There's Some Judgement Involved

Greetings and welcome to Inside Baseball with Old Chestnut. I'm Liam Allen with my friend Morris Sachs. How you doing, MB? I'm doing great, bud. How about you? Good. You ready to get back on the train? Yeah, let's go. All right. Let's go. You wanna break down the uh the possibilities of a rate hike like everyone else? Or rate cut uh uh cut, excuse me. It's been yeah so year. I know.

I have to be honest with you. Um, I think that was a blunder. Oh and um you know, I try and choose my words carefully. And in this case, blunder has a definitive meaning of a mistake even an amateur wouldn't make. And and let me let me break this down. You know, I I'm you know, I don't like the spotlight, which is why we don't have the talking head Monday to Friday. Right. Which I know there's great demand for. Um we could always throw in the leather.

We could have a reading from one of um Anthony's newsletters. You know, we could put a whole package together, but every day. Every day. But here's the problem. Um inflation is not dead. Yep. Now I only observe this through casual observation because, you know, I live a very insular life. Um, have considered becoming a monk and Apparently that's not they're not interested in me. Um they'll take the money though. There is a um

We went to see The Joker last night, the movie. That was terrible. Dude, I've got a new index. It's between zero and twelve. Twelve would be how many milligrams of THC you need to think it's funny. This was painful and and I wanted to like it. I really wanted to like it. Uh But um yeah. All right, stop stop flipping your papers. You're pay you're driving me crazy. I'm sorry. That's all right, thank you. Uh so um a couple of people have made comments.

that, you know, caught my attention. Um Cheryl said She ordered four hundred dollars worth of groceries. And after everything was put away, she said there was no food in the house. No food. Yeah, exactly. I'm familiar with that. Yeah. Uh two kids that eat like goats, okay? Like they do They do four hundred dollars of fruit a week. And I'm like, where where did the food go? Like where did it all go? Yeah. Yeah. It was four four hundred dollars. It's four hundred dollars a week at Costco.

for for what's the word for industrial s size? You know, like yeah, Chernobyl size watermelon. Yeah. Four pounds four pounds of strawberries gone by Tuesday. Cost me sixteen dollars.

Yeah. And uh that's why why are we easing? So to take it a step further. into the world of Cracker Jack. Um what these morons don't understand is What's the toughest thing for young families right now? Oh, buy a house. Bingo. Right answer. Okay. So you've noticed. The incredible comportment of people out in the wild. This is stuff that causes revolutions. And you know, I you can discount me as an angry old man, but you know.

What happens when the young people get together and go, this is bullshit? And they go wilding and they come up to the big houses in Greenwich. And just set'em on fire. Yeah. That new generation doesn't have that fire. They don't have that kind of drive. They're they're they're hanging out. Yeah, exactly. It's not happening. No. Well the you talked about the housing market, dude.

If you try to buy, say you found a house in let's call it Westchester or Fairfield, let's just call it 750, three quarters of a mil, seven fifty. Yeah. That house goes on the market Friday afternoon. It's gone five percent over the ask within twenty four hours. Yeah, it's a bill. It's either a someone the number one person is buying it with cash. All right. So if somebody so if you're if if you have your FHA mortgage.

And you're a nice little family and you've got your shit together and you've got your your down payment and you found the house you love, unless you have number one, cash. You're not getting the house. Number two, you gotta be a builder playing over because the builder wants it, cause the builder wants to knock it down. Double the double the price. Yeah. That's the only way you're getting that house. If you if it's and that's on a seven fifty.

Stuff below forget it. The stuff below that gets bought immediately. And I've heard from people that it un that the rate cut opened the real estate market. They were like, We as soon as the rate cuts hit, we put it for sale and we're gonna sell it in a day. Yeah. It's out of control. It's out of control, dude.

It's hard to describe. the point I want to make. So many people get on TV and talk about, you know, they should do this, they should do that. And it's usually driven off of they want the Fed to lower rates because they want to push up the risk gas. But you know, we here try and be a little bit more policy neutral. And I was very disappointed. There was a a podcast a couple of weeks back when I said

You know, when I saw the good news and the the the the listener wanna know what good news was it talking about. I said, Well they're m moderating or you know, they're looking at the employment and but they're sticking to their inflation guns. Well they just they just threw that fucking thing. And guess what? So I'm out to dinner. With two very bright people. One is in the real estate area who that's how I knew about the you know, they're just gone. Mm-hmm. And then um

The other guy uh talked about how, you know, with the Fed rates are going down. And this is one of these things I'd like to try and add a little value. When I heard the ease. I was delighted that I didn't own any long paper because we're finally going to get that steepener. And um That's again not gonna help the little guy. That's gonna help the David Zervos is the word. No, Dave's a great guy. I love climbing. Will him he's a great climber.

You know, a lot of fun. But, you know, he's not the guy that's worried about I mean, he'd be worried about the price of potatoes, I guess. He's got some shtick with that. You weren't with me on him when you had the shtick with the uh... Eating just meat. He went on the uh keto diet. He's he whatever he's doing, he has to stick to it because he is one of the producers. He is the he is the

number one producer of potato content on Instagram. Okay. David Zerbos, by far. Nobody consistently posts better pictures of the most Divine potato dishes on dude, can you tell me what his title is at Jeffrey's? Just can we just clarify that since you brought it up? Do I know? I'm guessing. Tree Chief Strategist. Okay. So Chief Strategist, okay? Uh yeah.

He just I mean like his tri his travel itinerary is just second to none. It's like the rolling stone it's it's yeah yeah it's uh it's Southampton, it's Southampton, okay, to Miami. to wherever it he goes to the best places and he just he does not not a care in the world, you know? He just well he shows up on CNBC, he does a thirty minute you know a thirty second whatever it is, a ten minute CNBC once a week. And you can you can hire'em for parties to do imitations of Jesus.

