just your IPO just crashed and burned. Get off Twitter. I don't wanna see you there and I'm gonna I I don't wanna say it on Twitter. I don't wanna embarrass you publicly on Twitter because I know how much it means to you. But I get direct messages from people every day sending me your bad takes on God only knows what. Okay. So all right.

And thanks to the blind squirrel for posting our two-year t-shirt. Unfortunately, merch shop just coughed called were sold out. Yeah, no kidding. I'll go search for them on eBay. I bet they're gonna trade up. Um Buddy, it's great to see you. I'm glad we came through this. I I really can't thank you enough for all the joy you brought to me and thousands of people and and um you know Bob Cobb, love you, man. We can't do it without you. And Bob's your uncle? Yep. I mean that.

What a home run is that. Yeah. Yeah. Bob's your uncle. Um Who's the other guy? Pat McGroy. Pat McGroin's always there for comments. Okay. That's one of the great ones. Bob Cobb, Uncle Eb Ebenezer, Uncle Ebenezer's. Also all the guys uh all the guys on Twitter. I know I bash Twitter, but yeah, like Red on the Day.

Uh Senator Brofie out in Colorado. Red on the day is fabulous. Platinum Yeah, Red on the Day, Platinum Sombrero, all the guys out on Twitter in the Twitterverse. Um, but those are the guys that send me the bill. My God, he's just gotta stop. Um, but yeah, dude, it's been uh it's been it's been a lot of fun. I wanted to ask you about Monday though, before you get off, was Monday panic or was Monday orderly?

Well, I guess it depends who you ask. It sounds to Kevin like it was panic. Okay. Yeah, yeah, yeah. That's a great answer to You know. This is a snarky comment, but I didn't have a lot of trouble trading Monday. The reason was because I was right. Right. If you're wrong, again, you gotta get to flat and get back from flat to right when everyone's going the same way. So all I had to do was stick my little pinky toe in there.

And uh, you know, when I talked to the Velvet Hammer, I put a bin in for 800. She goes, you bought them. Like, what? I guess we paid too much. But they're but they're higher now and that's how you gotta do it, you know. And uh I'm sure Hashem will smite us for taking this Hava, but uh you know, I just uh Yeah. Yeah. Every once in a while you gotta smell the roses because life is measured in spoonfuls and uh

That's it. It's brought me much joy, my friend. Much joy. I I'd say I I couldn't be prouder of you. And uh what we've done. And again, it without you there's no me and it would not have started without you and it wouldn't have continued and you made a lot of personal sacrifices and uh Um I'm glad. I'm delighted that there are people that listen and feel like we're helping them. And one of the great gifts of life. So well, in the words of your uh of your great

I believe it was a Cree Indian fishing guide. Was it a Cree? I want to get the chop. Let's not fuck this up. See you later, pal. All right. Take care.