In this episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle chat about:
- Risk-Taking & Bet Sizing
- Einhorn’s Bubble Hunting
- Lessons From Nuclear Meltdowns
- Airlines Unstable Equilibrium
- Ant Group vs Wells
- AT&T’s Fiber Play
- Starlink: SpaceX’s Satellite Internet Project
- What Cracks This Market?
- Bond Vigilantes
- Equity’s For Yield, Bonds For Capital Appreciation
- Buffett’s Threshold Return Hurdle
- Kelly Betting For The Jet
- Why We Should Not Make Mean Log Of Wealth Big Though Years To Act Are Long – Samuelson
- The Worst Value Value Opportunity Set In 15 Years (2015)
- It’s Difficult To Figure Out What Sequence Of Events Will Lead To The Calamitous Outcome – Taleb
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Tobias: And we are live. It’s Tuesday 1:30 PM Eastern, 10:30 AM Pacific, 5:30 PM UTC. If you’d like to watch the show live, it’s on The Acquirer’s Podcast YouTube channel. Sign up, you get a notification. How are you, gents?
Bill: Doing well. Shoutout to the listeners. Happy for Melt-up Edition 2.0. Still in the second inning.
Jake: Bill is trying to trigger me already, all right.[laughter]
Tobias: Bill’s calling in from sunny Florida. He’s got his Good Morning Vietnam, James Montier–
Bill: My Montier shirt.
Tobias: –shirt on.
Bill: Bought a plot of land.
Tobias: Toronto, Dublin. You did?
Jake: St. Joe’s?
Bill: No, not that plot. But we’ll see. My wife and I were just talking this afternoon, my– whatever. We belong to a club here and the people don’t believe in wearing masks, and they tend to skew older. So, we have this plot of land which I’ve defined– like I told her, I said, it’s better than cash, but don’t get too tied into the idea of building here because I have a feeling a lot of supply may hit the market where we are.
Tobias: Oof! [laughs]
Bill: Hey, it’s a money game.
Jake: That’s Tobin’s Q, but in a rough way there.
Bill: I’m seeing people are like really old.
Jake: Brewster’s Q.
Bill: First of all, one of these ladies deserves to die. I’m sitting there in a mask, and she comes up and she says, “You don’t need to wear that. It’s for the help.” I was like, “All right, lady. I’ll see you never.”
Jake: For the help? Wow. That’s a little antiquated.
Tobias: It’s aggressive.
Bill: It was antiquated. So, you can basically pin her age, and she’s out there maskless. So, I think her house would probably hit the market.
Tobias: What’s your topic today, JT?
Bill: Estate sales. No, I’m just kidding.[laughter]
Jake: Yeah, I’m going to be doing lessons from nuclear disasters.
Tobias: Oh, that’s a good one.
Jake: We’ll see.
Tobias: What do you got on today, Billy?
Bill: I think I’m going to go two different places and try to tie it in. One is risk taking and how it’s morphing as my situation is changing. There was sort of a debate of how much would you bet on a coin flip and it’s very dependent on your wealth, in my opinion. And then, I’ll probably try to tie that into a discussion I had with somebody that said how hard it was to be a fiduciary right now, because with rates at zero, you’re just forced to take more and more risk if your clients want any yield. And that usually doesn’t end too well.
Tobias: The Fed loves to take people up the risk curve. I’ll be talking about Einhorn’s latest letter and a little discussion on bubbles that I always think is interesting. Who wants to go first?
Jake: I always go first. You guys–
Jake: Yeah, lazy.
Bill: Fine. I’ll go first.[laughter]
Bill: I’m going to keep it clean. I was listening to one of our old episodes, and I realized I do curse a little too liberally.
Tobias: Just for the second half when no one’s listening.
Jake: Yeah, exactly.
Risk-Taking & Sizing Bets
Bill: I had said about Buffett back, I don’t know what letter, what meeting he said it but he said that he and Charlie would bet substantial amounts on a coin flip if the odds are right. And somebody said to me, “Well, what would you bet on a coin flip?” And my response was, “I don’t think that that’s an easy question to answer because given my situation now, I don’t have enough money that I can just mess around and lose it on a 50-50 bet.
So, no matter how good the odds are, I wouldn’t press that much of my net worth into it. But I mean, the way that I run my portfolio is somewhat concentrated. So, I guess I put a fair amount, but I think the odds are better than 50-50. But as I got wealthier, I think I’d be more willing to bet more on those types because if I lost, my quality of life doesn’t actually step change down. We’ve sort of talked about this before. I try to size bets, like my Qurate bet. I asked my wife, “How much can I lose before you resent me for the rest of our lives?” That was how I sized it.
Tobias: That’s the best sizing discussion I’ve ever heard. [laughs]
Jake: That’s the risk department chiming in on.
Bill: Yeah, that’s right. I’m not trying to do some hero call for some BS reputation when it’s going to cost me my family. So, that’s how I think about sizing things.
Jake: What would you call that like Wife-far or something like that?
Bill: Yeah, it’s a little bit– that’s right.
Tobias: Can I throw some– like Kelly. The Kelly criterion for a 50-50 bet with a one to one payoff would advise you to bet zero. So, if you’re 50-50, you need to be getting better prospects than that, but that’s the outer limit of how much you should bet that gives you the optimal geometric growth in wealth if you’re doing that. But there’s clearly some– there’s a distinction between what kind of you need to survive and what is the portion of your wealth that you should be applying Kelly to, that’s the way I think about it a little bit. You can Kelly bet on the portion that is wealth and the pot that is working capital is not Kelly bettable. So, I always make that distinction.
And then, it’s the outer limit, you’ve got to remember that and so your calculation’s necessarily going to be fuzzy. So, you probably should be sizing down to fractional Kelly for those reasons. And you’re not doing it in sequence, you’re doing it in parallel, so you size down again. And that’s sort of the way I think about. Kelly– there would be no circumstance–
Jake: [crosstalk] –rent money.
Tobias: Yeah. There’d be no circumstances where I’d be Kelly sizing into something. I’d always be some fraction of Kelly.
Bill: Yeah, that makes sense. The nice thing about equities too is, if you’re right on the business and you believe you can own it forever, the right tail gets the expected payout is theoretically infinite. It’s clearly not infinite, but it can really skew your expected value at that and from what I’ve seen, the right tail is a lot longer and priced a lot higher than I ever imagined it would be.