When he's got the beard and the yeah, he's the hairdo going, yeah. He's doing it, okay. But yeah, his potato content, like me as a as an Irish American with potatoes have a special place in my heart. See the internet like the social media is a problem, you know like If you're a if you're a adult male you get bombarded by sports, cars and girls.

I I don't care about any of those anymore whatsoever. Sports cars and girls don't do nothing for me. Whereas Dave having potatoes, okay, d down at at um at Cas. Casa whatever at uh what's the what's the one um in Yeah, there's one in Miami, there's one in New York too. It's a Casa Cipriani. When Zervos is having potatoes at Casa Cipriani and he's giving me a fifteen second HD video of them, that's what I go to social media for, unlike the map the mass.

mass population. But um well he's got a good gig Zervos has a good gig at Jeffreys. Jeffries had it hit another all time high this week. So our front our Jeff went along. I like Dave, I really do. He he he always managed to to walk that border between being an academic and having his feet on the ground and Yeah, is he an economist or is he a trader or he can do both? Well, I'll leave that to others more familiar with his PL than I. Yeah, yeah. Um he's a professionally trained economist.

He's managed positions from time to time. My limited understanding is he was modestly successful. Can I get out of this without offending anybody? You know. When has that ever been a concern? Let's not make it a concern today. He and I had some overlap at Bobo's place.

And so yesterday I was trying to reinvent myself as a grandfather. So I didn't have anything planned in the afternoon. So I took a half a gummy and I lied down, took a nap. put some fish on. And I started thinking about what did what did I think would be good to talk about this week. Because I know our topics are getting narrower and narrower, but what we can discuss. But before I talk about the market and geopolitical things as they relate to the market, um

I was thinking about a lot of the people I worked for over my career. And I had a lot of bad bosses. And you know, I remember, this is a true story. I remember at the time thinking, If I ever got to be a boss, I'm going to remember this is a way not to behave. I I it may sound a little naive, but the way Wall Street works is they take the guys who are good at trading and they make a manager.

Right there, that's that doesn't make any sense. You know, the number of guys who can make money consistently is very few and far between. And then they take them with no experience and they make them. Managers. Dude, they do that in sports too. Classic. A classic is like, you know, great player. Dude was awesome. Can't man, can't manage the team. And then the team has to fire.

Is that like Cal Ripkin Jr.? I don't know, but m like for to me, Messier, like Mark Messier is the Rangers. They always wanted Messier to coach the Rangers. They wanted him to coach the Rangers. And they said, look, he was a great player. Not uh we don't know about a coach and if he's not a great coach, then we have to axe the greatest Ranger player of all. It just makes a bad situation. But the point, the player does it doesn't translate.

You're good at hitting the ball, not telling the dude how to hit the ball, you know? Well There's a a New York Times article about Yogi Barra when he'd go down to spring training for the Yankees where he he you know made an impact. I'm actually looking for a job like that. If someone would hire me, you know Couple of days a quarter.

You know. I like you'd be better off like Rizzo Rizzuto had the gig. His f his buddy Phil Rizzuto, scoot scooter Rizzuto, okay. Rizzuto used to do the broadcast of the Yankee games and he'd leave in the ninth inning to beat the traffic. Dude, he'd be done after like the sixth or seventh scooter. Somebody would take over and do the rest of the game because Rizzuto was gone. That's the word yurt style. Somebody recommended

Uh they mic us up during the market and listen to our comments. But I I've discovered our listener base is much broader and deeper than I had realized. And there are actually hard on my hand, there are actually children that listen to this.

'Cause their parents listen and it's on in the background. So Kim, I'm sorry. Good morning, kids. Yeah. Yeah. Um speaking of kids, as a concerned grandparent, this is a legitimate question. And one I think if you haven't figured it out an answer to might Give you a little heads up. So you have two young children. Have you given any thought to when you're going to provide them electronic devices?

Oh yeah, absolutely. Whenever they whenever they want, dude. I want them to be on the cutting edge of technology. Okay. They're good. Eamon can log into the iPad and he can Um dude somebody s I I don't know. Fiona said something, my daughter said something about wanting to talk to me or and I was like, Yeah, well why didn't you get the iPad and call me? And she's like, I don't know, I didn't know the code or something, da da da. Amy was like, Just buy her a phone if you wanna talk to her

It's like no, we're not buying the four-year-old phone. You can talk to people. We were kidding around. But um no, the the four-year-old can uh can code into my iPad, open up YouTube, and watch handyman house. Okay. How often I now there's a now all right, so it's it's tricky. Like you're you've got two smalls. Those two smalls shouldn't watch a screen yet. No screen Zero screen. She can maybe watch. Like, dude, you can't let them watch coconut. They shouldn't watch anything bright or flashy.

Until like eighteen months, two years, and then they can watch like a little something on the iPhone if like Lisa and Chris are trying to go out to dinner and they have the kids are with them. I mean they have they have they'll leave a baby. You'll be home to babysit, but like I've already gotten the memo, yeah. Yeah. So there's there's like a certain time where like, yeah, you can let'em watch a little something to make

To soothe them. But by the time Fiona was three, um, she wa like I I'm guilty, dude. I watched Thomas the Train with her. Um, and we watched there's something called brain candy T. And the kid can count to a hundred. She knows her A B C knows the Facebook symbol. No. Oh, she does no, she does not. She doesn't know any of that stuff. Um She we watch like learning TV. We watched Miss Rachel. Miss Rachel taught the kid to talk, you know? But what so the other side is

You're gonna do it the old fashioned way where like my I you know fortunately I don't have to do anything. Right. But ask questions which irritate people. Oh yeah. But I can tell you personally is I guess I claim to be a fully developed adult. Watching the internet Fucks up my brain. Oh yeah. And um, you know, at that age, pre Early teens. That's for life, you know, and I I just I saw a thing like your brain can only process like

whatever, sixty mega megabits of of information per whatever. What there was a there's a ratio where like, you know, and if you're watching If you're watching a cartoon, which is images, flashlights, you're getting whatever, you're getting 120 megabytes of information in that minute. And it's it's mentally uh your brain gets tired. It's exhausting, you know? So to try to process that information.

