Merry Christmas To All, Except Bobby Cobb

Know what time it is?

Greetings and welcome to Inside Baseball with Old Chestnut. I'm Liam Allen with my friend Morris Sachs. How you doing, MV? I'm doing great. If there was any question why you received producer of the year, I think that just ends all doubt, right?

You know, my wife said I said, You know what? I'm like, should I do it? And she goes, You know, the show's not for everyone. I said, You know, you're right. I said, It's our show. And I said, You know, M Morris Morris loves Bruce. I love Bruce. I said, You know, we've come we have we have common ground. Great version of a great Christmas song. It's classic Bruce. He does his whole Bruce thing in the beginning. Oh, it's the wind blowing down at the beach.

Okay, Bruce. Okay. And then there's I mean there's Clarence, there's Clarence, there's Max. I mean it's no jungle land, but it's it it's a top-notch song. I was a huge fan. Until I read that when he wrote the song Racing in the Streets, one of the great, great Is it archetypal uh songs of girls in cars? He couldn't drive a car.

It's the brilliance of his artistry. A little bit of a sense, I guess what's the difference, right? You know, even Paul Jones said I could teach you to paint, but that won't make you Picasso. Um İzlediğiniz için teşekkür ederim. On the comments section. I thought well the last comment I read, okay.

Merry Christmas, by the way. Let's keep in light of Christmas, okay? I was raised a Catholic, okay. So let me just give you a quick quick rundown on Catholicism and Christmas, okay? All right. Christmas, well, I was taught that Jesus was a Jew, okay. His father was a carpenter. Okay. So dude, do you remember the bumper sticker that used to say my boss is a Jewish carpenter?

No. Yeah, there was a boy. There was a common bumper sticker that you would see. Yeah, it's up there with like the fish and the coexist, but like I can remember one that said, My boss is a Jewish carpenter. So that guy was a was a Catholic. You know, and like that was a a true literal a literal interpretation of the Bible that, you know, Jesus' father was a a Jew. And dude, this y this awareness to this goes back to your to your

grievance and your burden. Okay. The reason he was on the road, the whole story he was on the road is because they were rounding up the Jews to count the Jews and the the Jews had to hit the road. Okay. So that's how he ended up in Nazareth. All right. So my my God, my God. Okay, is a Jew. Okay. So riddle riddle me that, rabbi. Well that's why that's why you and I are, you know, brothers from another mother. I mean, I I guess if you go to twenty three and me eventually.

We all end up in the same place. But that that's obviously being used by aliens. Right.

Scamp brands and stuff. Okay, so before I forget, like in light of Christmas, can we avoid Hamas and can we not take a blowtorch to the comments section, please? But I have I have an idea. I have an idea in the Christmas. spirit okay instead of like a review of the year okay Perhaps we could do a review of the topic in question that was brought to light in the aforementioned comments.

section. How about that? How about that idea? Um are you talking about the fact that you can't return your gold in Costco? Or The fact that um someone's casting his versions upon my returns. Um I yeah, well it's like The guy said some things. I mean I read them, I reread them, and then I went back and read his previous work. And dude, it's not inflammatory. Okay. And I remember initially there seemed to be like a humor to them. There was a really high quality.

But like the the recent ones I had read were like he I'm not gonna say that he he he stood up for net jets. Um but I I look let's he

Let's start year one at Greenwich Capitol. What year is this? Give me the year. Well, so It's a little foggy because it's a little foggy because We, meaning me and my cast of characters, accumulated this data when we were going uh out to start a hedge fund. So all of this data was collated and vetted by a law firm called Seward and Kissle. Okay, you can look'em up.

And, you know, as with all of the hedge fund data, there's assumptions that are built in there. And uh I would say these numbers uh are well within. comparable approaches that others have taken. And and keeping in mind, you know, this is not an effort on my part to raise money. Uh this was an offhandy comment that I made. Um and uh first of all, I'll I'll stand by it, number one, number two, uh This this information, if you work hard enough, is in the public record.

If you don't believe me, you want to prove me wrong. You can dig it out. Okay. I'm not going to tell you how. because in our country you're innocent until proven guilty. So, you know, go find it and prove that I'm wrong. The the other bits of information to corroborate this return, again, This is not so much in the public domain, but I have every tax return back to nineteen eighty-two.

And I do. I know, I know. And since I've been paid on a formula for the bulk of those years, you can reverse engineer what I got paid. No. All right, you said it don't don't spend people gonna spend and from now until New Year's digging through you digging through Well I you know, or you can just say They that's what they did.

My question is, this is I think this is a better question. I don't know what what return number do we say? 20 something, whatever it is. 19.25. Okay, something like that. Okay. So I was thinking about this.

And you know, I actually got a kick out of it. So it's basically me, a kid from the pretty south side of Chicago, public education. A man who was a customs officer in China, okay, a ski bum with a bachelor's in economics degree. a mechanical engineer, and a guy who was a baker restaurant manager, okay, and our best computer guy. Never even graduated college. Nice. What a team. Okay. We put that return up.