Tobias: I think it’s interesting that you would bet more as you get more wealthy because the criticism of Kelly is that you get to a point where it doesn’t make sense to be Kelly betting, if you’ve covered your [unintelligible [00:06:56] for the rest of your life for everything that you want to do, it doesn’t make sense at that point to Kelly bet because all you can do is reduce your quality of life. Do you know what I mean? If you win, then–
Jake: I’d assume that there isn’t some step change to the level of wealth up there that maybe you’re aspiring to–
Kelly Betting For The Jet
Tobias: So, you’re saying you’re going to Kelly bet to get the jet?
Bill: Yes, that’s exactly right.
Jake: Kelly bet to the jet.
Bill: Yeah, because I don’t need a bigger house. All that a bigger house represents to me is more headaches. So, I don’t want– I don’t really want– [crosstalk]
Jake: Plus, the help has to wear mask.
Bill: I do want a ’69 Chevelle very badly. So, other than that, I’m not into the toys and stuff. I want a pretty simple life. But I would like to fly private.
Jake: So, now we’re going for 454 or 396 in that Chevelle?
Bill: I don’t know. I have to outsource this to my father. He’s more of a fan of the 396. I kind of want to drop like a crate engine and do like a total resto-mod, but he doesn’t like the way that I view those cars. But I do, those are sick. I mean, gray with black stripes or black with white stripes, oh.
Jake: I like the midnight blue with the white stripes myself for that one.
Bill: Chevelle is a good looking.
Jake: It’s a good-looking car. Yeah. I wonder sometimes like– I mean, they’ve done this a little bit with the Challenger. They take that old body style and make it look better. I always just wonder like, “What the hell happened during the 80s?” We went so far off the rail. [laughs]
Tobias: People are tuning into this episode, just wondering what they’ve walked into here.
Bill: Ralph Nader happened.
Tobias: We’re talking about resto-modding cars.
Bill: I wish that the Bronco came out and did real legit remake of the Bronco. But they ended up doing something stupid with it. Same with the Defender. There’s a lot of cool designs, but it seems like these companies these days don’t want to win.
Jake: What do you think about the new EV Hummer?
Bill: I think it looks okay. I don’t know. It’s weird to think of a Hummer as an EV.
Jake: It feels a little unamerican.[laughter]
Bill: It does. Yeah. Which is ironic, since Tesla is American and that part of it should definitely be celebrated. Anyway, the other part of what I was going to talk about– [crosstalk]
Tobias: Let’s talk about the private jets.
Equity’s For Yield, Bonds For Capital Appreciation
Bill: No, I did find an interesting– the conversation that I had was with somebody who manages money and he just said that he’s got these older clients that are approaching retirement. And how do you talk to a 60-year old that has one and a half million dollars right now that they’ve really thought they’d be able to retire on and they’re looking at bond yields down here? All of a sudden, you’re taking equity risk for yields. I was listening to Dalio talk to Ritholtz and he says, “Well, there’s no yield So, now you’re looking at price appreciation as a substitute for yield.” That’s a scary game. At some point, you’d think it can’t go higher, I don’t know how high. I’m in Team Melt-up and I say it’s the second inning, I’m only half-joking, but at some point, all the return has been pulled forward.
Tobias: Equity’s for yield, bond for capital appreciation. We’re in a funny world.
Bill: Weird world. If you don’t like bonds for capital appreciation, you can just buy SaaS which is like uber long duration growth bonds.
Tobias: Same thing.
Bill: With a little bit of dilution, but you just need the growth to outweigh the dilution and you’re winning.
Tobias: I’ve got some tech and some deep value, am I hedged?
Bill: Yeah, you’re pretty much bar-belled, right?[laughter]
Jake: You got all the bases covered.
Bill: It’s a weird world. It’s a hard place to invest.
Why We Should Not Make Mean Log Of Wealth Big Though Years To Act Are Long – Samuelson
Tobias: I think it’s funny that you think about more wealth, meaning you can do– you’re more likely to Kelly bet because that criticism– I forget who wrote it now, the one-word paper. Samuelson or someone like that, who wrote the one-word, one-syllable response to Kelly, where he said that–
Tobias: You don’t remember? The last word in the paper is syllable because he pointed out that he wrote the whole thing in one syllable, but every other word in the paper, I wish– somebody at home, please tell me, is it Paul Samuelson or is it somebody else– I’m getting that wrong, but a criticism of the Kelly paper where they said that the geometric rate of growth is not what everybody wants because it’s a personal decision and most people will reach this plateau where they don’t want to be Kelly betting anymore. But you’re going the other way. You’re saying you get to this point where you will start, you’ll get closer to full Kelly.
Bill: Yeah, well, I’m not saying that I’ll get– I’m saying that there is going, I hope, if the laws of compounding work and I behaved myself, that there will be a point in my life where maybe it will make sense to bet enough to step-change into the next life of luxury. I’d be willing to live a less luxurious life– There’s some amount that– I’m just thinking in step changes. It’s not theoretically correct. It’s not in a book. It’s probably Morgan Housel’s book.
I got to read it. I’m sorry, Morgan, I know I told you I would, it’s on the back burner. But I bet that a lot of that book is that way because I like how he thinks about money and the psychology of it. I think behavioral– it’s such a personal issue, but for me, I’m not looking to really get my overhead a whole lot higher and feel like I need to get money out of my portfolio. But if there’s ever a shot to get a jet, I’m going to take it. I don’t see why you wouldn’t.
Tobias: I hope you get there because I’ll come for a ride on yours.
Bill: I’m trying to get there on this podcast, it turns out that we can’t even buy the little valve that you screw over the tire to keep– We’re getting nothing.
Tobias: Who makes those valves? Maybe we should look at investing in them. It’s probably a Heico company.
Bill: It’s probably TransDigm charging $3,000 per valve. Shoutout! Anyway.
Tobias: I’ve got a topic here.
Jake: Yes, please.
Einhorn’s Bubble Hunting
Tobias: Einhorn’s written his latest paper. He says we’re in the midst of a gigantic bubble, which as a number of people have pointed out– so the name of that paper that I was talking about is Why we should not make mean log of wealth big though years to act are long. Written in 1979 by Paul Samuelson. It’s actually harder to read with one– he’s bent over backwards to write it with one syllable, but give the guy credit for actually getting it done.
Bill: It’s a dirty thing to do, I respect it.