So I never let them watch. I never let them watch cartoons. Like cartoons are the worst because it's it's a blinking, you know. I'll let them watch um. There's a show called Outdoor Boys and it's a dude that goes camping with his three little boys and he's got seven hundred million YouTube followers and it's just the the cleanest, most wholesome entertainment. I think that's I think that's great. Sheryl and I go out to dinner.

And there'll be a you know a large party somewhere. There'll be a bunch of kids and the kids will be zoned out looking at the iPad. And I'm like, yeah, this is in my opinion, yeah, you know, fan mealtime is special. And Okay. I if the kid can't sit still for twenty minutes with his relatives Yeah. How they gonna how they gonna grow up, I don't know. I saw the headline in uh in our New York Post this week that uh Generation Z cannot hold jobs.

Cannot hold Dude, I saw a thing elite colleges were surprised that kids can't read books, dude. There were these are headlines from the post and I and I and I believe them. Like I I'm sure there's kids out there that cannot read books. And I'm sure there's a a cohort of Gen Z that is that can't hold a job because they don't have the social and work skills to go to go work. Well, um I had heard that private equity firms, you know, the the benevolent

form of investment banking. Philanthropy. Um they uh they looked at the years of COVID and they won't even take resumes from people that were supposed to be getting trained during that period of time. I'm sure. Um, I got it. But let's go back to this bad good butt, bad boss thing. So, you know, I've noticed a few people I picked up on the fact that I'm a little I got a little chip on my shoulder about Babo and the chimps. And so

Here's a situation where I I forget how much money we were, you know, allocated in my area, but But where just r re for the listener that doesn't know, when did you go to Bobo's shop? What year and where were you in your career? Well, of course I was at the pinnacle of my career. Right. This was after Greenwich, right? This is this was peak MB. Yeah, like nineteen ninety something. Okay. All right. Um but you know when

I ran the desk at Greenwich, the prop trading desk. It was very important for me to have a collegial. attitude where people could feel comfortable sharing ideas and making sure they got credit for their ideas. I never took attendance. I never counted people's vacation days. You m you're managing$500 million. I'm gonna what are you like a punch in at the at the grocery store? And when we got to Bobo, they were like taking attendance.

And when I told the HR person I don't take attendance and I don't give reviews, uh she coerced the mailroom clerk into taking attendance. You know what kind of what what kind of statement is that about the belief you have in the people that you have working for you. You need some time off. You take some time off. You take a lot of time off and then there's no P at the end of the year.

There's no honey. Yeah. Smart guys understand that. Yeah. Um The other thing I saw a fair amount of, which really even to this day gets me upset is screaming at junior people. I saw people screaming at input clerks. and uh PL clerks who, by the way, are never wrong. I I was, I didn't bring that many people out from the back office to the front. But um when I did and I did, they were PL clerks because they know. Yep, yep.

You know? They don't they don't ha they can't hide behind a story or some lies or uh you know, they get Well to them is just add this up, add that up, uh you know. Yeah. Yeah to da da da.

Not that complicated. There's no emotion involved. And um, you know. I wish there was some other great insight. I I didn't see the point of giving reviews. Because What am I gonna tell you you did something wrong nine months ago? Yeah, yeah, interesting. Doesn't you know That's interesting because like, you know, a place like Bridgewater is so they're found. I read that book. Oh yeah, how how was that? How was that? Oh. Really? For Fughazi. You know, um A friend of ours had met Ray.

a couple months ago is going, Oh, you gotta meet this guy. He's so fucking smart. So smart. I said, Well we used to get the Bridgewater Daily Observer and it was very good. Yeah. And I was surprised they were selling it. even though they were getting a lot of money from it. Then they figured out maybe we shouldn't give our best ideas away and they stopped selling it. Yeah, imagine that. But you read this book, Looney Tunes.

And you know fact based? Fact based book? Well it was I I don't know. It was an unauthorized biology or biography. But I know he had, and this is all in the Greenwich. post along with the shooting in the old folks home. And apparently somebody found a finger in their salad in one of the restaurants. Um I have no problem with the shooting at the old folks

I think that's a nice story, quite frankly. Apparently you go up to Canada, they'll pay you to kill yourself. Yeah, that's like number one list on their like the treatments. Like, oh, you're not feeling well? Have you can have you considered offing yourself first and foremost?

Yeah. What the eighty one year old lady the uh so if you anyone the listeners that don't know, MB sends me a lovely article this week. A true lo ending to a lovely love story in my opinion was, you know, the eighty three year old woman's been in the home for two years and the husband came in. Pulled out the gun, did her, and then did himself on the spot. It was enough already.

I mean, you always hear about these old people though, they were married for seventy years and Dorothy passed away and you know, like Walter went thirty minutes later. I was like, All right, well we we don't need to drag out the ten years of sitting there drooling on yourself at the home, okay, you know, let's just go now. Yeah.

It's eighty four or at eighty three. How how many eighty-five year olds have you been like, Oh, that's how I'm looking to get to eighty that's where I'm looking to get, okay? Well let's be serious. How like I mean there's there's very few. I mean like Charlie Munger, you're like, oh Charlie Charlie's still on the ball at eighty eighty ninety nine, whatever he is, but I would like to see a list of

highly successful functioning eighty-eight year olds, okay? Well, I'm I'm trying, but uh Yeah. Yeah. Look at our look at our president. I mean, it doesn't doesn't look good, okay?