So what's the wrong with the rest of you fuck nuts with the Harvard and the Yale and the Super Ch? Like uh like why weren't your returns better? What's wrong with you? You do have a bunch of s you think it's because you had such a small team? You think it's because it was just for five, six of you and that you guys were like brothers? Do you think that you you think that's gotta, you know? I I think

I wouldn't say i i this is a rare instance where you didn't phrase it eloquently, but I do think you got to the heart of the matter. We had an environment where everyone's goals were more or less aligned, people felt comfortable with their station in life. There was no are moving down, you you got paid based on your performance. And so there was incentive for everyone to do well. And it it worked great.

Um, you know, I I mentioned this to Cheryl mostly because the red on the day guy is just. Un fucking believable. The guy is just so good. But I'm I'm especially with the woman whispering in the guy's ear and then the hair standing up. I just got a huge kick out of that. But I was saying to Cheryl, you know, this guy's impugning my reputation, and then I'm gonna do this, I'm gonna do that. She's gonna she says, you're gonna do none of that. We're not having any dick measuring contests.

Okay. And uh so uh I I stay on my as usual. Sher Cheryl and I are in lockstep as usual, aside from the running thing, which I won't address.

Well, you know, I I for many, many weeks, I wanted to make the comment about When I went to Greenwich Capitol, I felt like they made me into a man. Time stamped out. What year is that? Give me, is it nineteen? Uh nineteen ninety two. Ninety two. Okay. Now w what do I mean by that? So

You know, you walk around, you talk to a lot of people, you know that phrase, uh, trademark cocktail party bullshit. People make up the So if you went in, if you were on the trading floor of Grange Capital and said, I could stuff a basket. And someone says, No, you can't. And you said, Yes, I can. Okay. I'll bet you ten thousand bucks you can't stuff a basketball. Not a hundred dollars, not in nickel, not I'm, you know, ten thousand dollars. Okay.

Go over to the gym, just stuff it no, there's ten thousand dollars. And and the numbers went up from there. So all of a sudden, this loose bullshit talk. Drifted away because all of a sudden, you know, it was the financial equivalent of a duel. So my conversation with Cheryl, I said, Well I'll tell you what I'll I'll make some arrangement where under an NDA I'll produce the records, but we're gonna we're gonna put some money on. And that's where it went sideways.

So anyway, trust but verify. Uh plenty of people know us. And uh, but it it didn't, it it it a little hurt my feelings a little bit, but yet. When we started doing this podcast three three years ago, a friend of mine said, you know, look, before you get going with this, understand a few things. Uh these things very rarely ever come to anything. And if they do, it's typically they don't last very long because they're hard to keep up.

But he said the worst thing is you're gonna get a lot of mean comments, and a lot of them are gonna be anti-Semitic. Shocking thing to me is how wrong that's been. The proliferation of wonderful emails from people. It's it's it's heartwarming and and it it makes me, you know, uh so that's why, you know.

I get over it. I'll get over it. But we did we did very well. And for the points you brought up, we had a great team of people working together. And you know When you get the financial markets, when you get them. I don't want to say they're not that hard. They're always hard, okay? But after you've been doing it a while, if it's what you're meant to do, you you get in the flow. And and if you can combine that with some discipline, you know, you you tend to to do pretty well.

Um There's lots of things in the financial markets that uh give people an advantage. When you understand the the ins and outs, like the getting into the weeds on stuff. You know, there there are are are simple things like if you do with a a trade with the Fed. you're allowed to swap collateral. Well, to ninety nine percent of people listening, it doesn't mean anything. But if

you know, I'm in a situation I I I know I have advantage of that. You know, if if you short a option and it goes against you, you don't have to Post money, you can post collateral. That's a big deal. Your your money is always working. There's no limit move and delivery month on futures con. You know, I mean there's all sorts of these arcane rules that most people don't know, don't pick up on. But when you have a group of guys like we have had Somebody's always gonna remember that.

And that was one of the benefits why when you had these crises happen. with the exception of the Tybot, which we explained a couple episodes ago, the the the crises tended to work in our favor because we would always be be um angling asymmetrical trades in our favor. You you see what I mean? So if if we're not short volatility or short options, but we're always long options, if there's a surprise and the market moves dramatically.

If you have a call, it can go up an unlimited amount, but it can only go to zero. If if it is which is good. If you're short that the option and something weird happens is nish kit, right? I mean you're you're fucked. So based on certain generalized rules which we wouldn't violate, you know, that kept us alive and not only alive, but During the the the scary times are generally when we've we outperform people magnificently.

Dude, that's what I want. That's why I wanted the timestamp. I want you to go year by year so you can say, look, in in 2007, X happened, SMP did this, they did this, and we did this, and so-and-so did this because Those are just n the numbers that you that you can't argue with where other people m had, you know, the pick a year.