Tobias: Yeah, very much so. He thought there was such idiots that he could only write the paper in one syllable, so they’d understand it. That’s true.[laughter]
Bill: Good for him.
Tobias: Pretty good flex too to be able to do it. It’s hard.
Bill: Yeah, that’s true.
Tobias: I read Einhorn’s paper. He says we’re in the midst of a big bubble. Folks have been pointing out that he’s been saying that since 2014.
Jake: Do you think he writes these himself still? Or do you think there’s someone else writing them?
Tobias: Yeah, I don’t know.
Jake: It’s signed Greenlight Capital.
Tobias: But that’s what you do when you’ve got partners. You don’t sign one person’s name, you sign the partnership name.
Bill: Wouldn’t you write it? I’d want to write it. It’s the voice of the firm.
Jake: I’m just asking. I’m just throwing it out there.
Bill: I think he writes it.
Tobias: I’m amazed that Hussman was able to– Hussman now doesn’t write weekly. He writes it– I think it comes out monthly or quarterly or something like that, but he kept that weekly for a long time. Each one of those was like a dissertation. I don’t know how he did it.
Jake: Yeah. I don’t know.
Tobias: I just wanted to pull out one part of Einhorn’s letter because I thought it was pretty interesting. It’s something that I’ve discussed before. But he said on March 10, 2000, nobody knew that it was the top. Even by September 2000, it wasn’t clear. There was no obvious event that marked the top, only in hindsight do people try to back fit an explanation. And then he says, our working hypothesis, which might be disproven, is that September 2, 2020 was the top and the bubble has already popped.
Jake: That doesn’t sound like second inning.
Bill: Yeah, that’s because he doesn’t listen to the right podcast, dummy.
Bill: Come on, Dave. Holler at you boy, inning two.
Tobias: That’s something that I have noticed before, that the bubble doesn’t pop from top– the bottom– there seems to be some sort of like sideways drift for about a year before you really get into the bear market portion of the bear market. And it is only in retrospect that people go back– there’ll be some pullback, but then the market rallies up again or just drift sideways for a long period of time. And then, you get the back half is where all of the–
Jake: What do you think is happening there? Is it the psychology, like complacency? What Grantham said that there’s always retail participation at the very end and that’s one of the checkboxes. They’re there to make money very quickly, that’s what sort of sucks them in. You just see prices going up like crazy, and you can’t miss out.
It’s my chance to get rich quick. Well, if things stop going up, and they’re just going sideways, like boredom sets in, you don’t have a fundamental reason for owning it other than– it was going up before, I’m trying to get rich here. So, maybe that’s when you start punting it and then the selloff really starts to pick up steam. And I don’t know, that’s just my armchair quarterback.
Tobias: The technical analysts call it distribution, that sideways drift, and they’re like that’s the smart money selling to all of the dumb money on the– so, you get a year of distribution as these guys get out. I don’t know if that’s true and I don’t know how anybody knows any of this stuff. I think that technical analysis is kind of the same as reading the gizzards of chickens and things like that. I don’t think it’s really predictive.
Bill: I don’t know, man. I’ve sort of morphed on technical analysis a little bit and I don’t know, I used to like it–
Tobias: You like the bearish harami?
Bill: No, I’m not brushed up on my terms.
Tobias: Cup and handle, cup and saucer.
Bill: That, I know. I know, the cup and handle.
Tobias: Head and shoulders.
Jake: Yeah. [crosstalk]
Bill: No, that’s an option strategy, sir. Burry used to– [crosstalk]
Tobias: I think one of mine was a constellation too.
Bill: Jesus, are you guys going to let me talk?[laughter]
Tobias: Go ahead, dude. Go, go, go. [laughs]
Bill: I mean Burry used it for a while, Buffett messed around with it for a while–
Tobias: Six years, right?
Tobias: In the late 1990s– No, I’m just kidding. [laughs]
Bill: I wonder if there’s a way to improve some of– I mean, I don’t know, I have a real tension in my head about it because, on one hand, you either believe in buying things cheap. And if they’re cheap, they probably don’t have momentum in their favor and you’re probably going to have to watch it go against you for a while. Is there some way to avoid some of the big value traps with it? I mean, I don’t use it but I’m more intrigued with it than I– I’d sort of dismissed it and walked away and called it hocus pocus. And now, I’m sort of like, “All right, I get it.” I understand it as a tool, I don’t understand it as a decision making.
Tobias: The way I think about it is–
Bill: Fundamental reason.
Tobias: –the market is at any given point in time, it’s just where the marginal seller and the marginal buyer meet and we connect them together temporally, like we connect them together through time, and we get to see that there’s some relationship between one trade to the next. But I don’t think there really is any relationship from one trade to the next. It’s literally a random walk. And as a value guy, the advantage that you have is that you have some idea of what this thing is worth that is distinct from the random walk that follows on your screen. So, if it randomly walks down to a price that gives you a big expected return, then you buy. If it randomly walks up to a price that your expected return is now low enough that there are other better expected returns around again, you sell, but that’s sort of–
Jake: And then, you get fired.
Bill: I sort of agree with that, but I don’t agree with it because momentum is too proven for me to really believe that that random walks are truly random.
Tobias: That’s true. That’s fair.
Bill: But I don’t disagree with what you’re saying.
Jake: [crosstalk] –say there’s a market sell-off, how does that work? Isn’t there someone else buying on the other end of every market sell-off?
Bill: Yeah. Some poor market maker just [crosstalk] and leave them.
Tobias: Cash on the sidelines.
Jake: Cash on the sidelines. [laughs]
Tobias: I’m going to give credit to John Hussman, I didn’t understand– that made sense to me that, yeah, there are people who sit out there with cash wanting to buy. But as he points out, every time a trade goes through, there’s a buyer and a seller. So, there’s no cash on the sidelines, it remains the same.
Bill: Well, so the other thing that this guy that I talked to said, which makes a lot of sense. He manages like uber net worth, like high net worth people. He said, a lot of the really rich clients that he has, they just said screw it and they just went to cash. I’m not getting anything in bonds, I’m not taking equity risk. And he said the cash balances are way, way bigger than he would typically advise. But at the same time, how’s it going to tell him not to do it?
Tobias: But somebody has bought it, right?
Bill: Yeah, I’m just saying generally, I think it’s an interesting behavior that’s going on, and I’ve seen it in my own account. In my brokerage account, I used to buy treasuries when there was any yield and now, I just don’t really care. I’m not going to waste my time with this.