No, so I know um network uh put out go back to Bobo, the bad boss. Network didn't want us to bring in any geopolitical stuff, but I think I can do it in a way that won't offend anyone, even though this podcast, I'll remind you, is fucking free. So Friday is an example of a day. Thursday, Friday is examples of days where I would have scrutinized every position multiple times. Why? Because of the Middle East.

Now, I I I I have no trouble talking about this'cause I'm not picking a side. Yep, you're ri managing risk. Got it, got it. All I'm saying is You're stirring a pot of a lot of shit that could go sideways, right? Oil. You you want oil? Oil? You care about the liquid Yeah, well yeah, you have to. You know, our friends at Doomberg, I I just I love these guys to death. They wrote an article about water. And they're they're scientists. The guy who runs the place is probably the one who

When they're staring at each other, he looks down at the other guy's shoes. Yeah. Um, but they they talked about water. And water's been something that's been on my mind for a long time because there's not enough of it. And it's expensive and it's heavy and yada yada yada. But I've never figured out a way to invest in it.

And so if anyone has any good ideas on how to buy large amounts of water, and I'm not talking about a fucking pole and string truck. I'm, you know, like water rights somewhere out west. Υπότιτλοι AUTHORWAVE smack a little bit. of when I was talking about how Yeah, I had Chernobyl and I asked Cheryl about the Georgia and the wheat and I bought some wheat and

people criticize me for, you know, frolicking among people suffering. I'm like, I was not frolicking. I was trading and and that's what traders do. I mean, If I think California is so badly managed that they're gonna run out of gasoline and water, why am I the bad guy? Yeah. If I go buy a bunch of bad you know flower. Yeah. And you know, the thing about trading is

Your job is to make money. Right? One of the um one of the listeners wrote and asked, did I ever exceed my spec limits? And Good a good question, two part answer. At Greenwich or any other firm I work for, to the best of my knowledge. My intention and and actual situation. I don't think I ever once excluded or exceeded a a risk limit. Personally, fuck. All the time. And let me tell you how it worked out. Not great. Classic. Classic. Yeah, I'll explain why, especially a Greta.

We had, I think the reason the place was so successful was it was a clear religiously followed compensation plan. And if you stuck to the rules, And you got a chance to come back the year later, you got a chance to do it all over again. And and without getting too specific, because it'll probably ruffle feathers. Anybody can go and look at Morgan Stanley's financials, Goldman's financials, whatever. And I believe if you look, something about 50% of the earnings is paid out in compensation.

So Greenwich collected something like 50% of the profit. Which meant we could pay more than hedge funds. Now In the twist of fate, hedge funds have turned into nothing more than fee collectors. So But regardless, we didn't want to risk losing the right to that platform. And one of the best ways not to blow up is not to exceed your your limit. Although I'll tell you. especially at Bobo's place, the ineptitude of the risk managers, there's always ways, you know, you can

Snicker around things. So you can put things together in combinations. For instance, If you buy a five year note and you sell a five year note future, You've created a three-month instrument. You do a billion of that, you do 10 billion of that, now you got a lot. Or as Eckstein told me, Morris, if you got a million one year bills, they're like one year bills. If you have ten billion, they're like anything else, right? So risk managers at these places weren't smart enough and then argued

about what your interest rate exposure is. Um this VAR notion, value at risk, this was when you were just a kid. Right, right. But um that was part of what came out of the Nick Leeson debacle. And the Nick Leeson was the big guy who put bearings out of business. And in the textbook fashion, which is he made a mistake, and it wasn't a big mistake. And he just kept trying to trade his way out of it and That don't work.

just gets worse and worse and worse. Compounds the other way, right? Yeah. Yeah. It's like yeah. Yeah. And the the the world is filled with stories. Madoff is a story. Did he go to jail did he go to jail for that? Did Leeson go to jail for that? Oh, in Singapore, I think. Yeah. Yeah, yeah, yeah. Yeah. And it wasn't like you said it wasn't bad in the beginning, but he just kept like he dug kept digging and digging and digging, right? Well, there's that thing where It just... It's the moron trade.

Or in in gambling they call it gambler's ruin. If you double the size of your bet and the trade mean reverts, you get all your money back very quickly. The problem is mean reversion four letter word. I you know, yeah, yeah. you know that didn't work out and then nick leeson made a mistake that didn't work out there was a guy trading long bounds for a Japanese bank uh Tosh i don't remember you know but you know he blew up then there was a

Asian guy with copper. That didn't work out so well. Um The noble way to do it is like long term where you just gotta go to the Fed and be like, hey, we're in trouble. We need a bailout. Is that the that's the the gentlemanly way to to blow it up? You know. Those guys were they didn't have they didn't have enough they didn't have enough crooks on staff to cover to cover it up.

I remember we've told this story before, but you know, we had a small position in Russia that we didn't want. But I felt like if there was a problem, the front end would rally. So, you know, that was the story where I told Cheryl get dressed. We're going home, we're rich. Um, which is why I wanna come back to this Middle East thing. So I've already told you if I had been working in even with my own position.

I took everything to Treasury bills. What happened? What happened Friday? They announced Iran was lobbing missiles? Is is that was that the Friday? I was just closing as you're wrapping up for the weekend. I was just wrapping up for the weekend. Okay, okay. Um you know, I I think that um I understand. Some people were upset with the pager thing. I won't rehash that, even though I did inside deep inside, you know. But that If we're in a discussion

Someone's gonna say, Well if they can figure that shit out, what else they got going? And now, you know, Cheryl's involved in a non political thing. But for years now, she's been saying Israel's got shit planted all over Iran. They don't need to do anything and they can blow the place up. They don't need to drop a bomb. And, you know. Uh right now I think she's got street cred on this stuff, right? So if you don't prepare for some black swan event.