Because I know I'll give you a couple of examples that that come to mind, if I might. Okay. So let's go and talk about the long-term capital because that that and then the second one, let's talk about 9-11. Okay, are those those are two? I mean if you can think of others, I'm happy to talk about but those are the two that come to mind. So so in and I don't think there's gonna be anything new in here for those people who've been listening since day one, but the long term capital thing.

You know, we uh we meaning uh um uh Robbie and I had a position in Russian T-bills. It was not uh a meaningful amount, but we were under a lot of pressure to be involved in Russia. And you know, we had like a uh I can't remember, but I think we had a twenty-five million dollar limit. And my joke was I made twenty million in Russia because I only lost five instead of twenty five. But uh

I remember telling the story. Cheryl and I were in Washington with the kids doing like the White House tour stuff. And Russia Russia defaulted. And I remember saying to Cheryl, get the kids. You know, our first we're rich, get the kids, let's let's go home. Because we had all of this. long end paper, we owned all these Eurodollar options to protect against some sort of systemic problem.

Again, bought an option, option worked. And whatever we lost in Russia, okay, was made up many times over on the option. How does that relate to long term capital? Well, they got caught thinking they had No correlations, because every trade was different, except the geniuses didn't realize that in a crisis all correlations go to one. So every trade they had had to come off. And We had similar trades on. So those trades.

W we took it up the shooter. But again, we had so much long paper. I'm not going to say that we initially came out ahead. But it got us over the unwind process. And once they were out of the way. you know, it was you know, just get out the it was supermarket sweepstakes. Just start running down the aisles and see how much shit you can throw in the car. Yeah. So that was that was the long term. capital situation. Again, we've repeated this.

Um the the 9-11 thing, and you know, I'm always a little tempted to how to talk about this because everyone, not everyone, but uh the last time the comments were, you know, you bragging about how much money you make with all those people dying. I'm like, look. I didn't it had nothing to do with me, you know. I was just doing my job, you know, like an Auschwitz guard. Yeah, just doing my job, yeah, exactly.

Um, no, I you know, we're running our business. And it was a very it was a very steep yield curve. Okay, which meant and and uh a listener had asked about this, and I don't think I'll get to the whole thing today, but in that environment it behooved us to belong a lot of calls. Just the nature of the uh way option pricing is structured, steep yield curves make calls very cheap on a relative basis. And therefore they make puts very expensive.

But as we normally have on other trades that can become discombobulated in time of crisis, it was our systemic approach to always belong a lot of these front end options. And so we're sitting there on September eleventh, and all of a sudden the future start going nuts, and you turn the TV on, and then there's smoke coming out of the building. And we're like, Well, what the first thought was it was uh

You know, like uh an accident. Yeah. An accident, right? And um I'm sitting there and then I literally see the second plane hit the second tower. And now, you know. I don't know what the fuck is going on. It's like is are we under attack? You know, there's a a plane head to the Pentagon. Yeah. And um again, uh The market People run to treasuries. In times of crisis, people run to treasuries. And so where a lot of guys might have gotten into big trouble. Because they had to close the exchanges.

There was a problem in Lower Manhattan with the Fed, right? We had to tape up, take a piece of paper and write the previous day's closes, tape it to the window so we could have a reference benchmark, right? In the meantime, these options that we paid pennies for. were worth now dollars. Now that I'm not gonna claim no It's genius. But on the other hand, you got this guy, uh Nasim Talab. Yeah, yeah, yeah, yeah. The black swan genius. Okay, well.

Uh yeah, is he a genius? Well I maybe then that makes me a genius. Cause you knew that these options are systemically underpriced and

And so those are a couple of the examples. But you know, we what about Lehman brothers? What about Lehman brothers? Uh same, same sort of thing. You know, I one of the things that doesn't get spoken of much when we talk about the past was You know, I spent a lot of time trying to survey The rest of the world. I'm not going to claim to be an expert on India or Russia or this or that. But you know, there was a weekend where India and Pakistan were fighting over Kashmir.

I don't know where Kashmir is. The only thing I know about Pakistan is the capital is Karachi. Um I know I'll never go to India for obvious reasons. And but Um it's like Friday afternoon and I look and all these guys are short a bunch of shit and I had a meeting and I'm like, no nobody's going home short vowel when you have two countries.

with nuclear missiles point at each other. You know, get out there and cover the fucking thing. And, you know, nothing ever came of it, right? But if something had We would not have been in dire straits. Yeah. Um when we talk about uh large positions that would go awry. You know, generally we would set things up to have some sort of exit strategy or event or a way we could withstand. uh you know, uh ill wind or however you want to describe it. Do you have any near misses that you can think of?

Well uh a couple. One was the the Japanese government bond. uh you know, thing where they uh they conspired, colluded whatever to fuck the closing prices. Um another near miss and this would not have been a a career ender. We ended up losing a lot of money. The um the mortgage department came and did a deal in the UK where they bought a bunch of loans from this housing development. They were called fresh found.