Tobias: I see what you’re saying. They’ve already sold out equities. It’s just whether they buy treasuries or whether they just sit in cash. I see.
Bill: Yeah, that’s right.
Jake: [crosstalk] –three bibs on a CD. [crosstalk]
Bill: Yeah. It’s not worth it. As far as the bubble goes, I guess there’s too much value in value for me to think that there’s some massive– but I guess in ’99, you did have this dispersion where the high fliers or the high sort of got nuts. There’s no way that all of these stocks are in a bubble. There’s also no way they’re all worth this. And there’s no way that you can listen to Greenblatt say this and look at the valuations– everything that has worked seems to be like a good story that feels good and has options in it, and things are going well, and those are working really well right now. If somebody pitches some company that’s got a reasonable cash flow yield but a hairy story, it just can’t catch a bid right now. And that does not make sense to me fundamentally.
Tobias: I don’t know if it’s a ’99-type market. I think that there are those elements in it but I don’t think that ’99 is the right analogy. I think it’s more like a– it’s a NIFTY 50 type market where the 50 stocks in the NIFTY 50 were really great businesses. They were high-quality technology businesses that were growing very fast. And the story that supported them was coherent and good. It’s just that valuations got away from the NIFTY 50 and that was what ultimately brought them back to Earth. I think that something like that is going on now. I do think that the companies that are– I think that the market has roughly got the rank order right. Although I do think there is some ’99-type behavior in that. There are some companies that are not the FANMAG or–
Bill: Some of these smaller SaaS could not be rank ordered correctly.
Tobias: That’s right. In the middle, there is the issue. That’s right. I look today, it’s a good day for FAMG. It’s a bad day for value. And I look at the FAMG stocks, they’re like– Google is transitioning to a value stock because I saw that it didn’t participate today. It trades with the value trash and not with the high fliers and the rest of the FAMG. I just think that’s funny.
Bill: You get a capital allocator in that thing, and it would really scream. That’s the shame of it.
Tobias: Well, I think they’re doing it on purpose, aren’t they?
Bill: No, I don’t know, maybe. I mean, a little bit, but come on, guys.
Tobias: If everybody wakes up to the fact that three blokes control it.
Jake: Enigma machine.
Tobias: Yeah, there’ll be pitchforks as Jake says.
Bill: I guess. I don’t know.
Jake: Yeah, I think also to some of the difference in ’99– I mean it was shocking to read that the bottom decile, I think it was, of cheapest in ’99 had higher returns on equity than the top decile. There was a real quality to that cheap basket in ’99 that I think made it much easier to pull the trigger and be in it relative to today where now you’re like– [crosstalk]
Tobias: –some tradeoffs.
Jake: I’m in okay business, pretty good price, is this the hill that you want to go die on? [crosstalk]
Tobias: You have to be a handicapper.
Bill: Well, you’re forced into some bad decisions because it’s like, do I want to buy this thing at a good price when it’s sort of– if I’m going to own it for a long time, my returns are probably going to be like, meh, I don’t know.
Tobias: Yeah, I think that there is some– I just completely lost my train of thought, sorry, I got interrupted by– [crosstalk]
Bill: Ironically, I disagree with Pabrai’s conclusion that now is not the time to play the rerating game. I actually think the rerating game could get you pretty paid because some of them are too cheap. Some stuff will not be bought. It’s crazy.
You Almost Can’t Pay Too Much
Tobias: I remember what I was trying to say. As value guys should be doing most of the time, what you’re doing is you’re handicapping. You’re handicapping the game that you’re going to get from the risk that you’re taking on when you do it. What happens in these bubbly-type markets is that, particularly this one is more like a NIFTY 50 type market where, really, it’s just looking at, is this thing growing all the time and don’t worry too much about the price. Man, I’ve seen guys literally tweet that out.
Jake: Almost can’t pay too much.
Tobias: You almost can’t pay too much. Yeah.
Bill: Well, to be fair, if it’s small and it’s growing, I sort of get that sentiment. The other thing that I like is does it make you feel good.
Tobias: Yeah, that’s right.
Bill: The only reason that I think that there’s some validity in that is it could give you the conviction to hold and that could overcome a behavioral bias that could impede your ability to realize any return. But the idea that you should be making investment decisions based on your feelings seems sort of fundamentally opposed to the whole idea of being rational.
Tobias: Maybe you’re one with the investment universe. Maybe you’ve reached mastery.[crosstalk]
Bill: I’m not.
Jake: We’ll see how that whole sentiment changes as price changes as well, all those good feelings you have.
Bill: Yeah, well– or to your point, let’s see some of these stocks go sideways for a while. Now, maybe they won’t, maybe we’re just three morons and I get it, and whatever.
Tobias: I’m confident we’re three morons.
Bill: Yes, well, that’s true. That’s proven. Yes, like monkeys throwing faeces at each other. But I guess I would like to see a world where the businesses grow, but the momentum stalls a little bit, and I’d like to find out who really owns businesses. Then, they can find out what it’s like to be a value manager. So, all you SaaS bros, prepare for what happened the last 10 years to value and then you can see how fun it is. And then, everyone can call you an idiot for paying too much. That’ll be great.
Tobias: I don’t wish bad things on other people. [laughs]
Bill: Yeah, you can get trolled by random Twitter accounts that haven’t done half the work that you’ve done. It’s super fun.
Tobias: It doesn’t bother me at all. Mental fragility. Just going to disintegrate.
Bill: [laughs] I respect your ability to take it, sir.
Tobias: I don’t mind at all. I’ve adopted this new stoic philosophy that I think I had been doing it–
Bill: I mind. Fuck that. I said I wouldn’t curse. If you listen into this shit and you don’t think that Toby has put in the work to come up with some reason that he believes what he believes, then you’re a fucking dumb ass. This guy has thought about whatever you’re coming at him about, he’s thought about it. Now, whether or not you agree with the conclusion is one thing, but to comment like– it offends me big time.
Tobias: I appreciate that. But don’t worry about it. It doesn’t bother me at all because I’m not relying on– I’m not going to ask my enemies what they think about what I’m doing. I know what I’m doing because I’ve done the research, that’s the only place that you can get to.
Bill: I’ll tell you what, I’ll take the toxicity out of your heart and I’ll wish ill upon them. I’ve got plenty of love in my life, I can have a little hate.