Okay. And I understand that with the Fed, you know, just the tip with the ease, um has richened up the front end. uh that front end's gonna move fifty or a hundred if some nuclear missiles start blowing up. And um you know you get fifty or a hundred Euro dollar futures, that makes up for a lot of you know, mean reversion trade you f just forgot you had on. Um

You know, I looked at the options and uh nothing really stuck out of me. Um I know there's been a lot of talk about the lead metal. Oh thank you, thank you. Continue. Well, I you know, I went and I was digging through my bag of tricks and I decided, you know, I was the black cat that sat on a hot stove once. I wasn't gonna sit on a cold stove either. So so I have reduced all of my holdings. With the exception of one stock that was recommended by Dunberg.

Yeah. The last time I bought a stock recommended by a newsletter, it was Poseidon Concept. Which uh I made the mistake of doubling up on. And I got to experience what a class action suit was like. Yeah. If I I've gotten things now in the mail like Google is in a class action suit. I own Google for about eight seconds once, so I got an invitation to be part of it. I just shredded it. Okay, good. You know, that Poseidon thing took like twenty years.

After the lawyer, I might have got a hundred bucks back. But I learned a lot. Dude, the gold has been driving me crazy. You can't there's no way you you you absolutely refuse to reload that thing.

No, um and I'll tell you why. I think the Fed made a policy error. I think over time, if they continue to ease, the back end of the curve is going to steepen. And I'm I'm sitting at 100% cash. And and I'm comfortable because it pays six percent. But you know, think of the amount of cash I got at six. And if I'm right, I'm gonna be putting it to work at nine.

And to tell you how this works, so I told you I took a nap doing my grandfather thing. When I woke up, I checked the bank account and I I noticed I got my white privilege check. Which um when I was in the g industry we used to call that accrued interest. Um but if you don't have any savings. You know, how can you have your pudding if you don't eat your meat? Yeah.

Um so yeah, dude the gold the gold has just been going and going and going and it just will not stop, you know. Well you know, people are picking up their hot dogs, going to Costco. Yeah. I don't know how they've done selling it. Um who's buying it all? Is that China loading the boat? It's just I I guess. I guess. I I I you know, I back when I was sitting next to Peter McGarry. a f good friend at five fifteen and he bought some gold. This is so funny. I said to him

And why did I not ask myself the same question? And the answer is of course is you don't know Jack's shit about gold. And so what happens? I go on to lose a bunch of money. I don't know how Peter did. I'm sure he did fine. Um Um'cause you nailed it. You nailed it. Okay. You nailed the goal.

We're like gold, you know, I got a feeling gold like the geopolitical stuff. Now here we are in October of twenty twenty four, breaking down the geopolitical mess that you had predicted, and you're out of the gold. Yeah, that's how it works. It will haunt me for the rest of my days. Yeah, it haunts me and I wasn't even involved in it. It's like every day I gotta hear the goal is of twenty seven hundred. I gotta tell ya.

This is why it irks me so much when people say they're traitors. Okay. I've literally had days I was so upset I had to roll out of bed to get out of bed. I wasn't able to physically get up. Okay. You know, that's trading. That's you got a position so big you can't get out of bed. Don't give me your cocktail party bullshit, how you nailed NVIDIA. Exactly. Well, you know, we have a phrase in our Club we call moving the needle.

And for those of you who don't speak Jive, what that means is you made enough that it was a significant change in your net worth. If you're not trading in the move the needle range, you're not trading. Yeah. You got you know, you you can't even say you have a really an opinion. That's the problem with me. That's the problem with me with looking at trades. It's like if I see something.

You know, it's like the next thing I know, I've already violated every risk limit and and I'm hunting for more cash to add. I can't, I can't, you know, I once quipped that the difference between me and uh someone with a gambling problem was that I made money. I just couldn't I'd be up all night staring at trades. You've seen the iconic picture of Lisa and me sitting in front of the Bloomberg. Yep. I mean that

That's bath time. Yeah, she got her bath. Mom dried her off. She sat on front with me. Yeah. And we were looking at options.

Stan Druck Stan Stan Druck did uh I think he did Grant's symposium. I think he did Grant's Yeah, oh yeah, and Bill Ackman too, which is why I wondered like why am I gonna pay money? So listen to Bill Ackman. I I got the quote that I got that I took interest was Druck said that he doesn't see and they they they pressed him on a situation where they were like, Do you see a situation where the markets can go down? And he and he said no or you know, whatever. That that was the

That was the summary point that I got from Drux Talk. I didn't watch it. Um, you know, we protect grants copyright here, um, and we're paying customers. But yeah, I saw the Drux that they they pressed Druck on on situations w that would drag down markets and he's like and said, I c can't think of one, you know. Um I don't know why they had Bill there. I don't know Bill.

Please. Again, I I was having dinner with Big Ed and I mentioned the thing. It's like, who wants to pay to hear Bill Ackman? And you know, made some comments. And I said, you know, in all fairness, best Up there with best business partner ever, but you know, get a hobby. Yeah. Yeah. I mean, you won't even let me go on Twitter. Can't you talk to him? Oh, no, no. It's self destruction and I'm gonna lay dude it

He's so smart. He he you know, he's he's clearly a smart, uh successful, high achieving guy, but this is like the This is the dichotomy of these people that like You're so brilliant in one area, but you're just a bonehead in the other because you've left that that circle of the world. Dude, Twitter is the sewer.

Like eighty percent it's it's eighty percent of it is the sewer. I use it for the news. You can't get a news update and you can't get an alternative news source anywhere faster than Twitter. So I'll use it. If I wanna see what's going on from boots on the ground. So as I've mentioned her already in this podcast, so I gotta be careful. But I I put a lot of stake in Cheryl's views on things, mostly'cause she's smart and I've known her a long time and she's mostly right on these things.