And it was nothing really more than um a European version of a mortgage backed security. And this is back when Greenwich Capital felt like a partnership. And um so they bring this deal, I don't know, seven, eight hundred million, and it's new. And there was really no appetite for it. So the head of the mortgage group called me up and said, look. Can you buy a hundred million of these from me? You know, I can't promise you, I will not guarantee, I cannot guarantee you you won't lose money.

But in the end, trust me, it'll work out and it'll be a big help. Like, okay, about a hundred million. I don't know, X amount of months, weeks later, he's fired. And I'm lugging around these stinking bonds that nobody wants.

At all, right? And we carried them and carried them and carried them for, you know, 18 months or something like that. And we marked them down and marked them down and marked them down. And One day, you know, they just got to a level it was like they're just tying up too much capital and We blew'em out. Just just a total suck ass price. And

You know, was that a near miss? And it wiped out, you know, a third of the year, maybe, or something like that. We we had a unique system, uh, which I don't think people uh m really uh understood. So um you would be given an individual stop loss. So you are free to play in your sandbox. You had limits based on risk, value risk, balance sheet, that kind of thing, cash usage. But within that, you were pretty much free.

But you had a a limit, a stop loss. And once you got close, the manager would have a chat with you. And if you hit it, You you you were out. There was no there was no discussion. And um so what would happen would be January one, you have zero P L and you have your stop loss and So as the year went on and you started to build up a little PL.

You could literally add that to your stop loss. So if your stop loss was five million and you're up three million, well, you can lose eight before you get stopped out, right? So as the year goes by. I think interesting things happen. One is

You can start to incrementally take more risk because you have more capital. But this to me was one of the more fascinating elements of manager is the human being's inflection point. for income. So let's say you get to that point where all of a sudden You know, if you do nothing the rest of the year, you're going to get paid X. And you don't want to risk. losing a dollar in return for making a dollar, right? That let's call that the inflection point.

So for me as a manager, let's say I have Trader A and he gets there in March in three months and he's done for the year. Well, now I got a guy that's tying up resources. For the rest of the year, right? Which is a wasting asset. So my goal or my objective was to try and find. guys that I could incentivize them to move that inflection point up a little bit further. And, you know, if guys weren't gonna budge, you know, I could subtly

reallocate their resources. But you know, I was the plug guy at the end. So everybody got paid Full boat before I got a penny. Okay. After everyone got paid full boat, uh above the benchmark, then I I got everything. So it was this. Battle between trying to keep everybody incentivized to make money, right? But not blow up the place because the platform.

The the platform at Grunge Capital in the in hindsight wasn't quite as excellent, but that and I'll explain why in a minute, but It's no secret that Wall Street firms Keep half of the revenues for compensation. So half as in 50%, right? Okay. You with me so far? Hedge funds pay 20%. So when we made money at Grinch Capital, the firm, not Morris Sachs, but the firm got to keep half. So if you were gonna leave to go work at a hedge fund.

you're you got an awful high hurdle. Now the most of the traders got paid 20%, which was what hedge funds took in growth. Okay, so how if a hedge fund's taken in twenty. He how is he gonna pay the the trader twenty? Well there's other v scams that the hedge funds play on their their uh investors, which is a pity, but So, anyway, I we were determined not to blow up that platform, right? In hindsight, The guys who've made the mega money, okay. Um

They said, fuck it. They went out and they raised billions of dollars. And all of a sudden, they're making more on that 2%. on the assets and then the 20% on the ups, right? And yeah, it's a it's a different way of going. The world changed. And um you know, at that point, talk about inflection points. You know, me and my gang were everyone was generally pretty happy with how things were working. And um

So there wasn't a big incentive to go and start uh um start a fund. Now ultimately uh a few of us uh went and started a fund. And gave me some limited experience in the hedge fund industry. It's the biggest lie since blowjobs aren't sex. And and I I don't know which is worse. I I mean. Anybody who gives money to a hedge fund is a is just in my mind.

just doesn't get it. They don't they don't get it. Giving your money to hedge funds, haven't you given your money? Yeah, in fact, I knew you were gonna bring that up. No. I knew you were gonna bring that up. September 14th of 2018, I put in my redemption. Okay. I still don't have all of my fucking money back. How many? That's five years. That's five years. What did you sign? How's that a lot? How could Just a standard agreement? It was nothing different than every other hedge fund idiot.

So here's the deal. Five years. You give me a bunch of money, okay? I keep 20% of the up. Okay. You keep 80, but you get all of the down. Okay, right. Well, by the way, even if I don't make any money, I still get my 2%. Plus, and I'm not even sure how deep this goes. There's a whole ton of expenses. I didn't realize this. I mean I didn't have this right, but there's a ton of expenses that get billed directly to the investor.

That don't come out of the two percent that you're paying the hedge fund guy. Nobody's reading those, nobody's reading those statements. You're not reading the statement. I remember being in some of these meetings with these fund of funds. These are these people, these are the pimps. It's just to put it in just to put it in. You know, common knowledge. They go around meeting hedge fund managers for their investors. So they're, you know, talk about a drug that's been stepped on nine times.