Tobias: I’ve reached this stoic Zen state by– I think I did it intuitively and then I was very grateful to Jake to introduce me to the introductory books and some conversations with a mate of mine in Australia, Stu McKinnon, have got me very straight and all that. So, I feel I’m equal– even keel at this point.
Bill: It just annoys me that people don’t think that you’ve thought of this stuff. It’s like, yeah, I’m sure sometime in five books, he never had the thought– [crosstalk]
Tobias: That’s why it’s a market.
Bill: I know. The tweet that Preferred Shares shared the other day which you guys have commented about in the past was sort of in that 2013 area, the thing that we all missed and I wish that I was smarter back then, is there’s no way that all the multiples should have been that compressed. That was a bad, bad miss in retrospect.
The Worst Value Value Opportunity Set In 15 Years (2015)
Tobias: Jake @EconomPic pointed out the same thing. Jake Taylor wrote an entire piece about it. Talking about the worst value opportunity set in 25 years, which came out in 2015. He was dead right. He showed it to me, I read it and fully understood it and did nothing about it. So, that’s my–[crosstalk]
Bill: –compound town.
Tobias: We should have been.
Jake: We could have been the leaders of compound town at that point.
Tobias: We made a mistake. But live and learn.
Bill: That’s right.
Jake: Get the next one.
Tobias: Let’s eat some veggies.
Lessons From Nuclear Meltdowns
Jake: Okay. So, this is lessons from nuclear disasters. And as you guys know, my background before was running the power grid. So, I have a lot of fun doing these kind of little research projects. I feel like I’m bringing my worlds together. So, this is based on– a lot of it on this book, really good book called Meltdown. That’s by Chris Clearfield and András Tilcsik, I’m sure I’m saying that wrong, I apologize. Which came as an original book recommendation from Caffeinated Investors. So, shout out to him for this. Thank you. So, 19– [freeze]
Tobias: Into the Jaketrix.
Bill: [crosstalk] Jaketrix.
Tobias: He’s back.
Jake: Oh, sorry.
Tobias: Just from the date.
Bill: [crosstalk] talking about nuclear energy.
Jake: I didn’t say anything after that. So, it’s 1979, Harrisburg, Pennsylvania, and this little thing called Three Mile Island, you guys might have heard of it. So, it started out as just a simple plumbing accident, nothing special about it. And it turned into a huge disaster, but the causes of it were very trivial. There’s no earthquake or an engineering mistake. It was a combination of small failures. So, you had this little plumbing glitch, you had a failure of pumps to send water to the steam generator, which had increased the pressure in the reactor, which then– there’s an opening of a pressure relief valve and it failed to close. And then, there was a misleading indicator to the operators that there was a stuck– the valve’s position was stuck open.
Tobias: So, it’s a sequence of– you need this very precise sequence of things to go wrong. But it is possible for all those things to go. They’re low probability events play but they all go wrong at the same time?
Jake: That’s right. All of that happened in the amount of time that it took me to read that. It was 13 seconds.
Jake: Right. In less than 10 minutes, all of the damage to the reactor core was already done. The failure was driven by the connection between the pieces as much as the pieces themselves. And a cup full of nonradioactive water led to the release of 1000 liters of radioactive coolant, which ended up– people end up getting cancer, there’s a whole long tail of problems from this. This researcher named Charles Perrow studied it, and he calls these normal accidents.
What he means by that is that they are bound to happen because they’re these little small things that are going to happen and when we increase the coupling with the tightness of the coupling in our systems, we end up with a cascade of failures because of that. So, the complexity increases the chances that it’ll happen and then the coupling increases the chances of cascading errors after that.
And so, he draws this axis. On one axis is increasing complexity. And then, the other way is tighter coupling. And up in the upper right-hand quadrant where you have very tight coupling and high complexity is where you have the biggest meltdowns. And Perrow said that the financial system exceeds the complexity of any nuclear plant that he’s ever seen. We have a very complex system that is increasing in complexity along with a tighter and tighter coupled system.
What’s difficult is that you can’t see necessarily– you can’t find all the problems just by thinking about them because of this complexity. There are interactions that are so weird in complex systems that you’ll never be able to predict them. Then, you can’t predict the chain of errors that’s going to happen because of the tight coupling. Those two parameters, you get to thinking about how much are we cording this with just-in-time supply chains, the increased tighter and tighter coupling?
We have the internet of things where now everything is increasingly interconnected, which is a tighter coupling. Algos for everything, which I think adds a layer of complexity because one of the things of–transparency is a great antidote to complexity. When you can’t actually see the system that you’re looking at and get a status on it, it becomes much harder to diagnose problems. When everything is a black box in an algorithm, we don’t know why it’s doing anything, we’re just really increasing the complexity of everything in the world.
Bill: Can I just real quick, please, just to take the devil’s advocate part of that? There’s an argument to be made that through a lot of these social media platforms or something, you’re actually reducing the black box and you’re pulling back the curtain now. It’s got its other problems, I think that is what some people would say. So, I figured I’d bring it up. Also, do you even [unintelligible [00:35:21], bro?[laughter]
Jake: I would say in that social media instance, perhaps you are maybe adding transparency, which might reduce complexity, but you’re also greatly increasing coupling. Systems are tied more and more, people are tied more and more together. Ideas can transmit faster through that network now.
Bill: The groupthink of it scares me all, but that’s a separate issue.
Jake: Yeah, and I think one of the things too they found is that homogeneity, it will greatly increase coupling.
Bill: Huh. Yeah, that makes sense.
Jake: [crosstalk] –has a very homogenous idea, increases the coupling of our markets.
Bill: Dude, if indexing just ends up really bad, can we just all agree that– I don’t know how it went bad, but if everybody is just putting their money into a vehicle that buy stuff at higher and higher prices and no one is paying any attention, if that ends up bad, it’s not that unforeseeable somehow.
Tobias: But that’ll be the best thing that happens to the market. That’ll be the best thing that ever happens to us. Fundamental value guys.
Bill: Well, dude, people will get destroyed. [crosstalk]
Tobias: Yes, that part of it.
Bill: I’d feel bad for the people that were told this is the right thing to do. And then, once again, they feel screwed.
Tobias: Yeah, well, that’s fair.
Jake: So, that’s another thing, is that trust in systems creates tighter coupling because people stop doing their own work and their own calculations, and they just trust that the system is doing what it’s supposed to be doing.
Tobias: I do have some questions.