She's given me a big rundown about, you know, the news is no longer independent. They're not verifying their sources. If I told her I saw a story on Twitter. I get ridiculed. Do you care to comment? Uh it but you gotta check the source. You gotta check the source and if you but the dat the other thing is that you can get you can get news right from

said source on Twitter. Well they'll give you their story. Whereas back in the day you used to have to go to CBS News, CBS News had to clean it up and then by the time it got to news at eleven o'clock that night It was stale and outdated and there was an update. Whereas now you got guys in a helicopter flying over North Carolina saying this is what's happening on the ground and CBS isn't showing you this. This is X, Y, and Z and

You you really it's it's the pin it's it's peak do your own research. So do I have m networks permission to log? No. No, but what about a limited scope? You have a limited read only read only format. Or that that or you're just gonna have to forward it to me. What's the good? What good comes out of it? There's like it's just it's doom scrolling. They call it doom scrolling for a reason. Because

If you send me information, okay, I can interpret it and it may give you an advantage in the market. That's fair, yes. But you know But unfortunately Twimmer Twitter is primarily memes of like Jay Powell printing money from like a toy gun, you know? That seems pretty real. Okay. There you go. That's why there's there's gems of brilliance on it, you know?

Well, I really like Red on the Day. Oh yeah. I mean as biggest supporter of HipBlock there ever has been. Great friend. The be best friend to our social media that we've ever had.

So policy blunder. So this is a policy blunder. You're sticking with the fifty point was a blunder. Dude, it's based in data and the data sucks, dude. When have we gotten a good number? When has there ever been a number that hasn't To take a page out of Life Coach Leslie Harris's book? These economists are slowly coming for was it Joe DiMaggio record? Yeah, the fifty six uh being wrong. So if you got the brightest and the best, I'm not saying you do.

But they can't get the employment data right. So why are we making monetary policy decisions based on data you can't get right? Bingo. And and employment. I'm going out on a limb here. Remember I went to a state school, but I think employment's a lagging indicator. And you know We got plenty of people willing to come here and work. You Torsen Slock earlier talked about the time to get uh visas dropping and so I don't I don't see

You know, us running out of labor. But I do see people running out of purchasing power. Yeah. The The let me read Doc Slock from today. This is good morning Doc. No no no need for Fed cuts. The incoming data continues to remain robust. The US economy added two hundred fifty four thousand jobs in September versus a consensus expectation of one hundred fifty. All right, so we expected one fifty, we got two fifty.

That that's normal, right? Let's call them let's call them material error. Okay. That's that's a little more than a rounding. Okay. The unemployment, but then on the other hand, the unemployment rate from 4.2 to 4.1, rage group wage growth is solid and remains sticky. Job openings are going up, and the ISM services reading is also strong. Why is the economy still strong? Because of lower sensitivity to Fed rates for consumers.

And firms with locked in low interest rates. Yeah. Consumers have fixed rate mortgages. They don't care. They don't give a shit, dude. Strong fiscal and defense spending. Anyone that has a two percent dude, the the p a person that got that had a good job before COVID, all of a sudden now they don't have to work that now they can work from home. They stop going to their office.

They got a bunch of money from the government, their savings went through their roof, their house value went from 750 to 950. Okay. Where is the stress? Where where's the need to cut rates for that guy? It's not there. Okay. Yeah. What percentage of the country is that? Is that forty percent what do you it's what, forty per is that forty percent of the country or is that sixty percent of the country?

What do you think the number of them? That are interest rate immune? Yeah. Yeah, I kind of guess a guess. I can go half. Yeah, exactly. Half. So you got half. And in that half are the charcoal heads paying the visa rate. Forgive me for insulting you, but if you're borrowing money on a credit card.

Go to church, get some religion. I mean, you can't beat that. Yeah. I mean, I don't even think the mob charges that much anymore. It's a good business. It's a very good business. Yeah, if you can collect. I've been in the money-learning business. It's not elegant. Visa's doing okay. Yeah. That's not the kind of money lending I was doing. I know, I know. Um yeah, so combined with very easy financial conditions, the bottom lane the bottom line remains that rates will stay higher for long.

So no? So you ripped up your so the the idea that after you got that jobs number that you were gonna get another fifty point cut, that idea has va evaporated, vanished, right? Oh, I don't know. I I mean he's got the same Chucklehead driving the bus but you know Somebody I think highly of, and this is the the the worst explanation, was that Paul just got forced into, you know, forced into making that cut.

It's like Danny, you got forced into that courtroom. Hell I even dared you. You know, he he just there's too much pressure on him to ease and he caped. Like a wet paper bag full of rock. There was a dissent. There was a dissent. There was a you know, there was a uh w I don't know, a voting member, s whatever the r the number was was, you know. Is that just a token dissent? Not that it makes any difference, you know, but

Uh you know, I don't know. I I know. I have to be careful. So when we You you said that you you you had visions of that trade becoming coming on the horizon. Yeah, and I think we're moving along those lines. So without being too cryptic. The holy grail for fixed income people is a steep yield curve. And I think the yield curve will steepen. Will it get to the point that

You know, it's free money. I don't know, but it might what's that point? What makes that point? What is how do you ring that bell? So There's a little bit of judgment involved. And um I don't have any notes to give you an example, but In theory, money you're gonna get paid back tomorrow is less risky than you're gonna get in thirty years, right? So the thirty year rate should be much higher.