These fun to fund people are they're dumb as a rock. They are I I mean, and that's being mean to a rock. It's just it's just

It's shocking to me. And and I guess You know. You can't even call me a bitter old man. I I'm happy. I I mean like I haven't worked when did I stop working? Like ten years ago? This is fucking awesome. I know. I know. Dude, you so you had a block. Like if you stopped working 10 years ago, and like you when did you win what how long did you work in Greenwich Capital? 92 to what? Uh

Uh oh eight? Yeah, oh eight. Okay, yeah. So 16 years well, I I was at that uh I worked at Bobo's place for three months. Yeah, yeah. And then I was with Robbie Nij. G for For a year and a half. Yeah, yeah. But Robbie and IG was more, you know, my job was to be the gray hair guy. But uh no, I I haven't collected a paycheck in a long time. And um Yes, this is fucking great. This is the thing that

the hedge fund guys I d I don't think really get. And and don't get me wrong, you know, it's like, why are group rides always turn into races. It's right. Because people get caught up in the moment and they wanna they wanna, you know Get out the the big swing and dick thing. And so the hedge fund guys, it's like, oh, they're so competitive. I want to make the most money. I want to make the most well, you know, for someone at 63 now. I'm looking at the fact that the most valuable thing

Is not money. It's it's time and freedom. And I can't tell you how wonderful it is. And this is bragging. I don't have to listen to anybody. I don't have to do anything and just go do what the fuck I want to do. You know, I'm not sitting there on the crackberry. I'm not wondering, like, you know, is that investor gonna Paul or what's Jerome Paul gonna say? I can sit here and talk to my buddy about the fact, you know, right now, you know, the two-year note, which yields whatever yields.

i i is is pretty good. I still think it's pretty good and and you know uh But for all those hedge fund managers, listen, I mean this from the bottom of my heart. It's not too late. Okay. You can turn your life around. Stop stop working on the side of dark.

And evil. Let me let me light. Let me put Bob Let me put the Bob Cobb comment to bed now that we spent the whole show on it. Okay. Let me put that comment to bed though. because if he's gonna if he's gonna call into question the numbers at Greenwich Capitol, like you said, you can go find the numbers, but like just just let's just broad, you know, uh broad broad broad brush. You had no down years. You had no down years? No. Okay.

Broad brush, no down years. Okay. We we know there was never a a year where it was like, oh, you look at everyone else. You go through the who's who Okay, so maybe Warren didn't and maybe okay, so we use so Warren's name was use sorry, okay? And he and and he didn't say he was better than Warren said Warren was better than whatever the comment was. Dissect it. But you so bad years over the course of 16 and some of those numbers were gaudy.

I correct me if I'm wrong. I showed you that thing at one point, right? Thank you. Yes. Okay. Now uh Keeping in mind this is not a fundraising pitch. And I'm not gonna tell ya there may not there may not have been some mistake in here. Maybe the way the the month or the year got structured, maybe Maybe there might have been a down. I don't know. I don't think so. No, I don't think so. It was pretty straightforward. It in that model of

You start out at zero, okay, and you build, you build, you build. So the the the trader. Okay. Uh my job got easier as a risk manager as the year went on, because all of a sudden. The trader's got his own skin in the game, right? So if he loses money in October, that's coming out of his paycheck. If he loses money in January, that's coming out of me.

So, you know, I I I I don't know. Um, it's silly to argue about the I know the number of this or that. I I I think that What you and I've tried to do, by the way, which I I think mission accomplished, is, you know, try and create. a environment Where we can talk about investing, which can be complicated. Okay. And in no way Can anybody claim there's an ulterior motive? We don't take any advertising, we don't take any interviews.

Right. We there's no commercials. I mean there's nothing, right? It's just two guys having fun talking about the markets and trying to spread some some ideas or wisdom. And you know, if you don't Like the show, it's fine. It's it's it's fun. Yeah, he had a little bit of a snarky comment about the plane too. He said if like with the numbers were so good, where are the billions?

and where are the bigger planes that that's an easy that's an easy that's an easy one. Let me let me answer it. Let me answer it. Okay. Let me answer it because I want to talk about the plane a little bit. Okay. So first of all, he doesn't need the plane anymore. Okay. We don't need the plane. Number one Owning the planes is a money suck, okay? Unless

Number one, so first of all, let me walk you through this. Let me go back in time to when I met Morris and I was we were just two guys on a bike and it was like, Yeah, this is Morris. Okay. Somebody's like, Oh, Morris is very rich, okay. Morris has a private plane. Okay, wow. So as time progresses, okay. I learned that the brilliance of the whole fucking thing Is that Morris doesn't own a plane? Okay. Cheryl and a company own the plane, okay?