Jake: We have another meltdown to go to. Japan’s Northeast coast, and there’s this tiny village called Aneyoshi, I believe, and in that village, there’s this stone tablet. And on it, it says, “Dwellings built on high ground will ensure the peace and happiness of our descendants. Remember, the calamity of the great tsunami. Do not build homes below this point.” And it’s from the 1930s. All along the coastline in different towns, there are these stone tablets basically in the ground that say, “Don’t build below this point.”
This was where the water came up to in 1870, or whatever it was. Of course, with time, people sort of forget about this, they haven’t seen water there, and what do they do? They start building down in the lower areas, and they forget– they have to go relearn the lessons. But, of course, 2011 and the Tohoku earthquake, as a 9.0 earthquake off the coast of Japan, creates a tsunami and that leads to the Fukushima meltdown disaster.
What can we think about like– there’s a lot of old lessons and rules of thumb that might be we could consider the tablets or the stones put in the ground. So, you think about somebody like Walter Schloss. He would probably have a rule that said, like, “I don’t pay more than 10 times P/E. And it doesn’t matter what other good things are happening with this business, but I’m just never going to pay more than 10 times P/E.”
He doesn’t go down into the valley any lower than this point. And there’s lots of time periods where everyone is– you’ve built your house there and it’s no problem and you’re getting by with it, no problem. But then, every once in a while, there’s this long tail event that happens that will completely destroy your house if you don’t pay attention to the longer term, the tough lessons that your ancestors learned and tried to warn you about. And I think we ignore a lot of that especially in times like this where you buy things that feel good, you’re not as conscious about price. I would just say maybe look for your–
Bill: I thought you were going to talk about value managers, not buying compounders in 2015. Sowing the five years of pain.
Jake: I guess the answer is that you need to find your own sort of tablets and put them in the ground for yourself so that you don’t go building your house in places that have historically been wiped out in previous tsunamis. When it doesn’t go well for a lot of these people, there’s not going to be any– you could have seen it coming. That is the real answer. If you did little bit of work on history, you could see it coming. If you overpay for things, it typically eventually will not work out for you. So, anyway, that’s what I got for today.
Bill: The people I worry about the most are the people that are coming into Twitter, seeing the accounts that have done really well, and thinking that’s the strategy that they should maybe adopt without– Like I said, I actually think David Gardner’s approach is pretty friggin’ smart. I get it. But you’ve got to be him to implement it and he implemented early. He doesn’t implement it at the end. That’s the part that I worry about some people, but everybody’s got to get intuition somehow.
It’s Difficult To Figure Out What Sequence Of Events Will Lead To The Calamitous Outcome – Taleb
Tobias: I think that there’s something in Taleb’s approach to it where he says it’s difficult to figure out what sequence of events will lead to the calamitous outcome. It’s hard to figure out what combination of little outlets and valves and sensors failing and lights failing that will get you to the point where you have the meltdown or the stock market crashes or the business falls over. But it’s not hard to figure out that something is fragile, that it’s vulnerable. I think that’s a much more robust way of thinking about things. What’s the likelihood that there’s going to be another 100-year storm that comes through and blows the water up to this point? It’s low. It’s probably very, very low.
Jake: It’s like 1 in 100.
Tobias: It might be 1 in 100. Yeah. But it might be less than that. I don’t know. We don’t have enough data, we’ve only got one data point. I guess I literally defined it that way, so that’s fair. But then, it is foreseeable that it could happen, so maybe you just think that the laws of the house, given that there has been an event, like in the last hundred years that got us to this point. In the city that I lived in before I came here, Brisbane in Australia, they have these plaques up on the walls in the downtown central business district in the financial district, that say– and I used to walk past these every day. It would say that the flood came to this point in 1974. And it’s like six feet off the ground in the middle of the city. I’d just be like that’s absolutely insane that that water got that high. What’s the chance that’ll ever happen again? And then, after we left, there was another flood that got to the same level. So, the chances are pretty good. It happens pretty regularly, it turns out, don’t build below that point. So, I’d say yeah, look for vulnerabilities rather than the sequence of events that ends in the bad outcome.
Jake: [crosstalk] –trying to forecast these things, is incredibly difficult, and more probably trying to forecast a tornado than rain. We’re pretty good about figuring out, well, it may rain tomorrow, but knowing where a tornado is going to touch down, what’s going to be impacted, it’s such a much more complex idea, and I think that more accurately describes what we’re trying to figure out.
So, rather than thinking that you need to know what the answer is of why this is going to blow up, is not as helpful as just realizing that eventually, because of the complexity and the tight coupling, something bad will happen, even if it’s just little small errors that add up together. And therefore, tread a little lightly, be a little bit more careful, be a little bit more judicious.
Buffett’s Threshold Return Hurdle
Bill: I was chatting with my boy, Tiso, about this, this morning. Actually, I called him, drop the kids off, sitting there thinking about the Buff Dog, as I do. And I said to him, I said, Buffett’s so optimistic about the future but he didn’t buy stuff like Costco a long time ago. Forget about now or whatever. He had the shot and why do you think he didn’t take that shot? And why do you think he’s so stringent on multiples or what he pays?
I think the answer that Tiso gave is probably right is, he watched Coke go through what Coke went through and he watched Geico go through what Geico went through. And he’s probably got a better sense of how things can unravel or maybe over– waits more than the typical investor whatever it is. He also knows what a really, really good setup looks like. So, what may be enticing to some people, he’s probably like, “I’ve seen this deal before hundred times,” or whatever. I don’t know what it is.
Tobias: It could be as simple as he’s got a threshold return that he requires from risky investments and if you can’t foresee the threshold return being delivered via future growth and the current yield, if it doesn’t get over that threshold, then he just doesn’t invest.
Bill: I know but it’s so hard for me to buy that Costco never hit that. It’s really, really hard. And it’s hard for me to buy that Munger wasn’t in his year like, “Dude, you need to seriously look at this.” I forgive Google. I even forgive like Visa, MasterCard. I get– I mean, I don’t know that I really get it. But I kind of forgive it. Costco, I just can’t get over.
Tobias: Could it be a conflict?
Bill: I don’t know. Maybe.
Jake: He’s had his face ripped off by retail a few times.
Bill: Yeah, that’s fair.
Jake: Maybe, he was just like, “You know what? My batting average isn’t that great in retail. I’m going to take a pass on most of these.”
Tobias: How is it in airlines?
Bill: Yeah, but his boy is Munger, and Munger is so smart. Just once, you might want to be like, “Oh, Charlie’s really right on this.”