Uh take out convexity, take out inflation expectation, take out your academic fucking bullshit E random error. Okay. The rate out the back end of the curve should be higher. But every day that goes by, that long dated security is closer to being paid off, which means there's less risk, which means the rate comes down. price goes up. That's number one. Number two, in the steep yield curve, uh the people borrow money at the short rate, which is going down, and they invest And

risk assets which have a higher yield. So you're getting paid to hold the inventory and the value of the inventory, X exogenous factors, is dropping in yield. That's one of the accusations of our profound success. At Greenwich Capital was nothing but a carry and roll-down shot. Okay. And so because I know we're almost out of time. Uh I don't think I need to go through the specific mathematics right this second.

But if you have a brain and you get out a sheet of paper and draw yourself some examples, you're going to learn something. And we throw that with the concept.

This is usually reserved just for platinum subscribers, but um I keep talking about forward price. So if you bought IBM at 100 today, that means you think in a year it's going to be worth more than a hundred. Fair? If you thought it was going to be less. You wouldn't buy it unless you thought there was going to be a dividend or okay. Well, a fixed income. What I do is I look at what the forward price is. And then I think about

um the volatility in the market, how far can the rate move? E.G. and I used to have a rule of thumb that rates can't move more than 200 basis points in three months. That was my rule. And uh, you know, all of a sudden it gets back into this judgment call. You know, plus being a life member of the primary dealer society, I get the tips and then the inside the day the daily white privilege.

uh deposits to my bank account. Yeah, you have to have I beat that horse dead yet? Oh no, no. I've I'll tell you something I'll tell you something. I had when I'm doing my taxes, which is just a fucking ball busting experience, even at this point in my life. I had a Charles Schwab account that I opened. when I was trying to do this trading strategy with Robbie, I earned three hundred dollars in interest income last year in that thing.

I didn't have anything in there and they gave me three hundred bucks. Nice. Nice. Yeah. Tax you on that? That's taxable income. Ten ninety nine. Yep. I'll pay every penny. Plus there's some tax because you know I stopped generating W-2 income. Like the Obama Obamacare tax. Do you know about this thing? Oh we're in different taxes.

Tell me more. At this rate, not for long. Yeah, exactly. Tell me more about the Obama tax. What's the problem with that? I don't it's like because you make so much money you don't pay No, I I know nothing about that. Go ahead. How much they get you for? Uh you gotta get it. I'm doing my part. I'm glad. Yeah, exactly. I'm glad. And and hopefully part of that hundred goes to her new This is this is just beats the shit out of me. What's that clown Hawken?

Soda! Soda! Is it like a new version of the mayor liquor? Yeah, it's soda. It's soda. So this is how pathetic I am. When I was little, they were building houses in my neighborhood, and I got a jug of water and some lemons. And made lemonade and I went and sold it to the guys. I'm sure it was just a wealth transfer from my parents to me. Cause it was probably forty dollars in sugar and eighty dollars in lemons and I got I got five bucks. I got rid of you for five dollars.

No, we've we're that ship is sailed, dude. Um the um now you distracted me from what I I'm sorry. Well, I can go down that road. I oh I I know we have an election coming up and I guess the polls have it pretty close. But I'm really looking back to when Obama got elected and I remember based on discussions with locals that he was involved with some church people that had some very aggressive views. And then when he got elected, I'm like, you know.

Okay, look, not my guy, but it says a few things. One is if we can elect a black guy, this says great things about the country. Okay. And then I'm like, hey, here's an opportunity. for a guy, I guess Izzy Black, I don't know, whatever the story is. But here's an opportunity for him to lead and create a bridge. Right now that bridge is from Massachusetts to Martha's Vineyard, apparently. You're right. Um so that's why uh I perseverate week after week.

And now they're selling stuff what because you need the money now at this point in your life you're gonna get a job. So bizarre under the guise of of helping health, like improving health. It's just bizarre. It is She probably saw Gwyneth Paltrow's great success in the area of candle scent. Good lord. What a world. Um

How do you trade that election? How do you trade that election? You like this. You put your hands together and you sit on your treasury bills and you find your little area of expertise. Okay. Whatever that may be. Get down, figure out what's your competitive advantage. Okay. If you don't have one, T bills are great. Okay. Your competitive advantage is I can put my money where the only risk. Is inflation and the T bills tend to keep up with that. So for me, I've got my eye on some stuff.

And by the way, it's nothing new. It's the same old, same old, because I don't have this anxiety about having to come up with new ideas. If I thought sticking a pin in a cubie doll every day would make money. I'd have a box of Cubid dolls and I'd have

Ten thousand pins. I don't care. You were talking about bad bosses. I saw a clip. I don't know why Steve was Steve Cohen was in the news. Um I don't know if he's stepping away from the desk at point seventy two or whatever it was, but there was a little blurb about Stevie screaming at a trader about not having any new trade ideas for the year. And it was like the first Thursday of January.

He said Stevie was laying into him. They're like, This is the kind of atmosphere, this is the kind what this is what it takes. in the trading room. And I stood up, I don't know, I lost my mind. I just screamed right back at the guy. And that was the last time I ever got screamed at. I you've seen me on rides. I don't like getting yelled at. I don't like getting yelled at. Oh it's a nice way to put it.

Which was an interesting situation at Casa Sachs yesterday when do tell. Well, we're trying to do the tax return. Oh and a year ago I said to Cheryl. I get all these K1s and I send them to the accountants and then they lose them and then they come after me and then I gotta go find the fucking things again. She goes, I don't believe that. I don't believe that. Okay. So so I spent a year and I sent every tax return to the accountant and her simultaneously.

concomitantly, by the way. Nice. Very nice. So today they're it's uh yesterday they're coming up with we need this, we need that, and and uh was like well where is it i said you got it i what do you mean i don't see it i said well i i'm telling you you got it yeah they got it too well oddly enough They got them all. And and so I'm a little bit like

Told you so? Well yeah, a little bit. I mean you know it's like What else have I been what else what else have you been adamantly wrong about? This this kind of this kind of shines a light on your track record, you know? I don't know. I got one track record. It's my net worth. Okay. Their number, I don't know.