So the plane operated as a business, okay? It wasn't like Morris was like, I'm gonna go to Tahiti today on my jet and I'm gonna run up a giant bill. No, the plane worked six days a week and the seventh day it flew Morris where he wanted to go. So that was the beauty of it, okay? And then the beauty of it, you had it for how many years while the girls were from when to when? Oh yeah. Well, Twelve, ten, twelve years. Okay. The the one I like, it's a little bit simpler.

You will recall uh we had dinner with Leon Cooperman, who maybe we can call his returns into question, but he was flying jet blue to Florida. So do I shut up. So do I not everybody spends their money like a drunken sailor. Yeah, yeah, yeah. The plane thing, I just I love the plane. I always just love the play that you

Yeah. I lo I love I yeah, I love it too. The problem is it's like the fucking bills. It's like But um I don't know, I I know there's a number of hedge fund managers actually who I know listen that have a lot of money, never charter a private plane. I just love that. I just always... You know, and dude you would never know. The way you operate, no one would ever know, dude. So okay, so what? He doesn't he drives the Porsche, but like you were so un I drove a s I drove a Subaru for six years.

I drove I drove the nanny Subaru for six years. Nobody talks about that. Dude, I then I do the even then you drove and what you graduated to like an Audi you drove to the Audi all road wagon. But the best part about that was that you put the engine as the vanity plate, whatever. That one's good. I like that one. T F E seven thirty one. Yeah. No, you I thought it was P W. I thought you That was the second that was the Porsche, the P W three oh five A. Yeah.

Yeah, that's pretty good. So yeah, Bob, Bob, leave us alone. Bob, we love you, dude. You're great in the comments, but what do you want him to do? You want him to like Post the thing? It's it's it's a block of years, dude. It's it's analog on a spread. Okay, and it says nineteen ninety six. There's ten numbers and then at the end it says

Plus 27%. Okay. And there's 16 fucking lines of that. I don't know what else to tell you. And then he quit. And then he quit. He'd had enough. He went to Brevin Howard and said, no, thank you. I'm not working at this. He said, goodbye. All right. I'll go help EG. This isn't Willie Mays falling down in center field.

Are we uh are we gonna talk about anything other than just Yeah, crap. I wanna yeah, we're gonna go to the casino because you talked about the inflection point, okay? And there's no greater inflection point than than in the casino when when the the chips So I was enamored. with uh gambling when I was younger and um There used to be this, talk about white trash. There used to be this deal where on the on like Friday, you could go to the port authority and for 20 bucks.

Take a bus to Atlantic City and they'd give you 20 bucks worth of chips. So I I started learning about craps and I read about how the probability of a six or an eight.

is greater than the probability of a seven. And everyone knows once the point is made, you don't want a seven. So the idea of this method would be you'd bet money on the six and the eight and um over time vary your wagers but in theory over time you you could make some money and I would say empirically, I found that in my experience to be true. Not gigantically. Like if you wanted to stand there.

all day you could make like a hundred bucks an hour. But you had to stand there all fucking day, right? But but intellectually I knew that you know ultimately the house You can't beat that edge, right? Um, I was just sort of getting a little bit lucky and um eventually I got you know, realized how pathetic it was to sit on a fucking bus going to Atlantic City.

I was only 20 something, so you gotta forgive me. But what struck me as kind of cool, and I turned this into a little bit of a parlor trick. So you guys haven't seen this, but I sent Liam a picture of me holding a stack of casino chips. And so this parlor trick thing is I've done this, I think, three three times. I've done it a couple of times with my climbing buddies and once with one of my kids. And I I walk up to the crap table.

And I'll take out, I don't know, four or five hundred bucks and I'll get get a bunch of chips. And it operates like this. So if you go Onto our web page, someplace Way long ago, there's a chart and it shows what I think people are gonna call the weak law of large numbers. No I I saw this from a YouTube video, which is also posted on the website. So basically, you know, uh the average thought is if you flip a ho a flip a fair coin.

You either gonna, you know, half the time you get heads, half the time you get tails. Okay, so let's say you do it ten times. Well, you may not get five and five, you may get six and four. Four and six, seven and three, three and seven. Yup, up, up, okay. But if you flip a coin ten thousand times, okay, which you can do easily through a random number generator, right?

This and it's up there. This professor showed over something like 10,000 flips, you will get runs where there's a huge imbalance of way more. heads than tails or way more tails than heads than the 50-50, right? But by the time you go from zero to the 10,000th, you're back to roughly 50-50. What did I take away from this? I took away from it that even in the random, completely random set of numbers, okay, you're going to get streaks. You're going to get

Another simple way of putting it is you're going to get the guy at the crab table who gets on a hot roll. And so what I would do would be. Just stand at a crab table. for a while or I've tried and find the noisy one because those are the ones where there's activity, right? And again, streaks. And so you know, I'd stand there for a while and everyone would be impatient. Come on, let's go. No, no, I wanna. And all of a sudden, some I would just get this thing, like there would be

Some, you know, strange looking guy. All of a sudden he he's rolled three points in a row. And then I would I would bet all the numbers. You know, they would say the phrase would be like 54 crumbs. And so he'd start rolling and he didn't make his point or make a seven. He kept hitting numbers. And so I had bet all the numbers and when he would hit, I would leave it. I would say, but press the bet means take the winnings.