Tobias: But then, he figured out airlines.
Bill: No, he didn’t.
Tobias: But that’s what I mean. He crossed the Rubicon with airlines, then just like turned the army around, marching back over. It doesn’t matter. We’re not taking over Rome today.
Bill: [crosstalk] –airlines, my beloved, it’s so sad. Airline weekly popped up in my– [crosstalk]
Jake: –complexity and tight coupling. Pandemic is the perfect example of we were ripe for something like that.
Airlines Unstable Equilibrium
Bill: Yo, so Rob Madonna had said to me a while ago, he’s like, “The thing that I just can’t get to in airline’s is you’re living in a state of unstable equilibrium.” I think is what he said, unstable equilibrium. I don’t know exactly how he put it. He put it way smarter than I know how to say it now. But it’s like, just a little bit of tipping can knock the whole apple cart over. And turns out, he was–
Tobias: Why is that? Can you run it by me again?
Bill: I can’t. I’m probably putting words into his mouth. I feel bad for– [crosstalk]
Tobias: I like the way it sounded.
Bill: Yeah, I know. I need to look it up. Basically, it’s a term in physics where you have– like, it’s a system that it’s maybe not inherently stable, but it’s currently stable. And I think that–
Bill: Yeah, I think a little bit of that. And I still don’t know quite how to feel about it. I don’t think anybody that pitched airlines said, “And by the way, a pandemic could come knock out all their revenue for six months, and we’d all be fine.” So, I’m not sure how much of this is resulting but [crosstalk] keen observation.
Tobias: Why is it not inherently stable? Because I guess the argument for it would be something like, there just probably aren’t going to be any more big airports built and so there are a finite number of places to park planes, and so if you have a place to park a plane, then that’s a pretty big competitive advantage.
Bill: Yeah, I think that that works. I think that thought process works, if the planes can’t ever get bigger or denser– I think the problem that industry, if I was going to criticize the industry, I’d say okay, well, a gate shortage doesn’t mean it’s a seat shortage. And you still have labor costs that are going up and they were running into a pilot shortage, which is absurd to think of now, but it’s unclear that with– the consolidation, the thing that people get super wrong about all the consolidation stuff, is there was more competition per route than had existed before. Shoutout to Phil Ordway for pointing that out to me.
Tobias: How does that work?
Bill: Just because the way the networks overlap. If you get six subscale guys flying, your flight paths don’t necessarily have as much competition even though it’s counterintuitive.
Tobias: If you have lots of little regional airlines, it’s harder to get yourself from A to B. But if you’ve got a few bigger networks, they can see the full path more easily and so they start selling more on that route?
Bill: That’s right, and they can start to divert planes to more profitable routes. They get a sense of how the travel is working and what routes are profitable.
Tobias: Herb Kelleher had that great line where he said the problem with the competition in airlines is that if a competitor goes out of business, the plane just flies from where it is– somebody else picks it up the plane [crosstalk] and it’s back working on another route somewhere else.
Bill: Or they recap and cheaper, then their labor costs were lower.
Tobias: That’s a disaster.
Bill: Not ideal for a long time.
Tobias: That was the challenge. The most expensive carrier would go through bankruptcy and emerge out the other side as the cheapest carrier, and then the next one was like the domino ready to fall into bankruptcy.
Ant Group vs Wells
Bill: Yeah, I think that’s right. We should answer Masa Son cap because he’s coming at me on the Twitter machine earlier today. I don’t know. What does he want to know? He wants to know Ant Financial versus Wells. Ant probably does better. Why the hell would Wells catch a bid? I just think Wells is going to be a better organization in five years and I don’t think there’s a huge downside. I have no idea what the downside in Ant is. It’s probably zero. It’s probably the best investment ever. I don’t fucking know.
Tobias: What’s Ant? Is that the–
Bill: That’s another curse word, darn it!
Jake: Put money in the swear jar.
Bill: Yeah, well, I mean, it’s got to be like Alibaba’s financial arm. I have not done the work to know what the possibility is. It’s probably backed by the Chinese government or something. I have no idea. I don’t know. So, part of my ignorance on Ant Financial for now, I’ve had my focus elsewhere.
AT&T’s Fiber Play
Bill: As far as fiber versus cable goes, if I was building a network today, a greenfield network, I’d rather do it with fiber.
Tobias: What’s the question about, fiber versus what?
Bill: Just why doesn’t like AT&T steal share with their fiber overbuilds from cable companies? And look, I think that it’s something to be aware of. I think it’s a legitimate risk to be aware of. I think cable companies have the consumer relationships today. And I think that AT&T and Verizon really messed up selling the MVNOs. The ability to sell a wireless plan for the cable companies, I think was really letting the fox into the henhouse and I think it was a major strategic mistake.
Tobias: I don’t fully understand the difference between the two. They are saying that wireless as a competitor to fiberoptic cable?
Bill: Fiber over builders are competitors to cable companies. Historically, cable has been a much better technology than DSL. So, the question now is, if AT&T is going to build fiber to the home, why does AT&T not be cable? I think some of the answer in my head is cable already has the scale. You don’t build out fiber and automatically hook up 60% of the homes. So, now you have to be willing to advertise and eat that and grow into that, and it’s possible.
Tobias: It’s inevitable that fiberoptic cable gets built up over coaxial twisted pair or whatever that backhaul that they’re using. Whatever you’re using, whatever technology you’re running over coaxial, that has been getting better and has helped to keep up, but fiberoptic cable is so much better that it’s inevitable that it has to be overbuilt over everything else.
Bill: Maybe, I don’t know. We’ll see. You’ve got CableLabs coming out with 10G cable. More amplifiers, baby.
Tobias: Yeah. Same thing, technology improves also in the glass, and the glass, you can stick more on it.
Bill: Yeah, I mean, look, it’s something to watch. It’s not just what the best technology is, though. It’s also what the legacy–
Bill: –customer relationships are and does it make sense to overbuild all that. Well, in AT&T’s case, you’re also hemorrhaging DirecTV subscribers, and HBO Max is going to divert some attention. That’s a big entity.
Tobias: That’s fair. But at some point, the question will be like, “Do you just want to get 10 or 100 times faster connection?” The technology will eventually not quite be able to get there and then it will be fiberoptic beyond that.
Bill: Yeah, I think what Malone’s answer to this all is, is there’s no reason that those two separate infrastructure plants need to exist, and someday wireless and cable are just going to merge.