It must be white privilege, because it just sort of goes up. Yeah. And I I I don't I don't know. I th i so that's why, you know. Stevie Cohn, the fat criminal, he, you know, that would be a Martha Stewart weight loss program would be good for him. And there's an example of the revolution. If a bunch of guys come up to Stevie's house, I know where he lives.

No you know, the police can't protect one of the guys running for president of the United States. You think the first call is Stevie Cohn's house? And and I've got a lot of friends in Arizona who are well armed. Yeah, I bet. And and I like them very much. And and and I'm sure they'll opine on this, but I think even they know. They don't have enough rounds of ammo if the collective revolutionaries and and what happens when that uh Not so.

Bernie Sandward says, let's go burn the mot motherfuckers down. You know, every piece of property I own. It's a matter of public record. Yeah. So Lee Cooperman, I'm sure he spent a lot of money on personal security. Right? Because yeah. I've been to dinner with Lee, arguing over the cost of putting in a sump pump. My father was a plumber in the Bronx and that's just ridiculous. And okay, eat your early bird special. But you know. Shit happens in a hurry.

Right? I mean, take a look at your kids. How how long ago does it seem like they were yesterday, dude. It was yesterday. I I'm gonna fuck this math up, but I got a twenty eight I got a thirty five year old daughter. Yeah. Yeah. Do I look like I should have a thirty five year old daughter? I thought she was twenty two. Okay. And by the way, you know what creeped the shit out of me out was? We went to dinner in the city.

And last week, and very pretty, very appropriately dressed. But people are looking at me with scowls. Like you know. Just yeah, weird. Where'd you go to dinner? Helios. Okay. Good. What are you doing, Connie Helios? You know, we had our friend John Benson and Zuji in town. Yeah. And I wanted to take them a place where I could get a solid Italian meal. Okay, yeah. But Nishkit. the foods come off the boil. What's that that um

street in L Italy that's Arthur Avenue? Yeah, Arthur Avenue in the Bronx, yeah. I went there and I barely made it home before I had a fucking explosion. I remember Dave picking me up and I'm alone. I'm like, Dave, giddy up. Hope there's no traffic on the merit. I have a a contact in the heavy truck industry. You know, Ibwak's reach is very broad.

They have told me, I hope it wasn't in confidentiality, but in some of these trucks, the drivers are taking the seats out, cutting holes, and they're not even stopping anymore. Yeah, they gotta go. Yeah. Yeah. That's just what we need now after COVID is a good case of cholera because we deal with that really well. Next thing coming. Okay. You heard it here first.

Well yeah, there's so we have political concerns and then and then the the next pandemic is what keeps Bill Gates up at night. So we'll have the we'll have another pandemic eventually. Okay. I thought it was the gals on Peto Island that kept Bill Gates up at night. I'm never let by the way, I am never letting go of that. No, no shit. Just so you know. Just so you know. His wife let go of him. His wife his wife let him. Yeah. Yeah. And uh funny how that works.

How are you going to institute law when the people charged with making the laws don't follow the laws? I'm starting to sound like I'm nagging and I apologize. But you know, Will and Ariel Durant, the lessons of history. amongst the thugs. Hey, what about the girl from Bellhaven that called up?

her father's net jet, they flew to Martha's vineyard and they went around and busted a bunch of mailboxes and windows. I remember you remember that? Okay. So what's to keep them from saying Let's have a little run up round hill road, see what trouble we can get into. dangerous world out there it really is yeah it is so i guess we urge caution that's it buddy all right yeah

Dude, let me say one thing. It's been a year. I'm just looking at the time here as I look at the you're you're at the one year anniversary of that thing and of the the Middle East. of the attack of so I'm gonna call it what it was. Uh or or a year, dude, does it fe it feels like yesterday. that we talked about this this happening, you know, but we've gone through a year now. October seventh is when that festival was going on, that the Hamas were Hamas attacked Italy.

Israel. Israel. I don't they didn't get to Italy yet. That that's on their map. Freudian slip. I've had a long week. Um the um Yeah, just i you talk about time going by quick and like yeah, here you are a year later. You're at one year from and and what has No, I don't want to get into it, but so now we're what? We're at the seventh, we're a month. We got a month till an elec an election. We got a month until an election. Um And you're getting a rate cut right before it?

Twenty jobs numbers, inflation's not dead. It's just an interesting time. And I'm uh I thank you for coming on and talking about it with me.

My friend. Well, it's good. You know, we've a a rather full schedule here at WAC, but we always like to take time out for old friends. Exactly. All right, buddy. Red on the day. We'll see you soon. Um, thank you, Dr. Slock. Anyone else? Um No, just you know, our sponsor, Colece. Yeah, and Zervos. And Zervos. Zervos is uh you know, he thank you for letting us uh discuss the Wonderful life that you live. He doesn't live far from here. Maybe when they come with the torches on fire.

No. No, he'll be home for the holidays. You gotta get me over and give I need to sit down with Zervo so I can talk potatoes with him. Now it's like I don't a I don't ask much of you. I think you, you know, get me in front of Zervo. Uh it's hard for me to get on his pad because I don't wear a skirt and I don't cook. It's easier to get in front of Handler than it is Zervo's, okay?

So what does that say about this topic? You can get to the CEO, no problem. That's a that shines even more light on Zervos. Okay. Maybe Zervos is more important than I'm I'm I think if you add up the stack of chips, I'm taking rich. Okay, go I'm I'm taking rich, I'm selling z zeros and I'm all in. What's my limit? What's my limit? Yeah. So all right my pal. All right, pal. I'll talk to you next week. Take care. Thanks.