And keep it on. Okay. So we'd get one of these streaks where the guy might roll. twenty rolls and you know I happen to hit Press, press, press, press, press, press, press. And eventually they'd be like, all right, enough. And I'd get all this money and I'd I'd I'd walk out. And, you know, whoever I was with would be like, oh my God, oh my God, oh my God. And, you know, there were times I I got blown out right away.

But just as luck would have it, never when people were watching. When people were watching, it would work. But the math is the math, right? And um

I don't know. Dude, I can feel the energy that you're that you talk about at that table. Dude, there's no better energy when there's always dude, it's always a especially in Atlantic City. So like you you what you probably don't know this. You haven't been to Atlantic City, but like Atlantic City ph it now has guys from Philly and guys from Philly have a really dark

trademark beard. All right. So there'll be guys that are six five around so I have no I can't get to the table. I'm five I'm five eight one seventy five. I'm not getting next to it. All right. Cause there's like the the O line from the Eagles is around the craps table. Along with their assorted women and entourage, okay. But that energy and you can hear them too, the numbers and the the

The the dealer and the two the croupiers, whatever that are working. Right. That energy is so electric and you talk about those runs, dude.

When you see like when you walk by that roulette table and you see ten reds in a row. Roulette? Roulette. So you see ten. No, I'm just asking. So this is the same number question. You see 10 reds in a row. You do you do the black or the red? I don't I I I don't know. It's just a number of questions. That's like So like mathematically it works in the craps though. It's amazing though. It could work with the roulette. I don't know. I just never focused on that because

It's just the roulette thing always seemed to be a little bit like for losers. I I just didn't seem like there was much It's just the human nature. I wonder, like some like guys will walk by and be like, Oh, you bet the black, it's a no brainer. It's like the black's gonna hit he just hit ten reds in a row you know yeah well that that gets into the you know it's what n equals one right and and my whole thing whether it's Trading, gambling, relationship.

health, life, you never want to be in N equals one. You right? Ever, ever. Do whatever you can to avoid n equals one because it you don't ever want one shot. Yeah. One shot can take you out. And That's to me why, again, for the 9,000th time, selling options.

Like I I posted the paper, okay, on our website two years ago, underlined why they even admit the model doesn't work. Yet people and they got a Nobel Prize for it. I don't know which is more ridiculous, that or or or Obama getting the peace prize. I think It's a jump ball, frankly. But I heard he kept the I heard I heard he kept the uh the Harvard. President from uh from getting the axe. Okay. I I heard that he

He's the one that cat that said, uh uh, she stays. Okay. I I'm sure you haven't followed the Harvard drama. A little bit. A little bit. Okay. Okay, so a little bit. They've been calling for her her her ousting, and apparently Barack was the one that said, I put her in, I put the other one in, and you can't take her out. That's what I've heard. I don't want to end the Christmas show on that shit anyway though. We can talk about Joe Biden because he was a plagiarist.

Well he did. You know, we started with the list of plagiarists. Oh please, how many lies of the polit a politician lied and plagiarized? No. I don't know how Harvard I mean, forget it. It it's just it's such a uh exogenous event that the there isn't there symbol like truth. It's like let's dangle these shiny keys in front of people. Do you think this is this borders on crassness? But do you Never I I was gonna ask if you thought if you thought

If the president of Harvard wasn't a minority, that they would still have that job? Oh, zero chance. She only got the job because she was in a min minority. That's a that's like an on-the-record fact. Other other black professors at Harvard have come out and said, Why should she get a DEI pass?

when I'm black, I did the work and I didn't get the the promotion. So it's now you've now you that that's like a classic in support, someone that deserved to be moved up is like this cl this person plagiarized, hasn't written like hadn't written a s like hadn't re hadn't didn't I now you got me talking about it but like doesn't have a published like published work as a as an academic and they're like this is the president of heart

doesn't have a published paper or something like that. But like I said, she got installed by somebody and has a friend and she's protected and Bill tried to take her out. Bill couldn't get her out. Okay. Bill Ackman. Yeah. Well he don't he you know, come on. He's not he doesn't care any weight. Um but you know we did such a good job delving into politics last week. I just thought I could mention one thing which is a little bit I i

Go ahead. So I looked up and now because I'm getting old and I don't remember, but I think Harvard has an endowment of fifty billion dollars. Sounds about right. Yeah. Okay. Now We are free market guys here inside baseball with all chestnut. If people want to give their money to Harvard Endowment, that's great.