Tobias: Wireless always needs backhaul.
Bill: Yep. But you don’t want to be relegated to just a backhauler, that’s not a great business.
Tobias: Well, if you control– I mean, it’s possible that’s the most profitable part in the network.
Tobias: If you’re going to go backhaul– Wireless needs backhaul. And so, you could just say, “Guess what? We control all the backhaul prices going up. What are you going to do?”
Bill: I suspect that those are monopoly routes.
Starlink: SpaceX’s Satellite Internet Project
Tobias: It’s monopoly route to my house. What about Tesla’s Starlink? I see Samson Narokobi has a question here. What about Starlink? Will Starlink wipe them all out?
Tobias: No, it’s too hard. You just can’t get enough data through it.
Bill: This is what I know about cable, my absolute known. They have a lot of connections. It’s not that easy to overbuild and steal a cable customer and roll a truck out and set people up to give them a four-hour window that they’re going to have to be where they have no perceived benefit in their entire life because their broadband is already working. And if you start to get into like Starlink or 5G, if it’s raining outside and my internet goes out, it’s a nonstarter. I couldn’t even deal with DirecTV doing that. Forget about my internet. Especially after work from home, it’s got to work. I think the barrier is going to be really high to steal relationships from existing cable companies and probably fiber relationships. I’m not trying to trigger all the fiber bulls. I agree, it’s a good technology. I’m just saying.
Tobias: Throw your questions in and we’ll take a look at them.
Bill: I would never sign up–
Jake: And then ignore them. [laughs]
Bill: –for satellite internet ever.
Tobias: I mean, it makes sense if you’re in some remote part of the world. If you’re on a boat in the middle of the Caribbean, then get a satellite–
Jake: Get fiber.
Tobias: Get fiber to the boat. How far away is fiber to the boat technology?
Bill: Yeah, that’s right.
Jake: We’re almost there.
Bill: Well, what was that–? There was some company that used to do satellites and that was some of the–
Bill: Yeah, Iridium. You got it. Yeah, that’s where you need your boat stuff.
What Cracks This Market?
Tobias: I’ve got a good one here. What cracks this market? Election with split house and senate? Tesla fraud charges? Big tech legislation?
Bill: If I had to guess out of those three, Republican Senate and Democratic President because Republicans will figure out they care about spending again.
Jake: I’m going to go with D, none of the above. Didn’t you listen to the whole segment on complexity and coupling and how you don’t know where the errors are, they’re going to lead to the failure?
Tobias: Yeah, I have no idea. I don’t even know if it will crack.
Bill: I was given three to choose from. The problem that I have with bubble talk is it implies that there’s some crash coming, and I just don’t know that I actually buy that. I just think that there are pockets of froth that are probably not going to get a lot of return in the future. I don’t know how it happens from here to there. I do know that rates this low is probably going to cause a big problem sometime.
Tobias: One thing that I watch is the 10 year, and I didn’t look at it this morning, but it has been slowly creeping up. It’s coming off the absolute lowest base in 2,000 years or something like that. So, it’s still pretty low, but it has been creeping up slowly but surely. I forget where it was yesterday, but it might have been like 87 bips or something, which is ridiculous. Is it interest rates?
Bill: Oh, if rates go up?
Bill: Oh, we’re fucked. That can’t happen.
Tobias: Who is we?
Bill: Everyone. Imagine what would happen if rates went up?
Tobias: Well, the federal government is going–
Bill: If rates actually went up in a relatively quick amount of time, who can service their debt then? And then, good luck on the wealth effect. I think we’re all sort of really long rates, right? And maybe not.
Tobias: Do we get one more of these in before the election? Is this our last chance before the election?
Bill: Oh. No, I think we’ll have one on election day.
Tobias: We have one on election day. That’s right. Whoa. So, bumper special for election day. [crosstalk] This is the Halloween special that comes in before the election day.
Jake: Whoops. We forgot to dress up.[laughter]
Bill: The thing about the election though–
Tobias: Bill did.
Jake: Yeah, Bill– [crosstalk]
Tobias: Bill has come as Montier.
Bill: I do worry what might happen in a Republican Senate and a Democratic President, but outside of that– everybody’s just going to spend, keep the party going. Trump’s in, you know they’re going to spend. He’s done it for four years if the democrats get everything, they’re going to spend. So, just don’t own cash.
Tobias: The fact that there have been no consequences yet, isn’t that kind of evidence that MMT works?
Bill: Well, that’s what they’re going to say, right? They’re going to be like, “Well, look–”
How Much Does Earth Cost – Kayne
Jake: That’s what Kanye was saying was, wasn’t he? How much does the earth cost?
Bill: That’s right.
Jake: If money makes people happy, why don’t we just make more money?
Tobias: Makes sense to me.
Bill: There you go. Yeah, I’m sorry I haven’t looked at Ant. I should look at Ant. I’m sure it’s very interesting. My research projects are elsewhere right now. I’m saying that before we closed up.
Jake: Yeah, rates are an interesting– This is probably too much like macro doom and gloom bullshit, but it doesn’t feel like they don’t have anywhere else to go now. They’re in such a corner. They can’t let rates go up for the government debt. They can’t. Their only answer is just going to be to print more money.
Tobias: There’s negative rates around the world. You don’t think we can go negative?
Bill: I think currencies is the place to watch because the currency market’s so big that it’s hard to control. That’s where I think some stuff might really start to crack. But I don’t know what or when or how.
Jake: [crosstalk] –still bond vigilantes. Remember that? That was like a thing in the 80s, bond vigilante?
Tobias: What was the idea– they stop buying your debt and so your interest rates go up? Your coupons would go up?
Bill: Just real quick. Imagine what companies with like $400 million of revenue would be worth if rates were 6%? And there was actually cost of capital to investing in things. It’d be insane.
Jake: That’s a long way down from here.
Bill: But it can happen. I mean, it can’t happen overnight. It would be devastating. The real estate market would go to shit. We’re all playing one big wealth effect game in my mind.
Jake: So, would you say that maybe we’re not all as wealthy as we think we are on these latest marks to market?
Bill: I don’t think I’m that wealthy on this mark to market. So, yeah.
Tobias: That’s time. Thanks, folks. Tune in next week where we will ignore the election on a Tuesday. Maybe not, I don’t know. I don’t really want to talk about it.
Bill: I won’t be talking about it.[laughter]
Tobias: See you then.
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