You and I are supporting that because they get a tax deduction for that. Now, that's the law, okay, and that we're believers in the law because without laws, we live with the animals, right? But this is what this is the point I wanna make. So for instance, um they have fifty billion dollars sitting run by asset leveraged asset managers. Okay. So let's put it into a more real situation. Let's talk about breast cancer. Okay. Probably the most significant disease in my mind, because it affects.

half the population and it affects the important half. The women could get by just fine without us. Okay. Okay. Now why is there a cure for breast cancer? Because they threw so much fucking money at it, rightfully so, that now the cure rate is like 90%. So while Harvard is sitting on fifty billion dollars earning income to support a woman who is I uh you see what I'm getting at? Take the fifty billion, okay, and do something with it. Yeah. Let's let's let's get rid of you know.

uh I don't know, diabetes. Let's get rid of you know um skin cancer, let's feed the poor, let's but why you s why do you need fifty billion dollars? And you know what? Yale. Princeton, go down the list. These people, what are they doing? You go to these college campuses. the river to the sea, and they're building these huge fucking buildings. I I went to Northwestern to visit with with the girls. Oh this is like

It i it it's shocking what they built up over the years. Oh yeah. Like come on. Like a compound, dude. Yeah, like what it's it it's in the sh it's in Northwestern's in the city. Yeah. Well yeah, it's how it's it abuts. It abuts Chicago. Yeah. But whether it's it it's any of these schools, you know, if you need five billion to get you through a rainy day.

Yeah, I'm I'm fine. 50 billion and you're paying guys, you know, a couple million bucks a year to manage the money for you. And whether their Harvard employees Or they're giving the money to Citadel. Yeah. Guys are getting paid millions of dollars personally to manage that money. So if I ran the world, which is imminent. Well, you know, I'm not gonna stick my hand up. But if people ask...

It's great to see you, buddy. Merry Christmas. All right, pal. All right, dude. Um is that it? Is that it? You what? You're watching the clock and you gotta go, you got dinner? I don't know. I I I'm completely lost. What day is it? Just you just nailed the one hour mark, but I don't want any? I'm not ending on Harvard on Christmas. We need something uplifting, okay? Um Well there's fish.

Coming up. You did you did okay this year? Can we go through the year before you before everybody shuts off the show where you where you because when you start talking about fish? Okay. Because you did okay, all right. You did a you had a good year, right? I'm confused. Is this a trick question? You mean the fact that we called the market pretty good? Thank you. The two year note? Yeah, I know I I this is one of the few years of my whole career.

I felt like I got it right. I do. I feel good about that. I didn't make personally a huge ton of money. I I had I think I was up 10% this year. But I, you know, I mean I I'm a retired old guy. Yeah, unlevered. But no, I think we did a nice job, you know. Like that saying, you know, you can't tell whether it's June or July, but you can tell if it's August or December. Yeah. I like that. And and I think Dr. Lacey Hunt painted a very nice picture.

And uh um yeah, so but I I think for me And I hope people see this who listen is our weekly discussion. have now become part of my process. Like the things we talk about, because you know, I might make a couple of idiosyncratic notes about what to talk about. But concepts, not n it's not a speech. But the fact that we talk about things and suss'em out and draw on threads.

I found that in a lot of ways, that was the secret sauce with the guys at Greenwich. You know, you just start talking about stuff. Um, and you never know where it leads. But it only happens with people you respect and you trust, but most importantly, you have to align What's the word I'm looking for? You uh the outcomes. You want everyone to be pulling in the same direction, making sure that their inter that their interests are aligned. And if you can do that, you're gonna do great.

What was that? Was that better? Can I ask you the one one thing? This thing with the Jesus Christ with the birthday and all that. Why is it when I see pictures of Jesus Christ, there's always, he's always got a crucifix around his neck? Oh, I thought you were gonna ask why he was a handsome white male. Carrying me that. How come he's always like a he's sometimes I see him with blue eyes and he's always he looks handsome. I asked somebody once why the Virgin Mary was pure white.

And she lived in the Middle East and the guy who I love almost ducked me. And I meant no insult whatsoever, but I'm like They didn't have sunblock back then. I don't how do you not get tan? These are fair questions, okay? These are all fair questions in my book, okay? Um Yeah. Merry Chr Merry Christmas, folks. Have a nice everyone that's going to midnight mass. Okay. Oh, I I have somebody Red on the Day said he's gonna listen to the show at midnight mass, okay?

There we go. We're gonna wrap it up in an hour. Nothing's better than a one hour mass, okay? Oh, there was some uh I guess I took I don't like to give bad financial moon news around Christmas, but it was a tough year because of the increased costs in legal and compliance. Um there won't be Christmas bonuses. We know. And we're gonna and the worst part is we're suspending the matching four oh one K. Okay.

Next we won't be able to play intro music. We won't be able to afford the intro music. That's why we we the fish bills have been piling up. That's why we had to we had to use br we had to rip off some Bruce tonight. Oh, one of those guys, who is it, Don Henley? He's litigious. Don't like he'll sue you. Me the show with the show easy with with me. Oh it's isn't it Ibwak.com. Now it's us. Oh it's the royal we? Yeah, exactly. All right, take care, kid. All right, pal.